Gold Outlook 2021

https://www.gold.org/goldhub/research/outlook-2021
14 January 2021

Economic recovery and low interest rates set the tone

The COVID-19 pandemic raised uncertainty by compounding existing risks and creating new ones. But by the end of last year, investors were optimistic that the worst was over.

Looking ahead, we believe that investors will likely see the low interest rate environment as an opportunity to add risk assets in the hope that economic recovery is on the immediate horizon. That said, investors will likely also be navigating potential portfolio risks including:

  • ballooning budget deficits
  • inflationary pressures
  • market corrections amid already high equity valuations.

In our outlook for gold, we believe investment demand will remain well supported while gold consumption should benefit from the nascent economic recovery, especially in emerging markets.





Gold gained from risk, rates and momentum
Gold was one of the best performing major assets of 2020 driven by a combination of:

high risk
low interest rates
positive price momentum – especially during late spring and summer.
Gold also had one of the lowest drawdowns during the year, thus helping investors limit losses and manage volatility risk in their portfolios (Chart 1).

By early August, the LBMA Gold Price PM reached a historical high of US$2,067.15/oz as well as record highs in all other major currencies (Table 1). While the gold price subsequently consolidated below its intra-year high, it remained comfortably above US$1,850/oz for most of Q3 and Q4, finishing the year at US$1,887.60/oz.

Interestingly, gold’s price performance in the second half of the year seemed to be linked more to physical investment demand – whether in the form of gold ETFs or bar and coins – rather than through the more speculative futures market. For example, COMEX net long positioning reached an all-time high of 1,209 tonnes (t) in Q1 but ended the year almost 30% below this level. We believe this was due to the dislocation that COMEX futures experienced in March relative to the spot gold price, making it more expensive to hold futures compared to other choices.

Investors’ preference for physical and physical-linked gold products last year further supports anecdotal evidence that, this time around, gold was used by many as a strategic asset rather than purely as a tactical play.

Gold Outlook Chart 1: Gold outperformed major assets in 2020
Yearly returns and maximum drawdowns of select assets*

Return
Download
Maximum drawdown
Annual return
NASDAQ
Gold
S&P 500
EM stocks
Global Treasuries
US Corporates
US Treasuries
US HY
EAFE stocks
Commodities
Oil
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
Sources: Bloomberg, ICE Benchmark Administration, World Gold Council; Disclaimer

*As of 31 December 2020. Returns based on the LBMA Gold Price, Bloomberg Barclays US Treasury Index and Global Treasury Index ex US, Bloomberg Barclays US Corporate and High Yield Indices, MSCI EM Index, Bloomberg Commodity TR Index, MSCI EAFE Index, S&P 500 & NASDAQ Indices, and Bloomberg Oil TR Index. Maximum drawdown computed relative to the 2020 initial value for each respective index.




Gold Outlook Table 1: The gold price is near or above record highs across key currencies
Gold price and annual return in key currencies*

USD
(oz) EUR
(oz) JPY
(g) GBP
(oz) CAD
(oz) CHF
(oz) INR
(10g) RMB
(g) TRY
(oz) RUB
(g) ZAR
(g) AUD
(oz)
2020 return 24.6% 14.3% 18.4% 20.8% 22.4% 13.8% 27.6% 17.0% 55.6% 48.4% 30.9% 13.5%
Year-end price 1,888 1,543 6,266 1,381 2,405 1,669 44,343 396.9 14,030 4,489 891 2,446
Record high 2,067 1,746 7,013 1,573 2,749 1,883 49,803 461.5 16,518 4,907 1,165 2,863
Date† 6 Aug 6 Aug 6 Aug 6 Aug 6 Aug 6 Aug 6 Aug 6 Aug 6 Nov 2 Nov 6 Aug 6 Aug
Source: Bloomberg, ICE Benchmark Administration, World Gold Council

*As of 30 December 2020. Based on the LBMA Gold Price PM in local currencies: US dollar (USD), euro (EUR), Japanese yen (JPY), pound sterling (GBP), Canadian dollar (CAD), Swiss franc (CHF), Indian rupee (INR), Chinese yuan (RMB), Turkish lira (TRY), Russian rouble (RUB), South African rand (ZAR), and Australian dollar (AUD).
† All dates correspond to 2020.



Gold investment to react to rates and inflation
Global stocks performed particularly well during November and December, with the MSCI All World Index increasing by almost 20% over the period. However, rising COVID-19 cases and a reportedly more infectious new variant of the virus created a renewed sense of caution. Yet, neither this nor the highly volatile US political events during the first week of 2021 have deterred investors from maintaining or expanding their exposure to risk assets.

The S&P 500 price-to-sales ratio is at unprecedented levels (Chart 2) and analysis by Crescat Capital suggests that the 15 factors that make up their S&P 500 valuation model are at – or very near – record highs. Going forward, we believe that the very low level of interest rates worldwide will likely keep stock prices and valuations high. As such, investors may experience strong market swings and significant pullbacks. These could occur, for example, if vaccination programmes take longer to distribute – or are less effective – than expected, given logistical complexities or the high number of mutations reported in some strains.

Gold Outlook Chart 2: Equity market valuations continue to climb
Price-to-sales ratio for the S&P 500*

Price-to-sales
Download
2000
2010
2020
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Sources: Bloomberg, World Gold Council; Disclaimer

*As of 11 January 2021. Based on weekly data.



In addition, many investors are concerned about the potential risks resulting from expanding budget deficits, which, combined with the low interest rate environment and growing money supply, may result in inflationary pressures. This concern is underscored by the fact that central banks, including the US Federal Reserve and European Central Bank, have signalled greater tolerance for inflation to be temporarily above their traditional target bands.1

Gold has historically performed well amid equity market pullbacks as well as high inflation. In years when inflation was higher than 3%, gold’s price increased 15% on average. Notably too, research by Oxford Economics2 shows that gold should do well in periods of deflation. Such periods are typically characterised by low interest rates and high financial stress, all of which tend to foster demand for gold.

Further, gold has been more effective in keeping up with global money supply over the past decade than US T-bills, thus better helping investors preserve capital (Chart 3).

Gold Outlook Chart 3: Gold has kept up with money supply growth
Global M2 growth, US 3m T-bill total return, gold price*

Index level
US$/oz
Download
3-month T-Bill (lhs)
Global M2 (lhs)
Gold (rhs)
2000
1975
0
500
1,000
1,500
2,000
2,500
0
400
800
1,200
1,600
2,000
Sources: Bloomberg, ICE Benchmark Administration, Oxford Economics, World Gold Council; Disclaimer

*As of 31 December 2020. Based on global M2 cumulative growth measured in USD, total return index of 3-month US T-bill and LBMA Gold Price PM USD.



EM economic recovery to benefit consumer demand
Market surveys indicate that most economists expect growth to recover in 2021 from its dismal performance during 2020.3 And although global economic growth is likely to remain anaemic relative to its full potential for some time, gold’s more stable price performance since mid-August may foster buying opportunities for consumers.

The economic recovery may particularly realise in countries like China, which suffered heavy losses in early 2020 before the spread of the pandemic was controlled more effectively than in many western countries. Given the positive link between economic growth and Chinese demand, we believe that gold consumption in the region may continue to improve.

Similarly, the Indian gold market appears to be on a stronger footing. Initial data from the Dhanteras festival in November suggest that while jewellery demand was still below average, it had substantially recovered from the lows seen in Q2 of last year.

However, with the global economy operating well below potential and with gold prices at historical high levels, consumer demand may remain subdued in other regions.

Central bank demand not going away
After positive gold demand in H1, central bank demand became more variable in the second half of 2020, oscillating between monthly net purchases and net sales. This was a marked change from the consistent buying seen for many years, driven in part by the decision of the Central Bank of Russia to halt its buying program in April. Nonetheless, central banks are on course to finish 2020 as net purchasers (although well below the record levels of buying seen in both 2018 and 2019). And we don’t expect 2021 to be much different. There are good reasons why central banks continue to favour gold as part of their foreign reserves (see our Central Bank Gold Reserve Survey 2020) which, combined with the low interest rate environment, continue to make gold attractive.

Mine production likely to improve
Recovery in mine production is likely this year after the fall seen so far in 2020. Production interruptions peaked during the second quarter of last year and have since waned.

While there is still uncertainty about how 2021 may evolve, it seems very likely that mines will experience fewer stoppages as the world recovers from the pandemic. This would remove a headwind that companies experienced in 2020 but that is not commonly part of production drivers. Even if potential second waves impact producing countries, major companies have introduced protocols and procedures that should reduce the impact of stoppages compared to those seen in the early stages of the pandemic.

Putting it all together
The performance of gold responds to the interaction of the various sectors of demand and supply, which are, in turn, influenced by the interplay of four key drivers (Focus 1). In this context, we expect that the need for effective hedges and the low-rate environment will keep investment demand well supported, but it may be heavily influenced by the perceptions of risk linked to the speed and robustness of the economic recovery.

Focus 1: Drivers of gold performance
Gold’s behaviour can be explained by four broad sets of drivers:

Economic expansion: periods of growth are very supportive of jewellery, technology and long-term savings
Risk and uncertainty: market downturns often boost investment demand for gold as a safe haven
Opportunity cost: interest rates and relative currency strength influence investor attitudes towards gold
Momentum: capital flows, positioning and price trends can ignite or dampen gold’s performance
Focus 1
At the same time, we anticipate that the economic recovery in some emerging markets, such as China and India, may limit some of the headwinds the gold market experienced in 2020 caused by extremely weak gold consumption.

