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Massive stock and bond selloff

Friday Fed Announcement Triggers Biggest Stock Loss in Months

Gold Market Discussion

Massive Stock and Bond Sell Off Shake Markets on Interest Rate Prospect

stockbrokers selloff

On Friday, the Dow and Nasdaq had their worst day since Brexit. The Dow was down nearly 400 points and had its third worst week overall year to date. An unexpected announcement from the Federal Reserve that hinted at an imminent interest rate hikes was the catalyst. Eric Rosengren – President of the Boston Fed – said Friday that “low interest rates are increasing the chance of overheating the U.S. economy.” He commented that there needs to be a tightening of monetary policy in order to maintain full employment.

In the past several weeks, the stock market has been hitting record highs, so it was a shock to many investors. Gold also took a hit after spot price had been moving up above $1,350 the previous day. European stocks also had a dismal day after the news with their worst day in over a month. The U.S. dollar and short-term government bond yields moved higher.

The European Central Bank announced this week that they would not deviate from their course of stimulus. Mario Draghi encouraged national governments to increase spending, but it is becoming increasingly clear from both the ECB and Federal Reserve that the central banks are out of options on monetary policy.

What this means for investors: Gold also fell Friday, which is not surprising. When interest rates are higher, demand shifts from non-interest yielding assets like gold. If this stock market bubble finally bursts though – which it is dangerously close to doing – investors will start moving back to safe haven assets like gold and silver.

 

Markets are Frozen by Uncertainty Fears

frozen markets

Central banking policies have been at the root of the markets’ gains, and they will be a catalyst for when it crashes. The Fed has been mostly hesitant and vague for the whole year in a climate where the slightest word from a spokesperson shakes the markets. The current state of affairs for the global economy can be summed up by uncertainty – so much so that it is becoming increasingly clear that central bankers are even uncertain what course to take. The features of this uncertainty are:

  • A Federal Reserve preparing to hike rates as global growth is slowing.
  • An ECB that is paralyzed with inability to move forward and tries to shift responsibility (and blame) to national governments.
  • The Bank of Japan continuing an aggressive negative rate policy.
  • $13 trillion of sovereign debt at negative yield.
  • Brexit uncertainties are still rampant, as Britain is preparing to face an economic recession.
  • A U.S. presidential election unlike any other.
  • Apple – which accounts for 7% of the S&P 500 – ordered by the European Commission to pay 3 billion euros in back taxes to the Irish government, which Apple and Ireland have both appealed against.
  • Geopolitical instability in the Middle East, South China Sea, and North Korea.

What this means for investors: Precious metals will be the asset that investors will flee to when the system breaks down. It has happened before, and it can happen again. The banks can only prop up a broken system for so long, and the warning signs are numerous that the world is approaching another brink of economic collapse.

Former Anti-Gold Wall Street Investor Changes Course, Recommends Buying Metals

buy gold bars

Richard Bernstein
Richard Bernstein

Richard Bernstein, a notoriously anti-gold investor, is buying gold for his clients’ portfolio for the first time over inflation concerns and market uncertainty. When Bernstein – a former investment strategist at Morgan Stanley – taught at New York University’s School of Business, he was notable for telling his students that there was no difference between gold and “wampum,” the glass beads that the Eastern Woodlands tribes of Native Americans used to exchange as currency.

In his opinion, gold was only an asset because of some “romantic value” assigned to it. Just as wampum was only valued because of an agreed upon value, gold only means something because society has decided so. It could easily become nothing more than glass beads one day.

What Bernstein’s analogy is missing however is that gold and silver have been valued as currency by most societies for thousands of years. The example of Native Americans exchanging wampum is representative of a small fraction of human history.

What this means for investors: If Richard Bernstein is seeing enough danger in the markets to buy gold, investors should take note. Another important factor to consider is inflation. Precious metals are an effective way to hedge a portfolio against inflation, which is one of Bernstein’s chief motivations. Gold is also real money. It has been valued for thousands of years, and it does not lose value, unlike paper trades, fiat currency, and “wampum.”

 

Buy Gold on Rebound Rally

Buy Gold on the rebound rally

The pull back on gold price Friday presented a prime buying opportunity. This graph illustrates the Comex gold weekly trends for the past couple years. This week gold met resistance at $1,360 and pulled back some.

On the silver side, in last week’s Gold Market Discussion, we looked at why the cheaper metal’s price would continue to run.

What this means for investors: The primary point to take away from this graph is that the current retreat is a lucrative buying opportunity before the uptrend continuation to $1,360 and beyond. Gold is in a new, strong bull market, so any price retreat is a prime opportunity to take advantage.

 

 

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Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

Massive Stock and Bond Sell Off on Interest Rate Prospect

Read Here

Markets are Frozen by Uncertainty Fears

Read Here

Formerly Anti-Gold Wall Street Investor Changes Course, Recommends Buying Metals

Read Here

Buy Gold on Rebound Rally

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Deutsche Bank Backing out on Promised Delivery

Deutsche Bank Backing out on Promised Delivery of Gold

Gold Market Discussion

Why is the Deutsche Bank Backing out on Promised Delivery of Gold? Is Gold Approaching a Short Squeeze?

Deutsche Bank

This week German gold buyers discovered that they could not receive delivery of the metals they had paid for. The bank in question – Deutsche Bank – is the chief bank of Germany. Investors had bought through the gold exchange traded commodity Xetra-Gold. This is a gold investment service that is essentially more of a paper trade than actual physical gold, as many investors do not choose to exchange the warranty for physical delivery and instead treat it more as an ETF. However, the contract states that a buyer can redeem their contract for physical gold at the designated Deutsche Bank.

When an investor attempted to take the guaranteed delivery of their physical gold this week the bank was unable to produce it. Later – after being questioned – the bank issued a formulaic response stating only that the bank was in fact the designated supplier of physical gold despite its inability to deliver. The bank is the guarantor of the physical gold backing the warranty, thus it seems Deutsche Bank rather than Xetra-Gold is at fault here.

What this means for investors: The question to consider here is whether Deutsche Bank was unwilling or unable to deliver the gold. Each prospect is equally worrying. If the bank is unwilling to make good on the warranty, what is their impetus for wishing to keep possession of their gold? If the bank is unable, then where is the gold that is supposed to be backing these trades?

This is one of several signs that gold could be approaching a short squeeze. For every 542 ounces of gold traded on the Comex in ETFs, only one ounce of physical gold is sitting in a warehouse for physical delivery. This means that the price of gold can become exaggerated. If every holder of one of these paper gold certificates attempted to cash them in, there would not be enough physical metal to meet the requests. The price of gold would skyrocket, although many investors would be left high and dry. Eventually these imbalances will need to undergo some degree of correction.

This is a significant reason that owning physical gold is safer than gold ETFs. Physical gold investors can be confident that they have their investment safe in their own hands.

 

Gold and Silver Prices Ends Week with a Jump after August Jobs Report

fine-gold-close-up

On Thursday gold and silver saw dips in anticipation of the U.S. jobs data report for August. However both re-bounded Friday after some worse-than-expected data. Gold saw its biggest gain in a month when the data failed to hit estimates.

In July, the jobs report was better than expected which caused gold to take a hit, despite weak numbers in May and June. According to some analysts, far too much credibility is being placed in the jobs data, however, as GDP growth is still more sluggish than could be desired. The Federal Reserve keeps looking for positive economic indicators for a rate hike, and the July jobs report had significant bearing in a slightly more hawkish tone from Janet Yellen last week on a possible rate hike this month.

Silver saw a significant price jump as well. On CNBC’s Fast Money Friday, one analyst even said he preferred the white metal to gold in this market.
What this means for investors: The metals jumped due to demand for safe haven. The jobs data indicates a slowing economy and uncertainty, which both boost gold and silver demand. Precious metals also are desirable in the low interest rate world that we are currently living in.

Gartman on Gold vs. Bonds in Unorthodox Market

gartman gold vs bonds

Dennis Gartman, editor and publisher at The Gartman Letter, talked this week about some unusual trends in the past few months between the bonds and gold markets. Historically the two have always moved in opposition to each other. However as Gartman pointed out on CNBC, “…since June, as went gold, so went the bond market.” The absolute prices of both have rallied and fallen alongside each other in the past quarter, which is an anomaly.

Both investments are seen as safe havens during times of economic turbulence and uncertainty, which accounts for the rallies this year. They move in opposition as investors shift between the two deciding on the safest investment. Both saw significant gains following the post-Brexit volatility.

What this means for investors: There is huge demand or safe haven investments right now. The primary reason for this is uncertainty. With monetary policy experiments, contradictory U.S. economic data, negative ECB interest rates, the U.S. presidential election, and still some Brexit volatility, no one is certain of what is to come.

Silver Forecasted to Stay Strong [VIDEO]

What this means for investors: Silver rallied Friday after falling slightly over the past few weeks. Its rally shows it is still a strong performer – in fact performing better than gold this year – and set to gain even more in both short and long term. The current correction makes now an optimal buying time.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

Deutsche Bank Refuses Delivery of Gold
Read Here

Gold Rallies after Jobs Data 
Read Here

Gartman on Bonds and Gold
Read Here

Silver Rallies Friday – Investors Predict Higher Gains
Watch Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Economic Indicators About Trump vs. Clinton

What Economic Indicators Are Saying About Trump vs. Clinton

Gold Market Discussion

The Markets’ Take on a Trump Presidency

What would Trump mean for Gold?

Presidential elections in the U.S. have significant impact on market movements. Even the anticipation of (before the candidate is even elected) what a candidate might do is impactful.

According to some hedge fund managers, there is a correlation right now happening between investors wanting to hedge against a market drop in the event of a Donald Trump presidency. The CBOE Volatility Index – or VIX – gauges volatility expectations and right now its projections are moving in line with Trump’s polling numbers according to CNBC analysis.

What this means for investors: The VIX can be indicative of what traders expect for the rest of the year. It is not an infallible predictor, however. Although some traders are expecting volatility, it does not necessarily mean a long-term negative for the markets

 


Economic Data Forecaster of Clinton’s Chances

What would Clinton mean for Gold?

The economic data around Hillary Clinton’s chances is also worth noting. Some forecaster models are frighteningly accurate at predicting the outcome of U.S. presidential elections by taking into account unemployment, GDP growth, and inflation.

An economist at Yale – Ray Fair – analyzed the current race with his model based on these factors. The model has correctly predicted all but two presidential elections in the past hundred years. His results were emphatically in favor of a Trump victory. According to the assessment, a Clinton victory is impossible without 4% GDP growth. Growth is currently trudging at 1.2%.

What this means for investors: Of course, modeling data is not perfect. It is difficult to account for every variable, and this election is particularly volatile. A rate increase could be detrimental to the Clinton campaign based on the Yale model, but that doesn’t mean it still won’t happen. Regardless of victory, demand for safe haven investments like gold and silver will likely go up in the wake of the election if the economic data and slow growth continues.


Gold Advances after Fed Announcement from Yellen on Friday

The Fed says they might raise rates...again

On Friday the much-anticipated Fed announcement on interest rates drove gold higher. Gold had retreated earlier in the week in anticipation of the Federal Reserve meeting in Jackson Hole, Wyoming. The previous announcement from Fed chair Janet Yellen had hinted at a rate increase happening soon, so many had thought that Friday’s announcement might finally give a concrete timeline for that hike to occur.

The analysis of Yellen’s speech, however, did not reveal anything new in Fed policy strategy. Yellen did reiterate that a rate hike soon would be appropriate, but did not give a certain date or further details. Rather, she said it would be “gradual” and “over time.” According to Fed Funds data, odds of a rate increase happening in September fell slightly to 28% from 32%. Given the Fed’s tone recently, a rate increase in September is certainly not off the table though. One analyst believes it would more likely happen in December rather than September.

The chief factors that the Fed took into consideration are unemployment rates, GDP growth and global economic uncertainty. While the data is not robust enough for the Fed to take a definitive move from its doveish stance, Yellen did state that the economy was nearing employment and growth goals.

It is also worth noting that on Monday, the Libor – London Interbank Offer Rate – hit a 7-year high even as interest rates have been falling. The last time time it experienced such a spike was prior to the 2008 crash. Most loans are linked to the Libor, and this could be a sign of system stress, as the Fed acknowledged in the most recent FOMC minutes. A rising Libor in these conditions could make the Fed more reluctant to raise rates.

What this means for investors: The markets had a mixed reaction. Generally gold goes up when interest rates are low because they are seen as a safe haven. The Fed board does not seem able to make up their minds at the moment and are continuing to stall on an interest rate hike. A hike too soon in a volatile economy could send the stock market crashing, which would eventually support gold. It is an unusual time in monetary policy and well worth following.


Markets Still Adjusting to Impact of Brexit on the U.S.

What will Brexit mean for the US?

Brexit uncertainty still looms large in the minds of investors, bankers, and policy makers. In the initial fall out from the UK vote to leave the EU, the pound, euro, and most other world currencies plunged along with the stock market while the dollar and gold gained strength.

The initial frenzy soon died out, however. Stocks recovered and were hitting record highs within a month of the post-Brexit fall. The dollar and gold both remained robust as well though. The UK looks to be poised on the brink of recession now with the prospect of a long, arduous road of negotiations ahead to decide the nature of the UK – EU relationship.

What this means for investors: Economic uncertainty is at the forefront of monetary policy decision makers’ minds right now. Although the markets are not experiencing dramatic movement from Brexit right now, investors are still cautious about implications to come concerning Brexit. The economic data has still to be realized and analyzed, and until that point – and likely for a while after – the economic uncertainty will support gold prices.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

The Markets’ Take on a Trump Presidency
Read Here

Economic Data Forecaster of Clinton’s Chances
Read Here

Gold Advances after Fed Announcement from Yellen on Friday
Read Here

Markets Still Adjusting to Impact of Brexit on the U.S.
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Nixon Closes the Gold Standard

45-Year Anniversary of Fiat Currency Replacing Gold

Gold Market Discussion

Just Over 45 Years Ago the U.S. Left the Gold Standard – What Has Happened Since?

President Richard Nixon closed the Gold Standard 45 years ago in 1971
President Richard Nixon closed the Gold Standard 45 years ago in 1971

We just passed the 45-year anniversary of fiat currency replacing gold. 45 years ago – August 15, 1971 – President Nixon declared the end of the United States’s decades long, gold backed monetary system and replaced it with the current fiat system. The gold standard had ensured that something valued and physical – gold – was giving value to the dollar rather than paper, government promise, and digital manipulation. At the time gold was $35 an ounce. Today it is $1,350 an ounce.

