In the special part of the current edition of the Market Overview, which has been already released, we have analyzed who, among the five candidates, would be the best and the worst for the gold market as the next Fed Chair. In the rest of the report, we will focus on the “mystery of lacking inflation” and its implication for the gold market. We will also examine the potential effects of lowering the inflation target by the Fed or of adopting a more rule-based approach, in line with Taylor’s ideas. Last but not least, we will, as usual, provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last month and what investors should expect in the last two months of the year. In particular, we will analyze whether the December curse is likely to happen, i.e. whether the gold will bottom in the last month of the year, as it did in both 2015 and 2016.

• Read more

President Trump is to announce the next chair of the Federal Reserve soon. We invite you to read our today’s article about the candidates for the Fed Chair and find out who will be the best (and who the worst) for the gold market.

• Read more

In the last edition of the Market Overview, we focused on the economic rebound in the Eurozone and geopolitical threats from North Korea. In this issue of our report, we stay in Asia, as we will analyze the link between the Chinese currency and gold. We will also examine China’s role in the gold market, as well as the recent developments in the China’s economy. Last but not least, we will, as usual, provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last quarter and what investors should expect in the last three months of the year.

• Read more

In the last edition of the Market Overview, we noted that “Europe has recently been among the most surprising positive economic regions in the world.” In this issue of our report, we will, as usual, provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last month and whether the sideways trend in the gold market will finally end, given the recent gold’s jump above $1,300. We will focus on the current developments in the Old Continent, examining in detail whether the Eurozone economy has really accelerated and, if yes, what it implies for the gold market. We will also study how the yellow metal has reacted historically to threats from North Korea – such an analysis should help investors to take appropriate positions in the gold market during the elevated tensions between the U.S. and North Korea.

• Read more

In the last edition of the Market Overview, we analyzed the investment potential of platinum and palladium. We noted that the decline in diesel vehicles and the growth of electric cars could disrupt the demand for both these metals. In this issue of our report, we will dig into this topic, examining in detail how the looming changes in the automotive industry are likely to affect the precious metals. Last but not least, we will also provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last month. In particular, we will focus on the recent hawkish shift among the major central banks in the world.

• Read more

Investing in precious metals is generally associated with gold and silver. However, this group of chemical elements also includes the platinum-group metals, of which platinum and palladium are the most widely traded. This is why in this edition of the Market Overview we will analyze the investment potential of these two precious metals. To achieve this goal, we will examine the demand and supply outlook for these white metals and the pros and cons of adding them to one’s precious metals portfolio.

We also provide investors with an update on recent fundamental drivers of the gold market, answering the question how the medium-term outlook for the gold market has changed over the last month. In particular, we will summarize the first half of 2017 in the gold market from the perspective of its fundamentals. This analysis should help investors draw investment conclusions for the remainder of the year.

• Read more

In the previous edition of the Market Overview, we pointed out that “geopolitical risks clearly won with a hawkish Fed in a tug of war in the gold market.” However, the French presidential election was a turning point for the yellow metal, which started to decline after centrist Emmanuel Macron triumphed in the first round. Gold lost about 4.8 percent between April 21 and May 9, when the recent rally has begun. Does it mean more bearish outlook for the gold market?

In this edition of the Market Overview, we will provide an investors update on recent fundamental drivers of the gold market, answering the question how the medium-term outlook for the gold market has changed over the last month. In particular, we will outline a macroeconomic outlook in the context of a ‘reflation debate’. Is reflation coming or was the recent uptick in inflation only temporary? We will also analyze geopolitical changes and their possible implications for the gold market, focusing on the impact of diminished risk premium on the yellow metal. We will also examine how the EUR/JPY exchange rate can affect the price of gold, as some analysts point out the negative correlation between this cross rate and gold price. And finally, we will find out whether gold mining production has peaked and whether it is important for gold investors at all.

• Read more

In the first quarter of 2017 gold gained about 9 percent. In April, the yellow metal continued its rally due to the uncertainty about French elections and due to rising tensions about Syria and North Korea. Geopolitical risks clearly won with a hawkish Fed in a tug of war in the gold market. Does it mean more bullish outlook for the gold market?