Using Qaurum, our gold valuation tool (Focus 2), we analysed the performance of gold as implied by five different hypothetical macroeconomic scenarios provided by Oxford Economics. These are: 4

a steady economic recovery (their base-case scenario)
a delayed recovery
a deep financial crisis
a rapid economic upturn
a global second wave.
The results of the analysis suggest that, in general, gold may see a positive, though more subdued, performance in 2021.5 This may be driven primarily by a recovery of consumer demand relative to 2020 as economic conditions improve. In addition, gold’s performance may be boosted further by the prolonged low interest rate environment which would all but remove the opportunity cost of investing in gold.

Alternatively, our valuation model suggests that a global economic relapse from COVID-19 or any other unforeseen risks could result in weak consumer demand, thus creating a headwind for gold’s performance. However, a risk-off environment such the one captured by Oxford Economics’ “deep financial crisis” or “global second wave” may result in strong gold investment demand, which could offset low consumption as it did during 2020. Historically, this behaviour has occurred as investors look for high quality, liquid assets, such as gold, in these risk-off environments.

Focus 2: QaurumSM – Your gateway to understanding gold performance
Qaurum is a web-based quantitative tool that helps investors intuitively understand the drivers of gold performance.

Behind its user-friendly interface, Qaurum is powered by the Gold Valuation Framework (GVF). An academically validated methodology, GVF is based on the principle that the price of gold and its performance can be explained by the interaction of demand and supply.

Accessible from Goldhub.com, the World Gold Council’s data and research site, Qaurum allows investors to assess how gold might react across different economic environments in three easy steps:

select a hypothetical macroeconomic scenario provided by Oxford Economics, a leader in global forecasting and quantitative analysis, or customise your own
generate forecasts of gold demand and supply, and view the impact of key macro drivers
calculate and visualise implied returns for gold.
Based on these, investors can use Qaurum to calculate the hypothetical performance of gold over the next five years as well as long-term 30-year returns implied by GVF and the available (or user-constructed) scenarios.

Additional details on GVF methodology can be found at Goldhub.com.

Download the Gold Market Outlook for 2021
1FT: Fed to tolerate higher inflation in policy shift (August 2020) and The ECB begins its shift to a new inflation goal (October 2020).

2Oxford Economics is a leader in global forecasting and quantitative analysis and a specialist in modelling.

3Bloomberg consensus forecasts are available by using the function ECFC <GO> in its data terminals.

4Visit Qaurum for important disclosure about Oxford Economics’ data, as well as a detailed description of each scenario; the assumptions underlying and data used for each scenario; and its respective hypothetical impact on gold demand, supply and performance.

5This is not an exhaustive list of possible outcomes. These five scenarios reflect key investor concerns captured by Oxford Economics’ Global Risk Survey. Hypothetically, improving market sentiment – for example, due to effective vaccination programmes or the containment of the more transmissible COVID-19 variant – could put downward pressure on gold’s price performance relative to the scenarios currently available on Goldhub.com. Investors can modify the inputs using Qaurum’s customisation function.

Important disclaimers and disclosures[+]

Rate this content:
Collections:
Gold Demand Trends
Gold Investor
Market update
Market primer
Investment case for gold
Investment update
Market focus
Conflict-free gold
Market:
China
Europe
India
Middle East & Turkey
USA
Sector:
Market insights
Supply
Gold production
Recycling
Demand
Jewellery
Investment
Technology
Central banks/official inst.
Related Publications

22 January, 2021
A review of China’s gold market in 2020

11 November, 2020
The relevance of gold as a strategic asset 2020 – Russia edition

10 November, 2020
Gold loans help India weather the COVID-19 storm

29 October, 2020
Gold Demand Trends Q3 2020

2 September, 2020
Gold deposit rates – a guidance paper

30 July, 2020
Gold Demand Trends Q2 2020

16 July, 2020
Online gold market in India

14 July, 2020
Gold mid-year outlook 2020

30 April, 2020
Gold Demand Trends Q1 2020
Goldhub Footer Menu
Goldhub
Data
Portfolio simulator
About Goldhub
Privacy
Contact us
Sitemap
Terms and conditions
©2021 World Gold Council

沪ICP备16026324号

公安备案号31010602004116
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Gold Hub- Gold Price & Gold Market Data and Research

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Chinese, Simplified

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Home Gold Outlook 2021
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Statement regarding COVID-19

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Gold Outlook 2021
14 January, 2021

Sectors: Market insights, Supply, Gold production, Recycling, Demand, Jewellery, Investment, Technology, Central banks/official inst.

Rate this content:
Economic recovery and low interest rates set the tone
The COVID-19 pandemic raised uncertainty by compounding existing risks and creating new ones. But by the end of last year, investors were optimistic that the worst was over.
Looking ahead, we believe that investors will likely see the low interest rate environment as an opportunity to add risk assets in the hope that economic recovery is on the immediate horizon. That said, investors will likely also be navigating potential portfolio risks including:
ballooning budget deficits
inflationary pressures
market corrections amid already high equity valuations.
In our outlook for gold, we believe investment demand will remain well supported while gold consumption should benefit from the nascent economic recovery, especially in emerging markets.
Gold gained from risk, rates and momentum
Gold was one of the best performing major assets of 2020 driven by a combination of:

high risk
low interest rates
positive price momentum – especially during late spring and summer.
Gold also had one of the lowest drawdowns during the year, thus helping investors limit losses and manage volatility risk in their portfolios (Chart 1).

By early August, the LBMA Gold Price PM reached a historical high of US$2,067.15/oz as well as record highs in all other major currencies (Table 1). While the gold price subsequently consolidated below its intra-year high, it remained comfortably above US$1,850/oz for most of Q3 and Q4, finishing the year at US$1,887.60/oz.

Interestingly, gold’s price performance in the second half of the year seemed to be linked more to physical investment demand – whether in the form of gold ETFs or bar and coins – rather than through the more speculative futures market. For example, COMEX net long positioning reached an all-time high of 1,209 tonnes (t) in Q1 but ended the year almost 30% below this level. We believe this was due to the dislocation that COMEX futures experienced in March relative to the spot gold price, making it more expensive to hold futures compared to other choices.

Investors’ preference for physical and physical-linked gold products last year further supports anecdotal evidence that, this time around, gold was used by many as a strategic asset rather than purely as a tactical play.

Gold Outlook Chart 1: Gold outperformed major assets in 2020
Yearly returns and maximum drawdowns of select assets*

Return
Download
Maximum drawdown
Annual return
NASDAQ
Gold
S&P 500
EM stocks
Global Treasuries
US Corporates
US Treasuries
US HY
EAFE stocks
Commodities
Oil
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
Sources: Bloomberg, ICE Benchmark Administration, World Gold Council; Disclaimer

*As of 31 December 2020. Returns based on the LBMA Gold Price, Bloomberg Barclays US Treasury Index and Global Treasury Index ex US, Bloomberg Barclays US Corporate and High Yield Indices, MSCI EM Index, Bloomberg Commodity TR Index, MSCI EAFE Index, S&P 500 & NASDAQ Indices, and Bloomberg Oil TR Index. Maximum drawdown computed relative to the 2020 initial value for each respective index.




Gold Outlook Table 1: The gold price is near or above record highs across key currencies
Gold price and annual return in key currencies*

USD
(oz) EUR
(oz) JPY
(g) GBP
(oz) CAD
(oz) CHF
(oz) INR
(10g) RMB
(g) TRY
(oz) RUB
(g) ZAR
(g) AUD
(oz)
2020 return 24.6% 14.3% 18.4% 20.8% 22.4% 13.8% 27.6% 17.0% 55.6% 48.4% 30.9% 13.5%
Year-end price 1,888 1,543 6,266 1,381 2,405 1,669 44,343 396.9 14,030 4,489 891 2,446
Record high 2,067 1,746 7,013 1,573 2,749 1,883 49,803 461.5 16,518 4,907 1,165 2,863
Date† 6 Aug 6 Aug 6 Aug 6 Aug 6 Aug 6 Aug 6 Aug 6 Aug 6 Nov 2 Nov 6 Aug 6 Aug
Source: Bloomberg, ICE Benchmark Administration, World Gold Council

*As of 30 December 2020. Based on the LBMA Gold Price PM in local currencies: US dollar (USD), euro (EUR), Japanese yen (JPY), pound sterling (GBP), Canadian dollar (CAD), Swiss franc (CHF), Indian rupee (INR), Chinese yuan (RMB), Turkish lira (TRY), Russian rouble (RUB), South African rand (ZAR), and Australian dollar (AUD).
† All dates correspond to 2020.



Gold investment to react to rates and inflation
Global stocks performed particularly well during November and December, with the MSCI All World Index increasing by almost 20% over the period. However, rising COVID-19 cases and a reportedly more infectious new variant of the virus created a renewed sense of caution. Yet, neither this nor the highly volatile US political events during the first week of 2021 have deterred investors from maintaining or expanding their exposure to risk assets.

The S&P 500 price-to-sales ratio is at unprecedented levels (Chart 2) and analysis by Crescat Capital suggests that the 15 factors that make up their S&P 500 valuation model are at – or very near – record highs. Going forward, we believe that the very low level of interest rates worldwide will likely keep stock prices and valuations high. As such, investors may experience strong market swings and significant pullbacks. These could occur, for example, if vaccination programmes take longer to distribute – or are less effective – than expected, given logistical complexities or the high number of mutations reported in some strains.

Gold Outlook Chart 2: Equity market valuations continue to climb
Price-to-sales ratio for the S&P 500*

Price-to-sales
Download
2000
2010
2020
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Sources: Bloomberg, World Gold Council; Disclaimer

*As of 11 January 2021. Based on weekly data.



