Gold for the long haul – Now is the time!

Lawrie Williams

Gold should be part of every investor’s portfolio to protect against the host of geopolitical disaster scenarios that are looming on the horizon.

“Over the long haul, gold is the least risky and potentially most rewarding of all investment asset classes.”  So says New York-based specialist gold analyst, Jeff Nichols, in his latest Nicholsongold newsletter.  Admittedly Nichols falls into the gold bull camp, but is at the realistic end of gold analysis, seeing both potential upsides and downsides ahead.  His latest article is headed Gold: Now is the time, and in it he lays out the various factors which he sees as having the potential to drive the gold price in the medium to long term – and as noted in the first sentence of this article he sees a reasonable investment in physical gold (not gold derivatives) – perhaps 5% – 10% of an investment portfolio – as key to protecting one’s assets over time.

So what factors does he point to as being the likely positive points for investment in gold?  In truth he is primarily stating the obvious here, but it’s an ‘obvious’ which is often ignored by mainstream investors who seek more rapid returns than gold tends to offer.  But rapid returns are themselves risky – it’s all very well chasing the stock markets upwards but as investors have found to their cost, bull markets tend to be followed by a crash and investors are notoriously bad at recognising when a crash begins and by the time they try to take their profits it is usually too late.

But some of the factors which could very easily come into play could have both an adverse impact on the general stock markets and a positive impact on gold.

Primarily there are a significant geopolitical tensions which could easily escalate into something which is far more threatening.  Americans in particular tend to see these geopolitical risks as all being far away geographically and not having an impact on their domestic security – and it is America which is currently controlling the gold price, although with China exerting more and more influence on gold as time progresses this could well change.  While it might suit China to see the gold price stay at or around current levels as it, as most now believe, is building its own gold reserves on the cheap, it, and its citizens, now have such a vested interest in gold that it is unlikely to let the price drop much, if at all, below its current trading range.  We do seem to have been seeing a pattern here – the U.S. market appears to be intervening to prevent the gold price moving above the $1220 level, while Asian buying seems to be preventing it falling below $1180 with the $1200 mark being something of a happy medium.

But let’s look specifically at the geopolitical tensions. Most of which could have a strong impact on the global economy – and in this modern day and age the U.S. economic system cannot be immune to be being severely damaged by major economic difficulties in other parts of the world.

The Greek crisis continues to play out with neither side apparently willing to give ground.  The country’s Syriza political party, currently in government, came to office on a pledge to end ‘austerity’ – the current dirty word in European politics.  It can’t afford to back down on this and retain any domestic credibility.  Meanwhile the European Central Bank and the IMF are also unwilling to give ground on mitigating Greek debt and while the number of occasions Greece has appeared to be on the abyss of default are seemingly legion, this time around it cannot avoid this unless one side or the other gives up substantial ground.  Now maybe some kind of compromise will be reached – the economic aftermath of a Greek default could be devastating for some of the European banks which would likely have even more of an impact than the 2008 Lehmann Brothers collapse which precipitated the Global Financial Crisis of that year.  The U.S. markets would not be immune and could crash again accordingly – and the European markets even more so.  This next phase will play out this month.  We shall have to wait and see what materialises.

ISIS/ISIL continues to gain ground in the Middle East major oil producing region with huge swathes of Syria and Iraq falling under its draconian fundamentalist Islamic control.  This is potentially an enormously destabilising influence across the whole of the Middle East and parts of North Africa, and could spread much further afield into other Islamic religion-dominated areas in Asia and Eastern Europe.  While westerners cannot understand the appeal of a fundamentalist Islamic state and ‘jihad’, the principle obviously has a huge impact on religiously manipulated young Moslems in many other countries who may feel disenfranchised by their current domestic political systems.  9/11 demonstrated that even the U.S. is not completely immune to potentially economically destabilising terrorist attacks.

Ukraine continues to simmer.  Russia will not give Crimea back and will also probably not let the ethnic Russians in the country’s east be subsumed by what it sees as a fascist Ukraine  government intent on linking with Europe and wanting NATO to come in and ‘protect’ it.  Sanctions imposed on Russia seem to be hurting the Europeans at the sharp end as much as Russia itself, if not more so, while President Putin is increasing his trade links with former Soviet Union independent nations and with China forming an enormous economic bloc to rival U.S. global economic hegemony.  This may also lead to a major economic conflict which could strongly impact the currently U.S.-dominated global financial system.

