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All eyes were on the FOMC yesterday as they met for the final time in 2023. In the weeks running up to the meeting Fed officials stuck to the brief of sounding flexible when it came to questions asked about the direction of rates. For the last few months, FOMC members have repeatedly been asked if they have finally reached the ‘terminal’ rate after a long and onerous task of trying to take down inflation. Well, it seems they now all feel they have reached it, as Fed Chair Jay Powell said yesterday that the current rate of 5.5% is “likely at or near its peak for this tightening cycle”. 17 of the 19 members indicated that they expect rates to be lower by the end of 2024. A cut of up to 0.75% across multiple meetings is expected. Markets are pricing in a near 60% chance that the first of those cuts will come in March 2024. In response to the FOMC announcement, gold climbed over 1% and silver by 2.5%, global stocks also soared whilst bonds fell. Markets will also be looking out for announcements from both the Bank of England and European Central Banks, later today. Are we there yet? For what has felt like months, traders have been keen to know if the FOMC is finished with their rate hikes. It was expected that this was the peak of rates as inflation and other economic indicators increased convictions that the FOMC had arrived at where they felt they needed to be. Chris Vermeulen on Gold: This Is A Super Cycle At Play However, while there is still officially inflation in the economy, is now the right time to entertain the idea of upcoming rate cuts? One could argue that the Fed will now have made its inflation fight even harder as looser conditions could see a further wave of unbridled spending and borrowing from businesses and consumers, thus starting the whole cycle again. Of course, we all know that the current fight on inflation isn’t really fighting inflation. It’s more like a small battle in a very long, drawn out and damaging war. The Fed may well have brought down headline inflation, but they are yet to confront the real firepower that is sticky core inflation brought about by years of QE and low rates. More to come… The FOMC isn’t the only one tidying things up before the end of the year. Both the Bank of England’s MPC and the European Central Bank are set to hold their respective rate setting meetings. The Bank Of England is fighting a battle against a very stubborn inflation issue. Few expect them to start cutting rates as soon as their peers do. Currently there is little evidence that the economy is ready for rates to be cut. The ECB meanwhile is seeing some progress, with inflation at a two-year low. Investors expect to see rate cuts coming soon. Policy by stealth? So if (the majority) of major central banks are feeling punchy about their inflation victory what does this mean for gold? As we’ve seen this year, gold has become less sensitive to rate hikes, instead choosing to play its own tune. Whilst it did react to the FOMC news last night, it has been holding its own throughout the year. We will watch with some interest to see how it will respond to monetary policy in 2024. Of course, low rates are traditionally good for gold, but this year the inverse has been the case. We think we are starting to see a slight decoupling of the long-term relationship between rates and the price of gold, watch this space. As we head to the new year it is worth noting one of the major trends of 2023 – central bank gold buying. For many gold bugs there will come a day when gold is central to the international monetary system. For decades the bulk of goldbugs have suggested this will come about as a result of a collapse in the US dollar i.e. the global monetary system. Instead what we are starting to see is a change in the international monetary system by stealth, rather than by policy. We’re talking about the increase in gold reserves by a number of central banks. Central bankers have been net buyers of gold for some time now, without feeling the need to make any announcements. Changes in the geopolitical state of play has clearly prompted central bankers (as well as individuals) to question the status quo when it comes to managing their international finances. As a result, they’re turning to the ultimate insurance – physical gold. With very little set to improve in the coming years, whether it is money supply, the MIddle East, the Russia-Ukraine war and even climate change, we think 2024 will prove to be another pivotal one for gold, with or without monetary policy announcements.

Gold may not have managed to sustain the record high from the start of the week but it has remained firmly above $2,000. At the time of writing it is trading just below $2,050, a key resistance level. The price has shown very little interest in the usually much anticipated US jobs report, which came in below expectations. Nor did it indicate much interest in the Bank of Canada’s interest rate decision, on Wednesday. One wonders if an increasing number of gold market stakeholders are beginning to take a longer-term view and realising that central bank announcements or economic data can do very little to dispel the growing concerns that the current state of play for both global debt and global stability is no longer sustainable. If you’re wondering what caused Monday morning’s pop-up in gold, or what the rest of the month may hold then have a look at our quick chat with technical analyst Chris Vermuellen. Gold Outlook 2024 The World Gold Council has today released its much revered Gold Outlook 2024 report. As we have seen in 2023 the WGC expects central bank interest rate decisions and global economic performance to be the main focus for the gold market and therefore (based on historical performance) we may see ‘a flat to slightly weaker’ gold price. However, the WGC points out that there are two very significant factors which may drive gold higher. World War III? The first of these is ‘Geopolitical risks’ which ‘abound’, according to the WGC. And we couldn’t agree more. Looking at the map of the world today is akin to looking at a series of interconnected cinder kegs, each of which could represent a push towards a new era of conflict and a fight to be the next superpower. Battles which had previously calmed down or at least not drawn the attention of the global media seem to have now reemerged. Governments are scrambling to protect their own interests whilst seeking out alliances who of course have their own agendas. Chris Vermeulen on Gold: This Is A Super Cycle At Play The surprise talks between Putin and Saudi Arabia’s Crown Prince Mohammed bin Salman reportedly involved discussions regarding OPEC+, cooperation over oil and the situation in the Middle East. This comes a week after OPEC+announced it would be cutting supply and one day after China’s oil imports were revealed to be down for another month. Meanwhile the US continues to support the fight against Russia, by Ukraine and the battle against Hamas by Israel. The US and her allies’ allegiance to Israel and Ukraine is pushing the Middle East and Russia closer together. All whilst the West watches on and tries to fight its own moral and economic battles. Fact Two: Central Banks Can’t Get Enough Gold The second factor which will continue to have a positive effect on the price of gold is central bank demand. In October alone central banks added a net total of 42 tonnes of gold, with the People’s Bank of China being the biggest buyer. Year-to-date gold buying heavily outweighs sales, a trend that the WGC expects to continue for the rest of the quarter. Overall gold purchases by central banks in 2023 is expected to have added a 10% boost to the yellow metal’s price, according to the latest Outlook report. Headline space has also been taken up by news of Poland’s gold purchases. The central bank now holds around 300t of gold. It is believed to be looking to add gold to its reserves to bring its gold-to-GDP ratio in line with that of other eurozone members. A recession off the table? Geopolitics and central bank buying aside we do still have the matter of the global economy to contend with, specifically the United States. US government debt now represents more than one-third of total global government debt which means all eyes are on the country to see just how its economy is doing and how it can service the debt. For the majority of 2023 markets have been highly sensitive to moves being taken by the Fed. So far the FOMC has impressed in its management of inflation and avoiding a recession. Consensus seems to be that a recession will be avoided, instead Jay Powell has steered the country towards a ‘soft landing’. But, this is not guaranteed and it does not mean that the impact of higher interest rates has been fully realised. So whilst soft landings have not always been good news for the gold price, we would posit that the latent impact of increased rates on the US economy combined with geopolitical events and central bank buying will set gold up for a stellar 2024.

When we woke up to see gold had hit an all-time high overnight we knew we needed to take a look at some charts. And who better to do that with than technical analyst Chris Vermuelen of TechnicalTraders.com. GoldCore CEO, Dave Russell took some time this afternoon to speak with Chris about what took the gold price to new all-time highs, why it has now pulled back and what does the long-term horizon look like? It’s not just the gold price they cover in this 20 minute chat, look out for gold miners, uranium stocks and silver futures. As ever, we love to hear your thoughts on these videos and what the gold price means for your investment strategy. Does today’s performance have you buying more gold or do you think a bigger pullback is coming? Let us know!

Overnight gold stunned markets by obliterating resistance levels and rocketing up to a new all-time high of $2,148.99. As well as a new level we might also have seen a new standard in volatility being set as the yellow metal experienced $100 intraday swings. This morning gold has calmed itself down a bit. But make no mistake, we are in a new era for the gold price. What drove it so high? As always, it’s rarely down to one reason. Gold has had a stellar year due to a confluence of factors. And the reasons for last night’s pop are really no different. The US Dollar’s 3.5% fall since November has given non-USD buyers the upper hand when it comes to gold purchases. No one should be surprised that gold climbs when there are wars raging. It’s probably the oldest reason in the book for buying gold. When there is geopolitical uncertainty citizens, investors and central banks alike put their financial allegiance into gold. This year, with Ukraine and the Middle East showing little let-up, the reason to hold gold is stronger than ever. And many might point to the Russian sanctions as to why gold has become popular amongst central banks, but data quite clearly shows that demand was strong prior to Russia’s invasion of Ukraine. This is down to countries slowly turning away from US dollar reliance and instead to an independent currency, such as gold. Finally (a less fun one to explain) gold has also been given room to perform thanks to the drop in real rates which have dropped by 50 basis points since the peak in October. Markets are now pricing in up to 4 cuts from The Fed next year. Will other Central Banks be far behind? At the time of writing gold is now back down around $2,067, so did gold run ahead of itself, given it’s now backed off from its all-time high? Perhaps, but the move did happen during a low liquidity trading session which gives it more capacity for bigger swings. However, the tone has now been set for what we can expect from gold. Given much of its performance this year has been despite the lack of ETF buying, we expect to see an even stronger, more sustained performance when investors turn back to ETFs; something we believe is inevitable given the growing sentiment around owning the yellow metal. So whilst many might have seen the price this morning and wondered if they’ve missed the boat we would argue the boat is very much still in the dock but be prepared for some choppy months ahead.

