Sive Morten
Special Consultant to the FPA
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Fundamentals
Although this week we could mention only Fed meeting among important fundamental events and maybe SNB decision on rate cut, that was unexpected - volatility on gold market was significant. Geopolitical situation, US domestic political struggle, financial conditions across the world are becoming tighter. World is coming to some culmination point. As we've mentioned yesterday, June might become the decisive month for US bond market, closer to the summer many G7 central banks supposedly should make first decision on next rate steps. Raising degree of escalation in Ukraine and recent terrorist attack in Moscow on Music Hall tells that situation is coming to some hot point. Meantime inflationary expectations are revised up not only by government authorities and their representatives but by market participants as well. Combination of these factors create very good background for raising of gold market.
Market overview
Gold prices retreated a bit as the dollar strengthened a day before the Federal Reserve signals its interest rate stance at the end of the U.S. central bank's two-day policy meeting. Gold retreated after surging above $2,200 an ounce for the first time on conviction that the Federal Reserve will cut interest rates this year. The precious metal rose as much as 1.6% to a record $2,220.89 in early trading before erasing gains to drop as much as 0.9%. Gold has rallied nearly 10% since mid-February as the outlook for looser US monetary policy triggered fresh investor bets on bullion.
Gold prices hit a record peak of $2,194.99 per ounce on March 8, but prices dipped nearly 1% last week after the release of hotter-than-expected February U.S. consumer prices and producer prices reduced hopes of early Fed rate cuts due to the threat of persistent inflation. Price has got an extra fillip after Federal Reserve Chair Jerome Powell hinted that the central bank was on course for three interest rate cuts in 2024.
While the speed of gold’s rally caught some market watchers off guard, the Fed appeared to reaffirm those bullish expectations on Wednesday. The central bank maintained its outlook for three rate cuts this year, suggesting it isn’t alarmed by a recent uptick in inflation. Despite recent high inflation readings, Powell said the central bank is still likely to reduce interest rates by three-quarters of a percentage point by end-2024.
Traders are now pricing in a 72% chance that the Fed will begin cutting rates in June, up from 65% before the rate decision.
Holdings of SPDR Gold Shares, the world’s largest physically backed gold exchange-traded fund, rose for a fourth day on Wednesday, the longest winning streak since March 2022, according to data compiled by Bloomberg. Should the pattern hold, it could propel bullion to a fresh record high. Investor holdings in gold ETFs generally rise when bullion prices gain, and vice versa. ETFs had been a key driver in gold’s rally during the pandemic to a record high at the time. Since then, there’s been a glaring disconnect between the two. It seems that divergence works in favor of gold prices and ETF holdings is depended variable.
Data shows traders increased their net long positions in gold last week by the most since 2019. The metal will benefit even more as bullion-backed exchange-traded funds are likely to increase their holdings, UBS said.
China's central bank has been steadily building its gold reserves. "The People Bank of China's recent gold purchases had a significantly positive impact on its reserve assets diversity," said Bernard Sin, regional director, Greater China at MKS PAMP.
Canadian Miner Barrick Gold opens new tab said on Wednesday it was ready to explore new gold and copper deposits in the Democratic Republic of Congo, in partnership with the government. The world's No. 2 gold miner wants to explore the region after it had success with its Kibali gold mine in the northeast DRC. The mine produced 343,000 ounces of gold in 2023, which was nearly 8.5% of the company's output for the year.
Uganda's gold exports surged more than 10-fold in 2023 despite U.S. sanctions on a major processor in the East African country, data from the central bank showed on Tuesday. Uganda, which has emerged as a major hub of gold trade in the region, exported gold worth $2.3 billion in 2023, compared with $201 million over the previous twelve months, Bank of Uganda data showed.
Morgan Stanley raised its Brent oil price forecasts by $10 per barrel to $90 for the third-quarter of 2024, citing tighter supply and demand balances on OPEC+ commitment and Russia's oil production curtailments after recent drone attacks on its refineries. By looking at historical Gold/Oil relation that on average stands around 25-27, forecast suggest Gold price around 2300-2400$
As CNBC reports, there's still room for gold to surge as several countries are on a gold-buying spree. Prices could rise to $2,300 per ounce in the second half of 2024, especially against the backdrop of expectations that the U.S. Strong physical demand for gold is also fueled by its appeal as a safe-haven asset and investors looking to diversify amid lackluster performances in other asset classes.
