In an early October research note, Commerzbank analysts said they expect gold prices to exceed $1,300/oz soon.
“We see no real fundamental reason why the gold price should be having a hard time, given the numerous risks to the economy and financial markets,” stated the research team.
They pointed to troubling factors that are increasing demand for gold:
1. The possibility of a “disorderly Brexit”
2. Further escalation of the U.S./China trade dispute
3. Euro zone problems
4. Accelerated U.S. consumer price inflation
5. Low or negative interest rates ahead
Commerzbank believes that the U.S.-China trade conflict will soon slow business activity in the U.S. in a way that will hurt the pocketbooks of everyday Americans. This will lower demand for interest-rate policy tightening by the Federal Reserve and potentially increase demand for gold.
Famed investor Frank Holmes also weighed in this week on gold, saying a painful surge in inflation is just around the corner.
“Inflation continues to ramp up,” he said. “The price of Brent oil, the international benchmark, closed above $80/barrel last week… an incredible 3-fold increase from its low of $27/barrel in January 2016.”
Holmes concludes: “Get ready, gold bulls: The precious metal could be close to finding a bottom.”
Goldman Sachs, Bank of America Merrill Lynch, RBC Capital and other professional investment firms are also expecting higher gold prices over the next year or sooner.
But pro investors aren’t the only ones looking closely at precious metals. There was new market data released this week indicating more individual investors are considering gold and silver as well.
SILVER COIN SHORTAGE: U.S. MINT
The U.S. Mint just reported a substantial jump in gold and silver coin sales in the last few months. So much so, they are out of stock of popular items.
The Mint announced at the beginning of September that it had completely sold out of 2018 Silver American Eagle Coins “due to recent increased demand.”
Gold coin sales are up 44% over last year, while silver coin sales are up 89%!
Another good sign that more investors are considering gold and silver for their portfolios.
But they aren’t the only ones. In addition to individual retirement investors and global investment banks, central banks are also giving gold a closer look.
CENTRAL BANKS INCREASING GOLD BUYING
Poland just made headlines with a big announcement.
It has completed its largest gold purchase since 1998: over 9 metric tons of gold! Imagine how big of a home safe you’d need for a horde of that size. This is among the largest gold acquisitions for a European Union nation in decades.
Poland’s buying “suggests gold’s appeal to central banks might be widening,” says Matthew Turner, a strategist at Macquarie Group Ltd. in London.
According to Natalie Dempster at World Gold Council, gold is a critical tool to help insure fiscal stability for central banks. “Central banks have three main objectives when they are thinking about reserve assets: to keep their assets safe, to keep their assets liquid and to generate returns,” she says. “Gold can help to meet all three policy objectives.”
The National Bank of Poland rarely comments on the motives for its reserve policy, and this time is no exception. But economists said gold’s current price level has made the precious metal attractive to Poland’s financial watchdogs, while inflation jitters are also increasing.
“The NBP reserve management policy is based on diversification,” said Marcin Mazurek, a senior economist at mBank SA. “The basic criterion is the low price of the gold, combined with the expectation for higher global inflation.”
Poland’s overall gold reserves are dwarfed by those of Russia, the U.S. and others, but the country’s recent large purchase is one more example of increased central bank buying. Bank holdings in gold have now reached their highest levels in 20 years! Kazakhstan, India and the Phillippines have been recent acquirers of large gold positions.
India, one of the world’s largest gold investors, just increased its gold holdings by over 7 tons in August alone.
We never like to advocate market timing with gold. That’s why we urge you to consider the common long-term themes behind these recent trends:
1. Some of the world’s most powerful governments are increasing gold positions in their treasuries (portfolio diversification, safe-haven physical asset)
2. Large global investment banks are optimistic about the direction of gold prices ahead (potential for long term price change)
3. Investors are buying U.S. Mint coins faster than they can be made (long term physical demand trends)
Long term gold demand, our national debt, the inevitable rise of inflation, volatile markets, disturbing world events, rancorous political debate… all these are good reasons to consider what safe-haven physical assets might provide to your portfolio in the months ahead.
ARE YOU ALSO CONSIDERING GOLD?
Individual retirement investors, global investment banks and powerful central banks are all considering gold right now.
If you are too, you owe it to yourself to have a quick conversation with us. Before you act.
Every day, we talk with everyday Americans who feel concerned about our nation’s current bitter political divide and troubling financial trajectory.
They are looking for important things:
1. Portfolio diversification
2. Protection from inflation and market fluctuations
3. Physical, safe-haven assets
If you are looking for one or more of the above, we should talk today.
Why not call us today for a quick 15-minute update on gold and silver? We are here to support you with complete product guidance and detailed answers to all your questions.
Whatever you need to help you consider gold properly for your own family, we can provide.