In this edition of the Market Overview, we will provide investors update on recent fundamental drivers of the gold market. In particular, we will analyze the most important geopolitical developments – such as presidential elections in France, the formal triggering of Brexit and changes in Trump’s stance – and their possible implications for the gold market. We will also examine the macroeconomic front, focusing on the receding ‘Trump rally’ and the Fed’s plans to shrink its balance sheet. How has the medium-term outlook for the gold market changed over the last month?

• Read more

Gold started well this year: it rallied about 9 percent in the first quarter of 2017 (and about 11 percent from the bottom at the end of December 2016). Has it entered a bull market, or have we just witnessed a correction before the storm? On the one hand, fundamental factors remain rather negative for the yellow metal over the medium-term. However, gold prices have recently shown a remarkable resilience to hawkish comments and actions from the Fed. What does it mean for the gold market and which way will gold go?

In this edition of the Market Overview, we will dig into several important changes which have happened since our latest update. In particular, we will analyze the impact of the March FOMC meeting on the yellow metal. We will also examine the Trump’s recent actions, as well as geopolitical developments in Europe, and their potential implications for the price of gold. Last but not least, we will summarize the first quarter in the gold market from the perspective of its fundamentals. This analysis should help investors draw investment conclusions for the remaining part of the year.

• Read more

In January, Gold prices were in an upward trend as investors hedged against uncertainty about Trump’s policies. On the other hand, the macroeconomic picture seems to be rather negative for the yellow metal in the medium term. Which driver will prevail?

In this edition of the Market Overview, we will focus on the interplay of different factors on the gold market. Will gold shine as a safe-haven asset thanks to political uncertainty about Trump’s actions, and the downward risks in Europe (such as elections in France and Germany)? Or will we see acceleration in global growth led by the United States and see Fed tightening which will send gold prices south? Are we witnessing the replay of 2016 in the gold market, when the price of the yellow metal soared in the first quarter, or was the January rally only a correction in a bear market?

• Read more

Reflation has been one of the keywords for the markets in the last few months. More and more signals indicate that inflation is beginning to rise all over the world. What does it mean for the global economy and the gold market?

In this edition of the Market Overview, we will analyze the gold’s performance in the reflationary scenario. We will examine what is happening in markets right now and if such inflation is really coming. We will also delve into the causes of the current inflationary trends – are they rooted in Trumponomics and Great Fiscal Rotation only or are they independent from them? Are they merely temporary developments or lasting tendencies? Will the comeback of inflation be positive or negative for the global economy and the gold market? Is stagflation a new threat for the world and an opportunity for the yellow metal?

• Read more

Although in our previous annual summary, we claimed that 2015 was a “fascinating time for the global economy and the gold market”, it turns out that 2016 was even more captivating. The last year started with a Chinese bang, when the global stock markets – worried about the economic slowdown in China – plunged. Next, the Japanese shook the world by introducing negative interest rates. Investors were also preoccupied with the FOMC members’ remarks, the Deutsche Bank’s problems, the difficult situation of the Italian banking system, terrorist attacks in Europe, and the disastrous U.S. payroll employment in May. However, the biggest shocks of the last year came later, with the surprising outcomes of the Brexit vote and the U.S. presidential election. This year ended with the second Fed hike in a decade.

In this edition of the Market Overview, we will summarize the last year in the gold market from the perspective of its fundamentals. This analysis should help investors better understand the gold market, and draw investment conclusions for the new year. We will also present our gold outlook for 2017, focusing on the impact of the Fed’s rise and Trump’s policies on the price of gold. Given that in the long run the gold trade is generally about the Fed’s actions and confidence in the U.S. economy, the path of interest rates may be the biggest driver in the gold market in the next year.

• Read more

Ladies and Gentleman, Donald J. Trump has been elected the 45th president of the United States! Who would have thought that a real estate mogul without political experience would win the U.S. presidential election? But this really happened, becoming the next big shock after the surprising decision of Britons to exit the European Union. Talking heads will be analyzing for months why Trump won. Some argue that Hillary Clinton was a bad choice for Democrats (she is the personification of the establishment and all the scandals around her did not help); others point out the revolt against a corrupted system and elites, political correctness and globalization; the special character of social media which paved Trump’s way for the presidency; or that Trump just listened to the American people, especially forgotten men and women from Middle America.

