What a year it has been so far for Gold.
The yellow metal extended gains to an eight-month high as fallout from geopolitical turmoil including US-China trade tensions, a WW3-inducing Venezuelan ‘coup’, and Brexit uncertainty has spurred demand for the safe-haven metal. Spot Gold is now at its highest since May 2018 against the US Dollar.
Here are five things to look out for this year.
- It’s pretty late in the credit cycle and we can see that government deficits are set to increase. This is an interesting phenomenon in the developed world as an increase of monetary inflation, coupled with lower tax receipts and risks of a slowing global economy – could well see the “hedge” trade in place – whereby funds are placed into Gold.
- China’s reducing demand and slowing international trade is seen as one of the largest concerns among investors, and as such the precious metal again could well be sought as a further safe-haven.
- De-dollarization – is a big theme of late with big players in Asia turning their backs on US dollar settlement trading. This, in turn, has a profound impact on central bank reserves, not just in Asia, but other trading counterparts.
- Central European nations have been accumulating Gold reserves at record rates, clearly catching wind of the Asian trends.
- Gold is becoming massively under-owned in the West, notably with Gordon Brown selling half of the UK’s Gold reserves for less than $1k an ounce (ouch!)