Macquarie has also forecast gold prices to notch new highs in the second half of the year. While acknowledging that physical purchases of gold have given prices a lift, Macquarie's strategists attributed the recent $100 spike in prices to "significant futures buying" in their note dated March 7.
These purchases have strengthened gold prices despite high interest rates and a strong dollar, market watchers told CNBC. Strong physical demand for gold is also fueled by its appeal as a safe-haven asset amid geopolitical uncertainties. China is the leading driver for both consumer demand and central bank gold purchases, and the country's not likely to slow down. Among central banks, the People's Bank of China was the largest buyer of gold in 2023. China's weak economy and embattled real estate sector also drove more investors toward the safe-haven asset, with individual gold investment remaining robust, WGC said.
Poland's central bank was the second-largest net consumer of gold, snapping up 130 tons of bullion in 2023. Challenges of the Russia-Ukraine war "just right next door" drives Poland's desire for stability, said Wheaton Precious Metals CEO Randy Smallwood. Poland's central bank governor Adam Glapiński in 2021 had announced plans to buy 100 tons of gold in a bid to boost the country's financial security, according to local media reports.
Singapore recorded the third highest net gold purchases in 2023, driven by purchases by the Monetary Authority of Singapore (MAS), which bought 76.51 tons.
While MAS did not disclose the reason for the investment decision, Fan surmised that central banks across the board have been wary of the geopolitical risks from the ongoing Russia-NATO conflict - "They have probably been adjusting reserve allocations in accordance to their views on risk," he said.
Stronger gold prices were also driven by retail purchases of jewelry, bars and coins. On top of the People's Bank of China buying the most gold amongst the world's central banks, the country also recorded the highest amount of retail gold purchases. According to data from the World Gold Council, China overtook India to become the world's largest gold jewelry buyer in 2023. Chinese consumers bought 603 tons of gold jewelry last year, a 10% increase from 2022.
India's investment in gold bars and coins grew 7% year on year. The country's central bank demand for gold also continues to be strong, with the Reserve Bank of India purchasing 8.7 tons of gold in January, marking the highest monthly purchase since July 2022. Aside from China and India, Turkey's gold demand last year almost doubled that of 2022, according to WGC records. Unrelenting consumer inflation, limited available alternative investment and domestic political uncertainty during the presidential elections last year drove Turkey's demand for the yellow metal.
Inflation expectations are tacitly raising
BlackRock Inc. Vice Chairman Philipp Hildebrand said there’s an implicit recognition of higher neutral rates in US Federal Reserve policy as inflation remains sticky on persistent supply constraints. The former Swiss National Bank president said inflation is slowing and is likely to touch 2% but the question is about where service inflation settles, he told Francine Lacqua in a Bloomberg Television interview on Thursday.
And he is not alone with this judgement. GS also suggests higher neutral rate level. Goldman has published a note from its economic team arguing that the neutral and terminal rates, a polite euphemism for the inflation target, are now much higher. than is commonly believed, and this cycle it will be 3.25-3.5%
As we've mentioned yesterday, inflation expectations are raising together with deterioration of economic conditions. The Fed evidently tells that they are not going to cut rate until inflation hits 2% level, but market stubbornly ignores this statement and falls in the same pitfalls again and again. As it has happened in December 2023, when euphoria of rate cut was massive but yields has jump trapped investors in loss on bond market, as now - wide anticipation of rate cut could play bad trick with markets.
According to BofA research - inflation is considered among major risks in nearest time. 32% of investors surveyed believe that high inflation is the main "tail" risk, while 21% think geopolitics is the main risk, and 16% think it's a hard landing.
Atlanta Federal Reserve bank President Raphael Bostic said on Friday he now expects just a single quarter-point interest rate cut this year versus two cuts that he had projected previously, a change in his outlook driven by persistent inflation and stronger-than-anticipated economic data.
Yet both investors and economists have been off the mark more often than not over the past couple of years. Could they again be getting things wrong? The following is a look at what some of the biggest names in global finance say could scuttle Chair Jerome Powell’s rate-cut plans:
The latest data suggest that inflation slowdown is stalling. Consumer inflation has proved stickier than forecast, led by services and rents, while prices paid to US producers topped forecasts in February. Of particular concern has been the still-rapid pace of gains in prices for services excluding housing.
Still-strong job and wage gains could set the stage for another wave of strong travel spending this summer. Apollo Management Chief Economist Torsten Slok warns that a re-accelerating economy and rise in underlying inflation will prevent the Fed from cutting this year.