Henry Kissinger Image Source: University of Michigan, Gerald R. Ford School of Public Policy Charlie Munger Image Source: Gerard Miller | CNBC For much of November gold has been on a tear and this week investors have sent it way up, punching past $2000. Will these giddy heights of over $2,000 be how gold chooses to see out month-end? At the time of writing we cannot be sure. Yesterday prices did soften ever so slightly but the drivers that have affected gold this month (and prior) are ever-present. In all likelihood gold took a bit of a breather thanks to FOMC comments suggesting the Fed would not look to start cutting rates until after Q1, next year. Currently the ECB is odds-on to be the first central bank to cut rates, with the market pricing in a cut from the ECB in the first quarter of 2024, and the Fed in Q2 2024. When interest rates are low, it creates a more attractive environment for investors to buy non-yielding assets such as gold. Whilst we are very bullish that a gold price in excess of $2,000 will soon be ‘the norm’ it is very likely that today will see a routine round of profit taking as investors cover their long positions and in doing so offset their positions with a sell order. Profit taking or not, all the reasons as to why gold has been storming ahead still remain. Even while inflation appears to be faltering and the US economy is still doing well, there are still clear signs that we may witness sticky inflation and tepid growth. For traditional portfolios, the “stagflation” scenario—in which stocks experience price pressure but bond payouts decrease over time—can be fatal. And this is just one of many strong reasons why you need to hold gold in your portfolio. Gold is snapped up in times of low interest rates, high inflation and global turmoil. And where are things at present? Central Banks are already forecasting when they will start cutting rates, but inflation is clearly still present across a number of industries, currencies are flip flopping and we have a number of fires popping up around the world in the form of war and political posturing between nations. A stable world this is not. Does a hold over $2,000 matter? Psychologically, finishing the month above $2,000 is a big deal. It shouldn’t be, but it is. Afterall the $2,000 mark is just one price, in one currency, and gold is a global currency, traded around the world in a number of currencies and you might not even be buying in dollars. But dollars do still rule the world and the $2,000 price acts as a placeholder for those trading gold. Before you worry where gold will close today, or even in a year, we are reminded of a quote from the late and great Charlie Munger: Charlie Munger Steps Out Obviously Charlie Munger was no fan of gold or silver, stating that he had no interest in it. There is little interest paid by Berkshire Hathaway towards any kind of ‘alternative asset’ and such is the wide-spread mainstream respect for Charlie Munger and Warren Buffet that I suspect this approach has resulted in many institutional investors avoiding alternative assets such as gold and silver. But, there was once a time when Berkshire Hathaway stunned the world with a hefty physical silver purchase. Back in 1998 the company released a press release that stated: “The company owns 129,710,000 ounces of silver. Its first purchase was made on July 25, 1997 and its most recent purchase was made on January 12, 1998. During 1998, Berkshire has accepted delivery of 87,510,000 ounces in accordance with the terms of the purchase contracts and the remaining contracts for 42,200,000 ounces call for delivery at varied dates until March 6, 1998. To date, all deliveries have been made on schedule. “ As Charlie Morris explains, “As rumours of their purchase spread, the price took off, only to give much back after the announcement a few months later…They sold their silver hoard at a modest profit and later regretted the trade, probably because it went against their ideology to “never bet against America” and their establishment credentials.” Kissinger and Munger leave at the right time Henry Kissinger also passed away this week, clocking out at 100 years old. Like Munger he was born into a world where gold was still king of the international monetary system. But also like Munger he hugely benefited from (and was partly responsible for) the dollar hegemony that arose as a result of the 1971 decision to unpeg the US dollar from gold. There is plenty one could say about both of these two men. Regardless of whether you agree with their approach to investment or politics, there is still much to be learned from them. Patrick Karim, Charts and Gold’s Next Breakout Both Kissinger and Munger (through Berkshire Hathaway) were two of the biggest supporters of the superpower that is the US; Berkshire Hathaway is run with the ethos, “you don’t bet against America” and Kissinger was arguably one of the architects of the tower that the United States finds itself atop of, today. Both men appear to have bowed out just at the beginning of what is about to be the next shift in the global political and economic order. As Marc Faber said back in November: “…we have a world that is becoming divided between the wealthy, developed Western countries under the hegemony of the United States and their allies like Canada and Australia, UK and Europe, and then you have the BRICS countries that are becoming larger and have economically an increasingly large weight in the world and politically more influence,”

Happy Thanksgiving to all of our readers. For anyone celebrating we hope you have a wonderful day and we thank you for your support this past year. Big news this week – gold hit $2,030 in intra-day trading on Tue, it didn’t hang on but it did close the day with a hefty $20 gain closing at $2,020. It has since tried to hold onto the giddy heights of over $2,000 but a relatively strong dollar has put paid to that. However, there is still some upward momentum in the price thanks to confidence that the FOMC is done with hikes, and of course the as yet unconfirmed temporary ceasefire in the Middle East. Regardless of what reason you’re looking for as to why you should invest in gold right now, all indicators suggest that December is set to be a great month for both the yellow metal and silver. Data from Saxo Bank shows that for the last six years the precious metals have undergone a “Santa Rally”, with gold and silver yielding a 4% and 7.25% return, respectively. EU Banks To Show Resilience Yesterday the ECB released its biannual financial stability review. In it the central bank urged lenders to add more resilience to their balance sheets in the coming months. The ECB is concerned about the rising levels of loan defaults and late payments that they are seeing across the eurozone. The number of missed payments by borrowers is hardly surprising given the unprecedented rise of interest rates to 450bp. Whilst the ECB did reassure that the Eurozone banking system is starting in a good position, it did also state that increased funding costs and rising loan losses will impact profitability. As with the FOMC, markets are pricing in the belief that there are no more rate hikes coming. Of course, no monetary policy committee is going to confirm that just yet for fear of it loosening financial conditions too fast and too soon, sending us straight back to square one. Festive predictions have begun Thanksgiving marks the start of the festive season and there is just over a month to go before we can wave off 2023. As with every year end we are starting to see large institutions put forward their expectations for the year ahead. Goldman Sachs entered the fray feeling especially pleased with themselves as many of their predictions for 2023 were so accurate one might wonder if there are forces other than market forces in play. So what does the near psychic bank expect for next year? Well they are extremely optimistic, with big gains across the major stock indexes expected. They are still betting on a soft landing, and see inflation coming down thanks to interest rates, with no major fallout. They believe both interest rates and inflation have peaked, and no further rate hikes are to be expected by the major central banks. Whilst this might sound like bad news for gold, it is in truth very positive. This last year has shown gold’s true resilience in the face of rising interest rates and falling inflation. Investors (like central banks) are beginning to see the yellow metal as an asset for liquidity and stability. They are just starting to buy gold as a safe haven and not for its returns. This is great news for gold in the long term. Elections Could Change The Monetary System First up, Argentina welcomed in libertarian economist and TV presenter Javier Milei. The ‘radical’ politician took 56% of the vote. It has been reported that the majority of his support came from the youth vote. With inflation at 142% it’s unsurprising that the future of the country has been decided by those who are likely to be the most affected. Milei (also known as El Peluca (“the wig”) and El Loco (“the madman”) has expressed his desire to abolish the Argentinian peso and adopt the US dollar. This is an interesting approach from a libertarian – handing over your country’s monetary independence to the US. But he has also expressed his admiration for currencies that enable citizens to go about their business privately and without fear of anyone devaluing the currency through monetary policy. Contradictory, to say the least! Regardless of where his approach finally lands, this is set to cause some ripples, for sure. Patrick Karim, Charts and Gold’s Next Breakout The second election that could shake the boat is the one that only announced its results last night and that is the victory of Geert Wilders in the Netherlands. His Freedom Party doubled its number of seats in Parliament. Wilders must now work out how to form a coalition, a process which could take months. However he succeeds, this could be another pin in the Eurozone. Whilst Wilders did downplay his previous calls for ‘Nexit’ he is not a fan of the EU and it will be interesting to see how this comes into play in the coming years.