Nixon’s strategy was originally designed to be a temporary measure. He claimed it was to combat nefarious “international money lenders” who were waging war against the U.S. dollar. In reality U.S. spending on the Vietnam War was creating a massive budget deficit and soaring inflation. Both foreign governments and private investors saw the potential for dollar devaluation and immediately began flocking to gold.

What this means for investors: Nixon’s promise that the dollar would not decline was proved false. The dollar plunged. Within nine years of leaving the Gold Standard, gold had climbed from $35 to $850. Since 1971, there have been market upheavals, economic crises, and currency collapses around the globe due to speculation and manipulation of fiat money. Gold has real value, and that value will always protect wealth during uncertainty and crisis when printed paper becomes worthless.


The Fed’s Announcement and How It Affects the Gold Bull Market

Janet Yellen illustration by DonkeyHotey on Flickr

This week the Federal Reserve’s minutes were released from their latest meeting. Many investors were hoping the Fed would at last turn hawkish and announce an interest rate hike. However, the announcement was much more timid than these investors would have liked. The announcement was rather that an increase might be appropriate soon with no indication of specific date. Gold initially fell after the Wednesday announcement, but rose again Thursday on the uncertain nature of the announcement. Peter Grandich, the self-styled “Wall Street whiz kid”, later wrote that gold is in the early stages of its biggest bull market ever.

Silver is also likely going to ride the same bull market run as gold. The ratio between gold and silver is narrowing. It’s up more than gold so far for the year and could still have a ways to run.

What this means for investors: Many strategists have been saying for months that gold and silver are entering new bull markets. The summer is historically a slower period for precious metals, and as we enter autumn, prices could start to see more movement. Gold and silver are both up over 26% for the year, and have a ways to climb still. Price dips after announcements like the one last week are an optimal time to diversify an investment portfolio with both gold and silver.


Lord Rothschild Is the Latest Elite Banker to Increase Gold Holdings

Lord Jacob Rothschild
Lord Jacob Rothschild

The Rothschild name has been synonymous with speculative banking and furtive, elitist power for well over a century. This week Lord Rothschild called the current monetary policy of central banks around the world the “greatest experiment in monetary policy in the history of the world” as they attempt to force stimulus into economies through low and negative interest rates.

In his half-yearly financial report for his fund, RIT Capital Partners, Rothschild outlined the impending global risks. These risks were primarily the UK vote to leave the EU, the sluggish economic growth in China, tensions in the South China Sea, conflicts in the Middle East, the U.S. presidential election, and recent terrorist attacks in Germany, France, Belgium, and the U.S.

Along with outlining geopolitical and economic risks, the banker stated that he was increasing his gold holdings due partly to the increase in declining yields. He reduced pound sterling holdings due to the pound’s post-Brexit crash, and was also somewhat reducing U.S. dollar holdings.

What this means for investors: Many hedge fund managers and bankers are increasing gold holdings in their portfolios and preparing for a future of uncertainty and crisis. Gold protects wealth when fiat currencies fail. It could be an ominous sign when the world’s most powerful and influential are turning to gold.


Is the Stock Market Approaching a Stall? Why One Expert Thinks So

Art Cashin
Art Cashin, Director of USB Floor Operations at the NYSE

Art Cashin, director of UBS floor operations at the New York stock exchange, warned this week that even as stocks are hitting new highs, the market could be about to stall. At first look it might seem contradictory. Cashin thinks that it is possible people have simply not realized the stall approaching yet because of the gradual nature it has arisen.

The markets are also still awaiting economic data from the UK to see how hard it was impacted by the Brexit vote in June. Currently the British 30-year bond is yielding less than the U.S. 10-year after the Bank of England cut interest rates last year.

What this means for investors: When the stock market bubble finally bursts, investors will start flocking to gold. The current trend the markets are in are unusual in that the stock market is hitting highs even as gold continues to make gains. Gold will be a safe haven for investors when the market finally stalls, as Cashin predicts it will soon.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

45 Years Ago This Week the U.S. Left the Gold Standard – What Has Happened Since?
Read Here

The Fed’s Announcement and How It Affects the Gold Bull Market
Read Here

Lord Rothschild Is the Latest Elite Banker to Increase Gold Holdings
Read Here

Is the Stock Market Approaching a Stall? Why One Expert Thinks So
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Ben Bernanke Predicts

Ben Bernanke’s Forecast for Interest Rates, and a Look at the Global Economy

Gold Market Discussion

Ben Bernanke Predicts Fed Won’t Raise Rates

 

Ben BernakeFor months now investors have been expecting the Federal Reserve to raise interest rates. Events such as the May jobs report data, the June Brexit vote, and a lack of economic growth in Q2 have forced the Fed to continue to delay hiking rates. There is much speculation that September could finally be the right moment for the Fed.

However Ben Bernanke, former chairman of the Federal Reserve from 2006 to 2014, said this week that his successor, Janet Yellen, would be reluctant to raise rates for a while yet. Partly this is due to the Fed making incorrect predictions over the past several years, and thus being overly cautious lest it blunder again. In addition there is conflicting economic data, which adds a strong air of uncertainty to any decision making that the central bank takes.

December 2015 marked the first rate hike in nine years, and at the time the Fed forecasted four more to happen in 2016. So far there has been zero, and it is not our of the realm of possibilities that none will come in 2016.

What this means for investors: If interest rates stay low, gold will continue to climb. However what is more noteworthy is the lack of hard data to support a strong economy. The Fed’s reluctance to raise rates indicates that the U.S. economy cannot support higher rates. With such weakness, demand for gold and silver will continue to rise with safe haven demand.


China and Germany’s Warning Signs

China and Germany, the world’s second and fourth largest economies respectively, are showing dangerous signs of weakness. Chinese economic growth rate fell to a twenty-five year low last year, and the hard data indicates that the slowdown will continue. For one, both Chinese imports and exports fell more than expected for the month of July. In addition, retail sales are not hitting expectations, and fixed asset investment is down. The International Monetary Fund projects Chinese economic growth to fall below 6% by 2020. According to a UBS assessment, China has also begun to bail out its banks.

Germany’s economy accounts for one fifth of the Eurozone’s GDP, and a flailing Germany economy could easily infect every other country in the 28 country trading bloc of the EU. European Central Bank interest rates are still at negative as they attempt to pump stimulus into the economy. German bonds are trading at negative yield. Germany industrial, energy, and construction sectors all shrank in quarter 2, and high inflation was a hit on real incomes. HSBC economist Rainer Sartoris said this data does not even account for the impact of Brexit. The impact of this data will be seen later in the year.

What this means for investors: Japan, the world’s third largest economy, is in even more dire straits than China and Germany. While U.S. stocks rally and some interpret this as economic robustness, with such international strains on the global economy coming from these economic powerhouses, the system has dark clouds looming ominously over it. The global system is too far integrated for everyone not to eventually buckle under the continued pressure of stagnant economies.


Britain’s Exit from the EU Could Mean 4% Shrink in GDP

Brett or Bregret

The Brexit vote by Britain to leave the European Union in June this year wreaked havoc on the markets before the initial fervor fizzled out a few weeks later. British politics underwent a re-structuring with Theresa May taking over as Prime Minister from David Cameron and forming a new cabinet. The opposition Labour Party debated changing leadership from far left populist Jeremy Corbyn – who fiercely opposed Brexit – but without effect. May, like Cameron, is opposed to the British exit, however maintains she will uphold the “Yes” vote and enact Article 50 of the Lisbon Treaty, which would begin the two year process of negotiations around the mechanics of how an EU member state would leave.

After the Brexit vote, the British pound fell to its lowest in over thirty years. The Bank of England has also recently lowered interest rates in an effort to stave off recession. A recent study is indicating that the British economy will further contract if it loses access to the European single market.

The EU was originally designed as an economic union where countries could engage in free trade and movement of goods and services. If Britain leaves, this would have a dire impact on many businesses that depend on this access to sell products and services to a wider customer base. Because of Great Britain’s significant financial sector, some even predict lack of EU market access could shrink the British economy by 7%.

What this means for investors: The Brexit vote spurred record demand in Britain for gold and safe haven investing. Gold prices spiked after the Brexit vote due to fear and uncertainty. The outlook for Britain continues to be uncertain. It’s yet to be seen whether the nation will actually leave the European Union, but if it does, there will be significant impact that will stifle economic growth in Great Britain and the Eurozone for some time.


Gold and Silver Close the Week with a Rally

Gold was up Friday snapping back from a losing streak earlier in the week, maintaining its 28% climb for the year and closing out the week just over $1,350. Earlier in the week stocks had enjoyed a solid run as gold pulled back. Gold closed in the green even as the Nasdaq still managed to close Friday at a record high. This was due in part to retail sales for July doing less than expected and wholesale prices plunged the most in the year.

These are worrying signs the economy is not as strong as the stock market and the labor data report from July seem to indicate. Economic growth is not as robust as many have anticipated.

Silver was also up on Friday at just over $20. The white metal continues to perform for the year and is up 30%.

What this means for investors: There has been an unexpected correlation in recent weeks where the U.S. dollar and gold are both gaining. Historically the two are inversely related. Many experts are saying that gold still has a ways to run in this bull market, and data like this would seem to support that projection.


Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

Ben Bernanke Predicts Fed Won’t Raise Rates
Read Here

China and Germany’s Warning Signs
Read Here

Britain’s Exit from the EU Could Mean 4% Shrink in GDP
Read Here

Gold and Silver Close the Week with a Rally
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Precious Metals Bull Market

What Is Silver Saying about the Precious Metals Bull Market?

Gold Market Discussion

What the Gold Market Is Saying about Global Risk, Bank of England Rate Cuts, Japanese Stimulus

Global Risk

Michael Preiss of Taurus Wealth Advisors believes the global economic outlook is recession and stagnation. In his analysis on CNBC he stated that the gold market can reveal much about the state of the economy. He points out that gold is the best performing asset class of 2016 and has outperformed the S&P by 19%. Much of the world’s sovereign debt is seeing low and negative yields.

watch this video from Yahoo Finance UKWatch the video here from Yahoo Finance UK.

What this means for investors: Financial stress is becoming more apparent in the global system. If the recession that Preiss believes to be inevitable does occur, gold and silver will see more gains.

 


Silver’s Performance for the Year Optimistic for Precious Metals Bull Market

Silver has been a top performer so far for 2016. Silver often outperforms gold in a bull market for precious metals, which most strategists are agreeing is where the market currently is. The white metal is up more than gold overall for the year with both over 26% in the green for 2016. Georgette Boole – commodities and currency analyst at ABN Amro Bank – believes that silver will continue to outperform gold into 2017. An ounce of gold right now is able to buy the least amount of silver since 2014. The ratio was at its lowest in three decades during the record prices that we saw in 2011. This is an indicator that the bull market has a way to go yet.

Both metals gained early and mid-week after the Federal Reserve announced no interest rate hike and the Bank of England cut interest rates.

What this means for investors: Both metals have a bright outlook through 2017. Silver is driven by many of the same economic factors as gold, but its price is also dictated by industrial demand. It can also move more sporadically than gold. With an increase in usage in things like solar panels, touch screens, and RFI chips, the metal is seeing increased demand, which has lifted the price. Silver is a lucrative way to diversify a precious metals – or any investment – portfolio, and many first time silver investors are taking advantage of the price now to buy.


The Bond King: “I Don’t like Stocks, BONDS or Equity…gold and land are favored asset classes.”

Gross on CNBC August 2016

This week in his August letter to investors, Bill Gross, portfolio manager at Janus Capital, issued a warning against investing in stocks and bonds and advised investors to move into gold, land and other real assets.

The reason for his dour prediction is central banks’ monetary policies of low and negative interest rates and other foreboding signs of a weakening financial system. Low interest rates raise asset prices, but impede savings and business investment. He also stated that capitalism cannot function properly with interest rates at zero and negatives, and that global monetary policies will not succeed without nominal growth, which we are not seeing.

Bill Gross manages the $1.5 billion Janus Global Unrestrained Bond fund, which is up 3.93% for the year. He has also written acclaimed books on investing. Gross is the latest to join the swelling ranks of fund managers and investors who have gone bullish on gold. Stanley Druckenmiller, Paul Singer, Jeff Gundlach, and George Soros are just some of the other prominent names that have recently recommended gold to investors and cautioned against stocks in the current economic climate.

We sent out a mid-week blog post about this on Thursday Aug 4th which you can check out here.

What this means for investors: In times of market turbulence and volatility, gold becomes a more attractive investment. Demand increases, as investors become more risk adverse. Economic growth around the globe is slowing due to central banking stimulus policy, and without growth, high yields on stocks and bonds will become more difficult to find. Gold both preserves wealth during economic downturn and offers a return. The metal is up 26% for the year with many strategists projecting it to climb as high as $1400 by the end of the year.


Gold and Silver React to July Jobs Report

July Jobs report gold reaction

After gaining all week, gold and silver both fell Friday following the release of the July jobs report. The data was better than expected – especially after the dismal May numbers – with 255,000 new jobs added last month. Unemployment held steady at 4.9% as well. Targets had been 4.8%. It was a positive for the U.S. economy after the weak GDP growth from the second quarter. Stocks responded by rallying and precious metals fell as the dollar strengthened. Earlier in the week the case had been the opposite with stocks falling and gold gaining following European volatility and the Fed’s low interest rate policy.

Despite the robust numbers however, some analysts are still worried about the labor force participation rate, which is lower than what some targets call for. Corporate earnings for the second quarter are lagging in some sectors, causing concern over how strong the business cycle actually is.

What this means for investors: The jobs data gave stocks a much-needed boost on Friday after being down all week, as investors became more risk adverse. Friday’s slump for metals could likely be a short-term event, however, as the economic data is more indicative of economic slowdown ahead. The Federal Reserve may read the labor data as a sign to finally raise interest rates if they believe the economy is strong enough.


Here are some articles from the web discussing the topics in this week’s post:

What the Gold Market Is Saying about Global Risk, Bank of England Rate Cuts, Japanese Stimulus
Watch Video Here

Silver’s Performance for the Year Optimistic for Current Bull Market
Read Here

“I Don’t like Stocks, Bonds or Equity…gold and land are favored asset classes.”
Read Here

Gold and Silver React to July Jobs Report
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Bonds

When Bond King Bill Gross “Doesn’t Like” Stocks or BONDS, Perhaps We Should Listen

Watch: Bill Gross Doesn’t Like Stocks or Bonds!


