Best of the Week
Most Popular
1. Trumponomics Stock Market 2018 - The Manchurian President (1/2) - Nadeem_Walayat
2.Yield Curve Inversion a Remarkably Accurate Warning Indicator For Economic & Market Peril - Dan_Amerman
3.China is Now Officially at War With the US and Japan - Graham_Summers
4.Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18 - Plunger
5.Stock Market Longer-Term Charts Show Incredible Potential - Chris_Vermeulen
6.U.S. Stock Market Cycles Update - Jim_Curry
7.Another Stock Market Drop Next Week? - Brad_Gudgeon
8.The Death of the US Real Estate Dream - Harry_Dent
9.Gold Market Signal vs. Noise - Jordan_Roy_Byrne
10.The Fonzie–Ponzi Theory of Government Debt: An Update - F_F_Wiley
Last 7 days
Moving Averages Help You Define Market Trend – Here’s How - 14th Aug 18
It's Time for A New Economic Strategy in Turkey - 14th Aug 18
Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - 14th Aug 18
Dow Stock Market Trend Forecast 2018 - Video - 13th Aug 18
Stock Market Downtrend to Continue? - 13th Aug 18
More Signs That the Stock Market Will Rally Until 2019 - 13th Aug 18
New Stock Market Correction Underway - 13th Aug 18
Talk Cold Turkey Economic Crisis - 13th Aug 18
Which UK Best Theme Park - Alton Towers vs Thorpe Park vs Lego Land vs Chessington World - 12th Aug 18
USD is Rising. What this Means for Currencies and Stocks - 12th Aug 18
Hardest US Housing Market Places to Live - Look Out Middle Class - 12th Aug 18
America’s Suburbs Are Making a Comeback - 12th Aug 18
Stock Market US Presidential Cycle, Seasonal Analysis and Economy - Video - 12th Aug 18
Yield Curve Inversion and the Stock Market - Video - 11th Aug 18
Land Rover Discovery Sport 1st Dealer Oil Change Service - What to Expect - 11th Aug 18
How to Setup Webinars and Use Them to Overcome the Barriers in E-Learning - 11th Aug 18
Big US Stocks’ Q2’18 Fundamentals - 11th Aug 18
Dow Stock Market Trend Forecast 2018 - 10th Aug 18
SPX Testing Its First Support Level - 10th Aug 18
Dreaming of a "Comfortable Retirement" on a Public Pension? - 10th Aug 18
The Forrest Gump of All Future Democrat Election Losses - 10th Aug 18
More Uncertainty as Stocks Got Closer to January Record High - 10th Aug 18
Gold and Silver Kill Zone - 9th Aug 18
Even More Cracks in the Gold Dam - 9th Aug 18
Ignore the Stock Market “midterm election year”, Which is “supposed” to be Weak - 9th Aug 18
Stock Market Trend and Volatility Analysis - Video - 9th Aug 18
Tips on Maximizing Small Serviced Offices Space - 9th Aug 18
VIX’s Collapse is Bullish for VIX and the Stock Market - 9th Aug 18
Vestles Platform Offers Several Key Trading Tools - 8th Aug 18
US Stock Markets Higher Until November 2018 - Part 2 - 8th Aug 18
US Stock Markets Higher Until November 2018 - Part 1 - 8th Aug 18
Stock Market US Presidential Cycle and Seasonal Analysis - 8th Aug 18
Is the Stock Market Correction Over? - 7th Aug 18
Yield Curve Inversion and the Stock Market - 7th Aug 18
Stock Market Elliott Wave Analysis and Forecast - Video - 7th Aug 18
Trade War! Win the Economic Hostilities Against the Chinese - 7th Aug 18
Technical Analyst Sees Silver as 'Oversold' - 7th Aug 18
Alex Jones Banned! Will Unapproved Opinions Be Censored Off the Internet? - 7th Aug 18
Gold and Silver Stocks On the Verge of the Next Major Decline - 7th Aug 18
First Time Buyers Need to ‘boost the affordability’ of Their Move Alone  - 7th Aug 18
Long Term Care Homes as an Investment are Heating Up! - 7th Aug 18
The Exponential Inflationary Stocks Bull Market - Video - 6th Aug 18
Land Rover Discovery Sport Oil Change Service Dash Warning Message - 6th Aug 18
Restructuring of Western Economic Power - 6th Aug 18
Stock Market Trend and Volatility Analysis - 6th Aug 18
Stock Market and Economy False Narratives That are Just Wrong - 6th Aug 18
VPN – Is It Worth It? - 6th Aug 18
All You Need to Know About Umbrella Companies - 6th Aug 18
Why China Lost the Trade War Before it Even Began - SSEC Stocks Index - Video - 5th Aug 18
Dow Stock Market Elliott Wave Analysis - 5th Aug 18
Iran's Rial Currency Is In A Death Spiral, Again - 5th Aug 18
IMF Produces Another Bogus Venezuela Inflation Forecast - 5th Aug 18
Gold & Silver Precious Metals Monthly Charts - 5th Aug 18
Time to Position for a Decade-Long Bull Market in Natural Resources - 5th Aug 18

Market Oracle FREE Newsletter

Trading Any Market

One Belt, One Road, One Direction for Precious Metals

Commodities / Gold and Silver 2018 Feb 23, 2018 - 05:30 PM GMT

By: MoneyMetals

Commodities

All great events hang by a hair. The man of ability takes advantage of everything and neglects nothing that can give him a chance of success; whilst the less able man sometimes loses everything by neglecting a single one of those chances.
~Napoleon Bonaparte

China's launch several years ago of the One Belt, One Road Initiative is set to become the biggest commercial linking-system constructing project in world history. In the book David Morgan and I co-authored, Second Chance: How to Make and Keep Big Money from the Coming Gold and Silver Shock-Wave, we discuss the "New Silk Road" this way:

...the plan, described as an “economic partnership map with multiple rings interconnected with one another” envisions an economic land belt and a maritime road linking Beijing through Europe to the Mediterranean. This modern equivalent of the old Silk Road would weave together the economies of over half the world’s population via transit corridors of highways, high-speed rail, fiber-optic cables, pipelines, and air and seaport hubs.


OBOR - also known as the Belt and Road Initiative – is drawing supplies of commodities to it across the board, like iron filings to a magnet. Concrete, iron, zinc, copper... silver and gold. Silver, as a critical ingredient in the electronics and communication build-out; gold (+ silver) because of rising incomes for China's middle class – larger than the population of the U.S. – which will continue the historical habit adding to its precious metal holdings.

An excellent interactive map showing the primary pathways and effects of this mammoth construction project can be found at the South China Morning Post. Elements:

  • During a recent two-day visit to Beijing by U.K. Chancellor Philip Hammond, it was announced that former Prime Minister David Cameron would be taking a lead role in a US$1 billion private equity infrastructure fund directly investing in the One Belt One Road (OBOR) initiative. ~Tama Churchouse
  • HSBC has estimated that the expansive Belt and Road program will generate no less than an additional, game-changing US$2.5 trillion worth of new trade a year.
  • It is important to remember that the “belt” in BRI is a series of corridors connecting Eastern China with oil-gas rich regions in Central Asia and the Middle East. The high-speed rail networks, or new “Silk Roads”, will simply traverse regions filled with, what else, un-mined gold. ~Pepe Escobar
  • An almost unnoticed (when in the West, made light of) corollary is China's proposed "Latin Belt and Road" program, involving Brazil, Argentina and Chile. China's Foreign Minister says, "It follows the principle of achieving shared growth through discussion and collaboration. It is nothing like a zero-sum game."  ~Asia Times

The meaning for gold and silver?

When most Western analysts tout the virtues of precious metals' ownership, they focus on what Frank Holmes refers to as the "Fear Trade." They say you should (and we agree) own gold and silver as "insurance" against rising inflation, which by the year (daily in Venezuela and Zimbabwe) reduces the purchasing power of David Morgan's famously termed "paper promises." These highly-liquid metals can be turned into fiat paper virtually anywhere in the world.

Holmes also refers to the "Love Trade", a demand factor just as important and enduring. When people's disposable income rises, they purchase discretionary items - things not otherwise critical beyond the basics of food and shelter. This behavior, especially by Indians and Chinese ("Chindians") has historically been a habit; almost an obsession. Graceland Updates Editor, Stewart Thomson describes the OBOR context, saying:

Gold is headed back towards slow, relentless appreciation against fiat, but it won't be as slow as you might think... because of the exponential mathematical relationship between Indian wage increases and gold demand. The road to $15,000 will be built with one belt, one road, one price-advance brick at a time.

As citizens industrialize, they play catch up with everyone else. Because there are almost 8 times more Chindians than Americans, it's a super-sized version of what took place in the 1880s in America. (Given) that the Chinese are the world's biggest gamblers, and Indians are maniacally obsessed with owning all the gold there ever was, is, and will be, the bull era promises to be incredibly exciting.

"Technical proof"?

One of most overlooked tools in a technical traders trading box is the relationship between gold and global currencies. On major exchanges it's most frequently quoted in U.S. dollars, but in a given country, gold demand is expressed in local money. When we see gold advancing in dollars, that's important. When making new highs in other currencies, it becomes a bell-weather signal in its own right.


Gold vs. Emerging Market Currencies, courtesy allstarcharts.com

The blockchain-gold-silver nexus - another element to the equation.

Over the last year, I have written in this space – as well as in 2018 issues of The Prospector News and The Morgan Report – how the blockchain revolution will affect precious metals' demand and ownership. Kevin Vecmanis, in an essay titled "Gold and Blockchain", ties these golden threads together, commenting:

...Gold has found itself in the blind spot of investors almost seven years after making a nominal all-time high. Quietly, beneath everyone’s nose, gold is undergoing a tectonic shift. On every time frame – weekly, monthly, quarterly, and yearly - the trend in gold has shifted upwards. Gold smashed historical quarterly volumes the last two quarters in a row by a significant margin.

While western investors are enamored with the stock markets, there are two billion people in the east that view gold differently and are gladly taking it off our hands at lower prices. Their economic influence is rising. Their economies are in desperate need of transactional efficiencies that the blockchain offers. A rising standard of living in the east directly equates to a rising base demand level for gold.

This year right out of the box, precious and base metals, as well as shares of the better miners who produce them have been strong, a trend set to continue. Information Risk is being replaced by Price Risk.

Don't become a Lookie Lou who wonders later this year why you didn't act while metals were "affordable" and available. Don't become "the man (or woman) of ability" Napoleon describes, who misses "a chance of success" by neglecting to act on the bullish metals' signals Mr. Market is sending your way.

David Smith is Senior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com. For the past 15 years, he has investigated precious metals’ mines and exploration sites in Argentina, Chile, Mexico, Bolivia, China, Canada, and the U.S. He shares his resource sector findings with readers, the media, and North American investment conference attendees.

© 2018 David Smith - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules