Fed volatility a silver lining for precious metals

May 20, 2016 at 08:53


Gold and silver prices have taken a big plunge on the back of falling bond prices and rallying US dollar since the release of the FOMC’s last policy meeting minutes on Wednesday and the accompanying hawkish commentary from several Fed officials. All of a sudden the implied probability of a June rate hike, which had been sub-10 per cent a few days ago, has now risen to almost 75 per cent. This basically has diminished the appetite for low and non-interest-baring assets like the euro and gold respectively. But is the market overreacting to all this? After all, the FOMC was apparently less concerned about the economic impact of a rate rise because of a slightly weaker dol...

Harvard economist: Emerging markets need gold

May 20, 2016 at 08:47


Led by Russia, central banks remained strong buyers of gold in the first quarter of the year purchasing 109 tonnes. This represents the 21st consecutive quarter that central banks have been net purchasers of gold as they continue to diversify away from the US dollar according to the latest World Gold Council report. Despite the steady buying most developing countries still hold less than 10% of their reserves in gold, compared to 60% or more in places like the US, Germany and Greece. The much higher share in developed economies is mainly a legacy of the Gold Standard, but but even the European Central Bank, established long after the introduction of fiat currencies, ho...

Silver the best precious metals trade for next 3 years

May 18, 2016 at 15:18


There is, say the wise old men of geological lore, something like 15 times as much silver in the Earth’s crust as there is gold. Received wisdom is that in days gone by, the value of silver relative to gold reflected the amount of metal Mother Nature has given us: gold was, for hundreds of years, about 15 times the price of silver. Last year 27,579 tonnes of silver were produced (according to my most reliable of precious metal data sources, Nick Laird of Sharelynx) and about 3,000 tonnes of gold. In other words, just over nine times as much as silver as gold was produced. However, the gold price – about $1,270 an ounce – is about 75 times silver’s price of $17 an ou...

Soros, Druckenmiller buy gold as Paulson sells

May 18, 2016 at 15:06


Billionaire George Soros made two huge bets on the shiny metal during the first quarter of 2016. According to filings with the Securities & Exchange Commission, he acquired a $264 million position in mining company Barrick Gold (ABX) along with a call option valued at $123 million in the SPDR Gold Trust (GLD), an exchange-traded fund that's a proxy for the gold market (call options give Soros the right to purchase the underlying security at certain date and price). Shares of Toronto-based Barrick, the largest gold miner, closed on Tuesday up 2.4 percent to $19.36 and have surged more than 162 percent this year. Stan Druckenmiller, a billionaire who was Soros's chief...

China vault buy confirmed as Gold ETFs in China fly

May 18, 2016 at 14:54


The world's biggest bank by assets just bought a secret gold vault in London. China's ICBC Standard Bank agreed to buy one of Europe's largest gold vaults from Barclays, according to Bloomberg. The deal is expected to be completed in July, although no additional financial details were given. The vault is in a "secret" location and can hold up to 2,000 metric tons of gold, silver, platinum, and palladium. It was opened by Barclays in 2012. ICBC Standard Bank's head of commodities, Mark Buncombe, said that buying the vault "enables us to better execute on our strategy to become one of the largest Chinese banks in the precious metals market." Notably, China's ...

What can Gold do?

May 16, 2016 at 09:00


One of the chief virtues of a gold standard is that it serves as a restraint on the growth of money and credit. It makes runaway government deficit spending and major monetary catastrophes such as hyperinflation practically impossible. Opponents of a gold standard can't defend the political malpractices that are enabled by a fiat currency regime. So instead they spin a narrative about how gold supposedly hampers the economy. According to Keynesian economics, spending boosts the economy while savings contracts it. Keynesians put the cart before the horse. Savings and investment drive the economic productivity that enable consumers to enjoy a high standard of livin...

Gold holdings surge 25%

May 16, 2016 at 08:57


The great gold rush of 2016 is gathering pace. Holdings in exchange-traded funds have now surged by a quarter, with investors taking advantage of lower prices over the past two weeks to enlarge stakes on rising concern about central bank policy making worldwide. The holdings have increased to 1,822.3 metric tons, the most since December 2013, according to data compiled, after bottoming at a seven-year low in January. In the past two weeks, as prices lost 1.6 percent, ETFs swelled 63.2 tons, rising every day. Gold is the best-performing major metal this year after silver amid rising concern over negative rates in Europe and Japan and whether the Federal Reserve will ...