Gold Market Update
Gold was on a roll last week as market volatility worked in favour of higher prices amid renewed concerns about the U.S. economic recovery and the second COVID-19 wave. Gold turned its losses around with the precious metal rallying 3.5% since last Friday’s close after the Federal Reserve ruled out a V-shaped recovery in the U.S.
Investors hang on what the central bank says, and the Fed’s outlook has dampened the general confidence.
We expect the economic data (today’s Bank of Japan interest rate decision, Wednesday’s U.S. building permits and housing starts, Thursday’s Bank of England interest rate decision, and U.S. jobless claims) to be negative.
Markets will be searching for direction, and this is a tailwind for gold. We may see some near-term price weakness as investors chase further NASDAQ highs but we view these as buying opportunities given the huge disconnect between share prices and fundamentals like earnings.
Gold Price this week in AUD
This week our CEO Jodi Stanton was interviewed on Bloomberg, discussing how challenging economic conditions are impacting gold price.
Gold in the News
Here are a few articles trending on the subject of gold.
- Legendary billionaire investor Paul Singer is quoted in Jim Grant’s newsletter: “This is a perfect environment for gold to take centre stage. The fanatical debasement of money by all of the world’s central banks…should create a fertile ground for this most basic of all money and stores of value to reach its fair value, which we believe is literally multiples of its current price”: https://sprott.com/media/2687/grants-article-changing-monetary-places-may-15-2020.pdf
- Mike “Mish” Shedlock gives a somewhat technical explanation of why gold is continuing to rise despite lagging jewellery demand and the volatility of speculative demand: https://www.thestreet.com/mishtalk/economics/speculators-dump-gold-but-price-goes-up-anyway
- Multi-billion dollar asset manager Guggenheim Investments sees challenging times ahead for the U.S. dollar: “With the Fed going all-in on financing the government deficit, the U.S. dollar could be at risk to negative speculation of its status as the dominant global reserve currency. Investing in gold may help offset this trend. The accumulation of gold as a reserve asset historically has been seen as a responsible policy response in periods of crisis. This may very well become the policy option of choice in the future”. https://www.guggenheiminvestments.com/perspectives/global-cio-outlook/the-feds-roadmap
This week we highlight Gold – The Story of Man’s 6000-year Obsession. This is a tremendous multi-part video series produced by one of our colleagues Grant Williams. Key excerpts from this colourful and entertaining movie:
“Gold and the first banks”
Gold’s unique properties enabled The Knights Templar to create the first banks in 13th Century Europe, as people were able to store their gold in one bank and borrow against it elsewhere as they travelled across the continent.
“So what makes gold money?”
The reasons why gold remains money is essentially the same as they’ve been for centuries. And while, to many peoples’ confusion, many of those reasons are based on faith, the idea of faith in a timeless physical asset which has proven its worth since the dawn of civilisation is perhaps less cofounding than the faith shown in the central bank governors of the modern-day monetary system, who can conjure trillions of fiat money units out of thin air at will.
- The U.S. has 8,000 tons.
- The I.M.F. have 3,000 tons.
- Russia tripled its gold reserves in the last 10 years.
- China buying every piece of gold that is not nailed down.
To watch the first video in the series click here.
SendGold Handy Hints
Now you can view your gold balance in milligrams, troy ounces, Chinese tael, dinar, and Hong Kong tael.
You can now view your gold balance denominated in a number of different ways, including milligrams and troy ounces. On the main screen simply click the gold circle near the middle and you will see a list of options. You’ll always be able to view gold in “G”, which is SendGold’s universal denomination, equal to 10 milligrams. You can also choose to view your gold in milligrams, troy ounces, Chinese tael, dinar, and Hong Kong tael.
And remember, we are here to answer any questions. Just email us on firstname.lastname@example.org.