In this edition of the Market Overview, we will focus not on causes, but on consequences of the Trump’s presidency for the global economy and the gold market. Most analysts believed that gold should benefit from Trump’s victory, however gold’s response to his success calls this thesis into question (we mean not the initial move in the election evening, but the following developments). We will discuss how Trump could affect U.S. monetary policy and analyze his agenda, including the first 100 days, and its potential effects for the precious metals. Will the boosted infrastructure spending and tax cuts widen the fiscal deficit and weaken confidence in the U.S. dollar, or spur economic growth and cause inflation? Will Trump’s trade and foreign policies result in geopolitical chaos and recession? Will gold benefit from the upcoming presidency as an inflation hedge, safe haven and a bet against the greenback? Or will Trump revive the economy, but without triggering the negative consequences mentioned above? Will the gold prices fall? Or perhaps Trump's policies will turn out to be irrelevant for the gold market.

• Read more

On the same day in September, two of the world’s major central banks held very important but very different monetary policy meetings. The Fed again did nothing, while the Bank of Japan (BoJ) adopted another non-standard policy measures. Anyway, both central banks continue their unconventional strategies, despite strong evidence that they have been failing. The current U.S. recovery is the worst since the WWII, in spite of all the rounds of quantitative easing and zero interest rate policy. The case of Japan is even more depressing, as the country has been stuck in a sluggish growth for the last 26 years, despite quantitative easing, ZIRP and NIRP.

In this edition of the Market Overview, we will focus on the relationship between the Bank of Japan’s actions and gold. In particular, we will discuss the recent changes in the BoJ’s monetary policy framework and their consequences for the precious metals market. It is always worth analyzing the BoJ’s measures, as they are often copied by the Fed. We will also analyze the link between the yellow metal and the yen, as there is a growing conviction that both assets behave like safe havens.

• Read more

The Great Recession prompted central banks to adopt non-standard policies like quantitative easing and zero interest rates. The effectiveness of these tools in stimulating private credit expansion and economic growth is increasingly being questioned. Since more and more central bankers declare that the natural interest rate is lower than previously thought, some economists and policymakers argue that monetary policy should be even more unconventional. For example, according to San Francisco Fed President John Williams, a lower natural rate implies that “conventional monetary policy has less room to stimulate the economy during an economic downturn”.

In this edition of the Market Overview we will discuss which tools affecting inflation and real activity do the central banks have left. We will examine thoroughly the most debated innovative instruments, such as helicopter money, and consider how these ‘non-standard unconventional’ tools affect the economy and the gold market. It is quite unlikely that they will be introduced in the U.S. right now, but they may be only one recession away from us. This is why we decided to analyze them – quantitative easing was only an academic curiosity, once. We will also analyze recent propositions to change current monetary policy framework by increasing the inflation target or by replacing it by price level or nominal GDP targeting. Last but not least, we will address briefly the policy of targeting the long-term interest rates, introduced last month by the Bank of Japan. Investors should not ignore the change of its monetary policy framework as history teaches us that many of the unconventional tools adopted by the BoJ have been later adopter by other central banks, including the Fed. How would these proposals, if implemented in the U.S., influence the precious metals market? What's the true link between unconventional monetary policy and gold?

• Read more

As the British referendum is behind us, the most important political risk is the outcome of the U.S. presidential election. This is why in this edition of the Market Overview, we will discuss its impact on the gold market in more detail. We will present the theory of the presidential election cycle and examine how the shiny metal performed in recent presidential election years. We will also analyze how gold behaved during different presidential terms and study whether the governing party matters for the bullion market. And of course we will apply the conclusions from our historical analysis to the current race to the White House between Donald Trump and Hillary Clinton.

• Read more

In this edition of the Market Overview, we will discuss the Brexit vote in more detail. We will examine the reasons behind such an outcome and its consequences for the U.S. economy and the gold market. We will also analyze past examples of break-ups of political and economic unions, including exits from the European Union, to assess the potential impact of Brexit on the price of gold.

