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Trading Lessons

Now Is A Good Time To Buy Gold Says Fidelity Investments

Commodities / Gold and Silver 2014 Nov 13, 2014 - 05:41 PM GMT

By: GoldCore

Commodities

Joe Wickwire, research analyst and portfolio manager at Fidelity investments, presented some very grounded, reasonable arguments as to why one should buy gold at the LBMA Precious Metals Conference in Lima, Peru which concluded on Tuesday.

Fidelity Investments are a largely family owned mutual fund and financial services company. It is one of the largest mutual fund and financial services groups in the world. Founded in 1946, the company has since served North American investors. This year they were voted best investment company in an online broker review by Stockbroker.com. They have gradually moved up in the rankings from eighth place in 2011.


They currently manage a massive $2 trillion worth of assets. Gold is a diversification and makes up only a small proportion of their overall assets. Thus their pronouncements concerning gold can be regarded as independent.

"I believe that now is a good time to take advantage of the negative sentiment short-term trading sentiment", Wickwire said as reported by the Bullion Desk:

Wickwire argues that, from an asset allocation standpoint, actual gold market fundamentals are not linked to transitory US stock market volatility or whether or not the dollar moves up or down against the euro or the yen. Those items can be the basis for short-term trading strategies but not for long-term portfolio construction.

“I believe that now is a good time to take advantage of negative short-term trading sentiment,” Wickwire said.

He emphasised that, while precious metals may respond to market volatility in the short term, in the longer term the fundamentals are sound.

As many as 40% of mining companies cannot turn a profit with prices below $1250. We can extrapolate therefore that if prices do not rise from where they now languish ($1163) many mining companies will fold. This would lead to a supply crunch and consequent rising prices.

Mr. Wickwire reviewed the conditions behind the surge in gold price from 2001 - 2008 and concluded that similar dynamics are currently in operation.

"Today is quite similar - there are negative real interest rates, while countries are using currency as a policy tool to support nominal growth at the expense of real growth. And on top of that, supply from the gold industry is starting to come down."

He emphasised the importance of owning gold as a form of financial insurance and concluded
"It's important to remember that a little gold goes a long way. If you had 5-10% allocation in your portfolio from 2000 to 2010, you wouldn't have suffered a lost decade."

We agree that in the long term gold acts as a counterbalance to and a hedge against market volatility.

To fret over declines in price is to miss the point. Holding an allocation of physical gold as a proportion of one's portfolio ensures that, if and when faith in paper and digital assets declines and counterparty and systemic risk returns, one is hedged and ones wealth is protected. This is the whole point of owning gold bullion.

As always we advise owning gold in allocated gold accounts in vaults in the safest jurisdictions in the world such as Singapore and Switzerland.

Get Breaking News and Updates on the Gold Market Here

MARKET UPDATE
Today’s AM fix was USD 1,161.00, EUR 930.81 and GBP 736.26 per ounce.
Yesterday’s AM fix was USD 1,151.25, EUR 927.90 and GBP 726.43 per ounce.

Gold for immediate delivery lost 0.1% to $1,162.60/oz in late morning trade in London. It reached $1,132.16 last Friday, November 7, the lowest since April 2010.

Gold in U.S. Dollars - 10 Years (Thomson Reuters)

Futures trading volume was more than double the average for the past 100 days for this time of day, data compiled by Bloomberg show.

Global bullion demand declined 2.5% from a year earlier to 929.3 metric tons in the third quarter, the lowest since the last quarter of 2009, the London-based World Gold Council said in a report today. Jewelry consumption slipped 4%, while bar and coin purchases dropped 21%, it said.

Although questions are being asked about the Chinese demand data as it appears to only view Chinese demand through the rather narrow prism of Hong Kong exports to China. However, today China is importing huge volumes of gold bullion from all over the world and therefore deliveries on the Shanghai Gold Exchange are a much better benchmark of real Chinese demand.

Holdings in gold exchange traded funds fell 4 tons to 1,620 tons yesterday, remaining at the lowest in more than five years due to poor sentiment and weak hand selling.

Holdings in the world's largest gold backed exchange-traded fund, SPDR Gold Shares, fell 1.8 tonnes to 722.67 tonnes on Wednesday. This is the seventh straight day of declines.

Gold in GBP - YTD 2014 (Thomson Reuters)

A small amount of the ETF liquidations are by investors concerned about the return of the Eurozone debt crisis, geopolitical risk and systemic risk and opting for the safety of allocated and segregated gold bullion coins and bars.

Some support was offered by buying of physical gold bullion in China overnight, dealers told Reuters.

Buy Gold Bars at the Lowest Prices and in the Safest Way

Zero Premium Gold, a new low cost and safer gold investment, has been launched today. It allows investors internationally to invest in physical gold bars at the lowest prices in the market. Investors can now own gold bars at a record low premium of just 0% which is at the live market spot gold price.

High charges or premiums for gold bars have made investors wary of physical gold bars in the past and led to the success of online gold account providers with pooled allocated accounts and gold exchange traded funds (ETFs).

Zero Premium Gold is as cost effective as gold ETFs and other gold investment vehicles with the added security of outright ownership of the underlying physical asset.

This update can be found on the GoldCore blog here.

Yours sincerely,
Mark O'Byrne
Exective Director

IRL
63
FITZWILLIAM SQUARE
DUBLIN 2

E info@goldcore.com

UK
NO. 1 CORNHILL
LONDON 2
EC3V 3ND

IRL +353 (0)1 632 5010
UK +44 (0)203 086 9200
US +1 (302)635 1160

W www.goldcore.com

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

GoldCore is committed to complying with the requirements of the Data Protection Act. This means that in the provision of our services, appropriate personal information is processed and kept securely. It also means that we will never sell your details to a third party. The information you provide will remain confidential and may be used for the provision of related services. Such information may be disclosed in confidence to agents or service providers, regulatory bodies and group companies. You have the right to ask for a copy of certain information held by us in our records in return for payment of a small fee. You also have the right to require us to correct any inaccuracies in your information. The details you are being asked to supply may be used to provide you with information about other products and services either from GoldCore or other group companies or to provide services which any member of the group has arranged for you with a third party. If you do not wish to receive such contact, please write to the Marketing Manager GoldCore, 63 Fitzwilliam Square, Dublin 2 marking the envelope 'data protection'

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