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A Mixed Bag of Gold - Rory Hall (28/11/2017)

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November 28, 2017

Not since 2010 has gold moved to the upside as it is moving in 2017. The good news is it is being overshadowed by all the noise being made by cryptocurrencies and bitcoin in particular. Some in the gold community are upset about cryptos stealing all the headlines; not me, however. I love visiting websites and YouTube channels that have comments that read something like “ gold went up $6 today while bitcoin went up $600 – sale all your bitcoin and buy gold“. Of course this is intended as sarcasm and, once again, I love it. It shows how little people understand either of these monetary assets.

What is being reported, around the world, is nothing short of a mixed bag about what is happening in the physical gold market. Gold sales in India are down, gold sales in Germany are skyrocketing, gold is being discussed as trade settlement in Russia and China while we see gold retail sales in the US just fall off a cliff. This is to say nothing of Ray Dalio making his massive acquisition of paper gold through GLD. While this fraudulent vehicle, GLD, takes away from the overall physical gold market, it does make a difference in the physical gold flows.

Russia, China and all the economic alliances they are heading will all be using gold in some form – either at the sovereign level as trade settlement between nations or as backing for a currency or some combination of these two platforms. Russia and China have made this clear - the only thing we don’t know at this point is how gold will be used and if gold will be outlawed for use by the citizens.

As we approach year end India is probably the biggest surprise with physical gold for the wedding season being off due to a slower sales of their cash crops.

Kolkata: Demand for gold in rural India has taken a hit this wedding season with kharif crops like soyabean, guar, mustard and turmeric not fetching remunerative price for farmers, said traders. Sales generally pick up around this time after harvesting, but this year, demand has dropped by 25-30%, they said.

Lower demand has also resulted in gold being sold at a $4-5 discount in the wholesale market with bullion dealers offloading their stocks. “Rural demand is particularly muted in Madhya Pradesh, Chhattisgarh, Maharashtra, Andhra Pradesh, West Bengal and Bihar,” said Nitin Khandelwal, chairman of the All India Gems & Jewellery Federation. “Farmers are yet to get good prices for their produce.” Source

Gold is moving higher and today, Monday November 27, gold moved, once again, to the upside. At 5:40pm EST, gold was up more than $6.50 on the day. As we have explained on a couple of occasions gold must average gains just over $13.00 per month, for the next two and half years, to reach the new annual average high north of $1,670. Gold is going to achieve this new high and once it arrives it will remain in this rarified air. We have almost no doubt about this happening. One of the more important questions associated with this new annual average high is what kind of world will be living in? Inflation is already eating away at any disposal income in such a way that it is truly mind boggling to watch our fiat dollars disappear as quickly as they arrive.

Prices have advanced this month, keeping the metal on course for the biggest annual gain since 2010 after two monthly declines. Gold has benefited from a weakening dollar, tepid inflation that’s spawned divisions among U.S. Federal Reserve officials over a policy path forward, and uncertainties over President Donald Trump’s plan to cut taxes. In Europe, wrangling over Brexit and Germany’s struggles to form a coalition government have underpinned demand for the metal as a haven.

“Gold is starting to attract attention of asset allocators,” George Gero, a New York-based managing director at RBC Wealth Management, said in an email. The bullion futures market is “quiet and steady as we wait for more headlines on taxes in the U.S. and a Fed hike in December,” he said. Source

We will continue celebrating gains made in the real world and continue to be leery of digital representatives of currency. We believe gold and silver will continue moving to higher ground for the next several years. We are not predicting any get-rich-quick-schemes - we are just looking out for our wealth and take comfort in knowing that all the wealth we store today in physical gold and silver will serve us well in the time when we need them most.

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