Global Precious Metal Roundtable – Greece, China, Manipulation, Interest Rates and Outlook

July 17, 2015

- Recent events in Greece have undermined trust  in the EU
- Sentiment towards gold cannot get much worse
- Increase in interest and demand for gold recently
- Elephant in room is manipulated gold and silver market
- Will sharp slowdown in China see fall or rise in gold demand?
- Gold served its function as safe haven in recent months
- History shows that gold prices rise with interest rates
- Gold has performed well in most currencies this year

The latest ‘Global Precious Metal Roundtable’ was recorded Wednesday and featured Jordan Eliseo of ABC Bullion,  Bron Suchecki of the Perth Mint and Ron Stoeferle of Incrementum and Mark O’Byrne of GoldCore. Recent events in Greece and the EU, very poor sentiment towards, gold and silver manipulation, the relationship between gold prices and rising interest rates and indeed the outlook for gold were discussed.

The panelists agreed that trust in politics in the EU had been completely undermined with the latest ‘deal’ between the ECB, EU and Greece. The game of extend and pretend at the expense of people and entire socieites is now plain to see and euro-skepticism is on the rise.

These developments and recent events in China have caused a surge of interest in Goldcore’s research guides and market updates. However, despite record account openings from the UK and Ireland, the U.S. and Canada, many investors are funding accounts but holding off on buying due to the most recent bout of price weakness and very negative sentiment – particularly in the media.

Sentiment towards gold is very poor and the panelists agree that a catalyst may break that sentiment with Ronald pointing out that as prices rise investors tend to want to buy.

Gold has actually served its function in recent months. If you were in Greece with its capital controls or China with its collapsing stock market gold performed its role as safe haven.

With regards to manipulation, Mark pointed out that when central banks print vast sums of cash to buy bonds to suppress interest rates the last thing they want to see is a rise in gold prices. While there is no “smoking gun” commentators such as those at GATA have amassed a large body of circumstantial evidence and many astute and leading analysts in the gold market have come to the conclusion that gold is manipulated.

Manipulation should not be primary focus of analysts but important to keep an open mind and look at as one potential factor in the market. Ultimately supply and demand will dictate prices in the long term and manipulation will only work in the short term.

It was agreed that, historically, gold prices have risen in line with nominal interest rates. It is only an environment of positive real interest rates that is not so favourable for gold. The simplistic narrative that suggests that rising interest rates will be bearish for gold is incorrect. Indeed it would have far worse implications for stock markets and property markets and yet this is rarely warned of.

Gold has actually performed well in most currencies this year. In Euro and Aussie dollar terms, gold has delivered a healthy and sustainable 5% return so far in 2015. Investors should pay attention to prices in their own currencies – not simply gold in U.S. dollar.

Mark’s concluding comments were that it is important to focus on gold’s proven role as a safe haven, as an important diversification and hedging instrument in a portfolio. All the empirical data, academic and independent research clearly shows gold is a safe haven over the long term.

Bullion protects people from falling stock markets as seen in the 30% collapse in Chinese stocks recently. It has protected Greek investors and savers – from sharp falls in stock, bond and property markets. Indeed it has protected people in Greece from the recent draconian bank and safety box deposit withdrawal restrictions and from capital controls.

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,143.00, EUR 1,049.25 and GBP 730.68 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,145.10, EUR 1,050.12 and GBP 732.79  per ounce.

For the week, gold is marginally lower in dollars and pounds but has eked out gains in euros to above €1,050 an ounce.


Gold in USD – 1 Week

Yesterday, gold fell $4.20 to $1,144.10 an ounce and silver slipped $0.10 to $15.01 an ounce. Gold in Singapore for immediate delivery was flat and gold bullion in Switzerland was marginally lower.

Gold looks set for a fourth weekly loss, the longest retreat since February despite strong coin and bar demand – particularly in Germany and wider Europe and indeed in the U.S.

U.S. Mint gold bullion coin sales surpassed the January 2015 level yesterday and are currently at the highest level since January 2014.


Gold in EUR – 1 Week

China has announced a smaller than expected increase in its gold reserves. China’s gold reserves stood at 53.31 million fine troy ounces or 1,658 metric tonnes by the end of June, the People’s Bank of China announced today.

It was the first public adjustment to its reserve figures in more than six years. It last announced its reserve figure in April 2009, when the level was increased to 33.89 million troy ounces from 19.29 million troy ounces.

Chinese gold reserves increased by 57 percent and China’s holdings have now surpassed those of Russia to become the fifth-largest. The U.S. is believed to have the biggest reserves at 8,133.5 tons.

Gold is no longer used to back the trillions and trillions of paper and digital money of today, however it clearly remains money contrary to assertions to the contrary. Gold bullion remains a substantial part of central bank reserves in the U.S. and Europe. China became the world’s second-largest economy in 2010 and has stepped up efforts to internationalize its currency – the yuan.

This is the continuation of the trend of China positioning the yuan as global reserve currency and we would not be surprised if China begins to accumulate a minimum of 100 metric tonnes a month going forward.  The Chinese are pushing for full convertibility of the RMB and increasing their gold holdings will create confidence in the fledgling reserve currency and aid them in this regard.


Gold in GBP – 1 Week

The short term trend remains lower. Gold may be in the process of having one last sell off and capitulation. The move lower this week may signal the start of that phase.

Good physical supply demand fundamentals and a very supportive macroeconomic backdrop are being ignored and the momentum driven and increasingly computer driven futures market is dominating and pushing prices lower again.

Concerns about a Fed interest rate increase are also weighing on the market. Although to an extent we would be surprised if that was not already priced into the gold market – as it has been very well flagged at this stage.

Silver for immediate delivery was flat at $15.04 an ounce, marginally lower for a fifth day. Spot platinum fell 0.6 percent to $1,008.51 an ounce, while palladium fell 1.1 percent to $625.95 an ounce.

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Courtesy of http://www.goldcore.com/

Mark O'Byrne is executive and research director of www.GoldCore.com which he founded in 2003. GoldCore have become one of the leading gold brokers in the world and have over 4,000 clients in over 40 countries and with over $200 million in assets under management and storage.We offer mass affluent, HNW, UHNW and institutional investors including family offices, gold, silver, platinum and palladium bullion in London, Zurich, Singapore, Hong Kong, Dubai and Perth. 

The volume of all the gold ever mined can occupy a cube 63 feet on each side.

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