The double figure pop up in gold on Tuesday was more to do with weakening of the US dollar, than rampant gold demand itself. The significant drop in the fiat currency was largely thanks to the release of October’s CPI report. Echoing that of the previous month, the report showed weaker growth and lower than expected inflation. This has left some calling for the Fed to not only pause its rate hikes but also to do so earlier than expected. The very modest drop in the gold price yesterday was thanks to a small recovery in the US Dollar, the fact that gold barely dropped in price just shows how much support it continues to pull in from CPI and PPI reports. US avoids Shutdown…again… In news that will come as no surprise to anyone, the US government has ‘narrowly’ avoided a shutdown after the Senate passed a bill yesterday in a ‘race against the clock’ to pull a deal together. We could bore you with the minutiae of the deal but that would then set a precedent to explain the deal every time this happens, and it happens a lot so…we’re not going to start something we’re not going to finish. Christmas Credit Crunch As ever it makes sense to look at what is happening behind the official data releases that are much hyped by central banks and advisers. We are of course referring to the Federal Reserve SLOOS report (Senior Loans Officer Opinion Survey) which indicated that there is an ongoing tightening in lending standards. Great! You may cry, they should be more responsible! Yes, absolutely…perhaps. But the US economy (like all major economies) is one built on the back of credit. If these cautious lending practices turn out to mean a drop in actual lending, then that could point to a credit crunch and so a recession. Quite the bookend to a year that started with tumultuous activity in the banking sector. The UK isn’t inflating as fast as it was, but it’s also not doing anything at all… In the UK there was apparently cause for celebration when inflation figures for October showed that the growth in prices was starting to slow down. This preceded the growth figures which showed that whilst things were better than the 0.1% predicted slowdown in the economy, the UK is looking at a protracted period of stagnation and a near horizontal growth line. Currency Wars – done and dusted? Of course, the big news in the US has been the meeting between President Biden and Xi Jinping (standby for the fallout from the former calling the latter a ‘dictator’ immediately after said meeting). For many years the two countries of which the men preside over were the biggest players in Currency Wars. A term that dominated economic news prior to the pandemic. The term draws fewer headlines. Currency wars, as long as fiat rules, will always exist but we are in a very clear ‘lull’ in the long and protracted battle that has raged between the US and China for many years. Patrick Karim, Charts and Gold’s Next Breakout At the moment there is a general sense that there is no immediate threat to the US Dollar. It is still the reserve currency of choice, and China still chooses to hold its own reserves in dollars. Whether due to the timing of the report or just a shift in outlook, the Treasury’s bi-annual currency report did not reference China as a ‘currency manipulator’ of which it has done previously. This is not to say that we can label past accusations of currency manipulation by the Americans towards China as contretemps of times gone by. Instead we would suggest that right now it isn’t front and centre of currency management. China has always been one to take its time with any policy. It has placed heavy focus and significant resources on shoring up its reserves with gold and stabilising the renminbi rather than weakening it against competitor currencies. Given how weak China’s economic growth has been this past year, and Trump’s possible re-election, we suggest that both countries will return to the battlefield as economic growth becomes a major focus for each of them.

I have heard it said that technical analysis is “Astrology for Men”, the inference being that it’s got about as much use as arguing something will happen to the markets because the stars say it will. Keen to dispel this myth, I decided to chat with chart expert Patrick Karim so we could explain exactly why there’s a lot more to technical analysis than a few nice colours and shapes on the screen. As ever Patrick was a great teacher and was able to quickly and succinctly explain how we can use charts to help us to understand what is happening with markets and, more specifically, to understand gold’s past and future performance. Explaining how to read charts by looking at the Physical Gold and Silver Trust chart, as well as the historical gold price, Patrick explains how we look out for and expect breakouts, and where he thinks the gold price is heading next. Charts are, as I explain, a depiction of the emotion in the market. Very often it is too easy to forget that markets are traded based on emotion so any pictorial depiction of this is a great tool to appreciate how those emotions have and will affect asset price performance. We bring you a technical analysis chat every month, but if you’ve been finding that they don’t always help you to understand the whole picture, or that your chart knowledge needs a refresher, then this is a great interview to take some time to watch. As ever, let us know what you think and if you learnt anything new. In markets today: Both gold and silver December-futures hit a three-week low yesterday. Some risk-appetite appears to be tiptoeing back into the market, due to no significant escalation in the war in the Middle East. Prices are also not finding much support given central banks signalling that they have no intention to reduce interest rates any time soon. Markets do not appear to be pricing in the ever-increasing possibility of a US government shutdown, happening next week. However, as we get closer to the House of Representatives November 17th Deadline, we expect to see some upward pressure on the gold price. An interesting report yesterday, published by the Silver Institute, found that demand for silver over the next decade will far outpace the demand seen in the last ten years. They forecast a growth of over 40% in demand from industrial, silverware and jewellery sectors.

The big news in gold is two-fold right now; gold hit new all-time highs in several currencies and central bank demand for physical gold remains strong hitting a year-to date record in Q3 this year. Gold at $2,000? So whilst the headlines were all about dollar-denominated gold showing us that it’s still destined for levels north of $2,000 the real news is about other currencies and gold. Ahead of yesterday’s FOMC announcement the price of the yellow metal hit new all time highs in pretty much most of the major non-dollar currencies. This includes the Euro, British Pound, Chinese Yuan and Japanese Yen. To give more weight to the argument that the dollar is becoming increasingly less significant to the price of gold, the metal barely blinked following the FOMC’s announcement yesterday that it would continue to hold rates. At the press conference following the FOMC meeting Chairman Powell did confirm the Committee’s bias towards tightening, prompting gold to fall back slightly (to a five-day) low but it quickly recovered to levels seen prior to the announcement. We continue to see a breakdown in the negative correlation between gold and bond yields. This is most likely because investors are growing increasingly concerned about the fiscal outlook of the U.S. government and its mounting debt, which has topped $33 trillion. We believe factors beyond the control of the US and Federal Reserve are now placing more weight on gold demand and the price of gold, than previously. Most obvious is events in Gaza but there is also the small issue of central banks everywhere still trying to keep their economies afloat, and another looming energy crisis. Bank of England – will they? Won’t they? They won’t. Speaking of economic struggles and central bank decisions, all eyes are poised on Threadneedle Street and the Monetary Policy Committee. Markets are pricing in a no-change announcement from Andrew Bailey and the rest of the MPC. By keeping interest rates unchanged at 5.25%, would be a signal that the Committee is keen to see how the flurry of interest rate rises (14 hikes in a row) are taking their toll on the economy. Tomorrow marks one year since the MPC predicted the country was on course for its longest-ever recession and agreed on the biggest ever interest-rate hike since 1989. Today, economic signals and data are somewhat mixed but it does seem as though the UK economy is headed for a recession. In September the MPC report stated that, “suggested that activity had remained subdued and that there were growing concerns about the economic outlook”. Disappointed with silver? Good time to buy Silver is currently underperforming relative to gold, in the near-term.Both are cited as safe-havens, but in the short-term gold may shine more than silver in this respect. It may well be silver’s industrial aspect that is causing the price to drag somewhat as markets try and get a handle on what the Middle East and poor global economic numbers mean for the metal. Gold Down $100? This Really Shouldn’t Be A Surprise This may be the case in the short-term, but this is a great opportunity to buy for the long-term. No one buys silver expecting it to keep their blood pressure stable, but they do so because it is both an industrial metal and a good inflation hedge. Silver is hugely in demand across a number of necessary technological sectors, as well as acting as a store of value. Given its price increase of around 30% since the summer, this isn’t something to give up on just yet. Central Banks Go All In On Gold Central bank gold purchases continue to defy naysayers. According to the World Gold Council, Q3 net central bank buying was 337t, and even though this is lower than the same period last year, “demand from central banks y-t-d is 14% ahead of the same period last year at a record 800t.’ China and Poland were the most notable buyers. China added 78t to its reserves bringing its total purchases this year to 181t. Poland added 57t bringing its purchases this year to 105t. Gold now represents 11% of the NBP’s reserve. This is just over half of the 20% NBP President Adam Glapiński said the bank was aiming for. China has been on an 11 month buying spree, theirs and others’ gold demand is flying the flag for physical gold demand, which declined across other sectors (jewellery, technology etc). This is despite gold prices remaining strong, across currencies. This suggests that these purchases are strategic and tactical. Since gold was first discovered it has held intrinsic value for mankind. But, that value is seemingly increasing as the risks in the geopolitical sphere continue to grow. Gold purchases at these levels are basically central Banks metaphorically jumping up and down with the signal of global distress and saying ‘we need to own gold, we do not trust that the global system will be stable in the near-future’. When will everyone else catch on?

Last night, gold futures came within touching distance of $2,000, touching $1,998.60 and closed at $1,994.40. This move towards the key psychological level was especially impressive given US dollar strength during the day. Short-term strength of both assets is likely to be on the back of safe haven demand in the Middle East. Gold’s tear may have let up somewhat on account of US housing data performing better than expected as well as some diplomatic efforts in the Middle East starting to show some progress. Look out today and tomorrow for two key reports out of the US, which may also put pressure on gold. Third quarter GDP data will be released today at 8:30 AM EDT. And tomorrow look out for the most recent inflation statistics from the BEA (Bureau of Economic Analysis) as well as the September PCE (Personal Consumption Expenditure Price Index). Both of these will likely impact which way the FOMC will go next week. Currently, the common view of the FOMC is that they will hold rates where they are, however today and tomorrow’s releases could determine whether another hike is coming this year. China in a panic? Is it because of efforts to support its currency or geopolitical tensions? Or both? Who knows but US Treasury data shows that China has been selling off pretty chunky amounts of US assets. And where are they putting the proceeds? Well, who knows really but it’s interesting that both the PBOC’s and private investors’ gold demand has picked up pace across the same period that China has been selling off US Treasuries. This isn’t the only action China has taken to shore up its economy of late. On Tuesday the government announced plans to issue additional sovereign debt worth 1 trillion yuan. This will send the deficit to a three-year high. The decision to flood the market is more notable in what it says about the PBOC’s and governments concerns about the health of the economy, than the move itself. Expect to see more aggressive moves from China as it works hard to steady the economy’s collapse towards a soft landing. Watch this space Right now if you come across a mainstream article about the gold price and its recent performance then it will likely point to the ongoing atrocities in the Middle East as the main driver behind gold’s strength. Whilst we don’t disagree that the geopolitical risk premium is playing its part, it is quite short sighted and we don’t expect this to be a long-lived scenario. It’s too easy for the mainstream to forget that gold had been strong prior to the attacks by Hamas on Israel, and the ensuing retaliation. This is, as we have said frequently, because positive sentiment towards monetary decisions and the strength of the global economy is very weak at present. Very few people believe that the likes of the FOMC and governments have got any kind of recovery in their midst. Any decision by government or monetary policy committees is about making the best of a bad situation, and coping, not about paying down debt and bringing value back to currencies. Gold Down $100? This Really Shouldn’t Be A Surprise Of course, events in the Middle East and the actions of the US Federal Reserve are not completely disconnected. How the war will develop and to what extent it envelops the rest of the region and its allies will be very much a factor when the FOMC is considering whether or not to hike rates. But we’re not convinced that gold is so reliant on interest rate data. If you google something along the lines of “gold and interest rate relationship” then you will almost certainly see a search response along the lines of: “the relationship between gold and interest rates is traditionally an inverse one” or “gold and interest rates are negatively correlated.” But, right now. This simply isn’t the case. Interest rates are surging and gold is giving them the proverbial middle finger. More on this next week.

