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Updated 16:16 28/02/21

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January Gold News 2016

As financial markets become more and more detached from reality the message coming from the world’s central banks is inconsistent at best. If this trend continues central bankers risk losing confidence of the market and tipping the global financial markets into turmoil.

Mark Carney, Governor of Bank of England (BoE) is a perfect example. Only a few months ago he announced the BoE would be looking to raise interest rates, only to back track when equities started to tumble.

Janet Yellen is also facing criticism over the Feds handling of U.S. interest rate policy. Last month Yellen succeeded in raising ...

29 Jan 2016, 3:17 p.m.
Duncan Richardson

Germany's Central Bank announced yesterday they had successfully repatriated 200 tonnes of gold last year.  99.5 tonnes was returned form the New York Fed and a further 110 tonnes from Banque de France in Paris. The Bundesbank plans to repatriate 50% of the countries gold by 2020.

Prior to the euro zone meltdown the majority of Germans gold was vaulted abroad. Vaulting gold abroad was a legacy of the post war Bretton Woods’s system and the threats posed by the cold war.

The pace of repatriation is slow when you consider 10,000 tonnes of gold are imported and export out ...

28 Jan 2016, 4:34 p.m.
Peter Walden

The gold price rose sharply yesterday after the Federal Reserve said they are “closely monitoring” the global economy and how a downturn will impact the U.S.

Following their two day meeting The Federal Open Market Committee decided to keep U.S. interest rates unchanged, although they reaffirmed their intention to raise interests later this year.

In the face of a slowing economy, investors are increasing their bets the Federal Reserve will not be able to raise rates as fast as previously expected. The change in sentiment is boosting the gold price and traders are increasing their exposure to exchange traded funds.

28 Jan 2016, 4:33 p.m.
Duncan Richardson

The amount of registered gold held in the Comex fell 73% yesterday to 73,980 ounces, the lowest level in 20 years. Registered inventories represents the amount of gold which can be immediately delivered into the market. Prior to 2008 financial crisis the Comex held over 5 million ounces. Yesterday’s fall has to be one of the most surprising movements in the history of the Comex.

The ratio between the number of gold claims to physical gold held at the Comex has exploded to 542 paper ounces.

With stock market volatility set to remain and demand for physical gold, could the ...

27 Jan 2016, 4:57 p.m.
Peter Walden

The gold price has climbed to a six month high as investors seek a safe haven from falling equity prices. The gold price has now risen £65 per ounce since the start of 2016.  Overnight the main Chinese Stockmarket fell 6.42% and this morning the FTSE 100 has retreated a further 1.5%. In the last 7 months $15 trillion has been wiped off the value of global equities.

The yellow metal has re-established itself as the go to asset class when equities and other assets fall.

The recent volatility in global stock markets and poor economic data has prompted traders ...

27 Jan 2016, 4:55 p.m.
Adam Pike

Europe has grown accustom to financial panic. Greece has been pulled back from the precipice not once but twice, Cyprus has been bailed in and now Italian banks shares are plummeting.

Shares in Italian lender, Monte dei Paschi’s fell 18.5% last Wednesday and are down 57% so far this month. Even Unicredit’s one of Italy’s largest banks has seen its share price plunge 27% since the start of the year. Italian banks have lent over 200 billion euros which will never be repaid.

Decisive action needs to be taken and the Italian government can no longer pretend the debts are ...

25 Jan 2016, 4:43 p.m.
Duncan Richardson

Despite printing billions of Euros ECB President Mario Draghi is prepared to increase the size of ECB quantitative easing program and keep interest rates at zero for longer. Draghi said, there were “no limits” as to how far the ECB will go to ensure inflation is created throughout the 28 member Eurozone.

Inflation is currently running way below the Central Banks 2% target and unemployment remains stubbornly high.

Draghi told reporters the global economy had weakened and downside risks have increased. 60% of economists surveyed by Bloomberg expect the ECB to increase the size of monthly asset program when the ...

22 Jan 2016, 3:42 p.m.
Duncan Richardson

Top city analyst, Albert Edwards, is warning the global economy could collapse as deflationary forces take hold.  This latest warning comes only days after RBS and UBS warned their clients to be fearful of stock market.

Edwards a strategist at Societe Generale, said western economies will soon be hit by a deflationary wave from emerging economies and central banks are ignoring the risks. According to Edwards the crash will be very ugly and every bit as bad as the 2008 crisis.

Edwards, London’s most vocal bear believes the U.S. economy is in worse shape than the Fed wants to admit ...

20 Jan 2016, 4:52 p.m.
Adam Pike

2016 has already been an extremely volatile year for global stock indices. Trading on the Chinese stock market has been halted twice this year and FTSE 100 has retreated below 6,000 points. UBS is expecting equities to remain volatile throughout 2016 and have told their clients to reduce their equity exposure and stock up on gold bullion.