In addition, many investors are concerned about the potential risks resulting from expanding budget deficits, which, combined with the low interest rate environment and growing money supply, may result in inflationary pressures. This concern is underscored by the fact that central banks, including the US Federal Reserve and European Central Bank, have signalled greater tolerance for inflation to be temporarily above their traditional target bands.1

Gold has historically performed well amid equity market pullbacks as well as high inflation. In years when inflation was higher than 3%, gold’s price increased 15% on average. Notably too, research by Oxford Economics2 shows that gold should do well in periods of deflation. Such periods are typically characterised by low interest rates and high financial stress, all of which tend to foster demand for gold.

Further, gold has been more effective in keeping up with global money supply over the past decade than US T-bills, thus better helping investors preserve capital (Chart 3).

Gold Outlook Chart 3: Gold has kept up with money supply growth
Global M2 growth, US 3m T-bill total return, gold price*

Index level
US$/oz
Download
3-month T-Bill (lhs)
Global M2 (lhs)
Gold (rhs)
2000
1975
0
500
1,000
1,500
2,000
2,500
0
400
800
1,200
1,600
2,000
Sources: Bloomberg, ICE Benchmark Administration, Oxford Economics, World Gold Council; Disclaimer

*As of 31 December 2020. Based on global M2 cumulative growth measured in USD, total return index of 3-month US T-bill and LBMA Gold Price PM USD.



EM economic recovery to benefit consumer demand
Market surveys indicate that most economists expect growth to recover in 2021 from its dismal performance during 2020.3 And although global economic growth is likely to remain anaemic relative to its full potential for some time, gold’s more stable price performance since mid-August may foster buying opportunities for consumers.

The economic recovery may particularly realise in countries like China, which suffered heavy losses in early 2020 before the spread of the pandemic was controlled more effectively than in many western countries. Given the positive link between economic growth and Chinese demand, we believe that gold consumption in the region may continue to improve.

Similarly, the Indian gold market appears to be on a stronger footing. Initial data from the Dhanteras festival in November suggest that while jewellery demand was still below average, it had substantially recovered from the lows seen in Q2 of last year.

However, with the global economy operating well below potential and with gold prices at historical high levels, consumer demand may remain subdued in other regions.

Central bank demand not going away
After positive gold demand in H1, central bank demand became more variable in the second half of 2020, oscillating between monthly net purchases and net sales. This was a marked change from the consistent buying seen for many years, driven in part by the decision of the Central Bank of Russia to halt its buying program in April. Nonetheless, central banks are on course to finish 2020 as net purchasers (although well below the record levels of buying seen in both 2018 and 2019). And we don’t expect 2021 to be much different. There are good reasons why central banks continue to favour gold as part of their foreign reserves (see our Central Bank Gold Reserve Survey 2020) which, combined with the low interest rate environment, continue to make gold attractive.

Mine production likely to improve
Recovery in mine production is likely this year after the fall seen so far in 2020. Production interruptions peaked during the second quarter of last year and have since waned.

While there is still uncertainty about how 2021 may evolve, it seems very likely that mines will experience fewer stoppages as the world recovers from the pandemic. This would remove a headwind that companies experienced in 2020 but that is not commonly part of production drivers. Even if potential second waves impact producing countries, major companies have introduced protocols and procedures that should reduce the impact of stoppages compared to those seen in the early stages of the pandemic.

Putting it all together
The performance of gold responds to the interaction of the various sectors of demand and supply, which are, in turn, influenced by the interplay of four key drivers (Focus 1). In this context, we expect that the need for effective hedges and the low-rate environment will keep investment demand well supported, but it may be heavily influenced by the perceptions of risk linked to the speed and robustness of the economic recovery.

Focus 1: Drivers of gold performance
Gold’s behaviour can be explained by four broad sets of drivers:

Economic expansion: periods of growth are very supportive of jewellery, technology and long-term savings
Risk and uncertainty: market downturns often boost investment demand for gold as a safe haven
Opportunity cost: interest rates and relative currency strength influence investor attitudes towards gold
Momentum: capital flows, positioning and price trends can ignite or dampen gold’s performance
Focus 1
At the same time, we anticipate that the economic recovery in some emerging markets, such as China and India, may limit some of the headwinds the gold market experienced in 2020 caused by extremely weak gold consumption.

Using Qaurum, our gold valuation tool (Focus 2), we analysed the performance of gold as implied by five different hypothetical macroeconomic scenarios provided by Oxford Economics. These are: 4

a steady economic recovery (their base-case scenario)
a delayed recovery
a deep financial crisis
a rapid economic upturn
a global second wave.
The results of the analysis suggest that, in general, gold may see a positive, though more subdued, performance in 2021.5 This may be driven primarily by a recovery of consumer demand relative to 2020 as economic conditions improve. In addition, gold’s performance may be boosted further by the prolonged low interest rate environment which would all but remove the opportunity cost of investing in gold.

Alternatively, our valuation model suggests that a global economic relapse from COVID-19 or any other unforeseen risks could result in weak consumer demand, thus creating a headwind for gold’s performance. However, a risk-off environment such the one captured by Oxford Economics’ “deep financial crisis” or “global second wave” may result in strong gold investment demand, which could offset low consumption as it did during 2020. Historically, this behaviour has occurred as investors look for high quality, liquid assets, such as gold, in these risk-off environments.

Focus 2: QaurumSM – Your gateway to understanding gold performance
Qaurum is a web-based quantitative tool that helps investors intuitively understand the drivers of gold performance.

Behind its user-friendly interface, Qaurum is powered by the Gold Valuation Framework (GVF). An academically validated methodology, GVF is based on the principle that the price of gold and its performance can be explained by the interaction of demand and supply.

Accessible from Goldhub.com, the World Gold Council’s data and research site, Qaurum allows investors to assess how gold might react across different economic environments in three easy steps:

select a hypothetical macroeconomic scenario provided by Oxford Economics, a leader in global forecasting and quantitative analysis, or customise your own
generate forecasts of gold demand and supply, and view the impact of key macro drivers
calculate and visualise implied returns for gold.
Based on these, investors can use Qaurum to calculate the hypothetical performance of gold over the next five years as well as long-term 30-year returns implied by GVF and the available (or user-constructed) scenarios.

Additional details on GVF methodology can be found at Goldhub.com.

Download the Gold Market Outlook for 2021
1FT: Fed to tolerate higher inflation in policy shift (August 2020) and The ECB begins its shift to a new inflation goal (October 2020).

2Oxford Economics is a leader in global forecasting and quantitative analysis and a specialist in modelling.

3Bloomberg consensus forecasts are available by using the function ECFC <GO> in its data terminals.

4Visit Qaurum for important disclosure about Oxford Economics’ data, as well as a detailed description of each scenario; the assumptions underlying and data used for each scenario; and its respective hypothetical impact on gold demand, supply and performance.

5This is not an exhaustive list of possible outcomes. These five scenarios reflect key investor concerns captured by Oxford Economics’ Global Risk Survey. Hypothetically, improving market sentiment – for example, due to effective vaccination programmes or the containment of the more transmissible COVID-19 variant – could put downward pressure on gold’s price performance relative to the scenarios currently available on Goldhub.com. Investors can modify the inputs using Qaurum’s customisation function.

Important disclaimers and disclosures[+]

Rate this content:
Collections:
Gold Demand Trends
Gold Investor
Market update
Market primer
Investment case for gold
Investment update
Market focus
Conflict-free gold
Market:
China
Europe
India
Middle East & Turkey
USA
Sector:
Market insights
Supply
Gold production
Recycling
Demand
Jewellery
Investment
Technology
Central banks/official inst.
Related Publications

22 January, 2021
A review of China’s gold market in 2020

11 November, 2020
The relevance of gold as a strategic asset 2020 – Russia edition

10 November, 2020
Gold loans help India weather the COVID-19 storm

29 October, 2020
Gold Demand Trends Q3 2020

2 September, 2020
Gold deposit rates – a guidance paper

30 July, 2020
Gold Demand Trends Q2 2020

16 July, 2020
Online gold market in India

14 July, 2020
Gold mid-year outlook 2020

30 April, 2020
Gold Demand Trends Q1 2020
Goldhub Footer Menu
Goldhub
Data
Portfolio simulator
About Goldhub
Privacy
Contact us
Sitemap
Terms and conditions
©2021 World Gold Council

沪ICP备16026324号

公安备案号31010602004116
营业执照公示营业执照公示Skip to main content
Gold Hub- Gold Price & Gold Market Data and Research

English
Chinese, Simplified

Breadcrumb
Home Gold Outlook 2021
Share this page:Twitter Facebook LinkedIn Google Sina Weibo
Statement regarding COVID-19

X
By using this website you agree to our cookies policy

X
Gold Outlook 2021
14 January, 2021

Sectors: Market insights, Supply, Gold production, Recycling, Demand, Jewellery, Investment, Technology, Central banks/official inst.

Rate this content:
Economic recovery and low interest rates set the tone
The COVID-19 pandemic raised uncertainty by compounding existing risks and creating new ones. But by the end of last year, investors were optimistic that the worst was over.
Looking ahead, we believe that investors will likely see the low interest rate environment as an opportunity to add risk assets in the hope that economic recovery is on the immediate horizon. That said, investors will likely also be navigating potential portfolio risks including:
ballooning budget deficits
inflationary pressures
market corrections amid already high equity valuations.
In our outlook for gold, we believe investment demand will remain well supported while gold consumption should benefit from the nascent economic recovery, especially in emerging markets.
Gold gained from risk, rates and momentum
Gold was one of the best performing major assets of 2020 driven by a combination of:

high risk
low interest rates
positive price momentum – especially during late spring and summer.
Gold also had one of the lowest drawdowns during the year, thus helping investors limit losses and manage volatility risk in their portfolios (Chart 1).

By early August, the LBMA Gold Price PM reached a historical high of US$2,067.15/oz as well as record highs in all other major currencies (Table 1). While the gold price subsequently consolidated below its intra-year high, it remained comfortably above US$1,850/oz for most of Q3 and Q4, finishing the year at US$1,887.60/oz.

Interestingly, gold’s price performance in the second half of the year seemed to be linked more to physical investment demand – whether in the form of gold ETFs or bar and coins – rather than through the more speculative futures market. For example, COMEX net long positioning reached an all-time high of 1,209 tonnes (t) in Q1 but ended the year almost 30% below this level. We believe this was due to the dislocation that COMEX futures experienced in March relative to the spot gold price, making it more expensive to hold futures compared to other choices.

Investors’ preference for physical and physical-linked gold products last year further supports anecdotal evidence that, this time around, gold was used by many as a strategic asset rather than purely as a tactical play.

Gold Outlook Chart 1: Gold outperformed major assets in 2020
Yearly returns and maximum drawdowns of select assets*

Return
Download
Maximum drawdown
Annual return
NASDAQ
Gold
S&P 500
EM stocks
Global Treasuries
US Corporates
US Treasuries
US HY
EAFE stocks
Commodities
Oil
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
Sources: Bloomberg, ICE Benchmark Administration, World Gold Council; Disclaimer

*As of 31 December 2020. Returns based on the LBMA Gold Price, Bloomberg Barclays US Treasury Index and Global Treasury Index ex US, Bloomberg Barclays US Corporate and High Yield Indices, MSCI EM Index, Bloomberg Commodity TR Index, MSCI EAFE Index, S&P 500 & NASDAQ Indices, and Bloomberg Oil TR Index. Maximum drawdown computed relative to the 2020 initial value for each respective index.




Gold Outlook Table 1: The gold price is near or above record highs across key currencies
Gold price and annual return in key currencies*

USD
(oz) EUR
(oz) JPY
(g) GBP
(oz) CAD
(oz) CHF
(oz) INR
(10g) RMB
(g) TRY
(oz) RUB
(g) ZAR
(g) AUD
(oz)
2020 return 24.6% 14.3% 18.4% 20.8% 22.4% 13.8% 27.6% 17.0% 55.6% 48.4% 30.9% 13.5%
Year-end price 1,888 1,543 6,266 1,381 2,405 1,669 44,343 396.9 14,030 4,489 891 2,446
Record high 2,067 1,746 7,013 1,573 2,749 1,883 49,803 461.5 16,518 4,907 1,165 2,863
Date† 6 Aug 6 Aug 6 Aug 6 Aug 6 Aug 6 Aug 6 Aug 6 Aug 6 Nov 2 Nov 6 Aug 6 Aug
Source: Bloomberg, ICE Benchmark Administration, World Gold Council

*As of 30 December 2020. Based on the LBMA Gold Price PM in local currencies: US dollar (USD), euro (EUR), Japanese yen (JPY), pound sterling (GBP), Canadian dollar (CAD), Swiss franc (CHF), Indian rupee (INR), Chinese yuan (RMB), Turkish lira (TRY), Russian rouble (RUB), South African rand (ZAR), and Australian dollar (AUD).
† All dates correspond to 2020.



Gold investment to react to rates and inflation
Global stocks performed particularly well during November and December, with the MSCI All World Index increasing by almost 20% over the period. However, rising COVID-19 cases and a reportedly more infectious new variant of the virus created a renewed sense of caution. Yet, neither this nor the highly volatile US political events during the first week of 2021 have deterred investors from maintaining or expanding their exposure to risk assets.

The S&P 500 price-to-sales ratio is at unprecedented levels (Chart 2) and analysis by Crescat Capital suggests that the 15 factors that make up their S&P 500 valuation model are at – or very near – record highs. Going forward, we believe that the very low level of interest rates worldwide will likely keep stock prices and valuations high. As such, investors may experience strong market swings and significant pullbacks. These could occur, for example, if vaccination programmes take longer to distribute – or are less effective – than expected, given logistical complexities or the high number of mutations reported in some strains.

Gold Outlook Chart 2: Equity market valuations continue to climb
Price-to-sales ratio for the S&P 500*

Price-to-sales
Download
2000
2010
2020
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Sources: Bloomberg, World Gold Council; Disclaimer

*As of 11 January 2021. Based on weekly data.



In addition, many investors are concerned about the potential risks resulting from expanding budget deficits, which, combined with the low interest rate environment and growing money supply, may result in inflationary pressures. This concern is underscored by the fact that central banks, including the US Federal Reserve and European Central Bank, have signalled greater tolerance for inflation to be temporarily above their traditional target bands.1

Gold has historically performed well amid equity market pullbacks as well as high inflation. In years when inflation was higher than 3%, gold’s price increased 15% on average. Notably too, research by Oxford Economics2 shows that gold should do well in periods of deflation. Such periods are typically characterised by low interest rates and high financial stress, all of which tend to foster demand for gold.

Further, gold has been more effective in keeping up with global money supply over the past decade than US T-bills, thus better helping investors preserve capital (Chart 3).

Gold Outlook Chart 3: Gold has kept up with money supply growth
Global M2 growth, US 3m T-bill total return, gold price*

Index level
US$/oz
Download
3-month T-Bill (lhs)
Global M2 (lhs)
Gold (rhs)
2000
1975
0
500
1,000
1,500
2,000
2,500
0
400
800
1,200
1,600
2,000
Sources: Bloomberg, ICE Benchmark Administration, Oxford Economics, World Gold Council; Disclaimer

*As of 31 December 2020. Based on global M2 cumulative growth measured in USD, total return index of 3-month US T-bill and LBMA Gold Price PM USD.



EM economic recovery to benefit consumer demand
Market surveys indicate that most economists expect growth to recover in 2021 from its dismal performance during 2020.3 And although global economic growth is likely to remain anaemic relative to its full potential for some time, gold’s more stable price performance since mid-August may foster buying opportunities for consumers.

The economic recovery may particularly realise in countries like China, which suffered heavy losses in early 2020 before the spread of the pandemic was controlled more effectively than in many western countries. Given the positive link between economic growth and Chinese demand, we believe that gold consumption in the region may continue to improve.

Similarly, the Indian gold market appears to be on a stronger footing. Initial data from the Dhanteras festival in November suggest that while jewellery demand was still below average, it had substantially recovered from the lows seen in Q2 of last year.

However, with the global economy operating well below potential and with gold prices at historical high levels, consumer demand may remain subdued in other regions.

Central bank demand not going away
After positive gold demand in H1, central bank demand became more variable in the second half of 2020, oscillating between monthly net purchases and net sales. This was a marked change from the consistent buying seen for many years, driven in part by the decision of the Central Bank of Russia to halt its buying program in April. Nonetheless, central banks are on course to finish 2020 as net purchasers (although well below the record levels of buying seen in both 2018 and 2019). And we don’t expect 2021 to be much different. There are good reasons why central banks continue to favour gold as part of their foreign reserves (see our Central Bank Gold Reserve Survey 2020) which, combined with the low interest rate environment, continue to make gold attractive.

Mine production likely to improve
Recovery in mine production is likely this year after the fall seen so far in 2020. Production interruptions peaked during the second quarter of last year and have since waned.

While there is still uncertainty about how 2021 may evolve, it seems very likely that mines will experience fewer stoppages as the world recovers from the pandemic. This would remove a headwind that companies experienced in 2020 but that is not commonly part of production drivers. Even if potential second waves impact producing countries, major companies have introduced protocols and procedures that should reduce the impact of stoppages compared to those seen in the early stages of the pandemic.

Putting it all together
The performance of gold responds to the interaction of the various sectors of demand and supply, which are, in turn, influenced by the interplay of four key drivers (Focus 1). In this context, we expect that the need for effective hedges and the low-rate environment will keep investment demand well supported, but it may be heavily influenced by the perceptions of risk linked to the speed and robustness of the economic recovery.

Focus 1: Drivers of gold performance
Gold’s behaviour can be explained by four broad sets of drivers:

Economic expansion: periods of growth are very supportive of jewellery, technology and long-term savings
Risk and uncertainty: market downturns often boost investment demand for gold as a safe haven
Opportunity cost: interest rates and relative currency strength influence investor attitudes towards gold
Momentum: capital flows, positioning and price trends can ignite or dampen gold’s performance
Focus 1
At the same time, we anticipate that the economic recovery in some emerging markets, such as China and India, may limit some of the headwinds the gold market experienced in 2020 caused by extremely weak gold consumption.

Using Qaurum, our gold valuation tool (Focus 2), we analysed the performance of gold as implied by five different hypothetical macroeconomic scenarios provided by Oxford Economics. These are: 4

a steady economic recovery (their base-case scenario)
a delayed recovery
a deep financial crisis
a rapid economic upturn
a global second wave.
The results of the analysis suggest that, in general, gold may see a positive, though more subdued, performance in 2021.5 This may be driven primarily by a recovery of consumer demand relative to 2020 as economic conditions improve. In addition, gold’s performance may be boosted further by the prolonged low interest rate environment which would all but remove the opportunity cost of investing in gold.