LBMA This week I attended the LBMA’s Global Precious Metals conference in Barcelona. As usual it was a flurry of activity and discussion between cross sections of those involved in precious metals. At the end of the conference attendees are asked to give their forecasts for the precious metals markets, for the next 12 months. Early reports indicate that attendees expect gold to outperform amongst the precious metals, reaching $1,990.30 an ounce by October 2024. The outlook for silver was also pretty bullish. At the time of writing silver is sitting around $23. LBMA conference participants expect to see this climb to $26.80 by this time next year. We suspect much of this bullishness is on account of events in the Middle East. Gold has climbed by over 5% since the violence began. Prior to that it had been at its lowest since March. Next year will be an interesting one in terms of gold drivers, and some market participants may have to pivot themselves somewhat in terms of what to pay attention to. This year (and years prior) all eyes have been on the FOMC decisions, US dollar strength and of course Treasury yields. Next year we expect the gold market to pay less attention to these factors. After all, the FOMC isn’t expected to move much and already gold is barely blinking when US data releases are positive (see today’s labour numbers). Instead, more weight will be placed on safe haven demand and physical demand. This isn’t just in relation to war but also in economies where citizens have a natural affiliation to gold investment and perhaps aren’t performing as well elsewhere. We’re of course thinking about China, in particular. The Shanghai Premium is something we have discussed recently, this is a good indication of a divergence happening in the gold market. Buy Silver, For The Sake Of The Planet Silver is, of course, also a safe haven and we expect it will do well on the back of this, just like gold. But we are especially excited about it because of its industrial properties. The global transition to green energy is providing solid support for silver prices. For a long time, there have been concerns about supply-shortages. Unlike the PGM metals, there is no option for substitution. So, there could be a real stock issue if more silver supply is not found. It is estimated that another 2 or 3 mines will need to open in order to satisfy projected solar demand. Failing this, above ground stocks will need to be used. In both cases the current price does not make either option especially attractive, so watch this space to see climbs in the silver price. JP Morgan Would Be Proud LBMA participants are not the only ones getting ready to stock up on gold. JP Morgan’s Chief Market Strategist Marko Kolanovic is also set to. In the bank’s Global Markets Strategy report, Kolanovic explained that the continued escalation of geopolitical dangers and the overvaluation of equity markets in the United States and elsewhere made this an opportune moment for investors to boost their gold exposure. Gold Down $100? This Really Shouldn’t Be A Surprise The investment bank will be maintaining a“ defensive allocation in our model portfolio…We additionally increase our allocation within commodities to gold, both as a geopolitical hedge, and given an expected retracement in real bond yields.” This would no doubt delight the organisation’s founder who purportedly said before Congress in 1912, “Gold is money. Everything else is credit.” If you’re interested to know how bullish Kalanovic is on gold, JP Morgan is projecting spot gold prices to reach $2,175 by Q4 2024. More to come? It’s not even Thanksgiving yet so expect more forecasts in the coming weeks. Of course, in some ways they should be taken as a pinch of salt as no one can predict the future. No one expected the Middle East violence to pick up like it did, when it did, for example. But forecasts are a great way to pick up on the sentiment surrounding gold – why do industry professionals think people buy gold, why do they buy gold. It can give you a good feeling for how these same people will react when the unexpected happens. And, as we know, something unexpected always happens and that’s when gold shines.

Overnight the gold price hit a two-week high. One of the ‘supports’ for the gold price was the release of FOMC minutes yesterday, something that once upon a time would have done a bit of a number on the price of gold. Instead, it barely blinked. The metal also finds itself well supported on account of the tragic events in the Middle East. FOMC Release Wednesday’s release of last month’s FOMC minutes showed that many members are keen to tread carefully when it comes to further rate hikes. The minutes suggested that we will see higher rates for longer as monetary policy is likely to remain restricted for some time. Interestingly when the minutes were written the majority of members expected to see another hike in rates. But, this was before the bond sell-off of the last fortnight. This tightening in financial markets may have begun to do the job for the FOMC, and may prevent them hiking again. Middle East For the second time in less than two years we write this blog against a backdrop of headlines about a war that has already destroyed thousands of lives and will no doubt affect even more for years to come. There are two ways markets try to read wars – one is how it will affect demand and supply for goods, such as weapons and oil. The other is what its implications are for global stability. Unlike demand and supply, this is not quantifiable, and it is very uncertain. This is about what these wars mean – Do they reflect more instability in the coming months and years? Do they mean there could be a change in a power dynamic between nations? Are they a precursor to an even bigger war – as we saw when Germany invaded Poland, triggering the start of the Second World War. Gold Down $100? This Really Shouldn’t Be A Surprise Any war in the Middle East reaches beyond its physical location. The nature of the diplomatic relationships and alliances between the West, the East and the Middle East means it is a given that a war in the likes of Israel is sadly a proxy war for one between much bigger powers. What the implications of these latest events will be, no one can tell. It is for this very reason that we expect the likes of gold to do well in the coming months and years. Is Gold The Only ‘Luxury’ Anyone Will Soon Be Buying? Yesterday French luxury conglomerate LVMH was feeling pretty budget after reporting that sales growth was down this quarter. Its stock fell by 7% and the overall price is down by nearly a quarter since April. It was a tough day for the company that just a few months ago had been the first European company to boast a market value of $500 billion. In recent months the luxury goods industry has been confident that sluggish sales growth in the West will be easily compensated by sales growth in China, since it lifted its pandemic restrictions. However, this hasn’t come to fruition. Analysts are now warning that we can expect to see a ‘normalisation of growth across all countries’. A nice way of saying China’s struggling as much as everyone else. Why does this matter? Like new car sales, luxury goods sales are an excellent indication of where consumer confidence is. Yes, it’s just sales growth that is down (rather than actual sales) but if less people are joining the luxury market, or less people are expanding upon their usual spending then this is a slow turn towards changing long-term habits. Consumers are questioning if handbags and fine wines are really where they want their money long-term. As much as the likes of Hermes or Rolex (and my wife) would like to have you believe that their products are ‘investment pieces’ the truth is that no one is rushing to buy them when the proverbial economic sh*t hits the fan. As economic times get tough we turn to assets that are both faceless and borderless. No one relies on gold still being in fashion, there’s no Birkin equivalent to a gold bar. It’s just gold. It’s simple. Like designer accessories it’s a great way of getting your money out of a country without leaving the country but it is timeless and doesn’t rely on Vogue or this week’s ‘it’ model to tell you that it’s in fashion. Expect to see more gold demand in China as funds are diverted out of Hermés purses and into gold coins and bars. Speaking of gold demand We are still awaiting IMF numbers but the World Gold Council’s Krishan Goupal put out some interesting tweets this week concerning central bank gold demand. Goupal highlighted September purchases from the central banks of China, Poland and India. Poland’s gold may reach 20% of their total reserves (following comments from the President of the National Bank) whilst China’s total gold purchases this year are now 181t. It’s information such as this that is really forming solid support for the gold price. The release of FOMC meeting minutes is one thing, but they’ll be tomorrow’s waste paper. Physical gold purchased by central banks who are otherwise touting the benefits of fiat currency, is a whole other ball game.

Gold and silver continue on their downward trajectory this week. The US Government Shutdown Deal and comments from FOMC members appear to have boosted bets that the Fed will make space for one more hike in 2023. Prior to the last-minute debt-ceiling deal (yawn) being struck at the weekend, markets had favoured a December hike, as the next one to expect. This was because there had been an assumption that the US government would be shut down in November, when the FOMC is next due to meet. However, Saturday night culminated in a deal being struck to extend government funding for the next six weeks and this prompted markets to price in a hike next month, putting further pressure on the gold price sending it to 8-month lows and the gold/silver ratio to 8-week highs. It’s worth noting here that a ‘last minute deal’ was not a last minute deal to solve the US government’s financial problems. It was a last minute deal to keep kicking the can down the road. Just to delay the inevitable. It’s like when your kids want to keep playing out as it’s getting dark but it’s bedtime. They whine and plead to be allowed to stay out, you relent but everyone knows that ultimately it’ll soon be lights out and no one will be out playing anymore. It’s the same story here, markets and politicians have just bought some more time to make deals, not to actually fix anything. Gold’s standing firm In recent months gold’s performance has been somewhat subdued thanks to the performance of US Treasury yields which recently hit a 16 year high. However, a recent pullback has also pulled the dollar away from sunnier heights. We seem to be in a spot where traders don’t want to show too much interest in gold or the dollar, until they feel more confident about where the FOMC will go next. Gold is still buzzing above what seems to be a significant support zone around $1,810. In case you missed it, have a listen to my interview with Chris Vermeulen, recorded on Tuesday. For him this retraction in the gold price is totally expected. This week, keep an eye out tomorrow for the ever-popular US employment data, released at the end of each month. The Non Farm Payrolls (NFP) will no doubt influence both where the FOMC next decides to put interest rates and demand for the US Dollar. If US labour data positively surprises then we will likely see more support for US Treasury yields, and further declines in the gold price. But data releases such as these will just have a short-term impact, ultimately markets are going to be focussed on interest rates and how hawkish the FOMC is expected to be. Don’t forget about the other half of the gold market But, we’re only telling one side of the story. To only talk about gold against the US dollar backdrop and all of the hype that surrounds it is to do it a disservice. And to do a disservice to those who buy gold because it is gold, rather than because of how the US dollar, or US Treasury yields may or may not be performing on a particular day. We are of course referring to the impact the Asia trade (mainly China) is having on the gold price, and the strength it is giving it. Interestingly gold made some modest gains overnight during the Asian trading session but then promptly fell back. We say interestingly because it is becoming increasingly clear that gold trading activities in ‘the East’ are finally revealing the true demand and sentiment certain economies hold for gold. As I explained last week, gold has been undergoing a ‘conscious uncoupling’. For years a key driver for the gold price has been real rates, but in the last year or so, this relationship has begun to break down. When this began to break down there was a lot going on – inflation, war to name a few. So, for a while it could have been described as temporary – transitory, perhaps (to steal a favourite phrase of central bankers). But as the last year has gone on it is clear that Western markets no longer have the same influence over the gold price as they once did. Gold holds up when the economy won’t any longer. See China and recent announcements from Japan to appreciate just how shaky things are looking there. Gold is the proverbial canary in the gold mine, and that canary’s voice is getting louder and more people are singing along. Are Alcoholics Anonymous Sponsoring Inflation? And finally, did you hear the one about how inflation got everyone to sober up? Incrementum, the authors of the wonderful In Gold We Trust Report release a much-celebrated gold/beer ratio, every year. Just in time to make those enjoying Oktoberfest feel really good about their spending… Gold Down $100? This Really Shouldn’t Be A Surprise This year revellers got really stung as they were forced to pay a huge 8% more for their beer during Oktoberfest as it had increased to €14, a record price, compared to last year’s festival. Compared to pre-Covid prices, the price of beer has climbed by 26%. But, if you had been paying in gold then you would have been feeling pretty chuffed as, “The gold price in euros has almost completely absorbed the massive price increase this year,”

It’s been a tough couple of weeks. Everything’s down. Stocks are down, bonds are down, heck, even gold is down over $100. What’s going on? We turned to one of our favourite guests, Technical Traders’ Chris Vermeulen and asked for his take on market activity. What are his thoughts? None of this is a surprise and there’s nothing to worry about. In fact recent price moves have presented ‘an amazing opportunity.’ So we can relax. I won’t say too much more, for fear of spoiling it for you. So grab a coffee and enjoy this short interview. Let us know what you think about Chris’s take on the gold price as well as the performance of oil and bitcoin, of late. We’re always interested to hear your thoughts.

In a comment to MarketWatch last week we said that traders this week would be most focused on the CPI report that came out yesterday. In that very report, Inflation came in hot, above expectations, and posted its biggest monthly increase in August this year. It’s up 3.7% from a year ago. However, markets didn’t seem so fussed. The release did prompt them to make a sort-of gesture of a reaction – stock market futures initially fell back but soon recovered and had a choppy sort of day. Unsurprisingly, Treasury yields were higher as a result of the report. As we discussed in last week’s post, this kind of performance is proving to be poor for both gold and silver. A strong US dollar and high Treasury yields win the opportunity cost equation when it comes to which liquid assets one should hold in the short-term. However, as we also explained last week inflation still remains. The reason the US dollar and yields are so high is because of inflation. It is perverse given we all know what inflation really means for a currency, the economy and its citizens. However, this is a short-term phenomenon in the grand scheme of things. Headlines yesterday reported that transportation was one of the biggest victims when it came to inflation. This was largely blamed on oil prices. Whilst oil price hikes have slowed, the impact of a high price is yet to be fully felt in the economy. Wait until households feel the sustained increase in gas when filling up their cars week after week. How does that play into their inflation expectations? And how long before increased production costs feed into core inflation? A heavy analogy Not only that, but whilst economists congratulated themselves that the likes of goods and rents continue to disinflate, the harsh truth is that other key areas are still experiencing price rises – see healthcare and household furnishings as an example (h/t Omar Sharif, Inflation Insights). The spread of inflation is becoming broader, which in the short-term can make it feel like it’s less impactful. I like to think of it like an elephant wearing shoes (bear with me). When energy prices shot up (blamed on Russia) it was like an elephant wearing a stiletto had stood on the global economy. It was a very focused pain source. However, as the impact of terrible monetary policy, financial crises, pandemics etc has come to fruition, it’s now like the elephant is wearing trainers and standing on the economy. The weight is the same but the spread of the weight is across a broader area. So the pain feels significantly less. But what happens as the elephant gets comfy? There’s only so long you can cope with an elephant standing on you – whatever kind of shoes they’re wearing. Next week is the FOMC’s September meeting. No one is expecting much drama. Throughout the summer Fed members have been expressing their commitment to the inflation fight, citing the need to keep rates higher for longer. I highly recommend you grab a coffee and have a listen to my 13 minute interview with chart expert, Gareth Soloway. On Tuesday he outlines why he’s impressed by gold amongst the US dollar strength and why he considers this to be the Bad News is Good News part of the cycle. He also gives us his thoughts on silver (more about that next week). Expect $2,500 – $3,000 Gold In Next 12 Months ECB meeting More interesting today though is the ECB meeting. There was no doubt some hot debates going on amongst members. The Eurozone is expected to continue to overshoot its 3% inflation target, into next year. Members must have been asking themselves if they should hike to try to combat this? Is this wise given all signs look oddly recession-shaped? The Committee found itself in a coin toss of a decision and neither face is one that you want to risk right now. As it turns out they decided to hike rates to an all-time high of 25bp, to 4%. Unsurprisingly the Euro fell against the dollar. This is without question the ECB’s most significant decision in over a year. It indicates that the ECB is more worried about inflation staying above target than they were about a recession. Had the ECB decided to keep rates as is then markets may have considered it to be a sign of a weakness in their commitment to fight inflation. However, the decision to hike rates to an all-time high will also make markets nervous as the ECB may have just made what is almost certainly a guaranteed economic downturn, even worse. Where does that leave us? So where does that leave things? Nowhere we haven’t been before. Central bankers continue to grapple with inflation, to bring it down to an arbitrary level. An exercise in self-flagellation if there ever was one. With their meetings, press conferences and endless models, central bankers seem so convinced that there is a cookie cutter approach here. That they can use models and predictions to help them solve this crisis. But history shows us that life and economics are unpredictable and open-ended. There is no ideal solution here. A few groups of people are trying to make decisions based on pretty skewed models with data that isn’t always reflective of the right now, and certainly not the future. With this in mind we carry on. We add gold to portfolios and we continue to admire its strong position this year. It’s been remarkable given the US dollar and Treasury yields. So stand firm and ignore the noisy central bankers and data releases.

It's that time of the month again when we bring in a top chart analyst to take us through what they're seeing in the markets, right now. This month we have the brilliant Gareth Soloway. Gareth explains why he's watching the US dollar and why that means that "Good news is bad news" and when we can expect to see when "Bad news is good news". Gareth expects we will see gold breaking through all-time highs in the next 12 months, and praises gold for remaining so close to it's all-time high. As for silver? Is there a longer, sustained rally for the industrial precious metal? Will it head over $30? And, if you are fan of gold miners you won't want to miss why Gareth's excited about them. Click below to watch

