My analysis indicates that gold will be implemented in order to protect ‘global purchasing power’ and to minimize losses during our upcoming periods of ‘market shock’. It serves as a high-quality, liquid asset to be used whereas selling other assets would cause losses. Central Banks of the world’s largest long-term investment portfolios use gold to mitigate portfolio risk, in this manner, and have been net buyers of gold since 2010.

Investors should make use of golds’ lack of ‘correlation’ with other assets which makes it the best hedge against currency risk.  Last May of 2016, there was a huge trend change in U.S. gold investment as the Swiss exported a record amount of gold to the United States. There has been a huge increase in gold flows into the Global Gold ETFs & Funds.  Something seriously changed, in May of 2016, as the Swiss exported more gold to the U.S. within one month than they have done so over the last year.

Gold has a “clear presence” to play in a world dominated
with ‘global economic uncertainty”

Despite the fact that we are in for a period of great financial turmoil, investors can safeguard themselves by investing wisely in gold. Do not be left behind and witness your dollar assets losing their value.

It is in these very conditions that gold (precious metals) is the only investment that will appreciate in value over time.  Gold will continue to perform its’ role as a “safe haven” during these times of crisis which currently appear to be never ending. The metals surge of as much as 8.1% on the day of the “Brexit” vote, last month, is an indicator that its’ luster of safety is undimmed in the current markets. There is little to be gained from arguing whether such beliefs are right or wrong:  Governments, around the globe, have moved to a new stage of desperation by toying with the idea of “helicopter money”.

It is my belief that since “Brexit” occurred, it could unleash a general exodus and the disintegration of the European Union is now almost unavoidable.

The list of prominent Hedge Fund Managers who are investing in gold is growing.  Paul Singer, of Elliott Management Corporation, is the latest name to lend his support. It is likely that more investment institutions will turn to gold as the logical solution to countervail the effects of many years of ‘quantitative easing”.

Gold has been traded for over 5,000 years and for the first time has a positive carry in many parts of the globe as bankers are now experimenting with the absurd notion of negative interest rates. Some regard it as a precious metal while I regard it as a currency!

Soros Fund Management LLC, which manages $30 billion for Mr. Soros and his family, sold stocks and bought gold and shares of gold miners whilst anticipating weakness in various markets. Investors view gold as a ‘safe haven’, during times of turmoil but they tend to be late to the game as they don’t buy gold until there truly is turmoil and gold will have already appreciated substantially at that point.

“It’s a glaring warning sign of deflation. We’ve never really had deflationary fears throughout such a widespread part of the world before,” said Phil Camporeale, a Multi-Asset Specialist at JPMorgan Asset Management.

The FED is doing everything in its’ power to prevent a rise in the dollar. They are willing to “orchestrate” any scenario so as the stock market will continue to soar and people will feel a “wealth effect” from new stock market highs while the others are experiencing the economy “contracting”. The FED is getting everything it wants, in this regard, and will continue to do so as their number one priority is “debasing” the U.S. Dollar.

As the U.S. Dollar falls from all of the FEDs’ QE, it will lift up gold prices to unprecedentedhighs.

Investors of all levels of experience are attracted to gold as a solid, tangible and long-term “store of value” that historically has moved independently of other assets classes.

Golds’ importance, even in today’s environment, was clearly visible during the massive rally at the start of the year, when all other asset classes were tanking. Investors piled into gold on the scare of an imminent global financial reset.

Investors should make use of golds’ lack of ‘correlation’ with other assets which makes it the best hedge against currency risk.

Does Gold Continue Its Bull Market Towards $1500.00?

Conclusion:

The trend for ETFs to pile in to the precious metal sent the price of gold soaring by 25% in H1, the biggest price rise since 1980. For the first time ever, investment, rather than jewelry, was the largest component of gold demand for two consecutive quarters.

There will be another great opportunity in gold, silver and especially miners in the near future which followers of my work will benefit from. Follow my analysis and trades at:www.TheGoldAndOilGuy.com

Chris Vermeulen

Gold leasing helps China’s banks fill import quotas as retail demand sinks…

CHINA’s GOLD imports are being boosted by banking deals to lease bullion and raise loans, according to a new analysis, masking 2016’s hard fall in household gold demand from official trade data.

Gold-leasing deals offering cheaper finance costs than China’s central-bank interest rate, says Tom Kendall, head of precious metals strategy for Chinese-owned ICBC Standard Bank in London.

“Now, more than anywhere else, gold is widely used in China as a means of raising short-term liquidity” both by state-owned enterprises and also smaller-and-medium sized private firms.

