Gold bullion jumped 4 percent yesterday to $1,244.20/oz, its biggest single-day percentage rally since 2013. For the week, gold is 7.2% higher which is its biggest weekly gain since the global financial crisis in 2008.
Asset Performance – 1 Week
Gold and silver have benefited along with high credit government bonds from a rush to safety as investors worry about the health of banks, the banking system and the risk of a global recession. Gold is now 16.7% higher year to date. Analysts and traders see more gains ahead as the weakness in equities is likely to continue.
Silver is 6.3% higher for the week bringing year to date gains to 14%. Both look over valued in the short term and are due a pullback. Prices could continue to rise, making dollar cost averaging prudent. Buyers should be getting into position to buy on the next dip.
Bullion dealers around the world, including GoldCore, have seen a surge in demand for gold and silver. Buyers, who had been waiting for signs that the market had bottomed and a clear uptrend for the precious metals, are allocating funds now. There are some first time buyers coming into the market but demand is mostly coming from bullion buyers adding to allocations.
Global demand for both metals remains robust and has increased as stocks have fallen sharply in recent days. This robust demand is seen in the latest World Gold Council report – Gold Demand Trends released yesterday.
Central banks continue to be some of the largest buyers of gold. Demand for gold bullion from central banks grew by 25% in the fourth quarter of 2015 to 167 metric tons, compared with 134 metric tons the same time last year, according to the World Gold Council’s latest report.
Via Marketwatch
We have long asserted that given the scale of foreign exchange reserves held by central banks, official diversification into gold was likely to continue until their allocations have risen from the extremely low levels of today. As a percentage of overall fx reserves, gold allocations remain extremely small.
This is particularly the case with China and Russia – the two largest buyers of gold today.
Demand for jewellery, bullion bars and coins totaled 934.9 tonnes in Q4 2015, almost matching the Q4 2014 total (938.3 tonnes) and exceeding its 5-year average (913.8 tonnes). This demand has almost certainly increased in recent weeks given concerns about the global economy and the real risks of a new global financial crisis.
Assets in the world’s biggest gold exchange-traded fund, the SPDR ETF, rose 2% yesterday, the biggest inflow in two months. Total holdings of the top eight gold ETFs have surged 3.8-million ounces so far this year, after three consecutive years of decline.
The smart money is reducing exposure to risky assets and continuing to diversify into precious metals. This trend is likely to continue given the scale of the financial and economic challenges facing investors today.
Banks, economists, brokers, financial advisers and other experts did not see the first crisis coming in 2008 and many of them are not seeing it now.
A handful of people are warning about the risks of the coming crisis and again they are largely being ignored. Investors and savers will again bear the brunt for the inability to look at the reality of the financial and economic challenges confronting us today.
Diversification and an allocation to precious metals remains vital in order to protect and preserve wealth in the coming global financial crisis.
LBMA Gold Prices
12 Feb: USD 1,239.50, EUR 1,098.65 and GBP 852.07 per ounce
11 Feb: USD 1,223.25, EUR 1,080.80 and GBP 847.33 per ounce
10 Feb: USD 1,183.40, EUR 1,052.29 and GBP 816.56 per ounce
9 Feb: USD 1,188.90, EUR 1,061.90 and GBP 822.31 per ounce
8 Feb: USD 1,173.40, EUR 1,050.16 and GBP 810.44 per ounce
Gold and Silver News and Commentary
Gold Heads for the Best Week Since 2011 as ‘Fear Is in Control’ – Bloomberg
Gold eyes best week in 4 years as market turmoil boosts haven appeal – Reuters
Even Gold Bulls Underestimated 2016 Gain Now Topping Most Assets – Bloomberg
Investors ‘go bananas’ for gold bars as global stock markets tumble – Telegraph
Gold Futures Roar to One-Year High, Near Bull-Market Territory – Bloomberg
As worries mount, European banks face sell-off more savage than 2008 – Reuters
Video: Gold on the Cusp of a Bull Market – Bloomberg
This Chart Shows Just How Wrong the Gold Skeptics Were – Profit Confidential
World Gold Council Report: Central Bank Buying Up 25% From Q415 – Value Walk
Video: $102 Billion of Bank Debt That’s Making Investors Nervous – Bloomberg
Video: Dalio Thinks the Fed Can Repeat 1937 All Over Again – Bloomberg
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