Alternatively, our valuation model suggests that a global economic relapse from COVID-19 or any other unforeseen risks could result in weak consumer demand, thus creating a headwind for gold’s performance. However, a risk-off environment such the one captured by Oxford Economics’ “deep financial crisis” or “global second wave” may result in strong gold investment demand, which could offset low consumption as it did during 2020. Historically, this behaviour has occurred as investors look for high quality, liquid assets, such as gold, in these risk-off environments.

Focus 2: QaurumSM – Your gateway to understanding gold performance
Qaurum is a web-based quantitative tool that helps investors intuitively understand the drivers of gold performance.

Behind its user-friendly interface, Qaurum is powered by the Gold Valuation Framework (GVF). An academically validated methodology, GVF is based on the principle that the price of gold and its performance can be explained by the interaction of demand and supply.

Accessible from Goldhub.com, the World Gold Council’s data and research site, Qaurum allows investors to assess how gold might react across different economic environments in three easy steps:

select a hypothetical macroeconomic scenario provided by Oxford Economics, a leader in global forecasting and quantitative analysis, or customise your own
generate forecasts of gold demand and supply, and view the impact of key macro drivers
calculate and visualise implied returns for gold.
Based on these, investors can use Qaurum to calculate the hypothetical performance of gold over the next five years as well as long-term 30-year returns implied by GVF and the available (or user-constructed) scenarios.

Additional details on GVF methodology can be found at Goldhub.com.

Download the Gold Market Outlook for 2021
1FT: Fed to tolerate higher inflation in policy shift (August 2020) and The ECB begins its shift to a new inflation goal (October 2020).

2Oxford Economics is a leader in global forecasting and quantitative analysis and a specialist in modelling.

3Bloomberg consensus forecasts are available by using the function ECFC <GO> in its data terminals.

4Visit Qaurum for important disclosure about Oxford Economics’ data, as well as a detailed description of each scenario; the assumptions underlying and data used for each scenario; and its respective hypothetical impact on gold demand, supply and performance.

5This is not an exhaustive list of possible outcomes. These five scenarios reflect key investor concerns captured by Oxford Economics’ Global Risk Survey. Hypothetically, improving market sentiment – for example, due to effective vaccination programmes or the containment of the more transmissible COVID-19 variant – could put downward pressure on gold’s price performance relative to the scenarios currently available on Goldhub.com. Investors can modify the inputs using Qaurum’s customisation function.


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Recycling
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GOLD: Fire Insurance For Currencies Already Burning To The Ground

December 11, 2020 Egon von Greyerz Founder @ Matterhorn Asset Management & Gold Switzerland

After an extraordinary rally, gold recently entered an anticipated correction phase, which both math and history suggest is about to re-enter a continued trend dramatically upward.

A primary driver for such sustained precious metal strength is an historically undeniable (as well as approaching) paradigm shift toward rising inflation.

When properly understood, the topic of inflation, seemingly academic and even” boring,” in fact becomes rather exciting, as well as predictive, for informed and sophisticated investors.

True Inflation vs. Headline Lies
The great inflation debate continues, with many investors wondering why hyper-inflation has not been the norm given the trillions in fiat currency creation.

Just consider the US money printing in the last 16 years:

And yet despite such torrents of fake money creation, U.S. inflation has annualized at a reported 2% rate with no “Weimar-like” wheel barrels of inflated money in sight.

In short, many are asking: Where’s the inflation?

Toward this end, it is critical to first distinguish true vs. popular notions of inflation.

From the Austrian School to Milton Friedman, the true definition of inflation has always been understood (and measured) by money supply.

As the supply increases, inflation follows.

The popular/media-driven definition, however, uses consumer prices as measured by such broken scales as the CPI to measure inflation.

A Policy of Dishonesty

Unfortunately, the CPI scale, which has undergone over 20 alterations since 1980, is an openly comical and deliberately inaccurate inflation measure.

It’s akin to a bathroom scale that measures your body weight yet magically omits calories attributed to chocolate, beer, pasta or pizza.

That is, the CPI scale magically under-weights (discounts) medical, housing, energy, education and other key costs—all of which have openly skyrocketed while the CPI rates have “mysteriously” fallen to the floor of history.

This is no accident, as treasury departments and global central banks fully understand that if inflation, as measured by such scales as the CPI, were accurately reported using 1980-based metrics, we’d already be looking at greater than 10% inflation rates today.

If such truths were honestly confessed, then inflation-adjusted/real return on sovereign bonds would be so openly (and shamefully) negative (i.e. > -8%) that no one would buy government IOU’s.

Of course, that’s a big problem in a now broken world where government IOU’s (i.e. global debt to the tune of 280 trillion) is all that keeps our otherwise Frankenstein economies walking—arms outstretched.

Thus, rather than confess true inflation, the fiction writers at places like the Fed or the Bureau of Labor Statistics resort to a trick which all desperate policy makers inevitably embrace when their experiments fail: They fudge the numbers.

Stated otherwise: They lie.

But then again, and as empirically shown elsewhere, the highest offices are not necessarily filled by the highest minds.

Dishonesty at the policy level is nothing new.

Since Nixon welched on the Gold Standard in 1971, policy makers have been acting like college party boys without a chaperone.

They can borrow and spend with money created by a mouse click for the simple reason that it is backed, by well…nothing.

This fully explains why the US public debt to GDP ratio rose from 33% in 1971 to 106% by 2019.

By the end of this year, thanks to unlimited QE (money printing), that ratio will hit 120%.

By the true definition of inflation (above), such desperate money creation can only mean one thing: More inflation.

And More, Well… Lies
Remember, of course, that Nixon had said the dollar’s de-coupling from gold was only a “temporary measure.”

That was 50 years ago and the “temporary” continues… DC and Wall Street continue to party without a golden chaperone.

In 2009, as the Great Financial Crisis (caused by great debt) raged, Fed Chairman Bernanke equally assured the world that such money creation was a purely “temporary emergency measure.”

This too was purely untrue, as over a decade later, Bernanke’s “temporary” and “emergency” policy has since become a policy norm.

Hence the market’s reaction: Party on.

Today, the Fed and the central banks of the world do nothing but print fiat currencies to pay for unpayable deficits and give liquidity to an artificial and historically unprecedented securities bubble.

Enter the COVID Accelerator
COVID and the misguided policy reactions thereto, have only accelerated such insane debt levels and the creation of fake money to pay for it—all of which points to more inflation—namely, the kind that kills currencies and sends gold prices significantly upward.

The vast majority of investors, of course, pay no attention to these creeping inflationary forces and superficially supported risk assets, as they see only one thing: Rising markets riding a wave of fake liquidity over hidden rocks of unpayable debts.

But as we’ve also warned, the vast majority of investors are simply wrong.

But Where’s the Inflation?
That’s still the trillion-dollar question.

As of this writing, inflation in prices has not hit the Main Street (yet bogus) CPI scales, but has gone directly to Wall Street, as the bulk of the fake money printed since the GFC of 2008 went from the Fed to the primary dealer banks, and then to the publicly-traded corporations they serve.

In short, “price inflation” went to places like the S&P, not the deliberately false CPI.

This explains why the DOW and S&P can break new highs as the real economy endures record lows.

Such artificial risk-asset support in a time of open economic decline is disgraceful—but that’s what central banks do: Support banks and markets, not economies and real-world issues.

iCentral bank experimentation and market “accommodation” is a direct cause of the growing wealth disparity seen in the U.S. and around the world, and hence explains the populist movements which made the headlines in 2020.

Ironically, the vast majority of those angry crowds, like the vast majority of happy investors, can’t even point to the central bank source of both their woes and false comforts.

This is due to a fundamental ignorance (or ignoring) of basic economic forces.

Econ 101, History 101, and Basic Math
The core lessons of economics, math and history repeatedly confirm that diluting currency power via fake money policies never leads to economic growth, just temporary (and fatally dangerous) asset bubbles.

That is, for every dollar of printed growth, it takes four dollars of debt. Hardly a good trade.

The U.S. (like the other major economies of the world) are effectively running uphill in roller skates using gobs of debt to essentially churn in place, and then paying for that debt with fiat money.

Does fiat currency creation still seem like a wise, long-term plan to you?

For this, investors can thank “honest brokers” like gold-welching Nixon for taking US budget deficits from 2.8 billion in 1970, to $1 trillion in fiscal year 2018-19, and now $3.3 trillion for 2020.

In turn, investors can also thank print-happy central bankers like Greenspan, Bernanke, Yellen and Powell for fattening total U.S. credit market debt from $1.6 trillion in 1970 to $80 trillion today.

Folks, debt like this can never be repaid. Never.

So, what’s ahead?

The Great Paradigm Shift: Inflationism

Now, let’s get back to that elusive inflation question.

Just like families with more debt than income, the best option is to find ways to grow your income.

But as we’ve seen above, that kind of growth just isn’t there for a global economy whose debt to GDP ratio is now well past 3:1.

The kind of economic growth needed to squelch such debt levels requires a near-perfect alignment of debt-free consumer strength, rapid growth in working age populations, massive productivity booms in manufacturing and free trade as well as a central bank providing discipline rather than punch bowls to the markets—none of which is likely or possible today.

Full stop.

The next (and desperate) option, however, is to make one’s currency weaker, inflate the same, and pay yesterday’s debt with tomorrow’s inflated/printed currency, a policy now openly embraced by the Dr. Frankensteins at the Eccles Building in D.C.

Deliberate Inflation Ahead—From Boom to “Uh-Oh”

This, I’d argue, is far more possible and far more likely, namely to finance deficits with inflation-diluted currencies, a policy aptly named “inflationism.”