Equity benchmarks have hit record highs and premiums on corporate bonds aren’t far from record lows. Bloomberg’s US Financial Conditions Index is around its easiest level since October 2021 — before the Fed started hiking.
Congressional Democrats are already urging the Fed to lower interest rates, while President Joe Biden recently raised eyebrows by predicting that the Fed would cut — breaking with a tradition that the White House doesn’t comment on central bank’s actions.
Summers, a paid contributor to Bloomberg TV, has pointed out that when politicians attempt to influence the Fed, it can prove counterproductive, as the central bank is then forced to demonstrate its independence. While he wasn’t referring to rate policy, it may be something to keep in mind if the US central bank still hasn’t moved by late summer.
Some longer term views
Luke Gromen in his Tree Rings report puts forward two options for the world economy which can be summarised as follows:
In spite of gold outperforming most asset classes in this century, it remains at less than 1% of Global Financial Assets – GFA. Currently at $2,100 gold is at 0.6% of GFA.
Gold is up 600% since 2000 and 100% since 2015. So gold has now broken out and very few investors are participating. This stealth move that gold has made has left virtually every investor behind as this table shows:
The clever buyers are of course the BRICS central banks. Almost all of their purchases are off market so in the short term it has only a marginal effect on the gold price. The Comex was never meant for physical deliveries but only for cash settlements. But now buyers are standing for physical delivery. We have also seen last month major exports of gold from the US to Switzerland. These are either Comex 400 ounce bars or US government bars sold/leased and sent to the Swiss refiners and broken down to 1 kg bars for onwards export to the BRICS. These bars will never return again even if they are only leased and not sold. The above process will one day bring panic to the gold market as there will be nowhere near enough physical gold for all the paper claims.
So for any gold investors who don’t hold physical gold in a safe jurisdiction (NOT USA), that they quickly move their gold to a private vault where they have personal access, preferably in Switzerland or Singapore. Although now even these safe haven islands are loosing their status, especially Switzerland that is loosing "neutral" political status fast. It means no fractional gold ownership, no gold ETFs, metal accounts, funds or gold in banks. You got it. At least not if you want to be sure to get hold of your gold as the gold squeeze starts.
Although this week we could mention only Fed meeting among important fundamental events and maybe SNB decision on rate cut, that was unexpected - volatility on gold market was significant. Geopolitical situation, US domestic political struggle, financial conditions across the world are becoming tighter. World is coming to some culmination point. As we've mentioned yesterday, June might become the decisive month for US bond market, closer to the summer many G7 central banks supposedly should make first decision on next rate steps. Raising degree of escalation in Ukraine and recent terrorist attack in Moscow on Music Hall tells that situation is coming to some hot point. Meantime inflationary expectations are revised up not only by government authorities and their representatives but by market participants as well. Combination of these factors create very good background for raising of gold market.
Market overview
Gold prices retreated a bit as the dollar strengthened a day before the Federal Reserve signals its interest rate stance at the end of the U.S. central bank's two-day policy meeting. Gold retreated after surging above $2,200 an ounce for the first time on conviction that the Federal Reserve will cut interest rates this year. The precious metal rose as much as 1.6% to a record $2,220.89 in early trading before erasing gains to drop as much as 0.9%. Gold has rallied nearly 10% since mid-February as the outlook for looser US monetary policy triggered fresh investor bets on bullion.
Gold is seeing "some exhaustion to the upside as the positions moved swiftly over the past week or two and now it's taking a bit of a breather as the Fed pricing comes off a bit," said Ryan McKay, commodity strategist at TD Securities. For now we're not expecting a rally anytime soon. But at the same time, we're not expecting a big sell-off either because the physical markets remain strong and positioning is still fairly bullish."
Gold prices hit a record peak of $2,194.99 per ounce on March 8, but prices dipped nearly 1% last week after the release of hotter-than-expected February U.S. consumer prices and producer prices reduced hopes of early Fed rate cuts due to the threat of persistent inflation. Price has got an extra fillip after Federal Reserve Chair Jerome Powell hinted that the central bank was on course for three interest rate cuts in 2024.
"Overnight aggressive buying seems to have run out of steam and gold prices are correcting, given that rates markets have only marginally discounted the risk of more rate cuts for 2024," said Daniel Ghali, commodity strategist at TD Securities.
While the speed of gold’s rally caught some market watchers off guard, the Fed appeared to reaffirm those bullish expectations on Wednesday. The central bank maintained its outlook for three rate cuts this year, suggesting it isn’t alarmed by a recent uptick in inflation. Despite recent high inflation readings, Powell said the central bank is still likely to reduce interest rates by three-quarters of a percentage point by end-2024.