Investors have to remember that the referendum was not a formal, legally binding trigger for Brexit, so the United Kingdom is still a member of the EU. Actually, its exit has not been determined yet. And as there are some arguments that Brexit will not happen, there are precedents for countries voting against the EU, but remaining within it after all. In 1992, Denmark vetoed the Maastricht Treaty. Ireland rejected the Nice Treaty in 2001 and the Lisbon Treaty in 2008. In each case, the EU offered some concessions and opt-outs, thanks to which the treaties were ultimately accepted in the following referenda. Therefore, history may repeat itself in the case of the UK, especially when both sides fully realize the consequences of Brexit (some analysts consider them prohibitive). It would be definitely a much less gold-friendly scenario.

However, investors should be prepared for the worst, especially since the lack of a market crash after the referendum lowered the cost of exit. How would Brexit happen? According to the Treaty on European Union, to formally initiate the exit procedure, the UK has to give its notice under  (theoretically, the UK could ignore this legal route and simply leave the EU without invoking that clause, but such an option would be even more costly, as it would keep many details of withdrawing from the EU unresolved – this scenario would thus be the best for the gold market). David Cameron did not trigger it and it is still unclear when Theresa May, the new British Prime Minister, will invoke this article, if at all. Then, the EU shall negotiate and conclude an agreement with the UK, setting out the arrangements for its withdrawal and taking account of the framework for its future relationship with the EU. The treaty gives two years to negotiate a withdrawal agreement – and once this time is up, the UK is out with a deal or without one, “unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period”. As one can see, the procedure is not very detailed. There are many unknowns: for example, how and when the UK should make note of its exit. During this process the UK government will have to make many important decisions, including the future of its relationship with the EU. Therefore, we will also analyze the UK’s options are outside the European Union.

• Read more

In this edition of the Market Overview, we will discuss the relationship between gold and gold stocks. We will examine the historical price movements of the shiny metal and some gold equity indices. We will also analyze the pros and cons of investing in gold stocks when compared to other gold investments. Do you want to know what are the most important gold stock indices and how to benefit from monitoring them? This edition of the Market Overview focuses on the ratios between gold and gold stocks indices, showing how to use them as an investment tool. A relative analysis of bullion to gold stocks can help understand what is happening in the precious metals market.

Before we turn to the main topic, we will briefly address the British referendum on the United Kingdom’s membership in the European Union and its implication for the gold market. Britons decided to leave the EU – so what does it imply for the gold market?

• Read more

In this edition of the Market Overview, we will discuss the relationship between gold and other precious metals. We will analyze the historical price movements of gold, silver, platinum and palladium. Do you want to know what the ratios between gold and other precious metal prices are and what the normal ranges for them are? Is the gold-to-silver ratio too high, and must return to its historic average of 16? This edition of the Market Overview will answer these questions and show you why these ratios are useful, and how to benefit from them. A relative analysis of precious metals prices often signals bull and bear markets or indicates when to reallocate investment positions between gold and other precious metals.

• Read more

In this edition of the Market Overview, we will discuss the gold lending and swap market – a misunderstood and overlooked part of the gold market. Are you confused by the talk of gold backwardation, the gold lease rates (GLR) or the gold forward offered rates (GOFO)? This edition of the Market Overview will show you how these gold market-related interest rates and the price of gold interfere with each other. We will also discuss how the gold leasing is conducted, how it is linked to the gold prices, and why gold is leased at all. Last but not least, we will analyze whether the leasing of gold by central banks affects the price of gold, what negative gold forward rates mean, and how to interpret the occurrence of backwardation in gold.

• Read more

In the July edition of the Market Overview, we wrote that the investment demand drives the gold prices, because only professional investors (not consumers) provoke a stable, sustainable rise (or decline) in the gold prices. A month later, in the August edition, we analyzed the most important motives for investing in gold: hedge against inflation, insurance against financial turmoil and portfolio diversifier. However, we have not examined yet how the investors’ actions actually affect the gold market, so this time, we fill the gap and analyze how the changes in sentiments among gold investors drive the price of gold. We will focus on Comex, which is the largest and the most influential gold futures marketplace in the world (as was shown in March). Additionally, we will also address two other issues our readers often ask about: the impact of ETFs’ flows on the price gold and the way the gold ETFs really work. From this analysis investors should come to understand the gold market and its true drivers (e.g., how motivations of Comex participants affect the gold prices), as well as learn a few practical investment clues, especially how to interpret the COT reports and profit from them.

