Gold is having an amazing year thus far. Rising in ways that haven’t been seen in several years. With national (central) banks continually increasing their acquisitions, not to mention the number of different banks joining the fun, it’s no wonder gold is beginning to shine like new money – or is that the shimmer of real, actual money?
Gold, physical gold, is now beginning to grab headlines like it should all the time. As we have pointed out in the past every western world financial channel has a box in the lower third of the screen specific to both gold and silver. There is a reason for this – money. While gold only recently moved back on the balance sheets of national banks as a Tier 1 asset, silver is still in the “doghouse” when it comes to being considered a monetary metal. No worries, its day in the sun is coming soon enough. In the meantime, gold is getting a lot of well deserved attention.
Gold has risen 4.3 per cent this week, the largest increase since April 2016
Gold is poised for its best week since 2016 as the metal holds onto gains that propelled it past US$1,500 an ounce and silver trades near a 14-month high.
Both metals have rallied amid worries about the global economic outlook and as central banks around the world continue to cut interest rates. The ongoing trade war between the U.S. and China has also increased demand for haven assets, with traders and analysts in Bloomberg’s weekly survey near-unanimous on the bullish outlook for gold.
Spot gold gained 0.2 per cent to US$1,503.20 an ounce at 11:51 a.m. in London. The metal has risen 4.3 per cent this week, which would be the largest increase since April 2016. Spot silver rose 0.5 per cent to US$17.0122 an ounce. The Bloomberg Dollar Spot Index is headed for its first weekly decline in four weeks. Source
China has decided that 2019 is another good year to remain in the gold market and has posted another month of steady increase. This is now the eighth month in a row that China has added official gold to their balance sheet. Close to ten tons and more than 90 tons since December 2018.
There’s a powerful constant amid the to-and-fro of the U.S.-China trade war as currency policy gets dragged into the standoff between the world’s two top economies: Beijing wants more gold in its reserves.
China’s central bank expanded gold reserves again in July, pressing on with a run that stretches back to December. The People’s Bank of China raised holdings to 62.26 million ounces from 61.94 million a month earlier, according to data on its website. In tonnage terms, the inflow was close to 10 tons, following the addition of about 84 tons in the seven months to June. Source
I have had several conversations with people around the community and it seems there is a growing consensus that the bankers may not be able to beat gold and silver down like they have in the past. There has been so much attention regarding the proven in a court-of-law market rigging and manipulation this may force the bankers to move slower and hold back their aggressive moves to the downside.
Chris Powell, Secretary / Treasurer, GATA wrote a brilliant piece where he agrees the banks may not be able to make more aggressive moves but Chris sees it for different reasons than myself.
Your secretary/treasurer agrees that central banks won’t lose interest in controlling the gold price, and the scenario J.U. describes is plausible.
But now there is so much clamor from governments and central banks for currency devaluation — and, it seems, so much grasping by certain central banks for gold — serious downward pressure on the monetary metals may be very hard to maintain.
During the rise of the metals from 2000-2011 central bank policy seemed to be one of controlled retreat as they made cash settlements of their longstanding gold leases and disguised them as gold sales.
Central banks may revert to controlled retreat now that demand for the metals is increasing as a hedge against the insanity of the world financial system and the central banks themselves are splitting into opposing factions. Source
Of course, this doesn’t mean the bankers could make a completely outsized move to the downside in both metals before the sun goes down on this day. We have seen it before and don’t believe for a minute they are done with their price suppression scheme. What we believe is they have to use a little tact and finesse going forward. We are still of the same mind as we have been since 2009 – got physical gold and silver, close at hand?