“What we saw last night was the green light really for gold traders to come back in,” said Chris Weston, head of research for Pepperstone Group Ltd. Fed officials have said “they’re tolerant of the inflation that we’ve seen, they’re tolerant that the labor market strength is not going to be the impediment.”
Traders are now pricing in a 72% chance that the Fed will begin cutting rates in June, up from 65% before the rate decision.
"Gold is still one of our favorite trades for 2024 as an attractive portfolio hedge for equity investors," BofA Research said in a note dated March 20, adding unprecedented central buying was another reason to be bullish on gold.
Gold’s gains over the past five weeks have also been underpinned by long-standing supports including heightened geopolitical risks and buying by central banks, led by China. Chinese consumers have also been stocking up, purchasing gold coins, gold bars and jewelry as a way to safeguard their wealth from a property downturn and losses in the country’s stock market."The mood in the gold futures market is very bullish. So your hedge funds or any other short-term traders or trend followers are positioned for higher prices, and I think this is the segment that is in the driving seat while the physical gold market is rather soft," said Julius Baer analyst Carsten Menke.
Gold’s move toward $2,300 an ounce is a “reasonable technical target,” said Marcus Garvey, head of commodities strategy at Macquarie Group Ltd. “I think the Fed not taking the opportunity of recently firmer inflation to lean hawkish at their meeting yesterday means gold is now going into a short-term overshoot scenario,” he said.
Holdings of SPDR Gold Shares, the world’s largest physically backed gold exchange-traded fund, rose for a fourth day on Wednesday, the longest winning streak since March 2022, according to data compiled by Bloomberg. Should the pattern hold, it could propel bullion to a fresh record high. Investor holdings in gold ETFs generally rise when bullion prices gain, and vice versa. ETFs had been a key driver in gold’s rally during the pandemic to a record high at the time. Since then, there’s been a glaring disconnect between the two. It seems that divergence works in favor of gold prices and ETF holdings is depended variable.
Data shows traders increased their net long positions in gold last week by the most since 2019. The metal will benefit even more as bullion-backed exchange-traded funds are likely to increase their holdings, UBS said.
China's central bank has been steadily building its gold reserves. "The People Bank of China's recent gold purchases had a significantly positive impact on its reserve assets diversity," said Bernard Sin, regional director, Greater China at MKS PAMP.
Canadian Miner Barrick Gold opens new tab said on Wednesday it was ready to explore new gold and copper deposits in the Democratic Republic of Congo, in partnership with the government. The world's No. 2 gold miner wants to explore the region after it had success with its Kibali gold mine in the northeast DRC. The mine produced 343,000 ounces of gold in 2023, which was nearly 8.5% of the company's output for the year.
Uganda's gold exports surged more than 10-fold in 2023 despite U.S. sanctions on a major processor in the East African country, data from the central bank showed on Tuesday. Uganda, which has emerged as a major hub of gold trade in the region, exported gold worth $2.3 billion in 2023, compared with $201 million over the previous twelve months, Bank of Uganda data showed.
Morgan Stanley raised its Brent oil price forecasts by $10 per barrel to $90 for the third-quarter of 2024, citing tighter supply and demand balances on OPEC+ commitment and Russia's oil production curtailments after recent drone attacks on its refineries. By looking at historical Gold/Oil relation that on average stands around 25-27, forecast suggest Gold price around 2300-2400$
As CNBC reports, there's still room for gold to surge as several countries are on a gold-buying spree. Prices could rise to $2,300 per ounce in the second half of 2024, especially against the backdrop of expectations that the U.S. Strong physical demand for gold is also fueled by its appeal as a safe-haven asset and investors looking to diversify amid lackluster performances in other asset classes.
Prices could rise to $2,300 per ounce in the second half of 2024, especially against the backdrop of expectations that the U.S. Federal Reserve could cut rates in the second half of 2024, Aakash Doshi, Citi's North America head of commodities research, told CNBC.
Macquarie has also forecast gold prices to notch new highs in the second half of the year. While acknowledging that physical purchases of gold have given prices a lift, Macquarie's strategists attributed the recent $100 spike in prices to "significant futures buying" in their note dated March 7.
"Central banks, who have bought historic levels of gold over the past two years, continue to be strong buyers in 2024 as well," World Gold Council Global Head of Central Banks Shaokai Fan said.