Over the August period, it’s easy for people to switch off and to some extent, it might feel like the precious metals have been doing the very same! However, if you look at the YTD performance of gold across key currencies in the World Gold Council table provided below then you will take some heart that things aren’t so bad (especially if you bought in Turkish Lira!). But it does seem as though gold and silver have been under some pressure of late. This is largely thanks to the strengthening US dollar and US Treasury yields (they reached a 14-year high right before Labor Day weekend). Oil prices have also been rising. Interest rates and currencies have been relatively stable. All whilst the rest of the market seemed to take a bit of a tumble earlier this week. Why is this? Because things are looking up across a number of sectors and so there is a (new) expectation that the FOMC will keep interest rates at these relatively higher levels for longer. Therefore, it’s more attractive to hold US dollars than other liquid assets such as gold and silver, right now. Why Is the US Dollar So Strong? The strength of the US dollar is largely thanks to the fact that it is currently the biggest, bestest bully in a bad bunch. So strong is the US dollar against other currencies (namely Asian currencies) that both the Chinese and Japanese central banks have issued statements to warn that they will defend themselves should they feel the need to. This strong US dollar will exacerbate inflation across the world, of this we have little doubt. The majority of commodities (including oil) are priced in dollars. This makes imports expensive and so causes inflation to rise in countries that are already struggling with housing crises, cost of living crises and currency weakness. Weak growth across China (and calls for intervention from the central bank) is only boosting demand for the dollar more, as international savers and investors flock to it. Meanwhile market expectations suggest that both the UK and Eurozone may lower interest rates, sooner than the US given their own sluggish performances of late. This will only serve to boost dollar demand as it maintains its top-dog status when it comes to interest rates. There is little doubt that the US Treasury yield curve is the most important economic indicator right now. Since July 2022 it has been inverted and in the last month or so it has been steepening as long-dated rates have risen faster than short rates. A situation like this is tricky for assets such as gold. Investors tend to look at a yield curve such as this and expect that we are heading into a period of reflation and (therefore) further interest rate hikes. So, it is likely to be a tough period for gold. Especially, if we see periods when long and short term rates rise together. Why Do You Buy Gold? However…we always come back to this – why are you buying gold? Because it outperforms the dollar? No. Because it makes you a quick buck or two? No. You buy gold because it’s insurance for your portfolio. As perverse as it sounds – all the reasons why the US dollar is doing so well are the exact reasons why you should buy gold and hold onto it. Just because something is doing well, doesn’t mean that it is well. The US dollar is doing well relative to other currencies. The US country is doing well relative to other countries, largely because of dollar hegemony. This does not mean that the dollar is a safe asset. Currency markets are fickle. Think back to a few months ago when they were betting against the dollar. Expectations were that rate rises in the EU and UK would put pressure on the dollar, short positions were increasing. And, don’t forget the BRICS warming themselves up to use the dollar less and less. Patrick Karim on gold, inflation and the next break out It is still suffering and will suffer more, from the effects of very poor monetary policy. The currency and the economy have been inflated to never-imagined levels and the country is in a level of debt we struggle to write down numerically, in full. You do not buy gold because it is a competitor to a fiat currency, you buy gold because it secures your wealth when your portfolio is suffering the effects of decades long monetary abuse. A slow month or two for gold is not a sign that things are doing well, we would perhaps see this latest US dollar strength as the fat lady enjoying her moment, singing her head off.

Buckle up, because India isn’t just racing on the path of economic transformation; it’s blazing a trail. We’re talking about a nation that has evolved from contributing just 6.3% of global GDP growth in 2007 to a projected 17.4% by 2028. The underdog is gaining ground on China, and gold investors might be the unexpected beneficiaries. The Shift in the Economic Landscape In Q1 2023, India’s GDP growth stood at an impressive 6.1%, leaving China’s 4.5% in the rearview mirror. If you think this is mere fluke, you’re missing the larger tapestry of a world reshaped by dynamic trade, open markets, and crucially, domestic reforms. People Power Consider this: India is now the world’s most populous country, overtaking China in April this year with a population of 1.4 billion. By 2027, India is expected to add 75 million more citizens, while China will lose 8 million. China’s ageing, plateauing middle class lacks the fuel for significant economic expansion. In contrast, India’s youthful, underemployed population is a powder keg waiting to explode—in a good way. The Pitfalls of Central Control China’s love affair with central planning doesn’t just come with a bouquet of red roses; it has its thorns. High-profile tech billionaires go missing only to resurface “humbled.” This iron grip stifles creativity and injects tension into international relations. On the flip side, India—boasting a global diaspora helming companies like Alphabet, Microsoft, and Adobe—capitalises on its reputation for entrepreneurial freedom. Apple’s choice to manufacture the iPhone 14 in India instead of China is a glaring example. The Achilles Heel But let’s not get carried away. India has hurdles to clear. Despite its enormous promise, the nation has a history of failing to capitalise on its economic potential. Although Indian PM Modi has ushered in crucial infrastructure and modernization programs, the ghosts of bureaucratic and social challenges still haunt India’s progress. The Numbers Game To put things into perspective, China’s GDP sits at a hefty $17.7 trillion compared to India’s $3.2 trillion. China outpaces India in STEM graduates, R&D investment, and literacy rates. But remember, China was once an underdog too. In the ’80s, its economy was smaller than India’s. If China can leapfrog its way to economic primacy, why can’t India? Gold: The X-Factor And here’s where gold comes in. In India, gold isn’t just a metal; it’s part of the national psyche. Indians are increasingly moving from rural to urban settings, changing the form in which they invest in gold—from jewellery to bars and coins. As India’s economy expands, so will its appetite for gold, making it a market impossible to ignore for global investors. The Long Road Ahead India might be where China was in the early 2000s. The recipe for success includes enhancing educational systems, modernising infrastructure, and steering focus towards cutting-edge sectors like AI. The nation needs to decide if it’s content with mere participation or becoming a serious player. . As India fine-tunes its focus, the world watches. Recently India has focussed on getting a spaceship on the moon, which is an incredible achievement, but at the same time investment in AI is falling far behind the level one would expect of an emerging superpower. This may be telling as to where their priorities lie; playing to stay in the game or playing to a domestic audience. There can be no doubt that their future is in their hands and if fully embraced all the world will benefit from their success, even the Chinese.

This week the world has needed the eyes of a hammerhead shark in order to keep track of the meetings that are taking place. First up the BRICS nations, and interested parties, met in Johannesburg for the 15th summit of the group. And, yesterday saw the start of the Fed’s annual three day Economic Policy Symposium at Jackson Hole, Wyoming. The BRICS event has the potential to affect how we map the world in the coming years, whereas Jackson Hole is one that may cause some reaction in the markets but it’s unlikely to dramatically change the course of the global stage. In many respects, it is the actions of central bankers that has led to the BRICS’ formation. The need by the Fed to push dollars on the world, driving cheap credit and indebting those nations that have far less geopolitical clout than themselves, has led to major imbalances. Other Western banks have followed along like lemmings, realising that this was an alliance they could benefit from. What have the BRICS achieved? But the BRICS (and the multiple other countries hoping to sign up) have had enough. As Xi Jinping stated (in a speech delivered by his commerce minister) there is a country that is “obsessed with maintaining hegemony, [and] has gone out of its way to cripple the emerging markets and developing countries”. How much will immediately change as a result of the BRICS meeting, this week? Immediately nothing. But with the invitation to Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates to join, then we could start to see some changes in the coming months and years. Overall, there does seem to be an agreement to move payments away from the dollar, not with a common currency but by making it easier and more efficient to pay in local currencies. But, this was already in motion and had been accelerating since Russia’s faced dollar sanctions. The freezing of Russia’s FX reserves was the catalyst the BRICS needed to start making changes. Do the Purse Holders Even Care? Much of the focus in the BRICS speeches has been in regard to the need for a new world order. It has almost been a call to (geopolitical and financial) arms by the five representatives of each country who have spoken. How nervous will this make the central bankers meeting in Jackson Hole? If past performance is anything to go by, then not much. They rarely notice things before they happen. Central bankers are rapidly looking like the losing team in a relay race, standing waiting for someone to give them the baton to tell them what’s going on, rather than looking behind to see what’s coming up and about to take them over. After all, last year they were trying to cover themselves for not clocking onto inflation early enough. It was almost easy at Jackson Hole last year – they just had to say some strongly worded things to convince markets that they would come down hard on inflation. This year isn’t so easy. It’s now about fine tuning. The theme of the meeting is “Structural Shifts in the Global Economy”. A catch-all statement. Whilst last year was much about blaming the fallout from the Ukraine war and the pandemic for inflation, this year it’s about acknowledging that those inflationary events have in fact led to major structural and behavioural changes across the globe. Not to mention, the clean up after decades of easy money. This year central bankers have just had to do a bit of housekeeping when it comes to inflation. Now it’s the deep clean, it’s the structural changes. It’s when things get shaky. All eyes and worries on the US and China The Fed is faced with a dichotomy of trying to combat inflation but not go too hard and fast so as to make things too expensive for businesses and consumers. The labour market is strong, but loan repayments are falling and savings are being depleted. Spending is out of control and there is the minor issue of being over $32 trillion in debt. Meanwhile, markets are starting to get anxious about China’s economy. Usually, China’s bond yields (and wider economy) have long been correlated with the rest of the world, not anymore. They have been dropping, whilst others climb (some contained, others less so). The economy is fast slowing down, lenders are getting anxious about the ongoing defaults happening across property developers. The high debt burden is weighing heavy on China’s crown. Patrick Karim on gold, inflation and the next break out China’s economic woes have only served to exacerbate those issues already faced by the Federal Reserve. Whilst a slowdown in China may not be as impactful as say the bursting of the US housing market bubble, it will almost certainly negatively impact global demand and supply for goods. And these are just two of the world’s major economies, we haven’t even mentioned the ECB or the basket case that is the Bank of England. Listen to Jay Markets will tomorrow pay close attention to what Fed Chair Jay Powell says. Last year he delivered his most hawkish speech to date. This year, It is expected that he will side step making any short-medium term commitments as to what will happen to rate hikes. Softly, softly is likely to be the approach. Considering the theme of the symposium he would be wise to acknowledge the profound shifts going on across the globe whether changes to green energy, trade and currency arrangements, or the institutional frameworks that are no longer fit for purpose. All of these will impact monetary policy and currency markets one way or another. And this is where gold and silver investors should also consider themselves. Like Jay – don’t worry about the short to medium term. Yes, the gold price right now is a little boring, maybe even disappointing. But enjoy the quiet, maybe even do a little gold shopping. This week wheels have been set in motion towards changes that will set gold and silver right up for the coming months and years.