Trouble viewing video? Click here. Bond King Bill Gross “Doesn’t Like” Stocks or BONDS. Bonds! This is the former head of Pimco, where he managed the largest Bond fund to the tune of oh… $270 billion. After all, the man’s nickname literally is “The Bond King”. So what does he like?

 

Bill Gross: “I don’t like stocks, I don’t like bonds, I don’t like private equity…real assets such as land, gold…are favored asset categories.”

 

Yesterday in his August letter to investors, Bill Gross, portfolio manager at Janus Capital, issued a warning against investing in stocks and bonds and advised investors to move into gold, land and other real assets.

stocks and bonds warning from Bill Gross
Should investors be concerned about stocks and bonds?

The reason for his dour prediction is central banks’ monetary policies of low and negative interest rates and other foreboding signs of a weakening financial system. Low interest rates raise asset prices, but impede savings and business investment. He also stated that capitalism cannot function properly with interest rates at zero and negatives, and that global monetary policies will not succeed without nominal growth, which we are not seeing.

What this means for investors: In times of market turbulence and volatility, gold becomes a more attractive investment. Demand increases, as investors become more risk adverse. Economic growth around the globe is slowing due to central banking stimulus policy, and without growth, high yields on stocks and bonds will become more difficult to find. Gold both preserves wealth during economic downturn and offers a return. The metal is up 26% for the year with many strategists projecting it to climb as high as $1400 by the end of the year.


Bill Gross, Janus Capital Group
Bill Gross, Janus Capital Group

Who is Bill Gross?

William “Bill”  Gross is the founder and former Bond Manager of PIMCO, where he managed as much as $293 billion in assets. His understanding of the bond markets earned him the nickname “The Bond King”. In 2014, After 43 years, Gross left PIMCO to join Janus Capital Group, where he currently manages the $1.5 billion Janus Global Unrestrained Bond fund, which is up 3.93% for the year. He has also written acclaimed books on investing, “Everything You’ve Heard About Investing is Wrong” and “Bill Gross on Investing“. Gross is the latest to join the swelling ranks of fund managers and investors who have gone bullish on gold. Stanley Druckenmiller, Paul Singer, Jeff Gundlach, and George Soros are just some of the other prominent names that have recently recommended gold to investors and cautioned against stocks in the current economic climate.


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wall street

What’s Ahead for Gold and Silver after the Summer?

Gold Market Discussion

Gold Prices End the Week High on U.S. Economy Growth Concerns and European Bank Stress Test Results

The US Economic Growth?

Gold closed out July hitting two-week highs and seeing gains through Thursday and Friday to settle at $1350 by Friday close. The metal has entered a new bull market and is now up 26% for the year.

There were several factors influencing its run this week. The first was the Federal Reserve decision not to raise interest rates. The economic and labor market data is still not strong enough to predicate raising rates. Expectations of more Brexit induced stagnation and a continuation of central banks in Europe and Japan pursuing monetary easing are also significant factors. Crude oil is also plunging, and U.S. durable-goods orders fell ahead of the Fed meeting.

Growth in the U.S. economy for the second quarter was also lower than analysts predicted. This follows on a weaker than expected start to the beginning of the year. GDP for the second quarter rose 1.2% up slightly from 0.8%, but still short of the median expected growth among analysts of 2.5%.

On Friday the results of a stress test on Europe’s leading banks were released, and their weak results further gave gold prices a positive push. The oldest bank in the world, Italian Banca Monte dei Paschi di Siena, fared the worst out of the fifty-one banks tested, but most of the banks tested had worrying results. There is around 1 trillion euros of non-performing loans plaguing the European banking system. The stress test did not include a test for Brexit volatility and continued negative interest rates.

What this means for investors: The U.S. economy is not as stagnant as those in Europe and Asia, but it still not as strong as many peoples’ expectations and with the global economy becoming increasingly inter-dependent, this will put a strain on the world system at large. It is worth noting that the European bank stress test did not include the Brexit and negative interest rate factors, which are two of the direst indicators of the lagging economy. As economic uncertainty looms ahead for 2016, gold and silver could see significant further runs.


The November Election and Other Reasons Gold Could Still Run

Trump and Clinton

Major events, particularly political and geopolitical, impact gold and silver significantly. This year’s U.S. Presidential election is quickly becoming one of the most theatric and ugly elections and could its outcome – regardless of victor – could create a great deal of global volatility as elections often do. Some analysts have even gone as far as to cast a possible Donald Trump win as one of the biggest threat to global stability due to the unpredictability of what a Trump administration might look like. Regardless of whether this is a viable assessment or not, an unpredictable future tends to drive gold demand.

Gold demand is steadily rising in Great Britain and Japan on economic uncertainty fears. Although for most the Brexit economic fears were not fully realized, there is still a sense of fear as to what it will mean long-term if Britain leaves, and there has been a sharp upswing of British citizens buying gold (many for the first time). On the other side of the globe, there is a similar spike in gold buying as Japanese citizens see the BoJ’s monetary policy lagging, and government bonds fall below zero. Over $11 trillion of government debt around the world is currently at negative yield, and that kind of global strain can only hold for so long before there are dire repercussions.

Gold has been putting in a strong performance this year (up 26%), but it is currently playing second violin to a particularly strong equities market. Many investors agree, however, that gold is in a new bull market, and when the stock market enters an inevitable correction, gold prices will jump further.

What this means for investors: Many experts are predicting that gold will close the year at $1400. If that is the case, now is a prime buying opportunity. Safe haven buying around the world will also continue to drive gold prices. Silver has been moving in line with gold, making it an attractive investment as well.


The Federal Reserve Doesn’t Seem to Know What to Do

Federal Reserve Building

Gold prices lifted significantly mid-week after the Federal Reserve meeting where the Fed made the decision to postpone lifting interest rates yet again. Many have been expecting the rate increase to happen for the past couple months, but there is still no clear indication of when it might happen.

On Thursday the Fed announced that it would keep rates low and gold and silver prices responded accordingly by rising, which lasted through Friday. Danielle DiMartino Booth, a former advisor to the Dallas Fed, was on CNBC to give some analysis on the Fed’s current monetary policy. In Booth’s opinion, the central bank missed its opportunity for a rate hike some time ago. One of the methods of measurement of the robustness of the economy’s job market is the labor market conditions index, which has been negative now for six straight months. Other strategists also think they should have raised rates some time ago, and that this extended period of low rates will become a major problem long-term. Many are expecting a rate hike to finally happen in September, but it is still uncertain.

What this means for investors: If the Fed does eventually raise rates, gold will fall at first. However if these analysts are correct in their assessment that the Fed has missed its window of opportunity, rates could stay low for some time yet. There is still a palpable sense of fear as to just how strong the U.S. economy is and whether it can handle a rate hike right now.


Strategist Predicts Stock Market Rally Will End with the Summer


Last week U.S. stocks hit new all-time highs. However, investment experts are warning that the stock market’s current rally is approaching its end. One strategist compared it to a summer fling, calling it a “summer camp romance rally” and predicts that like a fling, it will fizzle out when summer turns into autumn. Another market expert also predicted that the stock market could see a significant correction before much longer.

One reason for the stock market’s attractive performance is that global government bond yield is at record lows. Instead, investors are moving towards stocks with more attractive relative valuations.

What this means for investors: The summer months are historically slower for gold, but gold has still made some gains through the summer months even as the stock market hit its highs. Post-Brexit fear sent gold and silver prices soaring, but price pullback through mid-July made this month a prime buying opportunity. Gold is ending July in the green, settling around $1350 by Friday afternoon.


Here are some articles from the web discussing the topics in this week’s post:

Gold Prices End the Week High on U.S. Economy Growth Concerns and European Bank Stress Test Results
Read Here

The November Election and Other Reasons Gold Could Still Run
Read Here

The Federal Reserve Doesn’t Seem to Know What to Do
Read Here

Strategist Predicts Stock Market Rally Will End with the Summer
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

dollar and gold correlation

The Dollar and Gold Currently in an Unorthodox Trend

Gold Market Discussion

The Dollar and Gold in a Complicated Relationship

dollar and gold unorthodox correlation

Traditionally gold and the dollar have an inverse relationship. When the dollar is strong, gold is weaker. Alternatively, gold rises on a weak dollar. However, we are currently seeing a dollar enjoying relative strength while gold prices are simultaneously over 25% into the green for the year. This trend defies history and is worth paying attention to.

Gold is priced in U.S. dollars, so one reason a strong dollar makes gold prices lower is because it becomes more expensive for foreign buyers. However central banking policy run wild around the world has many foreign investors seeking out safe haven investments like gold. Geopolitical turmoil and market volatility has increased the amount of economic uncertainty as well, raising gold demand. Non-government organizations like the IMF and OECD have recently issued warning reports of more global growth stagnation still to come.

Analysts at Citi believe that this dollar – gold correlation is a signal for more volatility ahead. Assets are becoming more interconnected as global financial markets become more intertwined, and the outcome is difficult for analysts to predict at this time.

What this means for gold investors: Gold’s slump from the last two years is over. Prices are at the highest they have been in two and a half years, and it is no anomaly. Silver is likewise performing strongly this year and has gained more than gold overall for the year.


More Stimulus from ECB and Bank of Japan and What It Could Mean for Gold

Bank of Japan main offices
Bank of Japan Head Office in Chuo-City, Tokyo, Japan

Gold prices lifted on Wednesday in anticipation of an announcement from the European Central Bank that they would increase stimulus funding in the floundering Eurozone. The monetary easing policies that the ECB has already been engaging in essentially weaken paper currencies, which makes gold stronger as it becomes more attractive than holding the devalued fiat money.

The Bank of Japan last week also announced it would pursue such a policy of “helicopter money” to attempt to stimulate economic stagnation. Central banks around the world have been embarking on these monetary experiments, which has sent some into the negative interest rate territory.

What this means for investors: Some of the world’s largest economies are in a slump that they cannot seem to get out of. The U.S. dollar and markets are relatively strong in comparison, but the integrated global financial system cannot withstand the strain forever of monetary easing policy. The central banks are attempting to prolong an inevitable major downturn. Investing in gold and silver is a way to hedge against this financial risk.


Britain’s Stagnant Post-Brexit Economy

England's currency

The pound, euro, and global stock markets all plummeted when Britain voted to leave the EU. Yet within a month they seemed to have regained at least some of the loss according to many media outlets that had backed the Brexit.

Yet the reality of the British economy is that it is shrinking and investors and policy makers are losing confidence. A couple months ago, the International Monetary Fund had reported that global economic growth overall was weak. After the Brexit vote, they cut projections even further.

The Bank of England could pursue monetary easing to attempt to stave off the slowdown. If Britain does leave the EU, they will possibly lose access to the single European market, which would hurt business across the board. One of Britain’s economic growth drivers – the service industry – was impacted particularly harshly by the Brexit vote.

What this means for investors: Demand for gold around the world is on the rise. More EU countries are now talking about having referenda to leave the EU. It is a foreboding sign that our current global financial structure could splinter. No one can predict the outcome, but it is certain that demand for gold will increase with the unknown.


Some Investment Analysts Predict Gold to $1500

Analysts predict $1500 gold

Many commodity and investment experts have agreed that gold has entered a new bull market. DBS Group Holdings Ltd., a Singapore-based bank, predicted the current rally well in advance and ahead of most. Low and negative interest rates are keeping demand strong, and with no rate hikes expected in the U.S. (and likely longer in other countries) until at least the end of the year, the rally is on track to continue.

Foreign exchange strategist Benjamin Wong stated this week that gold has had four major bull markets since 1970, and that this is another one. He also added that the markets have not dealt with the uncertainty of the U.S. presidential elections this year, and that could be a gold driver as well.

What this means for investors: DBS Holdings is advising investors to buy gold now. Their projections expect gold to climb to $1500 during this rally. Gold’s price dips this week made this week a prime buying opportunity.


Here are some articles from the web discussing the topics in this week’s post:

The Dollar and Gold in a Complicated Relationship
Read Here

More Stimulus from ECB and Bank of Japan and What It Could Mean for Gold
Read Here

Britain’s Stagnant Post-Brexit Economy
Read Here

Some Investment Analysts Predict Gold to $1500
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Why the Post-Brexit Stock Rebound Could Be in Trouble

Gold Market Discussion

The Post-Brexit Stock Rebound: The Market Rally Has a Lurking Problem

watching the stock market

In the Brexit aftermath, the stock market plunged so low that it lost all of its 2016 gains. However within a few weeks it has been hitting some historic highs to the confusion of many.

There is a darker side to the stocks rally though. Only 16% of the S&P 500 stocks are hitting the 52-week highs while more than a quarter are down at least 20% from their highs. The Down Jones is over 18,000, but the NYSE Composite measures a majority of stocks to be below their highs of last year. According to Bank of America Merrill Lynch, only 18% of active investment managers are outperforming their benchmark, making it one of the worst years on record. Even as the stock market is making its historic gains, there is also a significant amount of trade happening in safe haven investments such as gold, U.S. treasury bonds, and utility stocks. This suggests that there is still much uncertainty about how long this rally will last.

What this means for investors: Many on Wall Street are ignoring alarming economic data, weakness in the oil market, increasing levels of negative yield government debt, and U.S. corporate earnings recession. Gold and silver prices have been rising for the year as well even as the stock market rallies. The U.S. stock market is the only one of the world’s developed economies that has not buckled under economic uncertainty and pressure yet. The levels of volatility and uncertainty will likely increase and continue to drive gold prices as these problems with the stock market gain more exposure.


Silver Out Performs Gold Again

silver rally continues

Silver’s significant performance this year continues to be an important theme. Gold prices saw some pull back earlier in the week, but prices went up again mid-week and closed slightly down for the week on Friday. Silver was trading in the green for most of the week. Over the weekend an attempted military coup in Turkey drove prices back up as geopolitical upheavals often do.

Silver is now up over 45% for the year. The white metal is being driven by safe haven demand (like gold) and industrial demand.

What this means for investors: Many analysts are saying that the precious metals market is in a new bull market. The price dip this week makes now a prime buying opportunity as the markets correct. Gold and silver have been gaining for six weeks straight and are up significantly for the year.


Negative Yield German Bonds Selling at Auction

German bonds go negative

This week Germany became the first country in the Eurozone to sell at auction 10-year government bonds at negative yield. Investors are guaranteed to lose money over the life of these bonds. Germany is by no means the only European country with negative yield bonds, however. Irish bonds hit record lows, and Dutch bonds have just gone negative among others. Even positive yield bonds are still at record lows. Yields on the 10-year German bonds, which have been negative since June, are the benchmark for the Eurozone.