Thus, despite years of deflationary headlines and yield-curve controls by experimental central banks, inflationism is slowly (and I mean SLOWLY) becoming the new paradigm right under our noses.

As debt levels soar, fostering massive pricing bubbles in stocks, bonds, commodities and real estate, we are seeing the classic pattern of boom leading toward “uh-oh” and, in turn, a final shift toward rapidly rising inflation and hence rapidly declining currency valuations.

Gold’s Moment of “Ahhhh.”

In the current paradigm shift, gold will rise not because gold only rises in inflationary periods (after all, gold recently hit new highs in an openly deflationary global setting).

Instead, gold will rise simply because currency purchasing power will tank (and is already tanking) as inflationism progresses from a slow trot, to a cantor and then to a full gallop.

That is, gold will rise because currencies (diluted daily via money printing) are falling by the second. This is not an opinion, but a mathematical certainty.

Like Picket’s charge at Gettysburg, currencies are marching straight into a deadly (i.e. inflationary) cannon barrage.

One look at the recent rise in gold prices, for example…

…is literally nothing more than taking a chart of the dollar or euro’s purchasing power and turning it upside down, like this:

In short, gold has nowhere to go but up simply because currencies, in an inflationary paradigm shift, ultimately have nowhere to go but down.

Seeing Clearly
Informed investors see this.

They are not nervously day-trading in and out of gold price fluctuations subject to extreme, near-term volatility and “spoofing” in the paper-gold trade (for which banks like JP Morgan and Scotiabank are paying massive, $100M+ penalties).

Nope.

Informed investors are precisely that—investors, not traders.

They buy gold and hold, not because they watch price swings, but because they understand currency forces.

It’s that simple.

Informed investors hold gold because the dollars and euros in their pockets, banks and markets are getting weaker by the second, regardless of the amounts listed on their ledgers, statements and portfolios.

Or stated even more simply, gold is their fire insurance for a currency that is already burning to the ground.

Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management
Zurich, Switzerland
Phone: +41 44 213 62 45

Matterhorn Asset Management’s global client base strategically stores an important part of their wealth in Switzerland in physical gold and silver outside the banking system. Matterhorn Asset Management is pleased to deliver a unique and exceptional service to our highly esteemed wealth preservation clientele in over 70 countries.
GoldSwitzerland.com

He Was Selling Pens on the Street to Survive—Then a Man Snapped a Photo of His Daughter…

Abdul Halim al-Attar is a Syrian refugee who was selling pens in the streets of Beirut in order to make a living for his children

But once a photo of Abdul selling his pens while holding his daughter hit the Internet, it went big-time viral. The picture featured his daughter Reem sleeping on his shoulder as he tried to market his pens to passerbys in the scorching heat. It touched people’s hearts across the globe.

The heartbreaking picture of his little one slumbering on her struggling father was almost too much for people to bear.

Now, thanks to an online crowdfunding campaign set up for him, Abdul has amassed a fund of $191,000. It was an online journalist and web developer in Norway named Gissur Simonarso who saw this man’s plight and decided he wanted to help.

He had no idea that his simple campaign would bring in nearly $200,000.

And Abdul is certainly putting it to good use. The 33-year-old father has opened 3 businesses with the new financial blessing. He started with a bakery two months ago, and later he opened a kebab shop and a small restaurant.

He went from pen seller on the street to quite the business entrepreneur, and he now employs 16 other Syrian refugees. There are approximately 1.2 million refugees registered in Lebanon, and it’s been extremely difficult for them to find jobs, so his 16 employees feel very lucky.

“Not only did my life change, but also the lives of my children and the lives of people in Syria whom I helped,” he said. He gave away about $25,000 to friends and family members in Syria.

On top of the new business ventures, Abdul has been able to move his children into a two-bedroom apartment where his 4-year-old daughter Reem and his 9-year-old son Abdullelah can now enjoy a more comfortable life.

Reem gets to play with her new plastic kitchen set and swing, and Abdullelah is back in school after being out for 3 years.

And Abdul has a newfound respect in the community as well. “They just greet me better now when they see me. They respect me more,” he said smiling.

One act of kindness by one man ignited a viral act of kindness from thousands of strangers pouring in their contributions.

What a wonderful reminder that no act for good is too small. After all, you never know when it could change someone’s entire life.

http://www.faithit.com/he-was-selling-pens-on-the-street-to-survive-then-a-man-snapped-a-photo-of-his-daughter-world-changers/#.VmOfHlsG9j5.facebook

Don’t Dismiss The EU Investigation Into Alleged Gold And Silver Price Fixing | Gold Eagle

Goldbugs are bemused by reports that the European Union competition watchdog is investigating alleged ‘anti-competitive behavior’ by participants in the precious metals market. But anybody who remembers how the EU broke up the cement cartel a couple of decades ago will know that this is a watchdog that has very powerful teeth. It’s fines can bankrupt even very large companies or banks.

Prior evidence

True the goldbugs have watched and waited in the past when various investigations into alleged precious metal price fixing have been launched in the US, UK and Germany. These investigations have quietly concluded that nothing was wrong, despite some very convincing evidence from market watchers and industry experts.

The general view in the gold community is that the central banks themselves manipulate the gold price to help dampen inflation expectations. And the central banks are above the law in such matters.

However, they may have met their match in the EU competition watchdog. According to the Treaty of Rome and its later additions, EU law is the supreme authority, and even central banks are subservient to its law.

The European Union is particularly strong on maintaining a level playing field in terms of business competition and market pricing. There was a time big cement firms thought they were above EU law, until one day investigators turned up first thing in the morning to seize documents and take away computers.

After rather a short period of time the huge fines were made, hundreds of millions of dollars that really hurt profits. The cement cartel collapsed and prices fell, and so did their share prices.

EU calling

Could the bullion banks be the next to get that knock on the door early one morning? The EU investigators could do worse than start by reading back pages of the zerohedge.com website which regularly documents the false trades used to depress gold prices that are so blatant a blind man in a coal cellar could see them.

Why are these trades initiated? Who does it? On whose orders are they operating? What is the benefit to them of these blatant price manipulations?

These are a few of the awkward questions the EU competition guys might like to put to those few players who count in the precious metals market. Could this be another cement cartel for them to bust? Why not? It is just as obvious

 

Source: Don’t Dismiss The EU Investigation Into Alleged Gold And Silver Price Fixing | Gold Eagle

How To Break Free From Materialism In 3 Distinct Ways

Our society is currently enslaved by a 9-5 alarm clock lifestyle. Pieces of paper control our every move. From the moment we are born, we are indoctrinated by our parents, our school system, the media to think that success is defined by material gain.

Happiness, contentment and relationships are secondary to income. Because our culture values material success the most, we currently live in a world that is enslaved to the dollar.

Slavery is when your work is no longer an opportunity for economic advancement but is instead an act of mere self-preservation.

Most people are owned by their material pursuits, and spend their entire lives trying to pay off debt they earned from purchases and bills that have piled up over the years.

If you are reading this, there is a good chance you work a 9-5 job and are sick of it. Maybe your are psychologically trapped in a world of numbers and material concerns and want to break free from mental slavery.

Whatever your specific situation is, the truth is that the vast majority of people who read this are fed up with debt, long work hours and being programmed by advertisements to buy things they don’t need.

The good news is, just because you live in a consumerist society doesn’t mean you have to live as a consumerist.

Here are 3 ways you can break free from materialism and reclaim your soul:

  1.  Leave The Rat Race
  • Who wrote the rule that said we have to work 9-5 Monday through Friday?
  • Who wrote the rule that we have to graduate school and hop right into a full time job?
  • Who wrote the rule that said we have spent 40 years of our life working full time and can only retire when we are 60 or 70?

You don’t have to do what society thinks you should do, and you don’t have to do what your parents think you should do. If you are sick of the rat race, then leave it.

Nobody is putting a gun to your head forcing you to work 40 hours a week at a job you don’t like. But the bills need to be paid, right? That brings us to the next point.

2)  Don’t Live To Impress

The only reason we need to work 40 hours a week is because we buy things we don’t need with money we don’t have to impress people around us. Because we are taught that success and value is defined in material terms, we figure we need to accumulate as much possessions as we can.

If you cut your expenses in half and lived for yourself, you would only have to work half of the hours you work now.

  • Do you really need to finance that new car? Or should you buy a used one?
  • Do you really need to live in a 2000 square foot house with all new appliances?
  • Do you really need that new television?
  • Or those designer clothes?
  • The newest iPhone?
  • That expensive laptop?

A lot of the times, we enslave ourselves because our egos want to be seen as successful in the eyes of other people. We define our sense of worth and value on how we measure up to other people.

In the same way kids on the playground used to say “My dad can beat up your dad”, adults say “My houses is nicer than your house.”

As you can see, some people don’t grow out of this playground mentality. And because of this, many people live paycheck to paycheck. This pursuit of egoic self-glorification is ultimately what enslaves us to the dollar and steals our happiness. This brings us to the next point.

3)  Transcend The Material

Don’t define yourself in relation to other people, the materials you own, or the lifestyle you live. Define yourself in relation to your relationship with yourself and with God.

  • Are you spiritually fulfilled?
  • Do you feel whole and peaceful inside?
  • If not, how can this be called success?

Once you experience the part of yourself that is deeper than the material, the material world is a joke to you. Once you tap into that infinite space of grace and peace during meditation or communion with nature, there is no longer a need to carry on with the endless pursuit of material gain.

How many Buddhist monks do you think are in debt up to their eyeballs?