And last, but certainly not least, is the overall role of China which is keen to take what it sees as its rightful place in the global economic hierarchy – a process which it feels the U.S. is trying to block through its effective voting domination of the IMF.  With its enormous foreign exchange reserves mostly held in U.S. treasuries, China is in a position to seriously damage the U.S. financial system should it wish to do so.  It is believed to be building huge gold reserves and taking moves to dominate global gold trading and pricing.  With gold price strength being seen as U.S. dollar weakness the Chinese could have another economic weapon to hand.  It might be wise for the U.S. not to tweak the dragon’s tail any further – and the possible South China Sea interventions by the U.S. might be seen as a step too far by the Chinese which see what happens there as none of America’s business.

Nichols does, however, point out in his article that any of these factors, and probably some other black swans out there, could initially trigger a swift tumble not only in equities, but also in the price of gold itself as some retail and institutional investors have to raise cash to cover losses in equity and other financial markets. We saw this in the 2008 financial crash, but gold was quickest to recover of all asset classes.   But Nichols goes on to say that any such retreat in the metal’s price should be seen as an opportunity for savvy investors to acquire more gold at bargain prices.

 

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More SPDR gold ETF purchases show continuing institutional interest

New York closed yesterday at $1,270.20 up $4.90. In Asia gold slipped slightly to $1,267.80 ahead of London’s. At the Fix gold was set at $1,264.00 up $0.24 and in the euro, at €1,103.641 down €3.067, while the euro was slightly stronger at $1.1453. Ahead of New York’s opening gold was trading in London at $1,265.00 and in the euro at €1,105.09.

The silver price closed at $17.30 down 6 cents. Ahead of New York’s opening it was trading at $17.27.

There were purchases of 5.376 tonnes of gold into the SPDR gold ETF but no change in the Gold Trust on Thursday. The holdings of the SPDR gold ETF are at 773.305 and at 167.75 tonnes in the Gold Trust.  The purchase yesterday was big enough to lift gold prices to current levels reflecting continued institutional interest in gold.

When we look at Europe, we see that specific political events don’t move precious metal prices by themselves. How those specific events impact the large monetary picture is what matters. Right now the euro is consolidating in the mid $1.14 area despite impending quantitative easing and the Greek debt negotiations, which should send the euro lower. That is, of course, provided the market is not discounting a Greek euro exit, which would strengthen the euro. As to Greece, the current chapter shows Germany in an avuncular manner putting the two Greek Ministers in their place, a big mistake, if they want the euro to remain intact. We do not believe the two leading Greek Ministers can take such a scolding quietly. In that scene, we now expect Greece, through these two politically committed men, to take that story up a notch.

With the Ukraine about to see its currency lose all credibility and the nation about to move to bankruptcy we are waiting to see if the U.S. and Eurozone are willing to take the Ukrainian civil war to an international one. Russia has made it clear it wants, at least, eastern Ukraine and will pay any price for it. This is well described by the exchange rate of the Ruble. The next week we see how far the West will go? It will affect the economic state of the Eurozone and may well eventually see a rupturing of gas supplies to Europe if the West takes the strife up to the next level. Only at that stage will it affect the gold price, we feel.

In China we are seeing the government increase liquidity in the system and aiding borrowers to lift growth. We cannot see China allowing deflation at this point in time, so will continue to follow the developed world by expanding their monetary base. We also expect to see them join the rest of the world by weakening the Yuan against the dollar. This continues to be gold positive.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

Asian demand continues as main gold driver

Julian Phillips’ latest analysis of the gold and silver markets makes the point that Chinese and Indian demand remain the main price drivers while the  number of global geopolitical factors which can affect the gold price remain large.

New York closed on Friday at $1,284.3 up $26.70. In Asia gold held that level but London pulled it back to $1,275. At the Fix gold was set at $1,274.25 up $10.75 and in the euro, at €1,122.687 up €7.703, while the euro was stronger at $1.1350. Ahead of New York’s opening gold was trading in London better, at $1,277.30 and in the euro at €1,126.12.

The silver price closed at $17.26 up 31 cents. Ahead of New York’s opening it was trading uncertainly at $16.19.

There were no purchases or sales from or into the SPDR gold ETF or the Gold Trust on Friday. While traders and speculators moved the gold and silver prices around, the lack of physical gold sales took away the importance of these moves, for physical actions determine the gold price.

