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

Gold Outperforms Stocks In Q1, 2018

Commodities / Gold and Silver Stocks 2018 Apr 04, 2018 - 12:20 PM GMT

By: GoldCore

Commodities

– Gold signs off Q1 2018 with best run since 2011
– Gold price supported by safe haven demand, interest-rate concerns and inflation
– Trade wars and concerns over equity market have sent investors towards gold
– ETF holdings highest in nearly a decade
– Goldman Sachs: ‘The dislocation between the gold prices and U.S. rates is here to stay’


Gold ended March with it’s best performance since 2011. The safe haven asset completed a third-quarterly rise thanks to a weaker dollar, interest-rate concerns, inflation nervousness and geopolitical tensions.

Gold’s finish for the quarter was its lowest quarterly rise seven years but price-supporting factors present a bullish environment going forward. In the final week of the quarter gold traders were the most bullish they’ve been since January 26, according to the weekly Bloomberg survey, whilst Goldman Sachs turned bullish on gold for this first time in five years, suggesting they too see gold’s upside potential ahead.

ETF holdings reached 2,268.6 metric tons in March’s penultimate week, the highest since 2013. Holdings have increased in eight of the nine previous quarters, climbing by 43 tons in the first quarter this year.

The safe haven qualities of gold have brought it firmly back into the spotlight this year. Trump’s sabre-rattling and trade wars have done little to quell concerns that the global geopolitical and economic situation will return to a steady keel. Recent appointments to the White House – namely John Bolton and Mike Pompeo – have furthered exacerbated worries regarding the US President’s ‘America First’ strategy.

The administration is also favourable of a weak dollar, which suggests that little is likely to change when it comes to the currency’s recent performance. Whilst it has ticked up recently it has not been able to break it’s longer-term downtrend. Bloomberg Intelligence’s Mike McGlone said in a recent note that the gold price may soar to $1,400 per ounce should the downtrend not reverse and the US dollar remain weak.

The currency is also falling out of fashion. There is an ongoing shift out of the global reserve currency, not to mention the global equities fall for the first quarter in two years.

Gold remains unfazed by monetary policy 

Five years ago the gold price plunged as market commentators and funds became spooked over rumours of QE tapering. The Federal Reserve’s hikes have proven that easy monetary policy went so far that gold is an increasingly attractive option as both a safe haven and store of value.

Goldman Sachs analysts last week indicated that interest rates were one area of concern and would support gold prices, “Based on empirical data for the past six tightening cycles, gold has outperformed post rate hikes four times…Our commodities team believes that the dislocation between the gold prices and U.S. rates is here to stay.”

In times past one would understandably expect the gold price to react negatively to an uptick in interest rates, because the opportunity cost of holding it rather than bonds or cash increases.

But, six rises from the FOMC since 2015 have done little to break gold’s run. This is thanks to inflation which has impacted the cost of living so much that real interest rates have actually decreased between 2015 and the end of 2017. So, this could explain why the gold price has climbed.

More interestingly, however is that since the end of 2017 real interest rates in the open market have been rising and so too has the price of gold. In both Q4 2017 and now Q1 2018 the gold price has climbed, as have inflation-adjusted 5-year bond yields.  This is something that has not been seen since the gold price hit it’s all time high of nearly $2,000/oz. Perhaps another sign that the great global economic recovery we all keep hearing about is not quite as present as politicians would like us to believe.

Markets are also struggling to reconcile the disparities between the Fed’s and other central banks’ monetary policies. The FOMC is clearly in the latter stages of its rate-hike plans, yet other monetary policy committees are yet to make significant changes. This shows that the global financial system is not yet back on equal footing and we are likely to see more diversions across economies and markets.

LIBOR is back

…well it never went away, but it is back in terms of how it is spooking money managers once again. As we explained a couple of weeks back ‘the LIBOR-OIS spread has been climbing sharply and is now higher than levels seen during the height of the eurozone sovereign debt crisis of late 2011 and early 2012’.

Recently the pace of increases in LIBOR has accelerated, faster than FOMC rate hikes. This may be pointing to serious signs of stress in the U.S. money markets as this is something not seen since the financial crisis.

Trade wars are still a threat

For many gold’s safe haven qualities may have been reduced somewhat once the Trump administration made some concessions for various countries, following the announcement of steel and aluminium tariffs. Concessions were granted to those who account for around 85% of imports.

However, Trump has left some countries waiting for their sentence which creates uncertainty in the market. It also suggests the administration is still working through various trade policies that it plans to implement this year. The EU is a major trading partner that has been told that it will have to wait to find out the charges on its own exports to the US. Officials from the monetary union have already indicated that there will be an equal and fair response to any measures taken by America when it comes to trade.

Hurdles on the horizon?

The above is a very small snapshot of factors that are providing support to the price of gold. We have made little mention of the impact of Brexit, the stock market, peak gold and of course inflation which is now beginning to truly reveal itself. All of these will likely play varying roles when investors are deciding on portfolio allocations and safe haven assets.

The point is, wherever you turn there is a clear signal pointing upwards for the price of gold. At present it seems there are two things that could halt gold in its immediate uptick – a recovery for inflation and a fall in stock market volatility. The former is highly unlikely and the latter may happen in the short-term but ultimately will cause significant damage.

Once again the price of gold is indicating that there are major structural issues in the global financial and political system. They are all interlinked will little chance of one suffering without the other feeling the impact. Investors should take advantage of the gold price now. The factors are aligning for a situation akin to the the financial crisis, which could be dangerous for those holding cash in the bank or other assets exposed to counterparty risk.

As Dominic Frisby concluded in his latest piece on gold, ‘[there are those]who have owned gold since the 00s, riding out both the bull and the bear market. I can’t help thinking the next five years are going to be better than the last five.’

Listen on SoundCloud , Blubrry & iTunesWatch on YouTube below

Gold Prices (LBMA AM)

29 Mar: USD 1,323.90, GBP 941.69 & EUR 1,075.80 per ounce
28 Mar: USD 1,341.05, GBP 946.24 & EUR 1,082.23 per ounce
27 Mar: USD 1,350.65, GBP 954.64 & EUR 1,087.41 per ounce
26 Mar: USD 1,348.40, GBP 949.27 & EUR 1,086.95 per ounce
23 Mar: USD 1,342.35, GBP 952.80 & EUR 1,088.65 per ounce
22 Mar: USD 1,328.85, GBP 939.36 & EUR 1,078.10 per ounce
21 Mar: USD 1,316.35, GBP 935.53 & EUR 1,071.64 per ounce

Silver Prices (LBMA)

29 Mar: USD 16.28, GBP 11.58 & EUR 13.21 per ounce
28 Mar: USD 16.46, GBP 11.63 & EUR 13.28 per ounce
27 Mar: USD 16.64, GBP 11.79 & EUR 13.41 per ounce
26 Mar: USD 16.61, GBP 11.67 & EUR 13.39 per ounce
23 Mar: USD 16.53, GBP 11.70 & EUR 13.39 per ounce
22 Mar: USD 16.52, GBP 11.64 & EUR 13.41 per ounce
21 Mar: USD 16.25, GBP 11.56 & EUR 13.23 per ounce

Mark O'Byrne

Executive Director

This update can be found on the GoldCore blog here.

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 http://www.goldcore.com/uk/

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 containd 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'

GoldCore Archive

© 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