UBS expects the gold price to bottom in 2016 and then benefit from safe haven buying before starting a new bull market in 2017. From a technical prospective UBS believes equities have topped out and will now enter a secular bear market.

Volatility ...

15 Jan 2016, 11:49 a.m.
Duncan Richardson

After a positive start to 2016 the GOLD price has now fallen for four consecutive days and now trades at £749 per ounce. The price of the yellow metal retreated yesterday after the Chinese announced exports rose in December.

China’s falling stock market and weakening currency had driven investors to safe assets such as gold bullion. The plunging oil price and increased volatility in the markets have raised concerns over the health of the global economy.

The palladium price has fallen to a new 5 year low as Chinese car demand weakened.  China accounts for 20% of the global palladium ...

14 Jan 2016, 4:03 p.m.
Duncan Richardson

The Royal Bank of Scotland has warned its clients to brace themselves for a “cataclysmic year” and a worldwide deflationary crash. The bank believes major stock indices could fall by 20% and oil could trade as low as $16 per barrel.

The banks credit team believe today’s economic outlook is similar to the conditions prior to the 2008 Lehman crisis. RBS are recommending clients sell everything except high grade bonds. In a note to investors the bank warned return of capital is more important than capital gain in 2016.

Andrew Roberts, head of the bank’s credit team is expecting the ...

12 Jan 2016, 10:47 a.m.
Duncan Richardson

According to an independent think tank the Bank of England should abolish its Monetary Policy Committee and abandon its 2% inflation target because the Bank is responsible for a 100 years of boom and bust.

The Adam Smith Institute believes the Bank of England has done more harm than good and has made the economy more prone to financial crises. In the Institutes opinion the Bank of England has done a poor job managing our money.

The report’s author, Anthony Evans, said after a 100 years of failure the Bank’s control over money should be replaced with a free banking ...

12 Jan 2016, 10:28 a.m.
Adam Pike

Former Dallas Federal Reserve President, Richard Fisher, has blamed the Fed for creating a massive equity bubble.  Fisher admitted the Fed knowingly engineered a U.S. equity recovery and caused an asset bubble which will eventually burst.

Fisher was on the Fed’s Open Market Committee which voted for massive money printing via quantitative easing and for implementing the Fed’s zero percent interest policy. The ex-Fed official confessed to driving up the equity markets to create a so called wealth effect.

So finally after 8 years we have an admission from a Fed official admitting that equity markets are over-priced and the ...

11 Jan 2016, 4:07 p.m.
Duncan Richardson

The gold price has made an impressive start to 2016 and broken through the psychological $1,100 barrier. Gold is the ultimate safe haven asset and rallies during times of financial and geopolitical turmoil.

Gold has surged over 5% since the start of the year and broken free from the $1,070 - $1,080 trading channel which it had been stuck in for some time.

The price surge can be attributed to the ongoing turmoil in the Chinese stock market. China’s stock market has been suspended twice this week after falling over 7%.  The falling value of the Chinese Yuan is also ...

8 Jan 2016, 1:01 p.m.
Peter Walden

For the first time in a long time gold is the go to asset class as markets tumble and geopolitical risk rises in the Middle East and North Korea.

The gold price has now risen for the four consecutive days and risen above the psychological $1,100 per ounce barrier. Golds safe haven status was boosted after China’s main share index fell by 7% triggering a halt in trading. The selloff extended into European markets and according to billionaire trader George Soros, investors need to be very cautious.

Escalating tensions between Iran and Saudi Arabia is unsettling the markets and the ...

7 Jan 2016, 3:04 p.m.
Adam Pike

Gold output decline as miners struggle to put new mines into operation. As output declines, 2015 may prove to be the year gold production peaked. Declining supply eventually leads to higher prices.

Tensions in the Middle East continue to deteriorate especially in Syria and Iraq. This could potentially drive the gold price higher as investors seek a safe haven.

Physical demand for bars and coins continues to grow, pushing the gold price higher. Like in 2015 the world’s largest mints could run dry as retail demand spikes.

The dollar peaks and then falls against other major currencies such as the ...

6 Jan 2016, 9:55 a.m.
Duncan Richardson

The gold price jumped 1% as investors turned to the yellow metal for protection against increased geopolitical tension in the Middle East.

Relations between the regions two powerhouses, Iran and Saudi Arabia, is deteriorating after the Saudi government confirmed it had executed cleric Nimr al-Nimr. In retaliation a mob torched the Saudi Embassy and consulate in Tehran.

Saudi Arabia’s allies Bahrain and Sudan have also severed relations with Iran as geopolitical tension escalates across the region.  

Historically, traders turn to gold during times of geopolitical and financial instability. European shares have fallen hard with the FTSE 100 falling 2.4% ...

4 Jan 2016, 4:36 p.m.
Duncan Richardson