Today it remains in a similar area, with two weeks to go before the Chinese New Year. The current consolidation is some way above support. The tone of the market is good. The main gold driver remains Asian demand. With the Wedding season in India ongoing until May, Indian demand remains strong. In China, while the market will quieten down immediately after the 17th Feb underlying demand remains persistent on an ongoing basis.

The euro is slightly stronger today at $1,343 while the dollar index remains strong at 94.66. The foreign exchanges of the world are calming down at the moment, but for how long? We do believe that the Fed will use swap arrangements to calm the market and may well have set a desirable euro exchange rate level at around $1.13. We doubt that a particular exchange rate level will be defended for fear of a similar situation the Swiss Franc found itself in.

The number of global events that can affect gold remains large. At the start of the week, the most imminent remains Greece, but no immediate resolution one way or the other is in the offing yet.

In the Ukraine we believe the scene there is degenerating into a full scale war between Russia and the Ukraine, as the U.S. considers supplying lethal weapons to the Ukraine. Its impact on gold will primarily be felt in the Eurozone, where investors will be concerned with the stability of the euro as a result of this, but we don’t believe there will be no sudden rush into gold from that quarter.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

 

EU threatens Russia with more sanctions as war in Ukraine intensifies, Greece pivots to Russia

EU threatens Russia with more sanctions as war in Ukraine intensifies, Greece pivots to Russia

Latest commentary on Mark O’Byrne’s www.goldcore.com  website focuses particularly on worrying politico-economic developments in Europe which, if unchecked, could well lead to a banking and economic crisis which could spread globally.

EU foreign ministers are meeting in Brussels today to discuss imposing further sanctions on Russia following an upsurge in fighting in east Ukraine.

The EU and the US have already imposed sanctions on Russia and slapped asset freezes and travel bans on Russian individuals and businesses.

NATO says hundreds of Russian tanks and armoured vehicles are in east Ukraine. Moscow denies direct involvement but says some Russian volunteers are fighting alongside the rebels.

Greek’s new Prime Minister Alexis Tsipras and a leader of the country’s radical left-wing anti-austerity party, has indicated dissatisfaction with the sanctions posed on Russia. Russia and Greece have a history of good relations and shared culture. The opposition of EU sanctions by Tsipras may lead to the strengthening of the relationship between the two countries and spells trouble for further sanctions that are to be decided in the weeks ahead.

Tensions between Russia and the West are intensifying. President Obama’s suggestion that Russia would be cut out of the SWIFT banking transfer system was met with a degree of hostility and threatening words that has not been customary of the Russian government.

Prime Minister Medvedev warned that the “Russian response – economically and otherwise – will know no limits.”

The EU‘s push for further sanctions on Russia may be imprudent and only help ‘bait the bear’. Measures under discussion include asset freezes, travel restrictions on certain Russian individuals, and restricted access to capital markets.

The consequences of such a move could be dire. China have made it clear that it can provide liquidity to Russia if necessary, an offer the Russians have not felt the need to avail of as yet. Russia still sits on vast dollar reserves which it could dump on the market and buy Chinese yuan and other allied nations fiat currencies and indeed precious metals such as gold and palladium.

Or Russia could choose to cut off natural gas to Europe causing a crisis for homes and industry across Europe and paralysing industry and agriculture in already struggling periphery economies.

The war in Ukraine, in which 5000 people have already died, is growing in scope and intensity.

At some point Russia may directly enter the conflict – which it would justify given that the ethnically Russian people of Donetsk voted to secede from Ukraine following the overthrow of democratically elected, albeit corrupt, President Yanukovych.

Moscow’s intervention in Ukraine and its continued support for rebels in the east of the country is “not a wise course for Russia”, former UK foreign secretary and leading government politician William Hague has told CNBC.

“If Russia continues on this course of the last few days there will be a further grave deterioration in relations between the European Union and Russia,” Hague who is close to NATO told CNBC’s Worldwide Exchange.

The risks now fomenting in Greece as well the escalating tensions with Russia, along with the tacit admission that the EU is already in serious crisis by initiating emergency QE measures, mean that that the risk of banking contagion and collapse, economic collapse and currency collapse are real threats.

Gold and the Greek aftermath; and Ukraine too having an impact

The Greek election result fallout has created significant waves in the gold market looking ahead – while there’s always the Ukraine to spice things up….  Update of article previously published 2 days ago on www.mineweb.com 

Lawrence Williams

Perhaps predictably, gold initially jumped up to the $1300 level in Asian trading as the Greek election results became apparent.  But as the news, which had been largely anticipated, began to be assessed the gold price fell back fairly sharply in London trading before subsequently recovering up to around the $1290 level whereabouts it has remained since give or take a few dollars.  Analysts at Commerzbank put this down to ‘buy the rumour and sell the fact’ profit taking, but with the aftermath of the election result still to really impact, one suspects that the likely forthcoming very difficult negotiations between the new Syriza government in Greece and the EU/ECB and the IMF over renegotiation of Greek debt will create some significant waves in the gold market ahead.  Syriza has promised to end most of the austerity measures imposed on it by its bailout lenders and there doesn’t seem to be any means of paying for this without defaulting on its billions of dollars of bailout loans unless the EU/IMF can be persuaded to cut and/or extend them.

Initial indications are that the IMF, and probably the Eurozone nations led by Germany will, however, strongly resist any Greek attempts to renegotiate and write-off much of its debt.  IMF Managing Director, Christine Lagarde for example seems to be taking a hardline approach.  “A debt is a debt” she is reported as saying.  But how much this is setting out an initial negotiating position ahead of the inevitable horse trading remains to be seen.  If all this results in deadlock then there is a strong likelihood that Greece will default on its debt as soon as next month, or at best by this summer with the possibility it will be ejected from the Eurozone by the other members who may have had enough of the already huge costs of trying, unsuccessfully, to support the Greek economy and bring it back on track.  The Greek Syriza point of view is that with the huge debt overhang it will be impossible for the Greek economy to recover for years, if not decades if it continues to have to repay them.

But Syriza itself may not even have an easy internal ride.  It appears to be agonisingly short, by 1 seat, of an overall majority in the Greek parliament and has had to enlist an unlikely coalition partner in Independent Greeks – a right wing party which has little in common with the radical left wing Syriza apart from the ending of the austerity measures which have so devastated the Middle and Lower classes’ incomes and generated huge unemployment – particularly among the under-24s (estimated at around 66%).

Syriza itself is also something of an unholy alliance of Marxist far left across to some with almost Centrist viewpoints, but again all opposed to the austerity measure imposed on  the nation as a condition for past bailouts and put in place by the now defeated New Democracy party which controlled the previous administration.  There is a substantial element which wants an immediate Greek exit from the Eurozone – something Syriza’s leadership has tried to play down ahead of the election, as this option is not seen as a popular one amongst the general population.  However, if Greece is forced out of the Eurozone, and this can be blamed on current bêtes noires Angela Merkel and Christine Lagarde, somewhat akin to Russia’s President Putin being able to blame his nation’s economic woes on the U.S. and its allies and carry the nation with him, then that might make an eventual Greek exit (Grexit) more palatable internally.

There is also the potential of the Syriza victory generating momentum for other European anti-austerity and anti-Eurozone groupings.  The attempted negotiations on loan mitigation between the new Greek government and the EU/ECB/IMF , coupled with ever more uncertainty as to whether the EU itself will survive amidst the economic difficulties which beset it is bound to create uncertainty in the weeks, months and possibly years which lie ahead – and geopolitical uncertainty is a strong driver of investment money into perceived safe havens like gold.  So don’t write off gold’s initial relatively samll downwards move as the end of the recent momentum upturn as it looks like volatility, both down and up,  could be back in play in the markets.

As Julian Phillips succinctly puts it in one of his recent daily newsletters to his www.goldforecaster.com and www.silverforecaster.com subscribers:

“The result Eurozone officials feared most in Greece happened over the weekend with the far left party coming into power with all but one of a clear majority in Parliament. It is clear to observers that unless the E.U. agrees to write down debt and allow a turnover of austerity measures, the new government will have to leave the euro. It’s one or the other. Certainly, Greece is a drag on the euro as is Spain, but without them the euro would be much stronger, something Germany and other member states don’t want, so they must weigh this against agreeing to Tsipras’ terms and keeping Greece in the euro. What is a certainty is a painful path from now on for the euro and E.U. itself ensuring ongoing uncertainty in Europe.  Today the euro tried to fall below $1.12 but suddenly the euro is rising. The next few days will see the news on Greece being digested. But we mustn’t forget that the E.C.B. is soon to start its QE program. Will the E.C.B. buy Greek bonds against this background? February will see a decision on this come as Greece must renew debt obligations or default then. We do expect to see a weaker euro, at least up until then.

