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Gold has been struggling this year â but is the turnaround finally here?
Earlier this year, amid goldâs struggle, we noted all the negatives: that bitcoin was stealing goldâs thunder; that bond yields were rising; that the US dollar was rising; that the world no longer valued physical assets as much as it does digital.
But, especially, we noted the role that rising yields were playing.
Gold pays no interest â you donât get a yield. If bond yields are rising, money that would otherwise have gone to gold (in the event that yields were flat or falling) goes to bonds instead. Gold suddenly has an opportunity cost to it, as well as a storage cost. Thus rising bond yields are bad for gold.
For some reason, the effect of bond yields on gold is most visible with the ten-year bond. Iâm not sure why, but one theory is that the average time it takes to take a mine from discovery through to production is around ten years, so gold and ten-year bond yields tend to correlate.
But we also noted that gold was oversold, that it was sitting on an important technical level, that we were headed into a positive time of year for gold (April is usually a good month). Whatâs more, we noted that business was getting back to normal.
Rising yields indicate that people expect economic strength. A strong economy gives rise to inflation. Gold is the de facto hedge against inflation. In the long-term then, rising yields are good for gold.
The bottom-line roadmap was that we expected a rally in April, a turn in May, a June low and then highs later in the year.
We got the April rally: gold went from $1,680 to $1,845 a couple of days ago. It now sits ten bucks lower. Are we now getting the May turn? Itâs possible, but the landscape has changed.
There are two big changes in the underlying drivers. Firstly, bond yields have turned down. Inflation expectations, meanwhile, have risen again. As Charlie Morris notes in The Fleet Street Letter this week: âIf the reduction in the bond yield continues, then markets will start to favour more defensive assets. This would be a major shift in the narrative that has built up over the past year, from value back to goldâ.
Morris has recommended that his readers, already long gold, buy more. He thinks we are headed back into a ârisk-offâ environment, and you want to be in safe assets.
The fates of gold and the US dollar are once again intertwined
Perhaps the biggest driver of the lot though is the US dollar itself....
Read the whole of this article on the MoneyWeek website
Until next time,
Dominic
There is nothing wrong with a good bit of civil unrest, and even a bit of blood on the streets, tallyho!
It camnt be worse than the gradual death of any sensibility, and having to swoon and swelter under the "guidance" of Boris
A little shocked to learn there were no questions submitted prior to the AGM or online during the AGM. Does suggest we are either all happy campers, or all asleep at the wheel, or have grip on the wrong wheel.
best
the gnome
The Conservatives to me are just a mafia ..and with the aid of the media we have a one party state...nothing short of civil unrest or civil war will change this...and i don;t see this happening....
When US President Barack Obama infamously said Britain would be at the âback of the queueâ for any trade deal, the intervention backfired tremendously
Now that's something we can agree on....that bloke trying to thwart democracy at the request of the slime Cameron.
Whichever side of the debate you stand on i think we can agree that was appalling but then Obama is appalling and so is Cameron. These 2 obviously know nothing of ordinary folk who don;t take kindly to threats, they think the public are dumb sheep who need herding.
I take your points on Juncker Mr T and you may be right but he didnt help himself to be honest what i witnessed in the Euro Parliament.
As said always was 50/50 and i now kind of regret Brexit because with the 3 million HK passports offered we have gained nothing and lost more..
Yes read the RNS's. It's all there.
I am not sure what is the all important news we are waiting for for this share to jump up... Anyone got any clues. please?
Possibly share holders should consider writing to Centamin IR asking for some reassurance of what measures, if any, have been put in place to safeguard the confidentiality of sensitive information ?
Was he such an old fool, he seems to have more integrity than Cameron or Boris and I doubt he ever lied as much as they continue to do so.
https://inews.co.uk/news/politics/jean-claude-juncker-should-not-listened-david-cameron-brexit-961807
Time is said to be the greatest healer. But for Jean-Claude Juncker, the President of the European Union between 2015 and 2019, the gaping wound of Brexit five years after the referendum still seems sore.
The Brexit vote, he argues, goes against history. But not helping the healing process for the fiercely pro-European former Prime Minister of Luxembourg â his views were shaped by listening to his fatherâs stories of the destruction of the Second World War â is that it happened on his watch.
He blames his former nemesis David Cameron for the âmistakeâ of Brexit, himself for listening to Cameron, and the âmisinformationâ that he claims âbrainwashedâ the UKâs electorate.
âI should not have listened to David Cameron,â he says leaning back in his chair in his office in the commissionâs Brussels HQ.
âHe told me not to interfere in the debate in the UK, not to come to London, not to do interviews with the British press. I made a mistake because I did not defend the EUâs point of view in the UK. They asked me to shut up, so I shut up. That is something I criticise myself for. I should have spoken out rather than stay silent.â
Whether or not his intervention would have turned the 2016 vote in favour of Remain is up for debate. When US President Barack Obama infamously said Britain would be at the âback of the queueâ for any trade deal, the intervention backfired tremendously. And this was with a politician popular in Britain. Juncker â perhaps unfairly â has often been portrayed as the ultimate European bureaucrat.
e has more to say on Cameronâs failure though. Before calling the referendum the then Prime Minister renegotiated some terms of Britainâs membership arrangements. It was an intense and controversial deal to secure a special status for the UK.
âAnd yet, I saw that this agreement we negotiated with the British government played no part in the referendum campaign,â Mr Juncker, 66, said.
âNo one told the British public what we agreed on, say, the free movement of workers,â he adds, shrugging his shoulders at what he says was ultimately a pointless pact.
It could be argued, however, that Mr Cameron failed to secure all he needed to really win over the British public, with German chancellor Angela Merkel refusing to grant Britain an âemergency brakeâ to halt migration within the bloc.
Juncker was already seen as a bĂȘte noire by the Brexit campaign. He was the EUâs ultimate insider, an architect of the Euro, and â as Luxembourg Prime Minister for almost two decades â had attended more EU summits than any other leader. He was branded an arch federalist, said to be an alcoholic, and even tied to the Nazis through his father, who was forcibly conscripted into the German army following the invasion of Luxe
When will the man in the street learn(especially in the US with Reserve status) that if you pour water in beer to a greater and greater degree the less beer is in there...this is magicing money backed by nothing....At some point Govt debt in the UK and US is going to be looked at for what it is...a whole bowl of nothing. You only have to watch the cowboy westerns to see what money was...GOLD and Silver...if there was paper money...it was backed by GOLD and Silver....there are some westerns that actually have mention of the first paper bills...treated with extreme suspicion
The price is so steady it's like it could thread though the eye of a needle
U.S. dollar's status as reserve currency in jeopardy, âI'm bold gold, silver & platinum â - Danielle DiMartino Booth
Even in light of a clearly recovering economy, and new COVID cases on the decline, the government continues to inject liquidity into the financial system through fiscal and monetary stimulus, with the end result being the devaluation of the dollar and losing its global reserve currency status to China, said Danielle DiMartino Booth, CEO of Quill Intelligence.
âWe are no longer in an emergency situation. If the Fed is going to insist on being an ostrich and sticking its head in the sand, while it's pumping out $120 billion per month of quantitative easing as if we were in a depression, then yes, I see every reason for China to continue playing its very game with the intention of eventually unseating the U.S. dollar,â DiMartino booth told Michelle Makori, editor-in-chief of Kitco News.
Even if the Federal Reserve wanted to turn things around for the dollar, it would not be in a position to do so, Booth said.
âIf the Fed was to try and normalize policy and the stock market were to take a really big downturn, then you would see that ripple through the economy and we would be back in recession,â she said. âThe magnitude of the Fedâs intervention in this particular episode has put an entire economic recovery inside of a time compression chamber.â
The labor market, automobile and other consumer discretionary sectors have all rebounded as a result of fiscal stimulus, facilitated by the central bank, she said, but the Fed has gone on a âbridge too farâ and needs to step back and regain its independence from the Treasury.
Booth emphasized that should the dollar lose its crown as the worldâs defacto reserve currency, the mantle would be taken up by the Chinese yuan.
âI canât see [the dollar] being replaced by anything else but the Yuan, which would explain why [China] is trying, as aggressively and as rapidly as they are,â she said. âIâm not of the opinion that itâs going to be a cryptocurrency.â
On the fiscal stimulus front, Booth said that stimulus checks are not encouraging people to return to work, hence the lower-than-expected nonfarm payroll report in April; the U.S. added only 266,000 jobs last month, well below the 1 million expected by economists.
On the contrary, stimulus checks are indirectly hurting small businesses, Booth said.
Where is the action by regulatots? What are the auditors up to? Truly a cess pit. Should be names shamed and heavy fines.
Exactly what is the score here ?There should be serious consequences
Yep, no doubt he found that truth at the bottom of a bottle of malt whisky. But it's still a good quote.
Asia mainly down, following US again.
US futures only a tad down at the the moment.
Key today will be the US CPI data: "The consumer price index for April will be reported on Wednesday at 8:30 a.m., and is expected to be the hottest in nearly 10 years.
Economists have said the jump in inflation looks larger because of the base effects of last year when prices were weak due to the pandemic shutdowns.
The specter of inflation has been spooking investors, so any surprise the upside could stress the market."
Anyone who drinks before noon should be treated with great suspicion
I heard wine for breakfast ?
Yes i remember that from the old sozzled fool.
Hi Spindler!
"When things become serious, you have to lie."
Jean-Claude Junker, former EU Commission President
How on earth is that an accounting error...that's total baloney..a falsehood..a LIE. No business makes that kind of inventory mistake.....it's like BMW losing several hundred thousand cars off their ledger....IT DOES NOT HAPPEN !
Inflation result ? Well if the stats they use were any more use than a chocolate teapot there may be some reason for concern or are we talking about the market reaction to said stats as if they have any real meaning...i.e. the market acting like yeah thats some great clothes the emperor is wearing !
European shares moved lower during premarket trading on Wednesday as investors digested a fresh batch of corporate earnings and economic data reports.
Allianz, Bayer, and RWE were among the companies to report their results before the open of equity markets across Europe. Meanwhile, Germany's consumer prices along with the United Kingdom's GDP, trade balance and industrial production figures were just released.
The DAX fell 0.48% at 8:02 am CET, while the CAC 40 lost 0.73%. At the same time, the FTSE 100 was down 0.51%.
Breaking the News / JC
Happy hump yâal
Day two with no currency exchange rates data (?)
Gold and Silver still rising, and Fres was up 3.8% when I last looked them up on the Mex - so we could be in for a quick recovery tomorrow - hope so anyway. GLA.
Looks like you cannot rely on the LBMA. I hope there is not a conflict of interest running in the background. I do wonder about the QA/QC process they are running.
best
the gnome
The brokers get paid every time they sell or buy on behalf of a client. The more rash predictions from the analysts the more sells and buys, and the more $ for the brokers and their friends, the analysts. Funny about that.