End-of-week top gold news

Friday, 20-Mar-2015

Nick Webb (Independent) Ireland’s Minister of Finance adds gold to his portfolio “[Michael] Noonan’s personal investments give an insight into his thinking and his views on the risk and opportunities facing the global and European economies and markets. He has a track record stretching back decades of canny private investments.”

Note from MK: Noonan moved personal capital into gold over the past year, and his timing could not have been better. Though gold has declined in dollar terms, it has a done very well in most other currencies including the euro – up 11% thus far this year.

Paul R. LaMonica (CNNMoney) Why gold could rebound to $1,400 an ounce “Jeffrey Gundlach, the well-known investing guru who runs the money management firm DoubleLine Capital, is reported to have said in a presentation earlier this week that he thinks gold could rebound to $1,400 an ounce. His reasoning? Negative bond yields in Europe will make gold look more attractive. Gold is an asset that often outperforms in times of both inflation and deflation. In other words, when the market is scared of something, people flock to gold.”

Note: There were a number of bullish projections of gold that came out this week, even as the market traded at new lows for the year. The rebound in the latter half of the week lends some credence to these favorable outlooks.

(Reuters) Global recovery slow, brittle, fragile – IMF’s Lagarde “The global economic recovery remains “too slow, too brittle and too lopsided”, the head of the International Monetary Fund said on Monday, singling out the risk of financial market volatility arising from divergence in monetary policy among leading central banks.”

Note: This should come as no surprise to anyone who has been paying attention. Later in the week we found that even by Fed estimations, the U.S. economy appears to now be slowing as well.

Tyler Durden (ZeroHedge) Gold Spikes On Sudden $1.2 Billion Bid “For no good reason aside from the algos had their fun to the downside and crude ran its stops, preciouis metals’ futures have suddenly exploded higher on heavy volume… The surge in gold saw approximately $1.2 billion notional traded…”

Note: In the paper market, price will frequently seek out the level where the volume can be found. In this case however, it also marked the low of the move and gold ended this week more than $40 above the level where that big volume was found.

Jeanne Sahadi (CNNMoney) Meet the new debt ceiling: $18,113,000,000,000 “For lawmakers, a debt ceiling suspension is like a game of pretend. As in “We don’t want to publicly vote for an actual increase to cover all the spending we’ve already approved. So let’s pretend the debt ceiling doesn’t exist for awhile.”

Note: The return of the debt ceiling went largely unnoticed this week. The Treasury Department commenced their “extraordinary” tap-dancing to prevent a breach, which may go on for months before such measures run out. But sure as death and taxes, the debt ceiling will eventually be raised and the national debt will continue the inevitable march to that new mark.

(Financial Times) Fed’s rate dots now cast more dovish shadow “The dots and economic forecasts have all been lowered. Federal Reserve policymakers now expect a shallower path for its key interest rate in coming years as it trimmed growth and inflation forecasts for this year and next, according to the latest projections.”

Note: The Fed dropped “patience” from the policy statement, as was widely expected. This move was originally intended to signal a rate hike was imminent within the next several FOMC meetings, and yet with the negative revisions to the central tendencies the Fed came off as more dovish than they were before the change in guidance.

Phoebe Sedgman (Bloomberg) Gold Demand in Asia Seen Doubling as ANZ Sees Record Prices “Gold demand in Asia is set to double by 2030 and boost prices to a record as investment and jewelry purchases climb, according to Australia & New Zealand Banking Group Ltd. Demand from retail and institutional investors will jump to almost 5,000 metric tons a year by 2030 from 2,500 tons, analysts including Warren Hogan and Victor Thianpiriya said in a report. Prices may rise to more than $2,000 an ounce by 2025 and to $2,400 by 2030, they said. The bank says it supplied more than 20 percent of China’s gold imports last year.”

Note: The Asian appetite for gold has been growing steadily over the past decade. ANZ expects that trend to continue in the decades ahead. With mining output already peaking, market forces would dictate that ever-higher demand be accompanied by higher prices.

Warren Hogan and Victor Thianpiriya (Barron’s) Why Gold Will See $2,000 “ANZ’s Warren Hogan and Victor Thianpiriya say central bank demand may drive the metal to new highs as China emerges as a gold trading hub.”

Note: Another take on the ANZ analysis, this time from Barron’s, noting that “This dynamic could have a profound effect on Asian demand for physical gold.”

(Reuters) Gold heads for biggest weekly gain in 2 months, silver jumps “Gold prices hit two-week highs on Friday and were poised for their biggest weekly jump since mid-January, after the U.S. Federal Reserve’s cautious note on interest rates arrested a dollar rally and sparked broad-based buying of commodities.”

Note: Gold ends the week on a high note. I wish you all a great weekend. See you back here on Monday.