These purchases have strengthened gold prices despite high interest rates and a strong dollar, market watchers told CNBC. Strong physical demand for gold is also fueled by its appeal as a safe-haven asset amid geopolitical uncertainties. China is the leading driver for both consumer demand and central bank gold purchases, and the country's not likely to slow down. Among central banks, the People's Bank of China was the largest buyer of gold in 2023. China's weak economy and embattled real estate sector also drove more investors toward the safe-haven asset, with individual gold investment remaining robust, WGC said.
Poland's central bank was the second-largest net consumer of gold, snapping up 130 tons of bullion in 2023. Challenges of the Russia-Ukraine war "just right next door" drives Poland's desire for stability, said Wheaton Precious Metals CEO Randy Smallwood. Poland's central bank governor Adam Glapiński in 2021 had announced plans to buy 100 tons of gold in a bid to boost the country's financial security, according to local media reports.
Singapore recorded the third highest net gold purchases in 2023, driven by purchases by the Monetary Authority of Singapore (MAS), which bought 76.51 tons.
While MAS did not disclose the reason for the investment decision, Fan surmised that central banks across the board have been wary of the geopolitical risks from the ongoing Russia-NATO conflict - "They have probably been adjusting reserve allocations in accordance to their views on risk," he said.
Stronger gold prices were also driven by retail purchases of jewelry, bars and coins. On top of the People's Bank of China buying the most gold amongst the world's central banks, the country also recorded the highest amount of retail gold purchases. According to data from the World Gold Council, China overtook India to become the world's largest gold jewelry buyer in 2023. Chinese consumers bought 603 tons of gold jewelry last year, a 10% increase from 2022.
"At the retail consumer level, China was a major factor in strong demand for gold last year as individuals moved into gold to diversify from other asset classes," Fan said. "Gold is always the highest form of value gift that you can actually give someone within India. It's a real big part of the wedding season," he said.
India's investment in gold bars and coins grew 7% year on year. The country's central bank demand for gold also continues to be strong, with the Reserve Bank of India purchasing 8.7 tons of gold in January, marking the highest monthly purchase since July 2022. Aside from China and India, Turkey's gold demand last year almost doubled that of 2022, according to WGC records. Unrelenting consumer inflation, limited available alternative investment and domestic political uncertainty during the presidential elections last year drove Turkey's demand for the yellow metal.
"Turkey recorded strong retail demand as well, with investors piling into gold during the presidential election last year to protect against potential volatility in the Turkish lira," Fan added.
Inflation expectations are tacitly raising
BlackRock Inc. Vice Chairman Philipp Hildebrand said there’s an implicit recognition of higher neutral rates in US Federal Reserve policy as inflation remains sticky on persistent supply constraints. The former Swiss National Bank president said inflation is slowing and is likely to touch 2% but the question is about where service inflation settles, he told Francine Lacqua in a Bloomberg Television interview on Thursday.
If the dots are connected in what the Fed said, “there’s an implicit recognition that long term, the inflation path and the interest rate path is going to be sticky,” Hildebrand said. “We’re going to likely see a higher neutral rate level. The inflation numbers were slightly adjusted upwards for the next two years to come. That is going to be the real story here.”
And he is not alone with this judgement. GS also suggests higher neutral rate level. Goldman has published a note from its economic team arguing that the neutral and terminal rates, a polite euphemism for the inflation target, are now much higher. than is commonly believed, and this cycle it will be 3.25-3.5%
As we've mentioned yesterday, inflation expectations are raising together with deterioration of economic conditions. The Fed evidently tells that they are not going to cut rate until inflation hits 2% level, but market stubbornly ignores this statement and falls in the same pitfalls again and again. As it has happened in December 2023, when euphoria of rate cut was massive but yields has jump trapped investors in loss on bond market, as now - wide anticipation of rate cut could play bad trick with markets.
According to BofA research - inflation is considered among major risks in nearest time. 32% of investors surveyed believe that high inflation is the main "tail" risk, while 21% think geopolitics is the main risk, and 16% think it's a hard landing.
Atlanta Federal Reserve bank President Raphael Bostic said on Friday he now expects just a single quarter-point interest rate cut this year versus two cuts that he had projected previously, a change in his outlook driven by persistent inflation and stronger-than-anticipated economic data.
“I’m definitely less confident than I was in December” that inflation will continue to fall towards the Fed’s 2% target, Bostic said in comments to reporters. This caused him to scale back his outlook for rate cuts and push back the likely start date to later in the year, he added.