Next Tuesday the BRICS nations will meet in South Africa for the group’s 15th summit. This could be a game changer for gold. For something that only officially existed eight years after the term ‘BRICs’ was created, the bloc known as “The BRICS” has rapidly gone from an informal term for a group of fledgling economies to one which is carrying increasing weight when it comes to the future of the global system. Next week’s summit, hosted by South Africa, will not only welcome leaders of the BRICS nations (excluding Putin, no explanation needed) but also a further 67 leaders from Africa, Latin America, the Caribbean and Asia. Of these 67 leaders, 23 have formally applied for membership of the bloc, all hoping to follow in the footsteps of South Africa who joined in 2011. Something that has long been rumoured (and was discussed by me, just last month) is the creation of a common BRICS currency. It makes sense: the main impetus of the bloc is to rebalance the world order. Nothing creates imbalances in the global economy quite like US dollar hegemony. In truth, discussion of a gold-backed common currency is nothing new. In the last 20 years alone Asian and African leaders have suggested it. Most insightful was in 2009 when the then head of China’s central bank, Zhou Xiaochuan, wrote: “An international reserve currency should first be anchored to a stable benchmark and issued according to a clear set of rules … [Its] adjustments should be disconnected from economic conditions and sovereign interests of any single country. The acceptance of credit-based national currencies, as is the case in the current system, is a rare special case in history.” Of course, nothing has happened so far. But are we reaching a point where it might just? In July we perhaps had confirmation of how serious the proposal was when state-sponsored channel RT reported that the “BRICS were planning to introduce [a] new trading currency backed by gold in August.” It is worth noting that there is no mention of a new currency on the agenda for next week’s meeting. How much one can believe this, is anyone’s guess. Is it fool’s gold to plan a common currency? Clearly it will be no mean feat to agree upon and establish a BRICS currency. The five member nations alone all might all wish to establish an alternative to the status quo, but their agendas on the foreign stage do vary significantly. Despite the political clout of the emerging group of current and wannabe members of the BRICS, there are some major issues tearing through their economies. Take the collapse of the rouble, or the recent dumping of Chinese stocks and bonds by foreign investors. Not to mention the personal desires of soon-to-be Argentianian President Milie who wants to demolish the central bank and bring in the US dollar as the national currency. With such differences, how much are the BRICS nations really able to achieve? As BRICS-term ‘creator’ Jim O’Neill told the FT, they have “never achieved anything since they first started meeting”. But we think this is short-sighted and to believe this is to consider the nations as though they are still in the third-world. No one is suggesting that a single currency is introduced and that sovereign currencies are forfeited (as per the Eurozone). No, instead a common trading currency has been proposed. And, this could be major. Currently the bloc is made up of just five countries but should the additional 23 members currently seeking membership manage to join then this will significantly improve the political dimension of the group and prove a much stronger counterbalance to the G7 and G20 countries. The threat is on the sidelines What is most interesting to note is that it seems to be non-BRICS member Saudi Arabia that is leading the dedollarization process. See their comments in January about being open to a non-dollar oil trade. Should they become a member, then we will be up for some very interesting times indeed. As former GoldCore TV guest Jim Rickards explained recently: Why gold? One could ask why is it gold that is being touted? Why not a basket of currencies, or even a basket of resources? Why not a totally new currency, as we saw with the Euro? Because gold is borderless. Is it already accepted as currency – central banks hold it in reserve. It requires no central bank or mechanism by which to manage it. BRICS currency naysayer Jim O’Neill stated: “It’s a good job for the west that China and India never agree on anything, because if they did the dominance of the dollar would be a lot more vulnerable,” But the fact is, they do agree on something – that gold is money. Because it is a sovereign currency, it cannot be manipulated as fiat currencies can. The BRIC nations are unlikely to agree to anything that sees them support another fiat currency – the world learnt the hard way when they watched Bretton Woods play out. Look where that got us. If countries can get past their differences and agree to a gold-back common currency then the symbolism of holding one another’s gold will be huge. The precious metal is the perfect arbitrator. As we saw in Roman and later medieval times, rulers would send their children to live in formerly hostile kingdoms in order to secure peace. Imagine Chinese gold being held outside of China. Does Gold Need There To Be a New Gold Standard? Do we really need a gold standard to set gold on fire? With gold currently trading in a tight range between $1890 and $1900 it might feel pretty tedious and like we need something more than the FOMC minutes to drive the price, but in truth it’s going to be just fine. Gold doesn’t need to officially back a currency in order to shine. Should the BRICS decide to create a common currency, the US (and others) won’t take it lying down and this will see gold do well. Currently, much of the focus is what will happen to gold, should there be a gold-backed currency. Instead, the focus should be on what will happen to gold should the BRICS merely put a plan in place to manage the transition to a new, common currency (gold-backed or otherwise). Just like when you see invasions of countries or military coups taking place, it is not the final regime that will cause the most upset, instead it is the ‘in-between’, it is the transition to the new regime or the new currency that will cause the most upheaval. Of the many scenarios gold likes, it is the ones with uncertainty that it likes best. The whole world is (one way or another) invested in the dollar-led financial system. The five countries that currently make up the BRICS represent 40% of the world’s population and 26% of the global economy. Patrick Karim on gold, inflation and the next break out This is not some pesky group that is proving to be a minor distraction. The group does have the potential to be very disruptive, on a number of fronts. Should a move outside of the US-dollar system become one that is etched in gold, then this will make for a very uncertain time indeed. The mere conversation and posturing around the launch of a common currency will be disruptive enough. It is clear that the first step for the BRICS will be to establish an efficient, widely-adopted and integrated payment system for cross-border transactions and only then will there be a realistic opportunity to introduce a new currency. There is plenty going on elsewhere in the world (shoddy central bank management, slow US banking crisis, fiscal dominance, etc) for gold investors to get excited about. So if no new currency is announced next week then please just keep calm and carry on.

There is so much going on at the moment, both politically and financially that it can be difficult to know what to focus on when it comes to managing your investments. At times like these, it’s good to try to filter-out all of the “noise” and identify the major developing trends that will have the biggest impact on you, your family and your finances. Recently, I did just that and that’s what inspired my talk with Chris Martenson over at Peak Prosperity, earlier this week. Chris and I had a great chat about my top five super trends to look out for over the next 18 months. You can hear them all in the podcast, below. I’d love to know if you agree with my top five, and if not let me know what you would include, instead. For instance, do you think Demographic Decay is something we should be concerned about, when planning and managing our investments? What about De-dollarization? Let us know either by email or just tweet us here.