The economic repercussions of Britain leaving the EU are still a significant driver for the negative yield on German bonds. Europe is only barely recovering from the last financial crisis, and a British exit would slow growth even more. Britain’s new prime minister Theresa May has promised on her appointment this week that she will start the Brexit process. The European Central Bank has been slashing interest rates to negative and printing money as a means of buying bonds and trying to ease slowing. This is putting pressure on bond rates around the globe, however. Government bonds are usually considered a safe haven investment, but currently $11.7 trillion of debt is trading at negative yield.

What this means for investors: The Eurozone is grinding to a halt as monetary policy runs amok. Government debt – usually a low risk, safe haven investment – is at dangerous lows. Investors will start looking to other safe haven investments as they continue to lose money. The global financial system was not designed to be run on negative interest rates for this long, so there is much uncertainty from policy makers and analysts about what this means for the future. As investors continue to lose money on bonds, they will move to other safe havens such as gold and silver.


Japan Buying Up Gold

Japan flag

Rising Japanese demand for gold as economic uncertainty around Japanese monetary policy increases is a notable positive factor for global gold prices. Earlier this year the Bank of Japan lowered interest rates to the negative territory sending investors flocking to gold as a safe haven. It is looking likely now that Prime Minister Shinzo Abe, being advised by former Federal Reserve chair Ben Bernanke, will opt for “helicopter money” policy and start printing money for a $100 billion stimulus. One of Japan’s largest bullion dealers has said that in the past several weeks, sales have doubled and are up 30% for the year.

What this means for investors: This is a prime example of how during economic upheaval, investors see gold as the best storage of wealth. The sale of safes in Japan for storage of gold and cash are also up significantly. Japan has been through numerous rounds recently of monetary easing and stimulus and failed to make the Yen competitive again or hit inflation marks.


Here are some articles from the web discussing the topics in this week’s post:

The Stock Market Rally Has a Lurking Problem
Read Here

Silver Out Performs Gold Again
Read Here

Negative Yield German Bonds Selling at Auction
Read Here

Japan Buying Up Gold
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold bars and coins stacked

Why Gold and Silver Will Be the Most Secure Currencies

Gold Market Discussion

Why Gold and Silver Will Be the Most Secure Currencies

silver overtakes gold

Many eminent investors consider gold and silver as currencies. Peter Boockvar considers precious metals an “anti-fiat money” currency. Because gold is a tangible, finite resource, its value cannot be as easily manipulated or created electronically through central banking monetary policy as fiat currencies can.

Central banking policies – particularly in Europe and Japan – of negative interest rates has resulted in nearly $11 trillion worth of negative yield government bonds. These polices are also hurting the return prospects of pension funds and savers, threatening the existence of insurance companies, and straining the banking systems. In Boockvar’s words, “We are living in a world of monetary mayhem where monetary policy has embarked on an experiment that is now going haywire.” As central banks lose their grip on the policies they’ve embarked upon, the global economy is slowly grinding to a barely creeping pace.

What this means for investors: The warning signs that the global economy is in trouble are increasing. Many of these dangerous macro trends are prompting investors to move into gold and silver now. Boockvar believes gold and silver will be the last currencies standing when the current monetary regime inevitably falls apart.


WATCH: Why Gold Investors Should Also Be Watching Silver


Silver hit two-year highs on Monday as it climbed to $21 an ounce. Part of the price climb is still driven by post-Brexit safe haven demand. Some analysts are saying an increase in demand for silver’s industrial uses – particularly in solar panels – is also spurring the price climb. Silver still has a long way to go to hit its 2011 highs of $49. This suggests that prices could continue to rise. The French bank Societe General raised its long and short-term price forecast this week for both gold and silver.

What this means for investors: Silver has two strong drivers right now. Because of its lower price relative to gold, it can be more erratic in movement, but generally rides on gold’s wake. The white metal is so far performing better overall than gold for the year, however. While part of that is due to industrial remind, when analyzed in conjunction with gold price movement, signs indicate that safe haven investing is the strongest factor as investors diversify against increasing risk in the market.


WATCH: More Leading Analysts Flocking to Gold in New Bull Market


Investment strategists have been saying for a couple months that gold has entered a new bull market. Prices bottomed out at the end of 2015 and gold is up nearly 29% this year. At the start of the week, the metal reached $1,377, which was its highest level since March 2014.

An increasing amount of financial risk is in great part the catalyst for gold’s climb. Central banks around the world are pursuing low and negative interest rates as the U.S. Federal Reserve struggles to raise them. The economic indicators, however, have not been strong enough thus far to justify a hike. Divergent and unconventional monetary policies across the board along with a stock market that could be topping out are making many investors uneasy about the future.

What this means for investors: Gold prices rallied for twelve years until they peaked in 2011 and fell. It appears, as predicted, that the price truly did bottom in 2015. This new bull market could last a long time with the amount of volatility and future uncertainty for the global economy.


Federal Reserve June Meeting Minutes a “Non-Event” for Gold

The Federal Reserve released the minutes of its June meeting on Wednesday. Even following the tumultuous Brexit week’s volatility, there was little new information about the markets and direction for the economy. For the gold market, it amounted to a non-event and did not seem to impact gold price movement. The minutes acknowledged however that weak employment and payroll data for May was of concern, and that a July interest rate hike is now off the table.

What this means for investors: The stock market saw some gains after the minutes were released, but gold was not impacted. Generally gold moves in opposition with the stock market, so the fact that it made little movement suggests there is much uncertainty about the positive outlook that the Fed continues to attempt to project for the U.S. economy. The lack of growth in the labor force is sending warning signs despite the stock market’s positive movement. Some strategists are doubting whether a rate hike – first planned and postponed for June, and now for July as well – will even happen this year.


 

Here are some articles from the web discussing the topics in this week’s post:

Why Gold Investors Should Also Be Watching Silver
Read Here

More Leading Analysts Flocking to Gold in New Bull Market
Read Here

Federal Reserve June Meeting Minutes a “Non-Event” for Gold
Read Here

Why Gold and Silver Will Be Most Secure Currencies
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold and Silver March

Silver Hits 2 Year Highs and Gold Poised for Further Rally

Gold Market Discussion

Silver Hits 21 Month High This Week As Gold Lifts

silver is on the rise

Silver prices soared along with gold through the week. By Thursday silver was at $18.76 hitting its highest mark in almost two years.

During the last half of the week, the stock market recovered some of its losses. Both global stocks and U.S. stock indexes were trading higher from Wednesday. On one hand this seems to indicate that investors overreacted initially to the Brexit referendum. However as Dennis Gartman pointed out on CNBC’s “Fast Money” on Wednesday, if not for the U.S. and Brazil markets performing, the global stock market as a whole would be down 20% for the year. More importantly, the German 10 year bund, which is the benchmark European government bond, is currently seeing negative yields. This seems to suggest that many Europeans are still seeing a threat to the survival of the EU in its current form. The Deutsche Bank – the euro’s power source – was the hardest hit by the Brexit “Leave” vote.

What this means for investors: Silver has outperformed gold this year. Silver typically rides gold’s coattails, but it is also influenced by industrial markets. Its strong performance this year suggests, however, that it is equally valuable as a safe haven against global uncertainty. If the stock market’s correction this week is temporary as many signs indicate, silver could be a lucrative, cheaper option for protecting one’s wealth.


UK & EU S&P Credit Ratings Downgraded to AA after Brexit
Standard and Poor's Building

Gold prices have firmly held above $1,300 after getting a significant lift following the “Leave” vote on the British referendum on EU membership last week. The pound has fallen to 31-year lows with the euro taking a hit as well. Meanwhile the dollar strengthened on the plunging world currencies.

Standard & Poor’s cut the United Kingdom’s credit rating from AAA to AA this week after last Friday’s market upheaval. On Thursday they downgraded the European Union’s to AA as well down from AA+. They warned that the UK could face another slashing, since the vote means that there is “a less predictable, stable, and effective policy framework in the UK.”

What this means for investors: Analysts don’t know what to expect for Britain’s economic and political future. Many in Britain are still fighting to remain in the EU. Meanwhile British Prime Minister David Cameron has announced his resignation sparking vigorous debate and conjecture for who will take over the Tory leadership. The Opposition Labour Party is also wrought with inner-party turmoil and disagreement. Even if the Brexit does not go ahead, this uncertainty on the domestic political scene will make it difficult for the pound to bounce back from the hit it took. Gold will increasingly be seen as a safe haven.


What’s Next for Gold Bull Market after Brexit

UK cuts from the EU after Brexit

The Brexit vote was the beginning of what could be a mass upheaval of political and economic systems. It was a vote against the largest trading bloc in the world and the governance system that has arisen from it. Experts are saying that this is just the beginning of gold’s move. Scotland and Northern Ireland are increasingly showing signs that if the United Kingdom severs its EU ties, they will seek to sever their own ties with the UK and re-integrate with the EU. Former Federal Reserve Chairman Alan Greenspan said that if this continues to play out this way, we could expect a major bull market for gold.

Banks have also raised their gold bullion forecasts. Morgan Stanley and Goldman Sachs Group Inc. have both raised their predictions for the metal echoing the flight to safe haven that many other investors have already taken.

What this means for investors: This could be the calm before the storm. There are still many major and historic decisions to be decided about the future of the European Union and the nations that comprise the United Kingdom. Global markets will continue to waver under the strain of the uncertain future. The Brexit vote was a collective message of anger at a multinational governance system and that anger extends to the national government. It is not unique to Britain either. As populaces continue to question their government political systems (for better or worse), volatility will increase.


More Reasons Gold and Silver Will Continue to Go Up


What other factors are influencing gold and the markets? The Brexit is the hot topic, but there are other macroeconomic trends worth paying attention to as well. The high levels of uncertainty about the future of the European economic union are being ignored at the moment before UK – EU negotiations kick off more aggressively and Great Britain decides on its political leadership.

There is a real recession fear among central banks. The Bank of England, Federal Reserve, and European Central Bank have promised to provide liquidity in the market when needed, which would mean lower interest rates for longer. The ECB is already in negative interest rate territory. The central banks have precious few options left though to provide this kind of liquidity they have promised. The devaluation of currencies is another major reason for precious metals prices to lift. Gold’s initial spike after the Brexit vote was to be expected after such a historic geopolitical event, but its sustained growth will be tied to the loss in value of the pound, euro, and other world currencies. The Shanghai Gold Exchange has indicated that Chinese demand for gold is rising again. China is one of the world’s largest gold consumers, and is currently facing a currency crisis of a devalued Yuan and lagging economic growth.

What this means for investors: Investors are seeing many indicators that gold prices will continue to rise post-Brexit. Central banks are scrambling to find solutions to stave off crisis and global economic slowdown and running out of ammunition. As many in leadership and the media attempt to assuage concern about the effects of the British exit or even the possibility of it even happening, it is imperative to remain aware of the other threats to the global financial system.


Here are some articles from the web discussing the topics in this week’s post:

Silver Hits 21 Month High This Week As Gold Lifts
Read Here

UK & EU S&P Credit Ratings Downgraded to AA after Brexit
Read Here

What’s Next for Gold Bull Market after Brexit
Read Here

More Reasons Gold and Silver Will Continue to Go Up
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

The Brexit Aftermath

The Brexit Aftermath

Gold Market Discussion

What the Brexit Vote Means for Gold, Stocks, Currencies, and Banks

Vote is to leave the EU
On Thursday, Britain voted by 51.9% majority to leave the European Union. By Friday morning, the global markets – mostly poised for a “Remain” vote – were in chaos as the Brexit spurred a massive sell-off. This is a monumental event of which the significance cannot be stressed enough. It will be a catalyst for major global economic and political changes.

The Brexit aftermath: How the markets reacted:

  • Gold: Gold prices skyrocketed hitting 20-month highs. The gold price had its greatest one-day move in 7 years as investors flocked to the safe haven metal. After the official announcement, gold rose as much as $100. Gold was up 13% against the pound and more than 6% against the euro and Swiss franc.
  • The Dollar: The dollar strengthened as the pound and euro collapsed. Gold and the dollar generally move in opposition to one another: when one goes up, the other comes down. Yet both gained against the collapsing European currencies as many saw gold as a safer alternative.
  • Pound Sterling: The British Pound fell 8% as gold rose 8%. Pound sterling was at a 30 year low. Before polls had even closed, British citizens were lining up to exchange their pounds for gold, euro, or dollars. The pound was down 700 base points after Sky News called the results.
  • The Euro fell nearly 3%. The Norwegian krone, Swedish krona and Australian dollar fell even steeper.
  • Banks were the hardest hit sector. Many were down nearly 10% with Deutsche Bank experiencing the hardest losses. The Bank of England said it would pump billions into the financial system, and the European Central Bank said it will give banks all the funding they require.
  • Dow Jones and S&P 500: Both saw all of their 2016 gains wiped out. The Dow dropped 600 points and had one of its worst trading days ever.
  • The Nasdaq had its worst day since in five years.
  • Stoxx Europe 600 plummeted 7%, having the worst day since the height of the financial crisis.
  • Crude oil was down 5%.

What this means for investors:

Gold has not hit its peak yet. We are already seeing a massive flight to safety in gold, and as the global markets continue to reel, gold prices will continue to climb. These moves were a reaction to only one day after one vote. As the effects of these events continue to rock the markets, gold will move higher.

Experts like Dennis Gartman expect gold will keep rising. Those who bought in the past couple weeks when prices dropped back are now seeing great returns, but this is still a prime buying opportunity.


More Market Chaos and Volatility to Come; “Tip of the Iceberg” According to Alan Greenspan


The former Federal Reserve Chair said Friday on CNBC that this is the worst financial period he can recall – worse even than 1987’s Black Monday when the Dow dropped 23%. Greenspan also said that the euro currency is an “immediate problem,” and shows that the Eurozone and EU political integration has failed.

What this means for investors: Ultimately the Brexit vote was a political vote more than economic vote. It was a vote against European integration. Established systems in Europe are crumbling, and with such major disruption, the global economy is poised for an even worse crisis than the previous. The collapse of the euro is not just the collapse of one country’s currency; it is the collapse of nineteen countries’ currencies. Demand for gold will rise against such global uncertainty


The Domino Effect of the Future of the EU

EU Domino Effect
Several EU countries have already voiced a desire to hold their own referenda on leaving the EU as well. Leaders in the Netherlands, Italy, and France have called for national referenda. These are especially significant because these are three of the original six members of the EU’s precursory organization and all use the euro. In Austria – a country receiving a large influx of immigrants and with a strong right wing party – 40% want a referendum held. Polls have also indicated that the Czech Republic, Hungary, Denmark, and Sweden could likely vote to leave in a referendum.

