– Gold prices gained 16% in Q1 – best quarterly
performance since 1986
– Gains due to increasing global financial, macroeconomic and
monetary risk
– Stocks come under pressure – Flat in U.S.; Falls in Europe and Asia
– Sterling fell 20% on BREXIT concerns and the euro fell 11% against
gold
– Canadian dollar fell 10%, Aussie dollar fell 9% & Swiss franc
fell 12% against gold
– Outlook positive as gold and silver remain undervalued
– Reasserted role as safe haven in Q1
Year To Date Relative
Performance (Finviz)
Gold prices gained 16% in the first quarter and had their best
quarterly performance since 1986. Gold made gains due to continuing ultra
loose monetary policies, diminished U.S. rate-increase expectations, worries
about global economic growth, both U.S. and global geopolitical concerns
and turmoil in markets.
Most of the gains came in the first six weeks of the year when market
turmoil was at its worst and sharp falls were seen in stock markets. For
the quarter, the S&P recovered from losses and eked out a 0.9% gain,
the DJIA was 1.7 percent higher while the Nasdaq 100 fell 2.7% on
concerns of a new tech bubble.
Bloomberg
European stocks had a torrid quarter with the EuroStoxx 50 shedding 10.3
percent and the DAX down 9%. The Nikkei crashed 13.2% in the quarter as
the Japanese economy showed little signs of recovery and indeed looks on the
verge of a depression.
The dollar logged its worst quarterly performance since 1990 as the
Federal Reserve slowed the expected pace of interest rate hikes, citing
worries about the potential domestic impact of very weak global growth.
Sterling was the weakest major currency in the world and the British
pound weakened 2.5% against the dollar and 20% against gold over the course
of the quarter as worries about a possible U.K. exit from the European Union
led to traders selling sterling aggressively.
All currencies fell in gold terms even ones that were stronger than the
dollar. The yen was the strongest major currency in the world despite the
struggling Japanese economy. While it rose 7.1% against the dollar, it was 9%
lower versus gold.
Sterling fell 20% and the euro fell 11% against gold. The Canadian dollar
fell 10%, the Aussie dollar fell 9% and the Swiss franc fell 12% against
gold.
Gold started the year at $1,062, €974 and £716 per ounce and finished
the quarter at $1,233, €1,080.69 and £860.20 per ounce.
Geopolitical risk intensified with the risk of terrorism and war ever
present and gold continued to act as an important hedge against geopolitical
risk and indeed currency devaluations.
Further correction and consolidation remains a possibility given the
strong gains in the quarter. However, we expect currencies to continue to
fall in value versus gold in 2016 and competitive currency devaluations and
currency wars are set to return.
Even after recent gains, gold remains 35% below the nominal high in August
2011 and silver some 70% below its nominal high in April 2011. In inflation
adjusted or real terms, prices remain even more undervalued. This is
especially the case given the negative interest rate monetary backdrop and
other significant economic and geopolitical risks.
Gold reasserted its role as a hedging instrument and an important safe haven asset
in the quarter. Exactly, when investors needed gold to perform, as stocks and
currencies lost value in the quarter, gold outperformed. Once again, it
enhanced returns and reduced volatility for those with diversified
portfolios.
Gold Prices (LBMA)
01 April: USD 1,232.10, EUR 1,080.69 and GBP 860.20 per ounce
31 Mar: USD 1,233.60, EUR 1,085.50 and GBP 857.62 per ounce
30 Mar: USD 1,238.20, EUR 1,094.12 and GBP 860.23 per ounce
29 Mar: USD 1,216.45, EUR 1,087.71 and GBP 853.04 per ounce
24 Mar: USD 1,216.45, EUR 1,088.75 and GBP 861.89 per ounce
Silver Prices (LBMA)
01 April: USD 15.38, EUR 13.48 and GBP 10.76 per ounce
31 Mar: USD 15.38, EUR 13.52 and GBP 10.68 per ounce
30 Mar: USD 15.38, EUR 13.58 and GBP 10.68 per ounce
29 Mar: USD 15.06, EUR 13.44 and GBP 10.56 per ounce
24 Mar: USD 15.28, EUR 13.70 and GBP 10.82 per ounce
Gold News and Commentary
This 100kg gold coin goes on sale for £3.8m with GoldCore (Telegraph)
Gold scores biggest quarterly gain in nearly 30 years (Marketwatch)
Europeans `Concerned About Future’ Buy Gold, Austrian Mint Says
(Bloomberg)
Gold heads for best quarter since 1986 (Bloomberg)
UK deficit balloons to €41bn even as economy grows (Independent)
Silver fund holdings surge most since 2013 as price rally fades (Mineweb
via BBG)
“Better Prospects For Gold” – GFMS (Reuters via Yahoo)
Still More Upside For Gold ($1,488): Strategist (CNBC)
Daily Gold and Silver Digest – (Ed Steer)
Investors Warned: Market Turmoil Could Return (Examiner)
Yellen Says “Party On” – Stepek Says “Own Some Gold” (Money Week)
Read More Here
‘7 Real Risks To Your Gold Ownership’ – Must Read Gold Guide Here
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