“This is a signal and the market is taking it as that, that they will tolerate slightly higher inflation for longer,” Mohamed El-Erian said on the Surveillance Fed special today, unpacking a stand-pat rate decision in which nuance was everything.
Yet both investors and economists have been off the mark more often than not over the past couple of years. Could they again be getting things wrong? The following is a look at what some of the biggest names in global finance say could scuttle Chair Jerome Powell’s rate-cut plans:
The latest data suggest that inflation slowdown is stalling. Consumer inflation has proved stickier than forecast, led by services and rents, while prices paid to US producers topped forecasts in February. Of particular concern has been the still-rapid pace of gains in prices for services excluding housing.
“The services sector continues to be less sensitive to higher borrowing costs,” Mohamed El-Erian, a Bloomberg Opinion contributor and former CEO of Pimco, wrote last month. “This is particularly problematic for a marketplace that had been betting on aggressive and early interest-rate cuts by the Fed.”
Still-strong job and wage gains could set the stage for another wave of strong travel spending this summer. Apollo Management Chief Economist Torsten Slok warns that a re-accelerating economy and rise in underlying inflation will prevent the Fed from cutting this year.
“The market now has to realize that the data is just not slowing down, and the Fed pivot has given an additional tailwind to the economy,” Slok said during a recent interview with Bloomberg Radio’s Surveillance. “All that is likely to continue to be supporting growth in consumer spending, in capex spending, in hiring for most likely the better part of this year.”
Equity benchmarks have hit record highs and premiums on corporate bonds aren’t far from record lows. Bloomberg’s US Financial Conditions Index is around its easiest level since October 2021 — before the Fed started hiking.
“We’re at least at the foothills of bubbles,” former US Treasury Secretary Lawrence Summers said recently. “I don’t think right now financial markets have the kind of bubbly characteristics that they famously had at other times, but we’re not a million miles away from that either, so I think that’s something that also has to inform the policy making process.”
Congressional Democrats are already urging the Fed to lower interest rates, while President Joe Biden recently raised eyebrows by predicting that the Fed would cut — breaking with a tradition that the White House doesn’t comment on central bank’s actions.
Summers, a paid contributor to Bloomberg TV, has pointed out that when politicians attempt to influence the Fed, it can prove counterproductive, as the central bank is then forced to demonstrate its independence. While he wasn’t referring to rate policy, it may be something to keep in mind if the US central bank still hasn’t moved by late summer.
Some longer term views
Luke Gromen in his Tree Rings report puts forward two options for the world economy which can be summarised as follows:
- De-dollarization continues, the Petrodollar dies and gold gradually replaces the dollar as a global commodity trading currency especially in the commodity rich BRICS countries. This would allow commodity prices to stay low as gold rises and drives a virtuous circle of global trade.
- “China, the US Treasury market, and the global economy implode spectacularly, sending the world into a new Great Depression, political instability, and possibly WW3…in which case, gold probably rises spectacularly all the same, as bonds and then equities scramble for one of the only assets with no counterparty risk – gold. (BTC is another.)”
In spite of gold outperforming most asset classes in this century, it remains at less than 1% of Global Financial Assets – GFA. Currently at $2,100 gold is at 0.6% of GFA.
Gold is up 600% since 2000 and 100% since 2015. So gold has now broken out and very few investors are participating. This stealth move that gold has made has left virtually every investor behind as this table shows:
The clever buyers are of course the BRICS central banks. Almost all of their purchases are off market so in the short term it has only a marginal effect on the gold price. The Comex was never meant for physical deliveries but only for cash settlements. But now buyers are standing for physical delivery. We have also seen last month major exports of gold from the US to Switzerland. These are either Comex 400 ounce bars or US government bars sold/leased and sent to the Swiss refiners and broken down to 1 kg bars for onwards export to the BRICS. These bars will never return again even if they are only leased and not sold. The above process will one day bring panic to the gold market as there will be nowhere near enough physical gold for all the paper claims.
So for any gold investors who don’t hold physical gold in a safe jurisdiction (NOT USA), that they quickly move their gold to a private vault where they have personal access, preferably in Switzerland or Singapore. Although now even these safe haven islands are loosing their status, especially Switzerland that is loosing "neutral" political status fast. It means no fractional gold ownership, no gold ETFs, metal accounts, funds or gold in banks. You got it. At least not if you want to be sure to get hold of your gold as the gold squeeze starts.