BONUS GOLD!Release Date: Saturday, September 14, 2019
METALS MARKET UPDATE – WHAT YOU NEED TO KNOW
- Gold prices moved higher in Europe but lower in the US as investors digested news regarding the U.S.-China trade war.
- Monetary easing in Europe fueled higher gold prices in the EU.
- The Federal Reserve is expected to lower interest rates again which is positive for gold.
- President Trump has urged lower and possibly negative interest rates which makes gold an attractive investment.
- Gold ended the week at $1,488.90/oz. Silver closed at $17.52/oz.
METALS NEWS – CENTRAL BANKS PROFIT FROM GOLD'S RISE AS ANALYSTS SEE NEW RECORDS FOR THE YELLOW METAL
Gold's top performance has bolstered the fortunes of countries like Russia and China who have poured dollars into gold. Analysts such as banking giant Citigroup see gold continuing its rise to new records.
- Citibank joins other international banks in forecasting a new record high for gold. "Gold prices may rally to a record above $2,000 an ounce in the next two years, according to Citigroup Inc., which gave a laundry list of positive drivers including rising risks of a global recession and the likelihood that the Federal Reserve will reduce U.S. interest rates to zero." https://www.bloomberg.com/news/articles/2019-09-10/citi-says-gold-may-top-record-as-risks-mount-fed-cuts-to-zero
- Mark Mobius, the founding partner of Mobius Capital Partners, believes investors should hold 10% of their portfolios in physical gold to protect themselves against central bank policies. "'People are going to finally realize that you got to have gold, because all the currencies will be losing value….'" https://www.cnbc.com/2019/09/09/mark-mobius-on-investing-in-gold-as-central-banks-and-fed-cut-rates.html
- Efficient-markets analyst Tyler Durden wrote that a "perfect storm" is brewing to devastate the world economy and send gold prices to new records. "There is no end in sight to the flow of negative incoming data. The Fed is clearly not going to intervene, at least not until the situation becomes so horrendous that average people start demanding a response. Brexit is looking more and more volatile every day, and no doubt it will be blamed for economic tremors in the EU, just as the trade war will be blamed for the recession in the US. These are the "perfect storms" that drive gold to record highs. A repeat of gold's performance during the 2008 crash is certainly possible. In fact, I think the next rally in metals will far surpass the 2008 event." https://www.zerohedge.com/news/2019-09-07/gold-prices-will-keep-rising-because-crash-conditions-are-becoming-obvious
- Gold can improve the performance of a retirement portfolios according to a report from the World Gold Council. "Gold allocations of 2%-10% in a typical pension portfolio have provided better risk-adjusted returns than those with broad-based commodity allocations." https://www.gold.org/goldhub/research/gold-when-investing-in-commodities
- A research study by GraniteShares showed that a greater allocation to gold improves a portfolio's performance. "A study showing that a 5% allocation to the yellow metal improves the risk-adjusted performance of a standard portfolio of 60% stocks and 40% bonds… '"Gold has more value in a portfolio than most people think.'" https://www.barrons.com/articles/can-gold-help-diversify-a-portfolio-51568345813?mod=hp_ADVISOR
- DoubleLine Capital's deputy chief investment officer Jeffrey Sherman told CNBC viewers that gold will shine in an negative interest rate environment. "'[I]f you think that we're going negative [interest rates] and it's going to cause a problem with the financial system, I think that little shiny rock may be something that does perform very well.'" In June, DoubliLine's CEO Jeff Gundlack said he was "long" in gold. "Gold is up more than 11% since Gundlach's comments in June versus the S&P 500's 3.3% gain." https://www.cnbc.com/2019/09/11/doublelines-jeff-sherman-cautions-against-treasury-bid-likes-gold.html
- China has increased its gold reserves as protection against the continuing U.S.-China trade war. "Gold has risen 18% since the start of the year, in part because China has been adding vast amounts of the metal to its reserves… Gold's rise, which has come in line with the ever escalating US-China trade war, is a major sign that investors are worried about the state of the economy. Traders plowing into bonds and gold show that investors are scrambling to assets seen as safe havens in times of turbulence." https://markets.businessinsider.com/commodities/news/gold-risen-18-this-year-as-china-adds-nearly-100-tons-of-gold-2019-9-1028508082
- Russia's bet on gold as paid off as the value of its gold reserves have increased more than 40% to over $100 billion. "If Russia did need to tap its gold holding, it would fetch a hefty price -- the metal is heading for the best year since 2010 as the U.S.-China trade war hurts global growth and central banks ease monetary policy." https://www.bloomberg.com/news/articles/2019-09-09/russia-s-massive-gold-stash-is-now-worth-more-than-100-billion
ECONOMIC NEWS – INVESTORS LOOKING AT HISTORIC VOLATILITY
Despite easing in the U.S.-China trade war, analysts see a global economy that is on the tipping point of recession fueled by reckless central bank policies and growing debt.
- Economist John Mauldin warns that 2020 "will be the most volatile year in history" for investors. "'The last few weeks marked a turning point in the global economy…. We are vulnerable, and we'll be lucky to get through the 2020s without major damage… Markets will be a mess, bouncing up and down with each headline, Mauldin warned, and that will inspire politicians and central bankers to react. To 'do something.' That something, he said, will probably be the wrong thing." https://www.marketwatch.com/story/why-investors-risk-major-damage-ahead-of-the-most-volatile-year-in-history-2019-09-09?mod=mw_theo_homepage
- The chief economist for AllianceBernstein Holding L.P., a global asset management firm, has determined the true U.S. debt is nearly 2,000% of America's GDP. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said, "'We are quickly approaching a situation where we have dug ourselves a debt hole which is doing to have profoundly negative effects on the economy for probably decades going forward….'" https://www.cnbc.com/2019/09/09/real-us-debt-levels-could-be-a-shocking-2000percent-of-gdp-report-suggests.html
- President Trump has called upon the Federal Reserve to cut interests to zero, or even pursue negative interest rates, to help support the U.S. economy. "The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term," the President tweeted. https://www.cnbc.com/2019/09/11/trump-says-fed-boneheads-should-cut-interest-rates-to-zero-or-less-us-should-refinance-debt.html
- A survey of private economists revealed that most do not believe the U.S. will be able to reach its target of 3% GDP growth this year and GDP will continue to fall in coming years. "Private-sector economists surveyed in recent days expect U.S. gross domestic product to expand an inflation-adjusted 2.2% this year on average, measured from the fourth quarter a year earlier. Forecasters expect economic growth will slow to 1.7% in 2020 and will be 1.9% in 2021." https://www.wsj.com/articles/economists-dont-see-path-to-3-growth-in-2019-11568296800
- The U.S. Treasury Department sanctioned North Korea after its hackers attacked critical infrastructures in the U.S. "Treasury is taking action against North Korean hacking groups that have been perpetrating cyber-attacks to support illicit weapon and missile programs," said Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence, in the release. https://www.cnbc.com/2019/09/13/treasury-department-sanctions-north-korean-hackers-over-cyberattacks-of-critical-infrastructure.html
- Oil man, corporate raider and philanthropist T. Boone Pickens died this week at the age of 91. "Days after Pickens suffered "a Texas-sized fall" in July 2017, he wrote a LinkedIn post titled "Accepting (or Embracing) Mortality." "Now, don't for a minute think I'm being morbid," he wrote. "Truth is, when you're in the oil business like I've been all my life, you drill your fair share of dry holes, but you never lose your optimism. There's a story I tell about the geologist who fell off a 10-story building. When he blew past the fifth floor he thought to himself, 'So far so good.' That's the way to approach life. Be the eternal optimist who is excited to see what the next decade will bring." https://www.cnbc.com/2019/09/11/t-boone-pickens-oracle-of-oil-and-corporate-raider-dies-at-91.html