Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

World Gold Council: Gold Could Shine as Heightened Risk Meets Easy Money

  by    0   0

Gold will likely shine over the next six to 12 months as heightened risk meets easy money — this according to the World Gold Council’s mid-year outlook.

Gold ranked as one of the best-performing assets through the first half of 2019, beaten only by stock markets – which have also been supported by the turn toward looser monetary policy – and oil. And if you combine gold’s gains through H1 2019 and the Q4 2018, nothing beats it.

In a podcast last week, Peter emphasized that we need to recognize the reality on Wall Street. While stocks made significant gains in dollar terms over the first six months of the year, they actually lost values when priced in gold. You also need to put the stock market gains into a broader context.

The only reason that the market has done so well this year is because it got destroyed in the fourth quarter of last year. Remember, we had the worst December since the Great Depression as well.”

Peter said the stock market gains are really all about monetary policy.

The Fed has done a complete 180 on monetary policy and that is what has driven what I believe is a bear market rally in the US stock market.”

Globally, central banks have clearly pivoted back toward easy-money. The World Gold Council projects this turn, along with continued financial market uncertainty, will likely support gold investment demand and nudge prices generally upward.

The WGC report offers a succinct summary of the 180-degree turn in monetary policy, noting that it happened rather rapidly. It also points out that the Fed doesn’t often act against market expectations.

Global monetary policy has shifted by 180 degrees. Less than a year ago, both Federal Reserve (Fed) board members and US investors expected interest rates to continue to increase, at the very least through 2019. By December, the most likely outcome was for the Fed to remain on hold. Now, the market expects the Fed to cut rates two or three times before the end of the year. And while statements by board members, including Chairman Powell, are signaling a wait-and-see approach, the market has barely changed its forecast. The Fed may not do what the market asks, but it generally doesn’t like to surprise it either. In recent history, the Fed adjusted its funds rate in line with expectations whenever the market’s implied probability of such outcome was 65% or higher; the only notable exception was rate cut announced during an un-scheduled Federal Open Market Committee (FOMC) meeting in January 2008 when the global financial crisis began to unfold.”

The WGC report notes a number of significant risks in the market right now, including the potential long-term effects of increased tariffs, tensions between the U.S. and Iran, uncertainty surrounding Brexit, and overvalued stock markets.

Low interest rates are having the perverse effect of fuelling a decade-long stock market rally with only temporary pullbacks. This has pushed stock valuations to levels not seen since the dot-com bubble. Worryingly, in the event of a recession, central banks – including the Fed – may not be able to rely on cutting interest rates. Instead, they may need to use quantitative easing and, possibly, new non-traditional measures to reinvigorate the global economy. ” [Emphasis added]]

The WGC report also noted that a large portion of the world’s sovereign debt now carries negative real interest rates.

In summary, the WGC expects some volatility in the gold market over the short-term, but anticipates an overall upward trend for the yellow metal as investment and central bank demand remains robust.

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Fed Runs Repo Operations; Is It Baby-Stepping Toward QE?

In a move “Bond King” Jeffrey Gundlach said could be a prelude to the next round of quantitative easing, the New York Fed conducted a repurchase operation involving about $53 billion in debt instruments on Tuesday. The move to designed to unplug the financial system’s “plumbing” with an injection of cash was the first such […]

READ MORE →

Another Month, Another Record for Consumer Debt

Americans continue to drive the economy along spending money they don’t have. Consumer debt increased yet again in July, setting another record, according to the latest data released by the Federal Reserve. Total consumer debt surged $23.4 billion in July, driven by a huge jump in credit card balances. The big rise in consumer indebtedness […]

READ MORE →

Budget Deficit Shoots Past $1 Trillion for Fiscal 2019

The federal government continues to spend money at an insane rate and is running up budget deficits reminiscent of the Great Recession era. With one month left to go, the federal budget deficit for fiscal year 2019 eclipsed $1 trillion in August, according to Treasury Department data released last Thursday.

READ MORE →

Corporations Piling Up Debt at Record Pace

Corporations are piling on the debt. Last week, companies borrowed $74 billion in the US investment-grade bond market. It was the largest corporate debt increase for any comparable period since they started tracking such things in 1972.

READ MORE →

Russia’s Gold Bet Paying Off; Reserves Top $100 Billion

As Bloomberg put it, Russia’s bet on gold looks better every month. The Russian Central Bank’s gold reserves have topped $100 billion thanks to continued buying and surging prices.

READ MORE →

Comments are closed.

Call Now