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We’re Reaching Peak Gold - Bloomberg

We’re Reaching Peak Gold - Bloomberg

Release Date:  Friday, September 29, 2017

“Gold prices edged lower on Friday as slightly weaker U.S. inflation and consumer spending data did little to dampen expectations of an interest rate hike in December.” (“Gold Dips After U.S. Inflation Data, Set For Quarterly Gain.” Reuters 9.29.17)

However through the week, gold prices experienced volatility. “During the start of the week, gold prices were up by almost 2 percent due to ongoing tension between North Korea and USA. In last few days sentiments turned negative for gold after Fed Chairman took a hawkish stance with a possible rate hike in the month of December and announcement of Trump Tax reform plans.” (“Gold Price Volatility To Continue.” Indainfoline.com 9.29.17)

Gold ended the week down $17.70, closing at $1,280.40. Silver prices closed at $16.73, down $0.35.

We’re Reaching Peak Gold - Bloomberg
On Monday, the chairman of the World Gold Council stated that world may have already produced the most gold one year that it ever will.

“Production is likely to plateau at best, before slowly declining as demand rises, especially given global political risks and robust purchases by consumers in India and China…

“’It’s not clear how the whole U.S. political system will play out,’ said Oliphant, an industry veteran who’s been an executive at some of the world’s biggest gold miners. ‘All this uncertainty seems very fertile ground for people to get into gold…

“Prices could climb to as high as $1,400 an ounce in the next 12 months, and top record highs in the ‘medium term,’ Oliphant said at the Denver Gold Forum, the 28th annual gathering of mining executives, hedge funds, bankers and analysts that attracted about 1,100 attendees…

“Oliphant’s concerns over peak production echoed similar comments at the conference… this year. David Harquail, chief executive officer of Franco-Nevada Corp., said earlier Monday that the gold industry continues to be in an ex-growth phase where new mining projects are simply replacing older assets that are running out of ore…

“’We’re not going to fall off a cliff…, but in the same time it’s really hard to see how we’re going to produce enough gold to meet all this demand,’ Oliphant said.” (“We’re Reaching Peak Gold.” Bloomberg 9.25.17)

Yellen’s Comments Suggest Easier Monetary Policy Ahead, Which Is Bullish On Gold – Seeking Alpha
On Tuesday, Yellen admitted that the Fed may have overstated the strength of the labor market and the rate of inflation.

“My colleagues and I may have misjudged the strength of the labor market, the degree to which longer-run inflation expectations are consistent with our inflation objective, or even the fundamental forces driving inflation, said Yellen…

“These comments came in a speech delivered to the National Association for Business Economics in Cleveland. They are particularly interesting considering that the Fed just approved the first steps in unwinding their balance sheet last week…

“It is also interesting to note that Fed officials worry that keeping rates lower allows little room for stimulus when another economic slowdown hits… a tacit admission that the Fed is worried about another financial crisis ahead and may actually view equity markets as overvalued, despite comments to the contrary…

“’Sustained low inflation such as this is undesirable because, among other things, it generally leads to low settings of the federal funds rate in normal times, thereby providing less scope to ease monetary policy to fight recessions,’ Yellen said…

“Yellen’s comments today are bearish on the dollar and bullish on gold and silver. However, precious metals have yet to react too favorable to Yellen’s comments today. Gold and silver were both down sharply prior to her speech and while they have bounced a bit off lows, gold is still down $13 to $1,297 today and silver is off 33 cents to $16.83. Those are significant daily declines of 1% for gold and 2% for silver thus far…

“I believe this is providing an excellent buying opportunity for investors, as the market will eventually wake up to the fact that the Fed can’t remove accommodation without crashing multiple markets. When this realization hits a larger percentage of investors, we should see a continuation of the dollar decline and major rally in gold and silver. (“Yellen’s Comments Suggest Easier Monetary Policy Ahead, Which Is Bullish On Gold.” Seeking Alpha 9.27.17)