The ripples out from where this particular stone hit the water, covering Europe and the rest of the world have yet to be seen. Whether Greece stays in the euro or leaves it, we believe the resulting scene will be positive for the gold price.”

But Greece and its travails are not the only geopolitical goings-on which could have a positive impact on safe haven demand for gold.  ISIL and other fundamentalist Muslim militarist factions are most certainly not going to go away without considerably more grief to come.  They have the prospect of generating ever more military and political mayhem, not only in the Middle East, but also in North and West Africa and Asia where there are very substantial Muslim populations.

Meanwhile media overload has largely relegated what’s going on in Ukraine to a place among the less important stories out there.  Arguably the latest action in south east Ukraine, with the Russian-supporting separatists apparently moving to try and take control of the strategic port of Mariopol on the Sea of Azov, could be an equally destabilising force in European geopolitics.  Russia denies involvement, but the apparent usage of high tech weaponry by the separatist rebels belies a totally neutral standpoint.  A Russia-friendly controlled land corridor along the coast to Crimea would be of considerable strategic importance.

Should, heaven forbid, NATO be dragged into any kind of military action in support of Ukraine forces then this could result in a very significant conflagration and one doubts NATO’s European members would want to see this.  It would be a very different proposition to the military action taken against Iraq or Serbia.  Russia has high-tech weaponry, and a well-trained army, which would be a match for what most of the West can assemble and would have a significant logistical advantage in fighting next to its own borders.  The USA being further away geographically may take a more belligerent tone, but even the extreme ‘nuke-em’ brigade would probably fall silent given the possibility of being ‘nuked’ back.

And as for increasing economic sanctions against Russia, an economically weak Europe would probably not be keen to go down this route either given Russia’s potential for retaliating in kind – particularly in terms of cutting off oil and gas supplies.  The West may well be miscalculating Russia’s ability to survive economic hardships also.  The Russian population’s been through all that before, and can no doubt do so again without generating, in any serious manner, anti-government protest.  President Putin has a very high popularity rating as being a strong leader who has put Russia back on the map as a major military and political powerhouse which has done wonders for Russian pride.

So lots of potential ahead for geopolitical elements that may work in favour of a retreat into gold as a safe haven investment – and these are just the ones we know about.  We’ve already had a few unpredictable Black Swan events in the first three weeks of the year (see: 2015 Black Swans abounding – Safe Haven gold to benefit).  On this pattern there could be a whole host more ahead in what is already turning out to be something of landmark year for geopolitical discord and change.

The beginning of the end for gold and industrial metals price falls?

Lawrence Williams

Or the end of the beginning? … Looking at mixed fortunes ahead for gold, iron ore and base metals – positive, flat to negative and slightly upbeat respectively.

Latest article by Lawrie published on Mineweb.com.  Go to Mineweb.com to read this and other articles on precious metals, base metals, industrial metals and minerals and mining of all types.

The title of this article could be taken two ways, but our meaning in using it – courtesy of London metals and mining commentator David Hargreaves’ Week in Mining newsletter, which used aspects of the famous Winston Churchill wartime quote in its title and conclusions this week – is that are we perhaps actually nearing the bottom of the prices downturn virtually across the board in resources?

As the newsletter points out –  the Brent crude oil price has fallen through $50/bbl, iron ore is staring down the abyss, copper has a look of testing $6,000 per tonne on the downside, while gold has picked up to $1,200 plus etc.

In currencies, the US dollar continues its rise against all, or at least most, others, with the Euro testing nine-year lows. The Eurozone has moved into deflation as the forthcoming Greek elections could put in power a political party which could well implement a default on the country’s debts and lead to Grexit – the possible Greek exit from the European Union.

Further on the geopolitical front, Islamic fundamentalist-inspired terrorism has hit the headlines again with the Paris shootings at the Charlie Hebdo offices, the totally unprovoked murder of a policewoman attending a traffic accident and subsequent hostage taking leading to more deaths.  Rhetoric from leaders of ISIL, which now dominates large swathes of Syria and Iraq, preaches extending Paris-type events to other Western nations and calls for new attacks on airlines.  All very disturbing for a mostly rather less volatile and less religiously committed Western World.