China’s gold market is “highly evolved”, Kendall explains in the latest quarterly Alchemist magazine for trade body the London Bullion Market Association (LBMA), more sophisticated and less focused on physical demand and supply than many outside observers believe.

With China’s private demand and physical imports joining its gold-mining output as the world’s No.1 in 2015, “Jewellery and retail investment demand for bullion is clearly a large component of the Chinese market,” he says, “but…in reality a multitude of financial forces are at work.”

Already by 2014, two-thirds of daily transactions on the Shanghai Gold Exchange were “investment trading, or rather, derivatives trading,” said then-SGE chairman Xu Luode at an LBMA conference in Singapore.

“In my opinion, the desired ratio should be something like 20% [physical] / 80% [derivatives] or 10%/90%,” said Luode – formerly a senior official at Beijing’s central bank, and now executive vice-president at Bank of China (SHA:601988).

Here in 2016, writes Kendall, Chinese corporations outside the bullion industry are using gold leases “as a financing vehicle…a mechanism” for exploiting the gap between different interest rates.

Kendall gives the example of Chinalco ( SHA:601600), the state-owned aluminum giant, which in June borrowed 10 tonnes of gold bullion from China’s Bank of Communications (SHA: 601328, also known as BOCOM).

Selling that metal through the futures market, Chinalco said it would raise CNY 3 billion (almost half-a-billion US Dollars) of finance, with a ‘hedging’ contract then protecting it from any rise in the gold price by the time it needs to return 10 tonnes to BOCOM – like ICBC Standard and Bank of China, a full member of both the Shanghai Gold Exchange and the LBMA.

The annual fees on this 12-month deal – including the cost of leasing, trading the futures contracts, and also the price hedging – “shall not in aggregate exceed the benchmark interest rate for one-year loan set by the People’s Bank of China,” said Chinalco’s statement to the stock market.

With price-protected gold-financing deals cheaper than cash borrowing costs, this growth in China’s gold leasing market is enabling Chinese banks to “fulfil their import quotas” says Kendall at ICBC Standard – pointing to the government-set limits which would otherwise be reduced for future shipments if only part-met – “at a time when physical demand from the jewellery sector has slackened.”

“We think that trade data is somewhat overstating underlying demand,” agrees a note from Swiss investment and bullion bank UBS, pointing to “double-digit percentage declines” in estimates of China’s consumer gold demand.

“There is still no sign of the [jewelry] sector bottoming,” said analysts Thomson Reuters GFMS in their April-to-June update published last week, with China’s jewelry demand – usually accounting for 60% of the country’s world-leading consumer purchases – marking its weakest quarter since 2009, down by almost one quarter from Q2 last year.

China’s slowing GDP growth doesn’t fully explain this fall, says independent consultancy Metals Focus, because “Chinese retail sales (of all consumer goods) have achieved double digit gains in recent years [and] also during 2016-to date” while household gold demand has dropped by 20%.

This isn’t the first time that China’s finance sector has boosted gold bullion imports, using them to exploit the gap between different interest rates and prices rather than selling that metal to meet private demand.

Coming after 2013’s price-driven surge in household gold buying, early 2014 saw a further jump in China’s imports as bullion was ” used for short-term financing,” said Beijing analyst Liu Xu at Capital Futures at the time, noting that “tight money conditions [were] fueling such deals.”

By March 2014, analysts quoted by the Financial Times in March 2014 estimated that one-third of all China’s copper imports were for collateral in complex financing deals, while US investment bank Goldman Sachs saidgold could account for 30% of all such activity, perhaps totalling $250 billion from 5 years before.

New regulations in June 2014 then sought to curb this boom in ‘trade commodity financing’, raising both the cost to banks of issuing short-term letters of credit and also the size of deposits required from customers wanting foreign currency.

“Increased costs and higher [foreign exchange] volatility has made hedging currency risk more expensive” again, says Kendall, while metal borrowing by jewelry manufacturers has also fallen on the sharp decline in retail gold sales.

Within China’s domestic finance sector however, 2016’s tighter credit conditions, plus falling profit margins for corporations and that lower consumer demand for gold jewelry, have combined to make gold leasing for non-gold businesses attractive to both lenders and borrowers, says Kendall’s article for the LBMA, What Has Aluminium Got To Do With Gold?

“In effect, what the slowing Chinese economy has taken from the gold lease market with one hand, it has started to give back with the other.”

Adrian Ash runs the research desk at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London’s top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian’s views on the gold markethave been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany’s Der Stern and FT Deutschland; Italy’s Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews, or get more fromAdrian Ash on Google+

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