What this means for investors: The EU’s future is dire. Alan Greenspan also said Friday on CNBC that despite its efforts to prop up banks, the European Central Bank is limited in what it can do, due to the economic stagnation in the Eurozone. The Southern Eurozone is funded by the ECB and Northern zone, which is a fundamental problem without a clear or easy solution. The “Brexit” is like the first major leak in a dam, and it will spread and set off others until the dam finally bursts. Gold’s post-referendum spike is just the first upward move that will inevitably accompany this crisis.


Here are some articles from the web discussing the topics in this week’s post:

What the Brexit Vote Means for Gold, Stocks, Currencies, and Banks
Read Here

More Market Chaos and Volatility to Come; “Tip of the Iceberg” According to Alan Greenspan
Read Here

The Domino Effect of the Future of the EU
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

What Today’s Brexit Vote Means to Investors

What the Brexit Vote Means for the European Union and the Future

Britain holds a historic vote this Thursday – June 23rd – to determine whether they will remain in or leave the European Union. The question will be determined by referendum – a yes or no question decided by popular vote. What does it mean for Great Britain, Europe, and the globe if Britain exits the EU? We will break down questions you may have about the EU, Britain’s role, the referendum, and its future implications. Let’s look into what tomorrow’s Brexit vote means to investors…

Why Does Britain Want to Leave?

The Brexit BattleCurrent British Prime Minister David Cameron campaigned on the promise that he would hold the referendum if elected in 2015. His promise was in large part due to mounting pressure from Conservative Members of Parliament and the UK Independence Party (UKIP).

The “Leave” campaign argues that the EU has become too powerful and over-bearing and started to erode nations’ sovereignty in favor of a federal Europe. They believe it has too much control in peoples’ daily lives while operating with too much secrecy. It’s processes and institutions are unlike any other organization making it both too empowered and too distant. Many are also opposed to the influx of immigrants from other EU states that are enabled by the visa free moment, living and working rights of people across borders. The proposed “resettlement quota” proposed by the EU for Syrian refugees in each EU nation further fueled many of these sentiments.

Those arguing for a “Remain” vote see improvements to their daily lives and opportunities from EU membership. Many also like the strong commitment the EU pledges to workers’ rights and education opportunities. They also see a “Leave” vote as causing innumerable economic and logistical burdens for:

  • British citizens living elsewhere in the EU who will now require visas and work permits or be forced to move back to the UK, and vice versa Europeans living in the UK
  • Small businesses who avail of the single market to expand business opportunities
  • Countries like Ireland whose largest trading partner is the UK

What is the Purpose of the EU?

The EU flags

The EU is a complex, bureaucratic organization that many people – including EU citizens – struggle to fully understand. Knowing how the EU arose and how it operates is useful in understanding both the “Leave” and “Remain” campaigns.

The European Union was founded as an economic union on the principles:

  • Free Movement of goods – free trade across borders to create a single European market as if it were basically one country
  • Free Movement of People – visa free travel, living, and work for all EU citizens in all EU member countries

It was based on the idea that if countries were economically dependent on one another and enjoyed this freedom of movement across borders, future conflict could be avoided. It has become an increasingly political organization as well with a foreign affairs branch and leadership having significant weight on the global diplomatic stage.

Timeline of the EU:

  • Post World War II: During the economic rebuilding of war torn Europe, the European Coal and Steel Community (ECSC) is founded in 1951 with a treaty designed to keep countries from mobilizing troops against each other due to integrated dependence on one another for coal and steel.
  • 1958: Creation of the European Economic Community (EEC) and European Atomic Energy Community (Euratom) by six countries – Belgium, Germany, France, Italy, Luxembourg, and the Netherlands. First step towards future EU.
  • 1967: Brussels Merger Treaty streamlines organization by combining EEC, ECSC, and Euratom into one and establishes Commission and Council – replaced by Treaty of Amsterdam in 1997
  • 1973: Denmark, Ireland, and United Kingdom join EU
  • 1981: Greece Joins
  • 1986: Spain and Portugal join
  • 1989 – 1990: Collapse of the Soviet Union
  • 1992: Maastricht Treaty – Establishes European Monetary Union in preparation for the euro, introduces elements of a political union (citizenship, common internal and foreign affairs policy)
  • 1995: Austria, Finland, and Sweden join
  • 2001: The Euro is introduced – is now used by 19 of 28 countries
  • 2004: Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia join
  • 2007: Bulgaria and Romania join
  • 2013: Croatia (newest member country) joins bringing total member countries to 28

How the EU Works

The four chief institutions of the complicated structure are briefly explained in this video from BBC.


How the EU operates and legislates is far more complicated. It is the murkiness around the working process that alienates and disillusions many of its citizens.

EU Politcal System Explained
Click Chart Image to Enlarge

GO: What Happens if the Referendum Passes?

  • No one really knows for sure all of the implications of a “Leave” vote.
  • Treaties and trade agreements would have to be re-negotiated.
  • Twenty-seven countries must decide the legal procedure for numerous UK citizens settled within their borders.
  • Multi-national corporations and large banking institutions would have to re-structure and sift through countless red tape.
  • Both the pound sterling and euro would plunge as the single European market loses the ninth largest economy in the world from its bloc. The stock market would experience heavy losses and gold prices would lift as a safe haven investment.

STAY: Why Britain Could Vote “Remain”

  • It is likely that the fear of such an unknown future might be enough to scare enough voters into wanting to remain in the EU. For many a “Leave” vote carries personal risk to their daily lives and livelihood.
  • The immediate economic crisis that would occur would damage an already stagnant EU economy further in a zone where a large number of EU citizens have still not recovered from the 2008 global crisis.
  • Many of the UK citizens living abroad are retired or have families and will not want to uproot their lifestyles.
  • Younger voters tend to align ideologically with the EU for its political commitment to the advancement of human rights and open borders and opportunities for travel, higher education, and work opportunities in other countries.

What the Referendum Means for the Future of the EU

 Whether the referendum passes or not, it presents important questions for the future of the EU. “Euroskepticism” is on the rise in many more member countries. If Britain does leave, many predict there will be a domino effect of member countries holding referenda. If it doesn’t leave, Britain’s example could still prompt other nations to hold referenda and cause exits of other nations until the organization finally unravels.

Alternately however, a British “Remain” vote could be interpreted as a vote of confidence in the EU. Regardless, the aftermath of the June 23rd referendum will be worth following and will have significant historic and economic repercussions.

3 Reasons Why Gold Prices Have Bright Outlook

Gold Market Discussion

3 Reasons Why Gold Prices Have Bright Outlook

gold-bars-close-up

  1. The “Brexit”
  2. The Federal Reserve’s decision on interest rates
  3. German and Japanese negative interest rates

Right now, the potential Brexit and the Federal Reserve’s interest rate decision (see next section below) are two of the key drivers for gold’s rising price. A third, more long-term driver continues to be the negative yield on government bonds. A significant number of governments’ debt is selling at negative yield. The Japanese government bonds for with two year, five year, and ten year maturities all have negative yields. Two and five year German bonds are likewise yielding negative returns, and the German ten-year bond is close to a negative yield as well. This means that investors who hold these bonds to maturity are definitely going to lose money. Germany and Japan are two of the most significant economies experiencing this lack of growth given their size, but they are certainly not the only ones.

What this means for investors: As they continue to lose money, investors are going to start forgoing bonds in favor of assets like gold that store value. It’s also worthwhile to remember that the gold market is relatively small when contrasted to the bond or stock markets, so a relatively small amount of money diverting to precious metals investing could cause prices to soar.


Gold’s Mid-Week Price Jump Following Fed Announcement

gold set to resume rally
The biggest news of the week for the economy was Wednesday’s Federal Reserve announcement that the June interest rates hike proposed a few weeks ago would not go ahead after all. Recent jobs data from the Bureau of Labor showed alarming figures about lack employment growth and called into question whether the economy was strong enough for a rates hike. Gold and silver were both making gains earlier in the week and got an additional hefty boost following Fed chair Janet Yellen’s announcement with gold hitting 6 week highs and coming just short of $1,300. Stocks took a hit.

What this means for investors: This has two implications for investors. The first is that the economy is showing signs that it is not as strong as the optimistic projections of we have been hearing from the Fed. When the economy is suffering any kind of sluggishness, investors flock to gold as a safe haven against crisis. The second implication is that this is a prime buying opportunity for both silver and gold before prices surge higher.


Experts Say “Gold Will Soar” if Britain Votes Leave on EU Referendum

Is Britain in or out of the EU?
Should I stay or should I go?3

The possible “Brexit” – which will be voted on next week – was also an important discussion topic in the Fed meeting. The staunchest “Remain” contingent in Britain has said a “Leave” vote would be “economic suicide” for Britain. Whether this is an exaggeration or not remains to be seen, but it is certain that the euro and pound sterling would suffer a hard blow regardless and the global economy would suffer massive amounts of uncertainty and volatility. European investors have been heavily buying gold in the weeks leading to the vote.

HSBC Bank estimated gold would rally 10% to around $1400 if the leave vote wins out. In the past week, polls have tipped from “remain” to “leave” with some at as much as a 40/47 split.

What this means for investors: If the Brexit happens, investors here and in Europe who did not buy gold will be kicking themselves. All 28 countries in the EU bloc will find their economies reeling as they negotiate what the exit of one of their most influential partners means for trade deals. If there Brexit does not happen, there is still enough volatility in the Eurozone  and global economy at large that gold would likely not be adversely affected by the “Remain” vote. Although the Brexit has taken the spotlight for now, Greece’s recent financial collapse and debt default is also still weighing heavily on the Eurozone and will certainly continue to wreak havoc on the markets.


$10,000 Gold – Why One Commodities Expert Says It’s Possible

gold-bars
An impending global economic meltdown will drive gold’s price to historic highs, according to one of Wall Street’s most closely followed commodities traders, Jim Rickards. Rickards was on CNBC saying that gold is on the verge of a rally unlike it’s ever experienced before. The author of numerous New York Times bestsellers, he cautioned that the world is on the brink of another, ten-year cyclical financial collapse. He advised that gold is the ultimate safe haven in times of volatility such as will come in the next couple years.

What this means for investors: Rickards estimation tracks a cycle that’s been occurring for decades where every ten years the global economy experiences a massive disruption. He thinks 2018 is going to be the next such disruption and will likely be triggered by the U.S. government itself. Central banks will need a bail out as other banking institutions did in 2008, and the International Monetary Fund (IMF) is the only global source left with the funds necessary to do so. War and conflict in the Middle East or South China Sea would exacerbate this meltdown. As the money supply is disrupted, investors will flock to risk-off investment in gold and silver as the only safe protection of their wealth.


Here are some articles from the web discussing the topics in this week’s post:

3 Reasons Why Gold Prices Have a Bright Outlook
Read Here

Gold’s Mid-Week Price Jump Following Fed Announcement
Read Here

Experts Say “Gold Will Soar” if Britain Votes Leave on EU Referendum
Read Here

$10,000 Gold – Why One Commodities Expert Says It’s Possible
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Golden Bull Market fights the bear

Gold Prices Rise and Stocks Fall with Increased Concern Over Global Economy

Gold Market Discussion

Gold and Silver Prices Strong This Week, Stocks Vulnerable

gold provides security
Gold and silver prices continued rise this week following its strong close the previous Friday. Ominous signs about the stability of the U.S. economy started to become apparent after a much weaker than expected jobs data report last week. A few days prior, Janet Yellen, chair of the Federal Reserve, had called for raising interest rates saying the economy was strong enough to handle it. The jobs data though said otherwise, probably taking the rise off the table for now.

What this means for investors: The strength of the U.S. dollar appears to be ebbing. Increasing volatility in the stock market will be favorable to gold prices and drive investors toward safe haven investing. Both gold and silver continue to perform well this year with silver seeing a slightly greater percentage increase.


Influential Investors Saying Now Is the Time to Hoard Gold


Hedge fund managers and banking analysts are moving funds into gold in greater numbers. Just a couple of these recently have been George Soros, who has been buying up gold, and Stanley Druckenmiller, who told investors to get out of stocks altogether and into gold. Adding to the gold advocates this week were chief commodities analyst at HSBC Jim Steel, who believes there is sufficient geopolitical and economic instability to keep gold prices rising, and DoubleLine Capital CEO Jeff Gundlach who thinks gold could go to $1400.

Veteran industry trader Jim Bouroudijan believes the recent movements in the gold market are a red flag of an upcoming market adjustment that will favor gold.

What this means for investors: Some top investors and investment advisors are foreseeing much global economic instability, and protecting their wealth against it with gold. With a recent price dip a couple weeks ago, now is a prime buying opportunity. Gold is up almost 20% this year


Is the EU on the Brink of Collapse?

Brexit from the EU

The “Brexit” (British exit from the European Union) referendum coming up on the 23rd continues to play as a dark horse in the markets. Polls saw a rise in the past couple days in support of the “Leave” campaign. If Britain does choose to leave, the EU’s disintegration could ensue. If it doesn’t, the Union’s seams are under severe stress regardless. The biggest specters of doom hanging over the EU are the Greek debt crisis and the inability among member states to agree on a solution the refugee crisis. The past several years have seen a rapid rise in “Euro-skepticism” and dissatisfaction with what many see as a supranational organization that is chiseling away at member nations’ sovereignty.

What this means for investors: If the “Brexit” does happen, the pound and euro will plunge. If the EU collapses, this effect will be even more severe. Those who have not already safeguarded against currency collapses with safe haven investing like gold will certainly flock to it then as prices soar.


What Other Macroeconomic Forces Are Driving Gold?

china flag

The “Brexit” vote and the question of whether the Federal Reserve will raise interest rates are the influencers in the forefront right now for most investors. Another significant concern is the potential collapse of China’s economy. The second largest economy in the world, it has seen sluggish growth this year marked by a depletion of foreign currency reserves and flight of capital. In addition, Chinese political leadership is experiencing internal strife, which will make it more difficult to recover from their economic issues.

There has also been a growing lack of confidence in central banks around the world, which historically has been favorable for gold and is continuing to hold true. Government bond yields fell around the globe this week in Europe, Asia, Australia, and Europe.

