There is plenty of bad news out there. We have a trade war. Geopolitical tensions between the US and Iran and the US and Russia are high. Turkey is in the midst of a currency crisis that some fear will spread beyond that country’s borders. So, why aren’t people seeking safe haven and buying gold and silver?
The CEO at Australia’s Perth Mint has a theory. Richard Hayes said bad news has become so prevalent nobody really pays attention to it anymore. In a nutshell, bad news has become the norm. As a Bloomberg report put it, “Investors have grown immune to the economic and geopolitical risks that typically drive haven demand for gold.”
The price of gold in pounds spiked Monday as Brexit confusion and political instability sent Brits scampering into safe havens.
Spot gold against the pound rose nearly 1% after Brexit Minister David Davis and British Foreign Minister Boris Johnson both resigned their posts in protest.
Business Day described Brexit as a “ramshackle exit from the EU,” as a European Central Bank policymaker warned it could damage economic growth in the eurozone.
Indians are hoarding their gold despite an increase in the price during the first quarter of 2018. Analysts say they are holding onto their gold in anticipation of bigger price increases.
Gold was up around 1.5% in dollar terms in the first quarter of this year. According to the Economic Times of India, the yellow metal appreciated 4.41% in rupees.
Even with that healthy increase, old gold sales in India fell by 35-40% in Q1 2018 compared to the previous quarter. According to the paper, analysts and traders think Indians are holding back selling in anticipation of further price increases, especially if the US and China get into a full-blown trade war.
Over the last year, we’ve talked a lot about geopolitical risk. Could turmoil around the world now be the new normal?
Some analysts think so.
Gold hit its highest price in over a year Friday, breaking through the $1,350 barrier.
Friday morning, the spot price of gold was over $1,352, its strongest level since Aug. 2016. The yellow metal was up 2% on the week and was set for its third consecutive weekly gain.
The SchiffGold Friday Gold Wrap Podcast provides you with a brief overview of the past week’s precious metals news.
Gold finally broke through and held above the $1,300 resistance level this week.
There are a number of factors in place that could help sustain a gold bull run, but the biggest driver right now is fear.
And the fear isn’t unjustified. It’s a scary world out there.
Chinese investors are buying gold bars at a torrid rate. China’s appetite helped drive global demand for physical gold up 9% in the first quarter of 2017. Chinese investors gobbled up 105.9 tons of gold in Q1. That represents a 30% year-on-year increase, and was the fourth strongest quarter on record.
So, why the strong demand for physical gold in China? Mao Mao, a gold dealer in downtown Shanghai, told the Australian Financial Review she sees three major factors pushing the Chinese gold rush – and they all relate to fear.