The same culture that tells us success is measured by material success is also the most unhappy, overweight, stressed out and in debt culture in the world. Suicide is currently the 10th leading cause of death in America. I suspect a good percentage of depression comes from people being bright up in a dead-end society that is hollow, boring, consumer driven, spiritually void and enslaved to a piece of paper.

You don’t have to be a slave to capitalism, materialism, or consumerism. Be brave. Ditch the rat race, live within your means, know when it’s time to scale down and start practicing yoga or meditation, and you will open yourself up to a whole new world of possibilities you didn’t even know was there.

Scuba Divers Discover Buried Treasure

bit.ly/DiverDinars

Amateur scuba divers have found an enormous cache of gold coins off the Israeli coast

It’s an age-old plot device from a scuba diving-related story: amateur divers accidentally stumble across treasure on the bottom of the ocean while out diving, and drama ensues. But of course, that sort of thing wouldn’t happen in real life — or would it?

Amateur divers discovered nearly 2,000 gold coins near Caesarea off of Israel’s Mediterranean coast

There may not be any dramatic boat chases or seedy black-market bosses, but life did imitate art this week when a group of amateur divers discovered nearly 2,000 gold coins near Caesarea off of Israel’s Mediterranean coast.

The coins are estimated to date back some 900 years, from the time of the Fatimid Caliphate. This dynasty ruled the North African coast from the Red Sea to the Atlantic, and had its central government in present-day Egypt. The coins are reported to be in surprisingly good condition; some of them even show teeth marks from where a previous owner tested them for authenticity.

The coins are of varying denominations, including dinars, half dinars and quarter dinars.

The amateur divers practically stumbled upon the treasure while out diving, and while they first believed the coins to be toys, they quickly realized that they were genuine. They immediately alerted the authorities, which then raised the coins, all 13 pounds of them.

That the coins were found quite close together, as well as the history of Caesarea as an important port during the time of the Fatimid Caliphate, leads archeologists to speculate that it’s very likely that there’s a wreck from the period still to be discovered, perhaps a tax-collection ship returning to Egypt or a wealthy merchant ship.

Despite their discovery, the lucky divers do not get to keep any part of it. The Israel Antiquities Authorities describe the find as “priceless,” and states, like many similar laws around the world, that any antique findings made on their lands or in their waters belongs to the state, and that keeping any part of it, or failing to report it to the proper authorities is illegal. In Israel, the maximum penalty for keeping antiquities found is up to five years imprisonment.

Impressively, even after over 1,000 years on the bottom of the sea, the coins require no restoration. Because gold is a noble metal, it, unlike silver, doesn’t react with the salt in the ocean water. The Israeli authorities will now investigate the area, hoping to find the remains of the suspected wreck, or to recover any other artifacts that may be nearby.

Speculation about the amount of lost gold in the world’s oceans varies wildly, and an exact amount is near impossible to calculate. But even the more cautious estimates climb well into billions of dollars. Three shipwrecks were reportedly located in 2012 alone, the combined cargo of which is speculated to be $4.5 billion dollars.

Mengapa Saudi Arabia Tidak Pakai Dinar Dirham

Mengapa.Saudi.Arabia.Tidak.Pakai.Dinar.Dirham.

Sufyan al Jawi – Numismatik Indonesia

Banyak yang suka bertanya: mengapa Pemerintah Saudi Arabia memakai uang riyal kertas, dan bukan Dinar dan Dirham? Ini sebagian jawabannya.

Untuk menjawab pertanyaan mengapa Saudi Arabia memakai uang kertas riyal, dan bukan Dinar emas dan Dirham perak, kita perlu mengetahui posisi kerajaan ini. Pada mulanya wilayah Hijaz adalah bagian dari Daulah Utsmaniah yang, tentu saja, menggunakan Dinar emas dan Dirham perak sebagai mata uangnya. Pada pertengahan abad ke-18, sebuah amirat lokal, dipimpin oleh amirnya, Muhammad ibn Sa’ud (meninggal 1765), menguasai suatu desa yang kering dan miskin, Dariyah. Karena kegiatannya yang selalu membuat onar, dan mengganggu jamaah haji, kelompok Al Sa’ud terus-menerus dalam konflik dengan pemerintahan Utsmani.

Beberapa tahun kemudian, berkat bantuan seorang broker politik, Rashid Ridha namanya murid dari Muhammad Abduh, untuk memperkuat rong-rongan terhadap Istambul, anak cucu Ibn Sa’ud membangun aliansi dengan Pemerintah Kolonial Inggris. Aliansi ini terjadi pada masa Sa’ud bin Abdal Aziz, anak Abdal Aziz Ibn Sa’ud, cucu Muhammad ibn Sa’ud. Untuk perannya ini Ridha ‘menerima imbalan 1,000 pound Mesir untuk mengirimkan sejumlah utusan ke provinsi Arab di [wilayah] Utsmani untuk memicu pemberontakan,’ pada 1914.

Ketika itu Ridha juga telah mendirikan sebuah organisasi lain, Liga Arab (Al-jami’a al-arabiyya), dengan tujuan menciptakan ‘persatuan antara Semenanjung Arabia dan provinsi-provinsi Arab di Kekaisaran Utsmani’. Agenda organisasi ini adalah pendirian ‘Kekhalifahan (Konstitusional) Arab’, suatu rencana yang tidak pernah terwujudkan. Yang lahir kemudian adalah Kerajaan Saudi Arabia.

Berkat kolaborasi antara Sa’ud bin Abdal ‘Azziz – dengan legitimasi teologis dari Wahabbisme, atau ajaran Syekh Muhammad ibn Wahhab – dan pelindungnya Winston Churchil, PM Inggris ketika itu berdirilah kemudian sebuah kerajaan nasional di tanah Hijaz, pada 8 Januari 1926. Pada 1932 Tanah Hijaz, yang semula merupakan bagian dari Daulah Utsmani, oleh rezim yang baru ini secara resmi dinamai: Sa’udi Arabia! Inilah satu-satunya negara di dunia ini yang mendapat nama dari nama seseorang. Salah satu mata rantai awal pemberontakan ini sendiri, adalah Amir di Najd waktu itu, Abdullah Ibn Sa’ud, berhasil ditangkap dan akhirnya dipancung di depan istana Topkapi, di Istanbul, setelah diadili dan dinyatakan sebagai seorang zindiq, pada 1818.

Meninggalkan Muamalat

Sejak awal, Pemerintahan Saudi Arabia, merupakan sekutu kekuatan Kristen-Barat (semula Inggris, kemudian Amerika Serikat), dan menjadi semakin erat dengan ditemukannya minyak pada tahun 1950-an. Beroperasinya perusahaan minyak raksasa (Aramco = Arabian-American Oil Company) yang markas besarnya di Dahran, di tempat yang sama dengan Pangkalan Militer AS (berdiri 1946), di Hijaz, merupakan simbol dan sekaligus sumber kekuasaan Rezim Sa’ud sampai detik ini. Semakin hari kita ketahui Rezim Saud makin meninggalkan muamalat, dan mengislamisasi kapitalisme barat.

Raja Abdul Aziz bin Sa’ud, pendiri Saudi Arabia, berkuasa penuh mulai tahun 1926 sampai 1953. Pada mulanya, setelah memasuki Mekkah (8 Jumadil Ula 1343 H), beliau menolak berlakunya sistem uang kertas di wilayahnya, setelah memusnahkan uang kertas lira Turki sekuler yang beredar di Haramain. Pada masa dia memerintah jamaah haji dari penjuru dunia menggunakan belbagai jenis koin emas perak dari negerinya masing-masing. Namun koin dinar Hashimi dan real perak Austria – Maria Theresa, juga riyal perak Hijaz yang paling populer di sana.

Maka, pada tahun 1950-an, sempat populer di Amerika Serikat, anekdot kisah Raja Abdul Aziz yang selalu membawa harta kerajaan yang berupa koin emas-perak kemanapun dia pergi� bagaikan orang kolot dan primitif. Namun setelah dia wafat, penggantinya, Raja Sa’ud bin Abdul Aziz (1953-1964), bersikap lain. Sejak ia berkuasa, Pemerintah Kingdom of Saudi Arabian (KSA) mendirikan bank sentral yang bernama: Saudi Arabian Monetary Agency (SAMA) dan menerbitkan uang kertas riyal pada tahun 1961 melalui Dekrit Kerajaan 1.7. 1379 H, dalam pecahan 1 – 100 riyal.

Raja tergiur menerbitkan uang kertas karena lebih menguntungkan daripada mencetak koin-koin riyal perak. Ide uang kertas diambil dari keberhasilan SAMA atas penerbitan uang kertas receipt yang berlaku dalam uji coba pada musim haji sepanjang tahun 1953-1957. Dengan menerbitkan Haj Pilgrim Receipt dalam satuan riyal perak, SAMA mulai menarik semua jenis koin emas dan perak yang beredar di Haramain. Para jamaah haji dari luar negeri pun diwajibkan menukarkan koin emas perak yang mereka bawa. Setelah populer, kupon haji itu pun kemudian dinyatakan tidak berlaku lagi sejak Oktober 1963 dan finalnya tanggal 20 Maret 1964, diganti dengan uang kertas riyal.

Celakanya sejak saat itu, ONH atau BPIH (Biaya Perjalanan Ibadah Haji) wajib dibayar dalam uang kertas dolar AS, bukan dengan uang kertas riyal! Sebab Kerajaan Saudi Arabia telah menyepakati pula berlakunya perjanjian Bretton Wood (1944), yang menyatakan bahwa dolar AS adalah satu-satunya mata uang yang berlaku untuk transaksi internasional. Segala transaksi dengan koin dinar Hashimi dan riyal perak (1 riyal = 4 dirham), termasuk koin real Maria Theresa di batalkan oleh negara. Maka umat Islam sedunia berduka atas dibrangusnya mata uang syar’i: dinar dirham.

Genaplah sudah makna hadis dengan lafal berikut: “Tak seorang pun manusia yang tidak memakan riba” yang diriwayatkan oleh Abu Daud, semoga Allah merahmatinya. Dinar dan Dirham diberangus sampai dua kali, pertama 1914 oleh Sultan-sultan boneka sisa Daulah Utsmani (Turki), dan kedua 1964 oleh KSA tersebut di atas. Tapi para ulama belum dapat mengambil kesimpulan dari terbitnya uang kertas riyal ini, tentang status halal-haramnya uang kertas. Sampai, akhirnya, diterbitkan fatwa tentang uang kertas, pada tahun 1984, yang menyatakan bahwa uang kertas adalah halal.

Begitulah, sejauh sejarah Islam dapat kita ketahui, fatwa Saudi Arabia yang menghalalkan uang kertas, satu-satunya fatwa resmi dari suatu pemerintahan (“Islam”) di dunia ini. Tetapi, kisah ringkas sejarah ekonomi politik Saudi Arabia sebagaimana diuraikan di atas, kiranya cukup menjelaskan mengapa Saudi Arabia menggunakan riyal kertas, dan bukan Dinar emas dan Dirham perak.
 

Why Wall Street & Govts Hate Gold

Why Wall Street And Governments Hate Gold | Gold Eagle.

Michael Pento

December 8, 2014

Gold is hated more than ever by both governments and the financial services community. This is because it has now become imperative to keep the illusion of confidence in sovereign debt and paper currencies. To that end, a gentleman by the name of Willem Buiter, Citigroup’s chief economist, shot into the media spotlight by writing a note on the day before Thanksgiving stating his belief that gold is in a six thousand year-old bubble.

Citi’s chief economist penned this “brilliant” commentary in the days just prior to the Swiss referendum on increasing the percentage of gold reserves held by its central bank. In a clear attempt to influence the gold vote, Mr. Buiter also stated on November 26th that, “The Swiss vote is ridiculous and no self-respecting central bank should ever be putting a large chunk in a single commodity.”

This hatred for gold spurs from his belief that gold has no intrinsic value. But how can one individual have the hubris to believe he can erase thousands of years of human experience and knowledge that has maintained gold’s intrinsic value stems from the fact it is the perfect store of wealth?

Mr. Buiter went on to exclaim that, “Gold has become a fiat commodity or a fiat commodity currency, just as the U.S. dollar, the euro and the yen.” He continued, “The main differences between them [fiat currencies] are that gold is very costly to produce, while the production of additional paper money has an extremely low marginal cost.” So, here we have this paragon of the Wall Street and banking community saying that gold is no different from fiat currencies.

Since his body of work clearly shows he is aware of the definition of the word fiat, the only conclusion one can reach is that Mr. Buiter is being brazenly disingenuous. The word fiat means by decree or edict—from the Latin “let it be done.” In reference to currencies it means that governments and banks can create money at virtually no cost and at will. Gold is the exact opposite of a fiat currency. Mr. Buiter admits this in the very same commentary by stating gold is costly to produce.

Our collective human conscious has for millennia deemed gold to be valuable because it is; portable, divisible, beautiful, extremely rare and virtually indestructible. How many things on this planet fit those criteria? The answer is nothing else except precious metals; fiat currencies fail miserably when it comes to the rare and virtually indestructible part. This is what gives gold intrinsic value and what makes it so vastly different than fiat currencies.

In the near future, I believe Citi’s chief economist will be embarrassed by his remarks, especially when comparing gold to pet rocks. He also claims that gold, since it is just another fiat currency, can reach zero value just as paper money can lose all its worth.

 

But contrary to what this gentlemen thinks, the value of gold is about to soar because central banks and governments have become trapped. These market manipulators need to keep asset bubbles inflated in order to keep the wealth effect in place and sustain whatever anemic economic growth they have been able to achieve. Most importantly, they need to keep sovereign debt out of public hands in order to keep debt service payments remain low. This means governments have no escape from their massive and unprecedented money printing campaigns. Therefore, the value of fiat currencies is set to plummet when compared to precious metals

These haters of gold are becoming more bold and desperate in their attempt to maintain confidence in government issued debt and currencies as asset bubbles have reached dizzying heights and debt levels have exploded into record territory.

Inflation has become the goal of every central bank on earth. This makes the mean reversion of interest rates inevitable, which will lead to a global sovereign debt crisis. To illustrate this point, the U.S. national debt officially eclipsed $18 trillion this week! This equates to a trillion dollars + per year just on interest payments once the Treasury is forced to pay a more normal rate on all that debt. Economic chaos and soaring inflation will then follow, which should send U.S. Investors flocking to gold en masse.

Buiter’s concludes his inane commentary by stating that gold, “has had positive value for nigh-on 6,000 years.” “That must make it the longest-lasting bubble in human history.” But history has proven the real bubbles have manifested in sovereign-issued debt and currencies; never in gold. Since the rate of debt accumulation and government money creation is exponentially greater than at any other time in human history, I can state with confidence the “bubble” in gold has only just begun.

Why Gold Is Headed Much Higher

By Michael Pento
At Gold Eagle
November 24, 2014

gold price risingWhat really drives the price of gold? Some say it’s a fear gauge. Others prefer to look at the demand coming from the Indian wedding season. But the silliest of all conclusions to reach is that the dollar price of gold should be determined solely by its value vis-à-vis another fiat currency.

The truth is the primary driver of gold is the “intrinsic value” of the dollar itself, not its value on the Dollar Index (DXY). The “intrinsic value” of the dollar can be determined by the level of real interest rates. Real interest rates are calculated by subtracting the rate of inflation from a country’s “risk free” sovereign yield. Right now the level of real interest rates in the U.S. is a negative 1.55%.

A key factor is to then determine the future direction of real interest rates. The more positive real rates become, the less incentivized investors are to hold gold. And the opposite is also true. The more negative real rates become, the more necessary it is to own an asset that is proven to keep pace with inflation. The Fed has threatened to begin lift off from its zero interest rate policy in the middle of next year. However, the Fed has made it clear that it will only raise nominal yields if inflation is rising as well. Therefore, there is no reason to believe real interest rates will rise anytime in the near future.

The “intrinsic value” of the dollar is not rising; and most likely will not increase for the foreseeable future. The dollar is only rising against other currencies because the value of those currencies are being pummeled by their central banks to a greater extent than our Fed. The weightings in the DXY favor the performance of the dollar against the euro and the yen. Therefore, just because the nations of Europe and Japan are determined to completely wreck their currencies does not mean that the “intrinsic value” of the dollar is improving or that the dollar price of gold must go down. In fact, holders of the euro and yen should be more compelled to own gold than ever before.

The sophomoric view held on Wall Street is that gold must go down if the dollar is rising on the Dollar Index. Their specious argument is that it’s more expensive to buy gold because of the dollar’s strength, and therefore demand for the commodity must decrease. However, this argument completely overlooks the increased motivation to buy gold emanating from the continued attack on the yen’s “intrinsic value” by the bank of Japan. For example, real interest rates in Japan are a negative 3% and are promised by the Bank of Japan to keep falling. Japanese citizens should be scrambling to own gold in this scenario even if it will take more yen to buy an ounce of gold. And from all evidence available demand for the physical metal remains strong.

  • Supply demand metrics for gold are currently favorable.
  • Central bank demand increased to 335 tons so far this year, up from 324 tons in 2013.
  • Investment demand is up 6% YOY, while supply was down 7% YOY in Q3.
  • Nevertheless, gold is down about $100 an ounce YOY, and
  • Gold mining shares have plummeted by about 30% during the same time period.
  • This is due to short selling of gold futures by banks that wish to see the gold price lower.

In the short-term financial institutions may be able to manipulate gold prices lower, as they bring to fruition their self-fulfilling prophesies.

However, in the long run there exists three great risks to markets and the global economy in general that will be very supportive for gold:

  • A collapse of the yen that becomes intractable;
  • spiking interest rates in the United States due to the Fed’s unwillingness to get ahead of the inflation curve; or, more likely,
  • a significant weakening in U.S. economic data that puts serious doubt in the sustainability of the recovery and corporate earnings growth.

At least one of these events is guaranteed to occur because the free market price discovery mechanism has become completely abrogated and has been replaced by government manipulation of all asset prices. When these massive bubbles break it won’t be so easy to put them back together again because central banks and sovereign balance sheets are already at a breaking point. Therefore, the recovery won’t be as easy to engineer like it was back in 2009.

Equity prices have been propelled to record highs by the money-printing frenzy of central banks. And the Fed Funds Rate is near zero percent, instead of a more normal 5%. The total debt in the United States is near an all-time record 320% of GDP. U.S debt is up $7 trillion (14%) and global debt has increased over $30 trillion (40%) since 2008. Most importantly, the record amount of debt has been coupled with interest rates that have been artificially manipulated to record lows around the world for the past six years and counting.

This is why I know it will all end very badly once interest rates normalize. Regardless of bank manipulations and the BOJ’s kamikaze mission to commit Hara-kiri with its currency, gold will be an increasingly-necessary asset to own. Especially after this current illusion of prosperity comes crashing down.

You can learn more about the coming economic chaos by getting a free trial subscription to my Mid-week Reality Check podcast located at www.pentoport.com.

Michael Pento is the President and Founder of Pento Portfolio Strategies and Author of the book “The Coming Bond Market Collapse.”