What this means for investors: The falling bond yields are indicative of increasing levels of trepidation among investors and traders about central banks’ monetary policy and its ability to push their economies out of slow economic growth. Currently, the strongest macroeconomic and geopolitical trends favor a continuation of this year’s rise in gold prices.


Here are some articles from the web discussing the topics in this week’s post:

Gold and Silver Prices Strong This Week, Stocks Vulnerable
Read Here

Influential Investors Saying Now Is the Time to Hoard Gold
Read Here

Is the EU on the Brink of Collapse?
Read Here

What Other Macroeconomic Forces Are Driving Gold?
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

How to Store Gold Safely

How to Store Gold Safely

Where Should I Store My Gold Safely? 

Best place to store gold?

How to store gold safely is one of the most common questions we hear from clients who are purchasing gold for the first time.

As we researched the different methods adopted by investors, we wanted to share some of these options and list the pros and cons of each. Many factors need to be considered, but the first most investors consider is accessibility. How will you ensure your gold or silver is safe, secure, and accessible when you need it? After all, we own physical, private gold so that we can always keep our money within arms reach. With that said, let’s dive in…

The most common methods for storage are:

  • At home (in a safe, or at least well hidden)
  • In a bank’s safe deposit vault
  • In a private depository

There are pros and cons to each that should be considered, but generally home storage or a private depository box are the safest options.

Additionally, you should consider the size of the gold and silver you want to store, and if you expect to significantly increase your holdings. Bullion coins are small, and with only a few coins you can easily hold thousands of dollars worth of wealth. Graded and certified coins have plastic holders that make them slightly bulkier. Gold kilo bars and 100 oz. silver bars require even more space.


Storing Gold and Silver at Home: Things to Consider

It is difficult to estimate what percent of investors choose to keep their gold at home. This is primarily because most are wise enough to only let one or two trusted family members know.

In the event of crisis or catastrophe, you may need immediate access to your gold. For example, in 1975 during the Vietnam War, when Saigon fell, its citizens were given immediate notice that they must evacuate. Going to a bank to withdraw money was out of the question. Luckily, many had gold at home that they carried with them and used to set up new lives elsewhere.

  • PRO: You know the status of your gold and can access it virtually anytime.
  • PRO: Privacy of ownership is a big incentive for many investors, so it is logical to want to keep gold at home to maintain that privacy.
  • CON: Home thefts occur more frequently than bank or depository thefts. If it becomes widely known you have gold at home, your house may become a target.

Where you store your gold on your property also has considerable weight on the security factor. What security mechanisms (home alarm system, firearms, surveillance cameras, etc.) do you have in place on your property? These have an impact on the safety of home storage as well as the storage method.

In no particular order, here are the most common home storage options:

1. Burying Outside

bury your gold
It is highly unlikely a typical home burglar would know where to dig in your yard to discover buried gold. If you decide to bury it, you also want to be assured you or an appointed trustee can dig it back up. Would age, injury, or infirmary be an obstacle to retrieving it?

Although gold and silver are resilient metals, you would also want to make sure they are protected from the elements by purchasing an air and water-tight lock box (with a locking mechanism for extra security).

  • PRO: Out of sight. Burglars might know where to search the house for hiding spots, or see a safe (if you have one) and get it open. 
  • CON: Potential difficulty unburying. It can also be time consuming if you need them in a hurry.
  • CON: Susceptible to elements, natural disasters, etc.
  • PRO/CON: Consider the size. It is relatively easy to bury if it is a small amount, however, it is difficult if it is large amount or if you want to add to it later.

2. Upright Safes

upright safe for gold storage
Safes and floor safes are the preferred method for home storage. They come in numerous sizes and specifications with options for dial locks, keypad locks, key locks, and combinations of multiple locking mechanisms. Large, upright safes are heavy to move and can be utilized for storing other valuables. Smaller safes can be tucked away in nooks and crannies.

  • PRO: Large, upright safes are heavy and cumbersome for a burglar to move. They can also be utilized for storing other valuables.
  • PRO: They are equipped to withstand fire and water damage (to certain degrees).
  • CON: Large safes can be easily spotted.
  • CON: Small safes, if found, can be easily carried away.
  • CONSIDER: If you go for the safe option, buy a couple different safes and split your gold between them. Then if one is stolen, you have still got at least some of your stash left. One could also serve as a “dummy” safe and trick thieves into taking it, not knowing your most precious assets are hidden elsewhere.

For those shopping for safe purchases and installation in the Phoenix area, a popular choice is Arizona Lock and Safe.

2. Floor Safes

 

Floor safe
Floor safes are perhaps more secure than upright safes. They are much more easily concealed, and like upright safes, are equipped to withstand fire and water damage. They also have different options for locking mechanisms. In most cases you will need a lock and safe technician to install it.

  • PRO: The most easily concealed and secure safe.
  • PRO/CON: Immobile. Choose the placement carefully. This can be an advantage if it’s discovered. If you want to change the location, however, you will likely need a technician.
  • CON: Large safes can be easily spotted.
  • CONSIDER: Install two floor safes and split your assets between the two in the event that one is discovered.

2. Unsecured Hiding Place

strore gold in plain sight?
Examples of unsecured hiding places are under the mattress, in an old coffee can, or behind a loose floorboard. This storage method is not recommended. Some might think of it as “hiding in plain sight” and secure in that it is “too obvious”, but this is not the case. It is extremely risky and the surest way to lose your valuable coins.

  • CON: You or someone else could accidentally throw them out, forgetting they are there.
  • CON: Easily stolen.

Storing Gold and Silver Off-Site: Things to Consider

1. Bank Deposit Box

Bank Deposit Box

Chase Bank letterBank deposit boxes have an array of risks associated with it. For one, your access to your gold is limited to the bank’s opening hours. But more nefariously, you could be denied access all together. Banks like JP Morgan Chase have been known to send letters to their clients expressly forbidding storage of gold bullion (and cash) in their deposit boxes. A scan of the letter that Chase sent to deposit box owners is on this page, but you can click here to download the entire letter as a PDF.

  • CONSIDER: In 1933, gold was confiscated by executive order. Having gold in a bank deposit box made seizure easier.
  • PRO: It takes away the home risk of self-storage.
  • CON: There’s a chance you may have it confiscated. It happened once, it can happen again. The Chase example is further proof.
  • CON: Deposit boxes are not FDIC insured.
  • CON: Financial institutions could collapse.
  • CON: Storage cost.

2. Private Depository

store gold in a private depository

If you are (justly) wary of the banking system and don’t want the risk of home storage, a compromise might be a private depository. They are not subject to the institutional risks of banks and many provide 24/7 access.

  • PRO: Less personal risk than home storage.
  • PRO: Not subject to unsavory banking institutional regulations.
  • PRO/CON: You will pay a storage fee, but these are generally at a reasonable cost.
  • PRO: Your box is insured, and the location is well secured.
  • CON: Though you may have 24/7 access, it might be difficult to access immediately during a crisis depending on how far away it is or how much demand there is for access.

…And the Winner is?

Ultimately, it is up to the investor to decide which option is best suited to his or her lifestyle and needs. Most investors, however, shy away from the bank option because of the risk of confiscation and a mistrust of the current financial institutional system. Home storage can be the most secure if it is done wisely, but many find the private depository option affords the most peace of mind.

When choosing your storage option, it is a good idea to remember some primary reasons we own gold in the first place: privacy, liquidity, and tangibility. Considering those three values is important when deciding which means of storage is best for you.

Ask yourself:

  1. How important is it to you to have 24/7 access to your gold?
  2. How confident are you in securing your investment in your own hands?

If you said #1 is important to you and you are confident securing it yourself, we would always recommend self-storage of precious metals. Having your gold within arms reach is critical in times of crisis or disaster, but most importantly, you are in control of your own investment- with literally zero counter-party risk.

Again… privacyliquidity, and tangibility… isn’t that why we own gold in the first place?

Jobs Data is weak

Gold Rallies Friday on Bleak Economic Jobs Data While Dollar Falls

Stronger Dollar-Eurozone Fears

Bleak Economic Jobs Data: U.S. Labor Force Adds Fewest Workers in Six Years

bleak economic jobs data
The jobs data was more negative than even the most pessimistic growth projections, according to Bloomberg analysts. Average estimates put the number of jobs added to the U.S. labor force for May at 150,000. The reality was shockingly short at only 38,000 jobs added. The weak job growth was across all industries, but was particularly felt in factory, manufacturing, and those vulnerable to weak overseas markets. The number of part-time employees who want full-time work rose nearly 500,000 from April. The unemployment rate is now at 4.9%.

Why this matters to precious metals investors:
Much of the slowly returning confidence in the economy is misplaced, as data like this indicates. A weak labor market is indicative of a struggling economy. Gold prices have seen some pull back the past couple weeks, but the rally this week shows it has potential to rise higher if the economy continues to slow. It is a prime buying opportunity before prices rise again.


Dollar Plunges Lowest Since December and Stocks Fall While Gold Soars – Will The Fed Change Policy?

dollar-plumets-chart
Gold closed $30 up on Friday while stocks and the dollar fell. The reason for this was primarily due to the weak job growth that the U.S. Bureau of Labor released on Friday with only 38,000 jobs added in May – the lowest since November 2010. This data shook the markets and made many question the strength of the economy and labor market. Confidence in the economy has been tentatively returning, but as this new data shows, much of that was likely based on false flags and hopeful thinking. One currency strategist has said that the dollar correction is over and that it has a weak future.

It also has many wondering if the U.S. economy is strong enough for the interest rates hike that the Fed chair Janet Yellen announced for June. Some analysts are advising to scale it back and warning that it would strain the economy too much.

European Central Bank officials met this week to discuss interest rates and Greece. A decision on diverting more funds to Greece was postponed, but they decided to maintain negative interest rates.

Why this matters to precious metals investors:
The indicators are pointing towards a slowing economy. Demand for safe haven gold will continue to go up, as it has been in 2016. Gold prices will rise in tandem against the plunging dollar. Silver prices were also up as silver continues its stellar performance this year.


G-7 Annual Summit Meeting Discuses Slow Global Economy and Refugee Crisis

G7 2016 Summit Leaders
The annual two-day summit took place in Japan this week, bringing together leaders from the United States, Japan, Canada, Italy, France, Germany, and the United Kingdom, as well as two of the heads of EU institutions. The main topics for discussion were concerns over the state of the world economy, the refugee crisis, and cyber and maritime security.

Japanese Prime Minister Shinzo Abe compared the current global economic conditions to those of the 2008 financial collapse. Emerging economies are struggling, and their sluggish growth may last some time yet, according to Japan’s cabinet chief. Economic slowdown in China is impacting many nations’ economies and oil prices and commodities have been falling. Abe called for fiscal stimulus and flexible monetary policy from world leaders, but has been meeting resistance from the U.K. and Germany.

Why this matters to precious metals investors:
The U.S. job data and weakening economy are not the only thing that are impacting gold’s rally this year. The malaise is impacting all of the world’s economies and grinding growth to a near halt. Countries like China that are seeing significant downturn are increasing their gold holdings to stave off potential crisis.


We Are in a No-Growth Global Economy, Says OECD Secretary-General

OECD Logo
The Organization for Economic Cooperation and Development is an inter-governmental, global institution that strives to “improve the economic and social-well being of people around the world” by advising governments on monetary and social policy. The OECD’s macroeconomic assessment this week revealed the economy’s recovery from the 2008 financial crisis to be disappointingly weak. The International Monetary Fund (IMF) published a similar report in its quarterly World Economic Outlook.

Why this matters to precious metals investors:
The OECD’s and IMF’s assessments are in opposition to what Federal Reserve chair Janet Yellen and ECB chair Mario Draghi have been saying about improving economies. However, Yellen and Draghi are the chiefs of central banks with control over interest rates and policy decisions. The statements put out by them have more impact on the economy than reports from independent agencies like the OECD, but because they have their own policy agendas, they must be taken with a grain of salt. The OECD assessment echoes the concerns from the G-7 Summit leaders and points towards an ominous future.


Here are some articles from the web discussing the topics in this week’s post:

Bleak Economic Jobs Data: U.S. Labor Force Adds Fewest Workers in Six Years
Read Here

Dollar Plunges Lowest Since December and Stocks Fall While Gold Soars – Will The Fed Change Policy?
Read Here

G-7 Annual Summit Meeting Discuses Slow Global Economy and Refugee Crisis
Read Here

We Are in a No-Growth Global Economy, Says OECD Secretary-General
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Memorial Day 2016

Gold is in the Beginning of a New Bull Market- What Analysts and Banks See Ahead for Gold

Stronger Dollar-Eurozone Fears

[VIDEO] Leading Wall Street Analyst: Gold Will Hit $1900; Get In Now


Market Analyst Peter Boockvar was interviewed on CNBC this week saying that gold is in the beginning of a new bull market. He believes many are reading the market wrong and that gold and silver still have a ways to climb. Boockvar said the 2011 highs of $1900 are reachable and possibly passable. Here is his interview discussing Fed rate hikes and the future move on gold.

Why this matters to precious metals investors:
Boockvar’s assessment is that the current dip in prices is a perfect time to get into the gold market. Gold has been down the past couple weeks, but is still up 17% overall this year.


What Are the Potential Fed Interest Rate Hikes Doing to Gold and Stocks?

Janet Yellen
Janet Yellen, Chair of the Board of Governors of the Federal Reserve System

On Friday, Janet Yellen – chair of the Federal Reserve – announced that cautious rate hikes over the next few months are appropriate due to positive economic indicators. In anticipation of an announcement of a rate hike, gold has been down this week with a mixed performance in stocks.

However, this flies in the face of previous experience with rate hikes. The last time the Fed raised rates in December, the stock market practically collapsed. The positive economic indicators that the Fed is citing to justify the hikes are also likely exaggerated. Policy speculation alone has immediate repercussions in the market, so it could be that this speculation is accomplishing what the Fed wants to happen in the markets.

Why this matters to precious metals investors:
It is likely that the Fed is predicting a future downturn, and with rates currently so low, they would not be able to further lower them again without first having raised them. This indicates a lack of confidence in the economic recovery. The hike could have a negative equity impact like it did in December and gold would be the last asset-class standing.


Global Economic Trends Impacting Gold Right Now

Global Economic Trends Impacting Gold Right Now
Gold prices are caught in a tug of war of macroeconomic trends right now. Brexit fears are positive for price, while possible interest rate increases are holding it back. Demand is increasing in China on fear of economic uncertainty and the November presidential election will further market volatility. Central banks around the world are adopting negative interest rates, which implies economic weakness. Hedge funds are increasingly moving into increasing gold in their portfolios.

