Wobbly world markets and a weakened U.S. dollar are sending investors into safe haven buying mode fast. The latest boost to gold prices comes from a significant drop in rates across the yield curve, says TD Securities.
If you read only one sentence in this email, please read this one:
Federal Reserve studies have shown an inverted yield curve to signal nearly every U.S. recession for the past 60 years.
What is an inverted yield curve? This is when yields on benchmark 10-year U.S. Treasury notes fall below three-month rates. This just happened on Friday… for the first time since mid-2007!
Traders were shocked, even though recent major bank meetings have warned of slowing economic growth prospects. Our own Federal Reserve is among them.
“Gold is set to rally towards our $1,360/oz target sooner-than-expected,” TD Securities commodity strategists say. “Given that the market is increasingly pricing in a U.S. rate cut this year, the US dollar is on a weak footing and considering that equities are generally more worried about growth, gold could well move into a higher trading range sooner than expected.”
TD Securities sees gold prices rising to $1,360 within three months and then moving towards $1,400.
“Gold jumped to its highest in some three-weeks as the Fed adjusted the dot plots to signal no more interest rate hikes this year, global growth concerns grew, the USD dollar migrated lower and the yield curve inverted, adding upside to gold,” TD Securities says.
They aren’t alone in this positive outlook for gold prices. Central banks continue to hoard gold at a huge rate!
CENTRAL BANKS LOAD UP ON GOLD
In 2018, public data shows central banks added a combined 651.5 tonnes of gold to their holdings. Leading the buying were the United States, Russia and China superpowers, but they weren’t alone. This trend has been slowly gathering steam over the last eight years.
New big buyers have entered the running.
“This includes Poland and Hungary, the first European Union nations to buy gold since the start of the century,” said Junlu Liang, senior analyst with Metals Focus. “Hungary’s central bank not only just bought its first gold in 32 years, but also increased its total holdings by 10-fold.”
Even India has entered into the fray.
On Friday, ET Markets News said: “The Reserve Bank of India (RBI) has bought gold for the first time in nearly a decade, signaling that the metal could be in demand as a store of value. The RBI added 8.46 metric tonnes of gold to its stock of holdings during the financial year 2017-18.”
PRO INVESTORS TAKE A FRESH LOOK AT GOLD
Both Commerzbank and TD Securities have issued reports showing a big upswing in interest in gold from money managers.
“Money managers aggressively covered their short gold positions and took out new long exposure as they anticipated the Federal Reserve to sound a dovish tone,” said TD Securities. “The significant increase in length was also driven by the concurrent weakening of the U.S. dollar and renewed economic growth concerns.
“Speculative financial investors are … likely to continue betting on rising gold prices,” said Commerzbank. “In our opinion, this further paves the way for gold as it continues on its upswing.”
GOOGLE JUMPS ON THE GOLD TRAIN
Internet giant Google is also getting into gold in a big way – starting in India.
The new Google Pay investment plan will soon allow users in India to buy 99.99% pure gold. The service is still pre-launch, but updated service terms on Google Pay already read: “Google Pay provides a technology platform to offer the sale, delivery and repurchase of Gold and other related services.”
From this statement, it seems like Indian investors will soon be able to purchase digital gold and then sell it for either cash or have physical gold delivered.
Good news for India’s retirees seeking diversification and safe havens from the stock market’s inevitable volatility and crashes.
LET US HELP YOU FIND YOUR BALANCE TODAY
According to Frank Holmes, CEO of U.S. Global Investors, global economic growth is slowing. This has historically been positive for gold prices.
Holmes says physical gold is a proven store of value. Especially when other safe haven assets, such as government bonds, stop paying you good yields.
Holmes is currently recommending up to a 10 percent portfolio weighting in gold.
That said, your portfolio is yours to allocate however works best for you and your legacy. That’s why getting informed is so important. We have the experience and product information you need to make the right decisions for your family and your future.
Let us help you make your move today with a Gold bullion IRA!