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Gold Forecaster – Weekly #575: U.S. gold investors continue buying and the mood of the markets favor gold!

Dear Gold Forecaster Subscriber,

Weekly Gold Review

World gold markets finished the week in line with each other [Shanghai, London and New York] at around $1,235. The consolidation below $1,250 continues as this o

World gold markets finished the week in line with each other [Shanghai, London and New York] at around $1,256.70.

Last week started in a quiet mood with no startling gold related news moving prices. Sales from the U.S. based gold ETFs held back prices below $1,240, but we didn’t see them as precipitating a fall in the gold price today. We expected more consolidation.

The week saw Shanghai leading the way each day or holding levels seen in New York and London. But overall Shanghai lifted prices higher.

Most importantly the resistance at $1,250 was overcome and turned into support. This is a level that was support for a long time last year, so if this holds, we can expect the gold price to tackle the next resistance level at $1,290.

Alan Greenspan

The august Alan Greenspan has said, “The European Central Bank (ECB) has greater problems than the Federal Reserve. The asset side of the ECB’s balance sheet is larger than ever before, having grown steadily since Mario Draghi said he would do whatever it took to preserve the euro.  I have grave concerns about the future of the Euro itself.  Northern Europe has, in effect, been funding the deficits of the South; that cannot continue indefinitely. The Eurozone is not working.” Greenspan said Brexit is almost certainly set to trigger a collapse of the ECB despite the UK not having signed up to take on the currency.

Alan Greenspan says that investors are back to safe havens including precious metals because there is no trust in the banking system. And he said countries cannot continue to borrow in the way that they have been signaling that quantitative easing is not working. He added: “I view gold as the primary global currency.

Alan Greenspan is not selling anything, is not given to extreme statements, but is an ex-Chairman of the U.S. Federal Reserve.

Central banks in all nations have to control their national currency. The more currencies face loss of confidence the more control over their own citizen’s money is needed. Within their own jurisdiction central banks almost cannot be held to account. That’s why Japan can sustain its horrendous debt, most of it is owned by their own citizens.

Outside it they are in danger [as we see in Greece today].  So, when Alan Greenspan himself makes the above statements we should be looking to gold, particularly those who have to live with the euro, before they can’t!

verhead resistance at that level sees a build-up of a foundation around $1,240. Exchange rates have been a large influence this last week as gold in the euro advanced and in the dollar weakened at one point.

What does appear to be happening is that uncertainties across the world are worrying investors and they are being seen to favor gold investments. Here we are talking about directly held gold bullion under the control of the investor, not ‘electronic gold’. This demand is growing, as reported by our friends in Swiss refineries, etc, who continue to be going flat out refining gold into metric formats for trading in markets in Switzerland and eastwards. It is most enlightening to hear that such Swiss gold people are not at all happy to receive dollars in payment, only euros or Swiss Francs. This tells quite a story!

With even Blackrock recommending gold in portfolios we expect more U.S. buying to follow in gold.

One of the most difficult features of financial markets today is the demand for short term performance even within monthly time slots.

Gold has always been for the long term outperforming all other investments over that time, but in the world today it’s the fund manager that meets trading demands that is deemed the best manager. Indeed, we have always seen that the best portfolio manager is measured over the medium to long term and is not a trader. Warren Buffett backs that and proves the point.

We have absolutely no doubt that if you measure gold from today over the next five years or longer, gold will outperform all other investments. Look back over the last decade and we prove our point.

Having said that, we expect to see gold, from today to the end of the year, likely outperform all other investments. Even Alan Greenspan has recently stated that gold is the ultimate insurance policy.

This seems more than appropriate in a world that is moving from dollar hegemony to a multi-currency monetary system as ‘popularism’ is spreading across the developed world. With French and German elections pointing towards change and an E.U. that Greenspan says is ‘not working’ gold seems to be a safe place to weather coming storms…

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Julian Phillips and Peter Spina
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