Since 1975 worldwide obesity has nearly tripled and it is now one of the leading causes of death. Despite this, rarely does someone have ‘obesity’ recorded as the cause of death on their death certificate. Instead, it might read ‘complications from Type 2 Diabetes’ or ‘cardiovascular disease’: conditions that obesity has led to. The rise in obesity is thanks to changing diets and the ready availability of ultra processed foods, as well as changing lifestyles. Despite knowing such diets and lifestyle changes can be deadly, people still consume such foodstuffs and choose not to exercise because the negative impact of doing so is not immediate. In fact, the immediate feedback one gets from living an unhealthy lifestyle is very often positive. Your taste buds signal to your brain that the Snickers bar is really good, or choosing to watch your favourite show rather than go for a run gives you pleasure faster than going for a run does. To see the positive results of a healthy lifestyle is one that takes time. To see the negative results of an unhealthy lifestyle is also one that takes time. It’s not like you eat some deep fried chicken and wham! You’re struck down by a heart attack. No, that takes years of solid, poor choices. It’s only when you find yourself unable to run around with your grandkids or walking around with an oxygen canister do you wish you’d taken better, incremental decisions that would have led to a different outcome. It is only after years of poor decisions that you really feel the true impact. Central Banks and the Expanding Waistline This is basically how it works for central banks. The economy starts to look a bit shaky, or governments make promises they can’t afford or ‘peacekeeping’ missions are declared and the likes of the FOMC decide that rather than save and budget within their means, a big hit of ultra processed credit is what’s needed to help things along. Of course, they do this and everything starts to feel pretty good. Employment rates pick up, consumer spending rallies, startups are turning into unicorns, the S&P 500 is smashing through records and the housing market is booming. Everyone loves this approach to money that costs them very little and as a result they get addicted to it. The problem is the economy no longer knows how to function and stay energised without it. None of the economic policies that seemingly ‘helped’ the economy keep going have added to its overall long-term health. Central banks, recognizing that they have created an inflationary environment on purpose, willing the waistband of the economy to expand so that everyone ‘feels good’, then tries to tell everyone that these health issues are just ‘transitory’. But the truth is the expanding waistband is a fraud. Inflation is theft of wealth from the economy’s future. What’s the Excuse Now? Pretty soon food prices become difficult to manage, people can’t afford to heat their homes, the cost of materials climb and people are struggling to make ends meet. But, in the same way, we justify our weight to ourselves (it’s in my genes, I had a big meal last night), and the central bankers try to justify inflation to us. And they strip out the key components to measure inflation as if they can be easily ignored – we’re talking about food and energy prices here, i.e. two of the biggest costs to the household budget. Only in the last year have the likes of FOMC started to realise there is a big cost to all of this unhealthy economic policy of the last fifteen plus years. They tried to make amends for this by coming down hard on interest rates, and getting the economy to work harder to shift some of this inflation. But actually, how much has changed? ‘Core’ inflation is coming down ever so slightly- but that’s easy to do when food and energy prices aren’t included and costs for services continue to rise faster than anyone would like. As ZeroHedge pointed out, the US unemployment rate is exactly where it was when the FOMC started hiking rates, so is the S&P 500. Very little has improved. All that seems to have been achieved is a near-collapse of the US banking system (more on that shortly) and unsustainable debt levels. The only tool left: words Yesterday Jay Powell announced that the Federal Reserve was raising rates to a 22-year high of a target range of between 5.25 and 5.5 per cent. Markets are assuming that this is the final rate rise this cycle. Bless him, Powell did try in the press conference to wag his finger at the economy and declare that if it didn’t pipe down he’d be back in there to raise rates some more, but no one was really listening. “We have to be ready to follow the data…And given how far we’ve come, we can afford to be a little patient as well as resolute as we let this unfold.” Well, that’s a relief that the FOMC are now looking at the data to guide the way. Interestingly enough Christine Lagarde used near-exact the same phrasing earlier today during the ECB press conference. We’re not convinced that they hope data will drive the way as so far it seems to us that most central bankers now try to influence inflation expectations rather than inflation itself. Jay Powell uses his press conferences and FOMC reports as an inflation-reduction tool more than they seem to use monetary policy tools. As a result, the market is mostly playing along, now pricing this to be the last FOMC hike in the current cycle of hikes with rates being cut as early as 2024. Patrick Karim on gold, inflation and the next break out A slow-down in hikes and ultimately a fall in official rates is good for gold, a non-interest bearing asset, as it reduces the opportunity cost of holding it. But, this isn’t mainstream financial media here. Nothing is ever as simple as “this metric went one way, so this commodity will go that way”. This also isn’t’ the last 15 years where the world has become accustomed to low inflation rates and near-zero interest rates. As investors read the headlines that the Fed is likely to start cutting rates as early as 2024, there will be two expectations – one is that they will gradually cut back down to zero, the other is that inflation really was merely transitory. In other words, the Fed was right all along. Spoiler alert – neither of these things are correct. But what these assumptions do show is how addicted the market has come to low rates and the assumption that central banks really are the puppet master to the economy’s marionette. The truth of the matter is that inflation really isn’t going anywhere. Damage has been wreaked on the health of the economy. The drip, drip, drip of cheap credit and overheating has left us with a situation that sees negative real rates at best and financial turmoil at worst. Nothing, nothing repeat nothing that central banks around the world are doing should be giving anyone any confidence that they are on the right track to reducing our dependence on cheap credit. Therefore no one should have any expectations that real value will be returned to their currencies and savings in the mid to long-term future. Interest rates might be up again, but like an expensive diet plan, the promises are better than the results. Furthermore: high interest payments are clearly not just affecting US Fed’s annual payments. Remember that US banking crisis that arrived with a bang at the beginning of the year? Oddly enough it hasn’t gone away, although you wouldn’t think it looking at the news. Earlier this week US regional banks PacWest and Bank of California agreed to a merger. More deals between the 4,000 banks are expected, as increasing numbers struggle under unsustainable deposit outflows. One has to ask why this wasn’t bigger news. Granted the merger (unlike others this year) didn’t happen under regulator supervision, but it is clearly a sign that the embers of a banking crisis continue to burn.

It is said that the term ‘bank’ comes from the Italian ‘banca’ meaning bench. This is back when we used banks as safe havens for storing multiple real assets, particularly gold. The shelves on which the gold was stored were referred to as ‘the bank’ or ‘banks’. Hence we now ‘bank’ our money and use ‘the bank’ for various financial transactions. Nowadays, that term means a lot more than it did back then. The banking system is something very few people understand the complexities of, or have even had the need to make full use of all the different products and institutions that lie within it. It isn’t what it once was. Despite this, it remains as integral to daily life as it did when we relied on it to keep our hard earned gold safe. For many the ability to hold a bank account is akin to being able to exist in modern society. There was a time when to exist outside of the banking system was something that was associated with your economic status, rather than your beliefs. Financial inclusion has long been at the top of the agenda for many governments around the world. To have a bank account is to be able to partake in daily economic life – pay your bills, travel to work, save, heat your home, feed your children – all made possible by the virtue of having access to a bank account. Those who do not have a bank account are usually referred to as the ‘unbanked’. For a minority, it is a conscious decision not to have a bank account. But for the majority of those who are unbanked it is a circumstance of a difficult existence. 13 million people and 5.9 in the EU and US respectively do not have access to formal financial services. Efforts have been ongoing to reduce this number by putting systems in place that make banking more accessible for a wider selection of minority groups including refugees, prisoners, human trafficking victims, and so on. And rightly so, money does give you freedom. So when you are unable to access it, your life and the options available to you are restricted. Nobody wants that for their fellow citizens. You’re Wrong! You’re Debanked! So what does it say when the banking system on one hand wants to support those who have had to flee their home country because of their political beliefs, and yet on the other hand they are prepared to debank a citizen of their own country because of?…oh yes, their political beliefs? We are of course referring to Nigel Farage. Farage is a divisive character. It’s rare that he garners sympathy from the mainstream media and the wider political spectrum. But, that is exactly what is happening this week. Patrick Karim on gold, inflation and the next break out At the risk of repeating something you have already heard. Mr Farage has had his account with British-banking stalwart Coutts shut down. They originally said it was a funding issue. But a document accessed by Mr. Farage suggests it has a lot more to do with his opinions and political beliefs than it is to do with the amount of cash he held in the bank (of which there was enough to meet the criteria). The move has somewhat backfired for Coutts. In an attempt to effectively render Mr. Farage null and void from anything associated with them, the story is now appearing in over 4.7 million search results on Google. The move has also brought up a whole area of political debate which is long overdue – how much can one’s freedom of speech impact your freedom to exist as a normal citizen? As Farage himself said on the BBC last night, “Is it reasonable that law abiding citizens can be de-banked and become non-people?” The British Prime Minister, Rishi Sunak (definitely no fan of Farage’s) even tweeted: “This is wrong. No one should be barred from using basic services for their political views. Free speech is the cornerstone of our democracy.” The straw that broke… Farage isn’t the only unpopular person to have found himself sat out in the cold from his bank. Others associated with Brexit and unpopular views to do with transgender rights have also been similarly treated. But, worryingly, there is nothing about Coutts’ actions that appear to go against any rules. As FCA Chair Ashley Alder told the Treasury Select Committee: “For banks as well as other commercial enterprises, it’s fundamentally up to them to choose who they do business with…I’m not aware of anything in the FCA rulebook that goes to the point around how banks judge their own attitude to reputational risk, if that’s what it comes down to.” So there you have it. If your bank doesn’t like something you legally stand for, or you legally tweeted, or someone you’re legally associated with, or something you can legally belong to then they can shut down your bank account. This is a very scary move indeed, and something anyone (regardless of beliefs or even social media use) should sit up and pay attention to. As Mr. Farage said himself, It isn’t right that a commercial bank can legally decide to make someone feel like that, to render someone’s existence to a point that they feel like they are a ‘non-person’. But, it seemingly isn’t illegal to do so. Buy gold, buy your own sovereignty Usually, we talk about gold and the role it plays in a balanced portfolio. How it acts as financial insurance in times of inflation or global economic stress and so on. But, cases such as Nigel Farage’s bring us back to the very original reason why people chose (and still choose) to hold gold: because it is theirs, and only theirs. The rise of debanking points to one of the biggest arguments to own gold – once your money is held within the banking system then you have very little control or say over how you can use it. The beauty of gold ownership is that it exists outside of a politically motivated banking system. A system that thinks more about its own image than it does about the security of your money and the ease at which you are allowed to use it.

Last night GoldCore Director Dave Russell had a quick chat with Patrick Karim of northstarbadcharts.com. Patrick walks us through the charts that have him convinced that the gold and silver are “the surest bet” and why “the genie is well and truly out of the bottle”. Much of the focus of the chat was in regard to gold and silver’s relationship to CPI and how and when it will react to changes in the inflation-metric. As Patrick says, gold “will sniff out the destruction of purchasing power”, well we couldn’t agree more. In fact, those who choose to invest in gold have long been aware of its ability to preserve value in a well-balanced portfolio, because of the impact of inflation on other asset classes. Furthermore, look out for chat about ‘coiling’, the numbers Patrick believes will signal a breakout, and why the genie is well and truly out of the bottle. As always, we’d love to know your thoughts on the interview, and please let us know if it’s prompted any question you’d like us to answer!

Watch as GoldCore Director Dave Russell takes us through the Five Steps to Protect Your Portfolio from the Coming Economic Storm, with Physical Gold. (This presentation is a recording from the Virtual Money Conference: Mid-Year Portfolio Review) The world is on the brink of great disorder. Dramatic, negative changes are set to impact portfolios and the majority of investors are not prepared for this. If you’re concerned about this, then you’re right to be. Let Dave Russell walk you through the opportunity to hold physical gold in your portfolio, the ultimate antifragile asset. Walking viewers through the following five steps, Dave ensures that you’ll be confident in your decision to insure your portfolio with gold, by the end of this short presentation. This presentation covers the following five steps: 1. Understand the role of gold in your portfolio 2. Decide what gold products to invest in – how to navigate the options 3. Decide what products not to invest in – how to identify inferior gold bullion options 4. How to choose between different storage options 5. Decide how much to invest in gold