• Read more

In the previous editions of the Market Overview, we described the factors driving the price of gold along with the ones that do not affect it. We showed that the gold market is one of the most complicated markets in the world. Indeed, its structure is not very transparent, as gold is traded in many markets all over the word, and the majority of its volume is exchanged in the over-the-counter (OTC) markets. This is why analysis of the structure and mechanics of the gold market is so valuable.

In this edition of the Market Overview, we will examine how the gold market really works and how the price of gold is determined. We will describe the structure of the gold market and how it functions, focusing on the U.S. futures market and the London spot market, the two most important gold marketplaces in the world. From this analysis investors should come to understand the gold market and its true drivers, as well as learn a few practical investment clues.

• Read more

In the July edition of the Market Overview, we showed that the gold market is one of the most complicated markets in the world. Its complexity and uniqueness (gold neither derives its economic value from its yield nor from consumption or being used as an input in production) make people differ in their opinions about it. Many gold investors believe that the market for gold is systematically manipulated. There are many variations of this theory: some say that the precious metals are under the thumb of central bankers, while others blame big banks and their use of derivatives (‘naked’ shorts) and high-frequency trading for the declines in the price of gold. There are also worries about the discrepancy between paper gold and physical gold, the fairness of London trading, declining inventories at Comex and leasing of gold by central banks.

In this edition of the Market Overview, we will try to examine these views so investors have a better understanding of the gold market and its true drivers. Our analysis should, as always, enable investors to draw important investment conclusions.

• Read more

What a year! This fascinating time for the global economy and the gold market began with big news from Europe. The Swiss National Bank shocked the currency market, removing the peg of 1.20 franc per euro, the European Central Bank announced its QE program, the radical left-wing Syriza won the elections in Greece (in a few months, Greece would become the first advanced economy missing the payment to the International Monetary Fund), and negative interest rates made themselves comfortable in several European countries for good. Then, the attention moved to the emerging markets. The U.S. dollar appreciated further and commodity prices continued their decline, pushing Russia, Brazil and several other countries into recession. The economic slowdown in China, devaluation of the yuan and stock market crash in Shanghai, which caused the global stock market selloff in August, raised the biggest concerns. The geopolitical situation remained unstable, especially in Ukraine and the Middle East, leading to the migration crisis in Europe, the growth of terrorism, and eventually multiple terrorist attacks all over the world (in Paris, among others). In November, the IMF added the yuan into its SDR currency basket. And finally, the Fed hiked interest rates for the first time in almost 10 years.

In this edition of the Market Overview, we summarize the last year in the gold market from the perspective of its fundamentals. This analysis should help investors better understand the gold market, and draw investment conclusions for the new year. We will present our gold outlook for 2016, focusing on the impact of the Fed’s rise on the price of gold. Given that the gold trade is generally about the Fed’s actions and confidence in the U.S. economy, the future path of interest rates may be the biggest driver in the gold market this year.

• Read more

We continue our series about the drivers of the price of gold. In the previous edition of Market Overview, we focused on the somewhat overlooked impact of the bond market on the yellow metal and analyzed the relationship between gold and changes in bond prices, credit spreads, yield curve and the financial sector’s strength. In December we analyze how the very well-known macroeconomic reports: GDP, labor market indicators (e.g. nonfarm payrolls), inflation indicators (e.g. Personal Consumer Expenditures Price Index or Producer Price Index), and reports on consumer activity (such as Personal Income and Outlays and Retail Sales) affect the gold market. These indicators do not always have a direct influence on the price of gold, but they often affect the Fed’s actions and markets expectations on future economic growth, and thus indirectly the gold market.

Given that the gold trade is generally about the Fed’s credibility and confidence in the U.S. economy, the above-mentioned reports may significantly change the precious metals market. Indeed, gold is the most sensitive commodity to macroeconomic announcements, according to the IMF Working Paper “The Effects of Economic News on Commodity Prices: Is Gold Just Another Commodity”. The best example is the October Employment Situation Report, which stood behind the plunge of the shiny metal at the beginning of November. This is why it is worth analyzing the links between economic indicators and the gold market.

• Read more