These French terror attacks are probably partly aimed at stirring up anti-Islamic feeling within the majority populations in Europe in particular as a way of polarising potential civil strife to the ultimate advantage of the extremist elements involved.   It is estimated that around 5% of the European population follows Islam, and in France, with its strong former colonial connections in mostly Muslim North and West Africa, the Islamic faith may account for as much as 10% of the population – a very sizeable minority indeed.  Political parties with an anti-foreigner agenda are springing up across Europe and this could escalate as the ‘faith’ polarisation becomes stronger and stronger.  Virtually all the Islamic faith followers in Europe abhor the French killings, but if these result in anti-Muslim retaliation (which they are beginning to) the prospect of alienating this very big minority of the European population, leading to ever more blood on the streets, is very real indeed.

While the Russia/Ukraine situation has stayed out of the headlines since the beginning of the year, recently completely overshadowed by the Paris events, it has not gone away.  There remains the prospect of new European sanctions against Russia, ostensibly over its annexation of Crimea, but as we pointed out in a recent article these sanctions are damaging to Europe too, and could become more so should Russia raise the retaliation stakes.  Also the Russia/Ukraine situation may be much more complex than most observers have been prepared to recognise.

See: 2015 Black Swans – or another BRIC in the wall

This plethora of problematical geopolitical events has the potential to further destabilise the European economy, which is already in recession and entering a prospective period of deflation.  The events represent an almost unprecedentedly disturbing start to the year and we have to hope against hope that they do not continue throughout 2015 or the consequences for global economic recovery could be dire.

To all this we have to add China.  While the forthcoming year of the sheep suggests a period of calm and prosperity in the Chinese Zodiac, the slowdown in the country’s economy suggests otherwise, although GDP is still said to be growing at a rate of around 7% per annum.  Because of its huge impact on global metals demand, the Chinese slowdown from double digit GDP growth, with the major mining companies gearing up to meet the kind of demand growth those figures suggested, has had a dramatic impact on demand for raw materials – particularly for iron ore and copper.  There is the suggestion that inventories have been run down and demand could pick up as the year progresses.  However there is no doubt that the Chinese building and construction sector is slowing which doesn’t hold out great hope for an iron and steel pickup, although for copper the expansion of the country’s high speed rail network could provide some much-needed stimulus.

But Chinese individual wealth has still been growing over the last several years.  This is showing up in terms of automobile imports which are continuing to rise.  China, for example, is nowadays Jaguar/Land Rover’s biggest market on the luxury car front.  While an economic slowdown – but probably not a recession – is on the cards, the economy is still growing at a rate which Western nations would love to see.  While the government is no longer looking for growth at almost any cost, it does seem to be prepared to help counter any prospective serious economic decline through lowering interest rates and other measures and perhaps the hard landing which some have predicted will thus be held off.

So where does all this leave us in terms of metals prices going forwards?  Stagnation in Europe and lower growth in China, perhaps slightly alleviated by a weak recovery in the U.S., may not be auspicious for iron ore, although we suspect it won’t fall much lower.  Copper, as the main element in the base metals picture is a slightly more complex situation to forecast.  Assuming China does need to rebuild stocks and continues to invest in electrically intense infrastructure development, and, with many analysts predicting a supply deficit in the current year, then the red metal could well be at or near its bottom and due for at least a weak recovery in price.

Gold is another matter altogether.  The price is still seemingly being controlled by activity on the futures markets, but the European travails could lead to rising safe haven demand as a wealth protector should the EU start to unravel, while Chinese demand looks as though it should remain strong throughout the year ahead.  Continuing strength in the US dollar against other currencies would normally mean a decline in the dollar gold price, but recently gold has been holding up remarkably well in dollar terms, which means it has been a very good buy in other currencies – notably the euro.

So what is the overall view in our opinion?  Oil – flat to weaker as long as Saudi Arabia continues to pump it at current rates; iron ore flat to weak also with the three biggest producers all having expanded capacity heavily over the past year, but with demand, particularly from China, at best stagnant for the time being; base metals perhaps slightly positive, but not significantly so; gold’s fundamentals continue to look good, but then they have for the past couple of years and the price has still tanked.  Overall though gold, and the other precious metals, on balance, should probably continue to see positive gains ahead with the possibility of a major kick upwards should additional geopolitical problems materialise, or current ones escalate.