Why this matters to precious metals investors:
Despite its price dip this week, gold still has strong support. Indicators of a global economic slowdown are increasing and investors are protecting their funds with gold ahead of it.


Gold Setback Temporary? What Some Banks See Ahead for Gold

Gold is in the Beginning of a New Bull Market
In the past couple weeks, banks like JP Morgan Chase and Goldman Sachs have moved into a more bullish stance on gold, despite prospective interest rate hikes and recent price dip. Dutch bank ABN Amro is the latest to join the gold ranks. Their precious metals and FX strategy division reported that the current strength that the U.S. dollar is enjoying – contributing to the gold price pullback – is transient and a blip in the markets. Their projections are for increased inflation, and that there will be many other factors come into play on gold price other than the dollar.

Why this matters to precious metals investors:
Gold prices rise on a weak dollar, so if the current dollar strength is headed for a crash as many analysts are predicting, gold would see strong support. There is much global volatility, which will buoy up gold prices and hurt interest-bearing investments.


Here are some articles from the web discussing the topics in this week’s post:

Leading Wall Street Analyst: Gold Will Hit $1900; Get In Now
Read Here

What Are the Potential Fed Interest Rate Hikes Doing to Gold and Stocks?
Read Here

Global Economic Trends Impacting Gold Right Now
Read Here

Gold Setback Temporary? What Some Banks See Ahead for Gold
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

The Brexit

Gold Lifts as “Brexit” Fears Shake the Markets

Stronger Dollar-Eurozone Fears

The “Brexit” Politics and Their Impact on the Markets

Will England Exit the EU?

A few weeks ago we touched on the possibility of Great Britain voting to leave the European Union and what the impact of this move would be on gold and the markets. The referendum for the British exit – known most commonly as the “Brexit” – is fast approaching; it is set to take place on June 23rd and will be decided by popular vote. Many investors are anticipating a move to gold ahead of the referendum.

The European Union is, at its core, an economic union founded on the principles of free movement of people, goods, and services across borders. As one of the economic powerhouses of the EU, if Britain severs these ties, the shock waves will be intense as markets and businesses struggle to stabilize.

Initially, the dollar would likely do well if the referendum passes, as the euro and pound struggle, but the future of the EU project would be called sharply into question as other EU countries debate following Britain’s lead. The central and eastern European bloc – particularly Czech Republic and Poland – are already debating hosting a similar referendum.

Why this matters to precious metals investors:
Expect gold prices to rise ahead of the referendum. If the referendum passes, gold will likely rise again on market uncertainty and euro volatility. Investors – especially in Europe – will start fleeing to the safe haven investment.


Why is China Buying a $90 Billion Gold Vault in London?

China Buying English Gold

China is once again upping its gold consumption. This time it is putting its holdings overseas. In a secret location in London, China just bought a vault that will hold around $90 billion in gold. The Chinese economy’s sluggish growth has numerous investors worried. China is now consuming forty percent of the gold that comes out of the earth every year, making it the world’s top consumer. As an impending economic collapse in China looks more likely, gold is becoming more desirable as a safe haven net.

China has also been selling off massive amounts of U.S. Treasury bonds in an effort to fight the economic slowdown. It is the fastest sell off of U.S. debt by central banks since 1978.

Why this matters to precious metals investors:
China has the second largest economy in the world. An economic meltdown would have dire repercussions for global markets at large. Turmoil and volatility in the market is positive for gold prices, which is why China is becoming increasingly desperate for a large gold reserve.


George Soros Betting for Gold, Against Stocks; Will Gold Keep Rising?

George Soros is now in gold
Billionaire investor and business magnate George Soros

Formerly a vocal enemy of gold, billionaire George Soros is now moving a massive amount of funds into gold in a move that demonstrates lack of faith in stocks. He has said he believes the collapse of China is imminent. Despite some pull back on gold this week following a Fed discussion on an interest rate rise earlier than initially expected, gold has still made tremendous gains since the start of the year. Gold seemed to perform well in the Asian markets on Friday.

Why this matters to precious metals investors:
Despite its price dip this week, gold still has strong support. Indicators of a global economic slowdown are increasing and investors are protecting their funds with gold ahead of it.


Is Now the Time to Buy Silver?

silver bars and coins

There has been a lot of buzz around silver given its extraordinary performance this year. In a rising gold market, silver may have just beaten gold as the top metal performer. Some analysts are projecting silver still has a ways to go in outperforming gold.

Silver was still up on Friday while gold was down following the Fed meeting minute’s release.

Why this matters to precious metals investors:
Both silver and gold are up 20% this year with silver up marginally more than gold. Both metals respond to many of the same market factors, but silver has a greater number of industrial uses that can move the price as well.


Here are some articles from the web discussing the topics in this week’s post:

The “Brexit” and Politics and Their Impact on the Markets
Read Here

Why is China Buying a $90 Billion Gold Vault in London?
Read Here

George Soros Betting for Gold, Against Stocks; Will Gold Keep Rising?
Read Here

Is Now the Time to Buy Silver?
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

What is 1 oz of Gold Worth?

What Is 1 oz. of Gold Worth?

The Price vs. the Value of Gold… What is the Difference?

Price of gold vs the value of gold
When investing in gold, price and value are not created equal.

The value of gold is measured beyond the daily spot price. Right now, as you read this post, the live spot price of gold is $2885.26 +23.86 . You may have just calculated your gains or losses based on when you purchased your gold. While the price of gold is important to understanding gold investments, you will find that it is gold’s long-term intrinsic value that has stood the test of time. While you read this post try to think about the longevity of your financial future. Let’s not consider today’s price of gold, rather how it has retained its value over time.

Buying gold is considered a safe haven against economic downturns and market uncertainty. Gold has the ability to preserve its purchasing power in ways that other investments do not. Gold’s worth is in its security and high quality performance over time as a preserver of wealth.

While market forces, inflation and economic trends influence the daily price of gold, gold retains purchasing power regardless of price. In the 1920s, one oz. of gold was worth $20. A $20 gold piece could buy a man a fine suit and night out on the town while today a $20 bill could not cover a fraction of those costs. However, the cost of 1 oz. of gold today could still buy those same goods as it did in the 1920s.

You may recall a national news story from 2014  when a California couple discovered over 1,400 twenty-dollar gold pieces buried in their yard. The stash, now referred to as the “Saddle Ridge Hoard“, was determined to be loot from a 19th century bank robbery, was worth over $11 million. If someone were to find 1,400 twenty-dollar bills, they would be priced at their face value (worth $28,000) which is worth much less than the gold today.

Over time, both the content of the gold and the demand for the coin, now a rare, historical piece far exceeded the monetary equivalent of its $20 face value. This is how gold preserves your future purchasing power. Holding gold for the long term will hedge against inflation. When you are ready to “cash in” or liquidate to the currency in use- you will find that it will be convertible to a fair value… unlike the box of paper money in the floor safe.

Take a look at the chart below which displays the increase in major purchases, goods, and commodities since 1971- the year the United States came off of the gold standard. Other than gold far outperforming the other data points, the most eye-opening number should be the average income in the United States- which has grossly under-performed against the other data points. You know the old saying “the dollar doesn’t buy what it used to”? Simply put: The dollar has been losing it’s purchasing power.

How gold protects and preserves your purchasing power
While all the goods and major purchases increase around us, our income has not kept up with the pace.

Is Your Money Safe in the Bank?

You may not have the money you think you do in your bank account. New banking regulations are making it more difficult to withdraw large amounts of cash due to banks being unable to keep sufficient cash reserves on hand. Imagine you walked into your bank and asked for a $1,500 withdrawal – knowing you had $10,000 in your account – just to be told that they could not give it to you.

Countries that have used bail-in with private citizen fundsUnlike the money in your bank account, gold is a tangible asset and not just a number in a computer system. It is a private and secure way that you can hold your hard earned wealth outside the dangers of a fragile banking system. When you don’t have access to your “money”, having a private, tangible asset like gold makes its value, well, very valuable.

This scenario may seem like a far-fetched and extreme circumstance, but in fact this has recently been a reality in some recent European countries such as Greece, France, Poland, Hungary, and Cyprus. Citizens of these countries were denied access to their money with daily limits for withdrawals, and in some cases, were the victim of nationalized “bail-in” programs.

The bail-in is a policy much like the “bail-outs” we saw here following the 2008 financial crisis. The difference? The banks needed to be “bailed out” by the government. In the case of the “bail-in”, the government is the one in need of financial help. Where does the money come from? You guessed it- you the taxpayer. Whether the funds come from pensions, taxes, or in some cases- private retirement accounts- the government could have full power and authority to seize the private assets from it’s citizens. Private gold is the line of defense you will want on your side in an economic environment such as this.

Dangers of Fiat Currency

Dollar delving and losing purchasing power

Fiat currency – denoted in the paper bills we use today – is only worth as much as the government printing it can guarantee it for. Its worth is subject to many risks and uncertainties. Physical gold does not have the same ambiguity attached to it. It is a commodity with intrinsic value that has stood the test of time against currencies that have risen and fallen.
If today’s currencies collapsed under the strain of government spending and borrowing, war, and further economic meltdowns, gold would be a safe haven: universally valued, a trade-able commodity, and a benchmark of wealth.

The Dollar and the Gold Standard: A Timeline

Understanding the history of gold and money in the United States is important in understanding gold’s worth. From its beginning, the U.S. dollar was backed by or convertible into gold.

  • 1787: An early clause in the Constitution prohibited states from making anything but gold and silver as payment tender.
  • 1900: The Gold Standard was adopted that stated, “…gold…shall be the standard unit of value, and all forms of money issued or coined by the United States shall be maintained at a parity of value with this standard.” The Gold Standard guaranteed the dollar was worth 1.5 g of gold at that time.
  • World War I: the Gold Standard was suspended (but eventually restored) as foreign entities liquidated their debts in gold. The Federal Reserve System was introduced and the U.S. Treasury issued emergency currency to assure debts to creditors.
  • 1929: The Great Depression hit, Wall Street collapsed, and speculators began to demand gold in exchange for what was now almost worthless paper currency. Eventually nearly all of the world’s major currencies abandoned the gold standard in favor of fiat currency: essentially a piece of paper with a government promise of value attached to it.
  • 1933: President Roosevelt passed the Gold Reserve Act banning private ownership of gold except for foreign exchange and revoking gold as a universal legal tender for debts. Roosevelt also raised the official price of gold to $35 per ounce, making the dollar more attractive to foreign buyers and foreign currencies more expensive for dollar holders. This led to more conversion of gold into dollars and allowed the U.S. to effectively corner the gold market.
  • 1944: The Bretton Woods Conference takes place to set up a new, international monetary system.
  • 1971: Nixon axed the Gold Standard completely. Dollars were no longer guaranteed by gold and the American economy suffered a devastating blow.

How Much Longer Will the Dollar Remain as World Reserve Currency?

The U.S. dollar has been the world reserve currency for over seventy years since the Bretton Woods Conference. When the Bretton Woods system was introduced, the dollar was still backed by gold. The dollar had replaced the British pound sterling as the world reserve currency.

Now over twenty countries peg their currencies against the dollar and conduct trade in the dollar rather than their various currencies. Inflation and trade deficits have led to such devaluation of the dollar that the future of the dollar’s status as the world reserve currency is now murky.

The World Reserve Currency chart
Nothing lasts forever– Here is the limited reign of the last five world reserve currencies previous to the US dollar.

Gold Is a Safe Haven Investment

Protecting your money with gold is similar to owning a house. When you buy a house, it is more than just an investment. The house becomes your home. It has utility that extends beyond getting a return on your money. It provides shelter and stability. Unless you are a hedge fund or a billionaire, day trading gold is not advisable.what is 1 oz. of gold worth?

Think of gold as insurance for your retirement account. In fact, it is even possible to own physical gold directly within an IRA, to reap the rewards of both the hedge value and the tax benefits at the same time.  Historically, gold has always defied inflation, posted profits, and most importantly- been in global demand. For certain, the same cannot be said for Enron or Blockbuster shareholders who purchased stocks, giving control to outside institutions. Ask yourself this: if you plan to retire in 15 years- will your money be there for you? As investors, we own gold for the future, not for tomorrow or next month.

In summary, as you look toward your financial future, keep in mind that the price of gold today is not the sole determinant for investors looking to secure their long term finances. It is what the value of 1 oz. of gold will be when you need it most 5, 10, or even 20 years from now.  As Economist Oakley R. Bramble wrote “Gold bears the confidence of the world’s millions, who value it far above the promises of politicians, far above the unbacked paper issued by governments as money substitutes. It has been that way through all recorded history.” By taking control over your physical assets you eliminate the chances of your investments being subject to unpredictable actions by the government and other institutions. With the national debt at an all-time high, and government finances in turmoil, the need to preserve and secure wealth is ever more present.

Gold Market May Bull

Gold Enters a Bull Market with 30-Year Record High Demand

Stronger Dollar-Eurozone Fears

Gold Enters a Bull Market, According to JP Morgan

Gold Enters a New Bull Market

One of Wall Street’s largest institutions, JP Morgan Private Bank, is betting on the gold rally to continue. Solita Marcelli, the bank’s head of fixed incomes, commodities and currencies, holds the view that gold could hit at least $1400 per ounce by the end of the year. Gold’s retreat on prices this week is, in her assessment, a healthy market correction before its next climb. Gold ended Friday on a positive note, recovering some of the gains from the previous days. JP Morgan is one of many financial institutions recommending their clients position for a new and very long gold bull market.

Why this matters to precious metals investors:
These projections are positive for both gold and silver. Both precious metals are sensitive to the same market factors. Silver has already been out-performing gold this year, so it is safe to assume both metals have entered this bull market.


What Jobs Report Data and Fed Policy Means for Gold Market Rally

jobless claims definition
Gold climbed a substantial amount last Friday after the Bureau of Labor Services reported much fewer jobs created in April than had been anticipated. This is a sign that the economy is not doing as well as hoped. Banks like Merrill Lynch and Goldman Sachs (among others) are changing their projections for interest rate hikes happening because of the negative economic data. A policy of negative interest rates – which is what the Federal Reserve is currently pursuing – is favorable to gold. Many investors were hoping for a policy reversal and interest rate hikes by June, and are now finally adjusting to the reality that it isn’t likely to happen.

Why this matters to precious metals investors:
When the economy is weak, gold is strong. Unemployment rates are on the rise and the dollar is losing steam. Investors in all financial sectors are starting to realize this and adjust expectations accordingly. Investing in gold now is a safe way to stave off risk with the rise of these negative economic indicators.


Central Banks’ Policy Direction Points Leading Hedge Fund Managers to Gold

Paul Singer
Paul Singer of Elliott Management Corporation (ECM)

Investment experts continue to push gold as the safest investment in this environment. Gold just had its best quarter in thirty years and is on the rebound. Global investors are becoming increasingly uneasy about the unprecedented monetary easing policies from the world’s central banks and its ramifications for inflation. Several eminent hedge fund managers are making gold their largest currency allocation. Investor confidence in central banks is weakening by the day leading to a revitalized demand for gold. Even Goldman Sachs, whose outlook for gold bullion has been more conservative than others, bumped up its gold forecast this week. Billionaire hedge fund manager Paul Singer recently said in an April 28th letter to his clients:

“It makes a great deal of sense to own gold. Other investors may be finally starting to agree. Investors have increasingly started processing the fact that the world’s central bankers are completely focused on debasing their currencies.”

Why this matters to precious metals investors:
Some of these hedge fund managers flocking to gold are among the most successful in their field. The stock and equity market volatility has become too dangerous for many investors. If inflation continues to rise, gold will become even more attractive as a safe haven against a weak dollar. Buying now will stave off these risks later.


Q1 of 2016 Sees Highest Demand for Gold in a First Quarter Ever

Q1 2016 Sees Highest Demand
Concern over China’s debt problem, volatility in the equity market, and the Federal Reserve’s negative interest rate policy drove gold into its best quarter in thirty years. Demand soared to the second highest level on record. The metal attracted private investors and some of the world’s largest hedge funds alike. Stanley Druckenmiller, founder of Duquesne Capital Management, believes the equity bull market is “exhausted” and gold is now the company’s largest currency allocation.

Why this matters to precious metals investors:
With this kind of data, the run on gold that we’ve been seeing the past couple weeks has some definite support. It is not just a short-term fluke in the market. Demand and price are directly correlated, and as demand continues to rise, so will price. Demand at levels like this is not likely to quickly reverse, so gold has nothing but bright prospects for this year.


Here are some articles from the web discussing the topics in this week’s post:

Gold Has Entered a Bull Market, According to JP Morgan
Read Here

What Jobs Report Data and Fed Policy Means for Gold Market Rally
Read Here

Central Banks’ Policy Direction Points Leading Hedge Fund Managers to Gold
Read Here

Q1 of 2016 Sees Highest Demand for Gold in a First Quarter Ever
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold Market May

Gold Price Hits $1,300 – Could it be Moving Towards $1,500?

Stronger Dollar-Eurozone Fears

Gold Price Hits $1,300

gold bull market 2016
On Monday, gold spot price passed the $1300 mark for the first time in over a year. Gold is up now 22 percent for the year and is crushing stocks, bonds, and most other asset classes. Gold’s performance this year has been driven by a few different factors. The first was the stock market’s dismal performance at the start of the year. This drove investors to the safety of gold. As the stock market picked up, gold calmed down until recently, when the dollar began to take massive hits. The dollar’s strength of the last couple years is starting to fail, and a weak dollar means gains for gold

Why this matters to precious metals investors:
This interview from Bloomberg this week on the dollar dilemma succinctly describes the relationship between gold and the dollar and why now is an optimal time to buy gold. Some market experts are projecting that gold is on the path to $1500 before year’s end.


Leading Analysts Predict Gold to Keep Rising and Advise Buying Now

Stanley Druckenmiller says get into gold
Billionaire hedge fund manager Stanley Druckenmiller advises to get out of the stock market and get into gold

Renowned billionaire and hedge fund manager Stanley Druckenmiller advised investors this week to get out of the stock market, sell off equities, and head towards gold. He pointed towards Fed recklessness in borrowing from future consumption and slowing cash flow in U.S. corporations as foreboding signs for the dollar’s future.

Dennis Gartman, on CNBC’s “Fast Money” on Monday, predicted gold could end the year 10 or 15 percent above current levels. He argued that fundamental principles were in place that favored precious metals due to central banks’ policies. Many of the world’s central banks are favoring an easy monetary policy with low interest rates that is making their currencies less valuable. As currency weakens, precious metals become more attractive as a safe haven investment.

Why this matters to precious metals investors:
These market experts are seeing recklessness and uncertainty lying on the horizon for the U.S. dollar (and the global economy at large). These are indicators that gold is going to start becoming more attractive as a safe haven investment, which will drive the price. Gold has moved past the bear market it has been stuck in and its projections for this year are bright.


Stock Market Experiences Worst Week Since February

stock slip worst since February 2016
The stock market closed out April with its worst losses since February. This caused even more unease among investors because of the market’s weak performance at the start of the year. Power players like Apple, Google, Microsoft, and Chevron all suffered major losses. The effect of the Bank of Japan’s shock decision to keep negative interest rates also is impacting the stock market and hitting the dollar and yen.

Why this matters to precious metals investors:
The stock market’s volatility this year is making investors wary and risk-adverse. If this trend continues, demand for precious metals will soar even higher, pushing prices up. Monetary policies from the world’s central banks are also indicating future scenarios where safe haven precious metals will thrive.


Silver Eases Back This Week, But is Expected to Rise Again

silver is on the rise
Silver’s stellar performance over the last few weeks eased back slightly this week. The corrective move will likely be temporary, as U.S. economic data, monetary policy, and increased demand in China will continue spurring the metal’s gains. So far this year, silver is up more than 23 percent and has hit highs not seen in over a year. The dollar dilemma driving gold is also driving silver, and the Fed’s policy and weak stock performance will also drive silver price.

Why this matters to precious metals investors:
Unemployment in the U.S. is rising and economic growth is slowing, according to data coming out this week. These signs are pointing ominously towards a declining dollar. Despite some resistance this week, silver is still the strongest performing investment of 2016 so far. Take advantage of the pull back now to invest.


Here are some articles from the web discussing the topics in this week’s post:

Gold Price hits $1,300
Read Here

Leading Analysts Predict Gold to Keep Rising and Advise Buying Now
Read Here

Stock Market Expereinces Worst Week Since February
Read Here

Silver Eases Back This Week, But is Expected to Rise Again
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

gold and silver bars split

Gold & Silver Prices Hit 15-Month Highs & Rally Against Weak Dollar

Stronger Dollar-Eurozone Fears

Gold and Silver Prices Hit Highs Vs. Weak Dollar

gold vs the weak dollar

Gold hit a 15-month high on Friday as the dollar got crushed. Gold opened with its fourth consecutive day of gains and climbed as high as $1,292 per ounce. The shiny yellow metal is now up 20% since the first trading session in January and silver is advancing with equal (if not greater) steam. A weak dollar and an economy that is barely growing are contributing to the precious metals’ impressive runs, and coin sales in the U.S. are on the rise. The Bank of Japan’s decision this week to keep interest rates low and the Federal Reserve’s continued policy on low rates also gave gold a boost this week.

Why this matters to precious metals investors:
A couple of months ago analysts were projecting gold to hit $1,300 by the end of this year. It is already fast approaching that mark. Some are now even saying it could hit $1,400 by next month. Unexpected and negative projections for the dollar’s future are accelerating gold’s move making now a ripe opportunity for buying.


Rocketing Silver Set for Best Month Since 2013 as Gold Climbs

Silver is the Star

Silver was at a one year high this week and up 15% this month thanks to the dollar’s slump and rise in industrial demand. A stabilizing Chinese economy with increasing demand for precious metals is also partially responsible. All precious metals were up this week because of worse-than-anticipated economic growth this quarter that lowered the prospects of higher interest rates. Low interest rates makes non-interest yielding assets like gold and silver more appealing.

Why this matters to precious metals investors:
Precious metals are on the move. After three years of falling prices, all signs are now pointing towards positive growth trends for both gold and silver through this year. This Bloomberg graph shows the sustained upward climb of gold and silver against a steady decline of the dollar. The dollar value and precious metals value move in opposition to one another, and with a bleak outlook for the dollar this year, gold and silver have every reason to continue their march.


Weak GDP Growth in Q1 Weakens Dollar

Dollars down the drain

Lackluster economic data coming out this week on U.S. GDP growth is expected to keep the dollar on its downward spiral. In the first quarter this year, real GDP grew only 0.5%. This was the third consecutive quarter of growth slowdown.

Why this matters to precious metals investors:
Gold and silver become increasingly attractive as a safe haven investment as the economy slows. During times of recession and a shrinking economy, gold has had some of its highest price runs. The warning signs of a potential economic downturn are increasing. Buying now will protect against these future uncertainties.


Gold Price Climbs After Fed and Bank of Japan Decisions to Stand Pat on Policy

Bank of Japan and Federal Reserve Logos

The Bank of Japan’s decision to maintain a tight monetary policy this week came as a surprise to many analysts, who were expecting a stimulus, and sent shockwaves into the markets this week. Similarly, investors looking for the Fed to change course from recent cautionary policy instead got more of the same following a Federal Reserve meeting that confirmed that it was in no rush to raise interest rates anytime soon. Both of these events helped to boost gold prices. The dollar fell sharply against the yen and a basket of currencies following the news. On the U.S. monetary front, expectation that a Federal Reserve rate hike would happen before September is dwindling and traders’ expectations for such a hike occurring fell over five percentage points this week.

Why this matters to precious metals investors:
The monetary policy course that the Federal Reserve has set out on will continue to boost the price of gold as well this year if it stays on course. Analysts are also now saying gold has finally found its price floor after the past few years, which can only be positive for gold’s future. The pieces are in motion to see gold make great gains this year.


Here are some articles from the web discussing the topics in this week’s post:

Gold and Silver Prices Hit Highs Vs. Weak Dollar
Read Here

Rocketing Silver Set for Best Month Since 2013 as Gold Climbs
Read Here

Weak GDP Growth in Q1 Weakens Dollar
Read Here

Gold Price Climbs after Fed and Bank of Japan Decisions to Stand Pat on Policy
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

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DOHA Oil

Doha Oil Negotiations and Domestic Data Reports Boost Gold

Stronger Dollar-Eurozone Fears

Gold Price Rises as Oil Price Falls after Doha Oil Negotiations Derail on Iranian-Saudi Tension

Doha Oil Rig

The oil market endured a tense week as OPEC countries met for negotiations in Doha that ultimately broke down, causing oil prices to plummet. Rising tensions between regional rivals Saudi Arabia and Iran over output levels led to the demise of the talks in Qatar’s capital city. Iran, who has been increasing output since lifted sanctions in January, refused to sign up for the output-freeze that was proposed for all OPEC countries. After the Iranian refusal to play along, Saudi Arabia, the world’s leading oil producer, stated that they would likely increase output in conjunction with the Iranians as the freeze would only be effective if everyone signed up to it. Investors had been betting on an oil deal being reached, so when the crude oil price fell nearly 5%, demand for safe haven gold went up, lifting gold prices.

Why this matters to precious metals investors:
Iran and Saudi Arabia’s rivalry extends far past oil. The two countries’ religious-political feud derives from a centuries-old ideological division that still influences diplomacy in the region. These recent negotiation breakdowns are one of many indicators of increased volatility in the Gulf States. This kind of instability can be a strong driver for gold prices. As oil prices fell on Tuesday, investors shifted their focus towards gold as the metal offers more security. Gold, unlike oil, has intrinsic value that makes it more desirable in the face of regional threats to global security.


 

Silver Hits 11 Month High; Up More Than Gold in 2016

Silver Hits 11 month High

Silver has been building on its gains from last week and shot up 4.5% on Tuesday. So far this year silver is up 22% while gold is up 18%. Some of the reasons for silver’s rally are the same monetary policies driving gold and a Chinese economy that is gaining back some of its strength and putting increased demand on the metal. Silver is sometimes called “the poor man’s gold” for its relatively cheap price, but performances like this prove it can stand apart as a sound, and sometimes more lucrative, investment. Some experts are calling the white metal the best investment so far of 2016.

Why this matters to precious metals investors:
Silver generally trades against gold at 60 ounces to 1. Before it went through this corrective rally, it had seen disparity as great as 80 to 1 and is now returning to its historic parity. Silver’s strong performance all year is proving its returned stability. Now is a prime time to diversify a precious metals portfolio with silver as it continues its upward climb.


Precious Metals Soar as Dollar Slumps After U.S. Data

Weaker Dollar after US Data

This week’s release of U.S. economic and employment data was less than positive, which helped drive price increases in gold and silver. The U.S. housing market was hit harder than expected and the dollar slumped against other basket currencies while silver hit a 10-month high, gold rose 2% and platinum reached a 6-month high Tuesday. With a cautions Fed policy on interest rates, analysts predict the precious metals market to hold onto its gains into the next quarter.

Why this matters to precious metals investors:
The U.S. economy is becoming sluggish and interest-bearing assets are suffering, which is lifting the price of gold. The dollar is performing at its lowest in over six months. Investors are flocking to safe haven metals rather than a risky stock market.


China Starts Gold Fixing in Bid to Expand Global Market Sway

China Starts Gold Fixing

China is continuing to send ripples through the gold market. The world’s second largest economy is showing a proclivity towards having a large holding in gold. China is now the world’s largest consumer of gold and purchase of coins and bars is on the rise. The Chinese central bank is increasing its bullion holdings as it moves to diversify its foreign-exchange reserves. On Tuesday China began a twice-daily price fixing in a bid to increase its sway in the global market and establish a regional benchmark that could potentially rival the benchmark set in London twice a day. Having more sway in the gold market would help a Chinese strategy to establish the yuan’s expanded international use. Experts are saying this is an important development to watch as it could mean the start of increased use of gold in the Chinese monetary system and China becoming a key player in the gold market.

Why this matters to precious metals investors:
Over the next decade as China’s economy expands, it will likely overtake the U.S. as the world’s largest economy. The ascendant power’s focus on gold shows the metal’s long-term value and desirability. The Asian superpower has decided to prioritize the bullion market as an international market to have significant sway over. Because gold safeguards wealth against economic turmoil and global instability, having such a stake would ensure Chinese economic power in the future.


Here are some articles from the web discussing the topics in this week’s post:

Gold Price Rises as Oil Price Falls after Doha Negotiations Derail on Iranian-Saudi Tension
Read Here

Precious Metals Soar as Dollar Slumps after U.S. Data
Read Here

Silver Hits 11 Month High; Up More than Gold in 2016
Read Here

China Starts Gold Fixing in Bid to Expand Global Market Sway
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign