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Gold Market Overview

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By leaving out weekly fuss, the Gold Market Overview reports enable you to see fundamental changes on the gold market in monthly format. The monthly report reveals what will drive the price of gold in the future and helps you to focus on the most important changes. Market Overview reports will make sure that you don't miss the forest for the trees.

  • Gold One Year after QT and Ten Years after Lehman

    October 5, 2018, 9:50 AM

    Quarter, year, and ten years. That’s what we are writing about in this edition of the Market Overview. We start with the summary of the third quarter of 2018 and our outlook for the end of the year. Next, due to the 10th anniversary of the Lehman Brothers’ bankruptcy, we present lessons from that event for the gold investors. We also offer an update on the quantitative tightening. The program started one year ago, in October 2017, so it is an excellent opportunity to come back to the issue. Last but not least, we analyze whether POTUS can reduce the Fed’s independence. The recent Trump’s remarks worried investors, so they require a comment. The weakening of the US central bank could alter its monetary policy and the gold market – but is it possible? Let’s read our monthly report and find out!

  • Will the Fed’s Tightening Trigger another Recession?

    September 6, 2018, 12:21 PM

    The end is near! The Fed hikes interest rates and it never ends well! The yield curve is almost flat. Recession is just around the corner! This is what one can hear every day. But are these gloomy predictions justified?

    In this edition of the Market Overview, we will examine this million-dollar question. We let our imagination run wild and sketch the rosy picture. Then, comparing optimistic and pessimistic scenarios, we will be able to provide our Readers with a data-based and realistic gold market overview.

    In particular, we will thoroughly examine the previous tightening cycle to answer the question whether the next recession is likely to occur in the near future. Based on our historical analysis, we will draw some important investment conclusions for the gold investors. Last but not least, we will discuss the yield curve again. We have written about it in the last edition of the Market Overview, but the issue is so hot that it definitely needs more attention. We closely observe it for our Readers – and we will share our thoughts with them.

  • Gold Market after Nine Years since the End of Great Recession

    August 3, 2018, 9:41 AM

    How quickly time passes! It has been nine years since the Great Recession ended. What does it imply for the economy and the gold market? Are we on the verge of another crisis?

    In this edition of the Market Overview, we will answer these questions. We will summarize the gold market in H1 2018 and provide tips on what to expect next. In particular, we will analyze the state of the current economic expansion, and whether or not it will end soon as many analysts believe.

    Also, we will examine the two hottest issues in the past six months, or even the whole recovery. First of all, inflation has come back. After years of being subdued and resulting in fears of deflation, it has reached the Fed’s 2-percent target. Will that make gold shine – or not necessarily?

    The second important theme we will discuss is the yield curve. It has become very flat – actually, we are only about 25-30 basis points from the inversion. As the inverted yield curve is believed to be a good predictor of the recession, we will dig into the topic and draw conclusions for the gold market.

  • Will Fed’s Tightening Set the World on Fire?

    July 3, 2018, 11:58 AM

    In June, the Fed hiked the federal funds rate for the seventh time in this tightening cycle. A lot of people worry that the Fed’s unwind of its balance sheet combined with the higher interest rates and the stronger dollar will bring the next catastrophe to the world. Italian yields have already spiked, while Argentina and Turkey face economic crises.

    In this edition of the Market Overview, we will dig into this topic. We will examine in detail the recent monetary policy decisions undertaken by the Fed and the ECB, the two systematically important central banks. After the ECB decision to stop its bond-purchase program in December 2018, there will be no quantitative easing on both sides of the pond. We will analyze what it means for the gold market. Given the fears that the Fed’s tightening will cause the next crisis, we will examine this hypothesis in the context of the gold market, focusing on the emerging countries, which are especially sensitive to changes in the Fed’s stance.

    Last but not least, we will go for another trip to Italy, to reflect on the possible implications of the Italian turmoil on the euro and the gold market. And we will try to establish whether the next crisis in the Eurozone is coming.

  • Will Rising Rates and Dollar Drown Gold?

    June 5, 2018, 8:25 AM

    We live in turbulent times. Truism? Obviously. But see for yourself how much has changed since the last edition of the Market Overview. The 2-year Treasury yields jumped above 2.5 percent. The broad U.S. dollar index surged above 120, while the index against major currencies above 89. The euro declined below 1.175 against the greenback. The price of gold dived under $1,300. Are there more declines in gold prices ahead of us?

    In this edition of the Market Overview, we will answer this key question. To achieve this ambitious goal, we will carefully examine the recent macroeconomic developments, such as the rising interest rates and rapidly appreciating U.S. dollar – and their likely effects on the gold market. Given the enormous global pile of debt, which is sensitive to changes in rates and greenback’s strength, we will analyze whether, or how strongly, the debt crisis threatens us.

    Last but not least, we will go on a journey to sunny Italy to inspect the country’s not-so-sunny political and economic outlook. As it is one of the biggest economies in the world, we will investigate what could be the possible consequences of recent populist breakthrough in Italy for gold.

  • What Shapes the Price of Gold?

    May 4, 2018, 10:07 AM

    Earth is not round. Neither flat. It is an oblate spheroid, but we model it as if it was round. In economics and finance, we also use a lot of models. We need to simplify reality – abstracting from some accidental features enables us to focus on the essence of things. When we analyze the concept of a horse, we can ignore its particular color.

    When we model gold prices, we also abstract from some factors. In modern complex economies, everything is interdependent. But we cannot fall into nihilism and say that everything affects everything, including the price of gold. There are some casual relationships – and some drivers are more important than others.

    In this edition of the Market Overview, we focus on the most significant drivers of gold prices. We distinguish three such factors – and we examine how they affect the price of gold. In general – and in the first four months of 2018 in particular. Knowing what really impacts the gold prices enables investors to make better decisions. They can skip the analyses which concentrate on the gold mining supply or the average production costs – and focus on the true factors.

    Although we argue that there are only few key drivers of the gold prices, we show that it is extremely difficult to model the price of gold. We do not offer oversimplified solutions, as many analysts do. Instead, we take our time to explain how the gold drivers are really interconnected – and how to use this knowledge in the gold investing.

  • What Is Gold and How Rising Debt Will Affect It?

    April 6, 2018, 4:57 AM

    Roger Waters, once the leader of the legendary Pink Floyd, released a solo album entitled “Amused to Death” in the 1990s. Looking at some data, we would describe the 2010s rather as “Indebted to Death”. What does it mean for the gold market?

    In the last edition of the Market Overview, we wrote about the debt cycles. In this edition of the Market Overview, we will continue this topic, analyzing the current dynamics in the U.S. debt. In particular, we will focus on the federal debt, which has just surpassed $21 trillion, and the margin debt, which has been recently rising as well.

    Based on Damodaran’s classification of investments and his distinction between pricing game and value game, we will determine whether gold is an asset, a commodity, a currency or a collectible. When we establish once and for all the nature of gold, we will be able to formulate a proper philosophy for investing in gold. Adopting an appropriate stance will enable investors not to commit simple mistakes and to boost their gains.

  • Where Do We Come From? What Are We? Where Are We Going?

    March 2, 2018, 7:00 AM

    February was hot. The stock market crashed. It partially rebounded, but where are we now – and where are we going? In this edition of the Market Overview, we will analyze what does the recent correction in the S&P 500 Index imply for the gold prices.

  • Will the Great Unwind Shake the U.S. Dollar and Gold?

    February 1, 2018, 12:40 PM

    The first month of 2018 is behind us. It was exciting period for the gold market, as the shiny metal jumped again above $1,300. The two most important macroeconomic themes in January were the so-called Great Unwind of the central banks’ balance sheets and the weakening U.S. dollar.

    In this edition of the Market Overview, we will focus on these key issues. First, we will examine what the Great Unwind implies for the U.S. dollar and gold. In a response to the Great Recession, the major central banks boosted their balance sheets. A decade later, there is a strong economic growth momentum, so we head into the Great Unwind. The tightening of monetary policy and higher interest rates could be negative for gold, but more hawkish BoJ and ECB would mean narrower divergence in monetary policies between the Fed and other major central banks.

    Second, we will expand our analysis on the future of the greenback. In particular, we will answer the question of why the American currency has been falling like a stone recently, despite the Fed’s tightening cycle. We will also explore the historical bull and bear cycles in both the U.S. dollar and gold. As the yellow metal has a strong negative correlation with the greenback (and the usual relationship between the gold prices and real interest rates broke down temporarily), the trend in this currency is likely to be the vital driver in the gold market in 2018.

  • Gold Market Summary of 2017 and Outlook for 2018

    January 3, 2018, 3:24 PM

    This was another fascinating year. Perhaps it was not as eventful as 2016 (when the Brexit referendum and Trump’s triumph in the presidential election happened), but it was still very interesting. Trump officially became the President of the United States, while Emmanuel Macron won the French elections. Later this year, Trump almost unleashed nuclear war on the North Korea. And the cryptocurrencies rallied at the end of 2017, drawing the attention of the world. The last year was also a time of changes within the Fed – Powell was nominated as Yellen’s successor. But generally it was a rather politically calm and economically positive year, despite the natural disasters, which may explain the modest gains in the gold market. The conflict over North Korea did not explode, the U.S. stock market continued its upward move, and the Fed gradually tightened its monetary policy. The global economic growth accelerated and became more synchronized.

    In this edition of the Market Overview, we will summarize the last year in the gold market from the perspective of its fundamentals. This analysis should help investors better understand the gold market, and draw investment conclusions for the New Year. We will also present our gold outlook for 2018, presenting the base scenario and examining some black swans or potential triggers for the rally in the gold prices. We will focus on the impact of the macroeconomic trends, the Fed’s monetary policy and the U.S. dollar value on the price of gold. Given that in the long run the gold trade is generally about the confidence in the greenback, the fate of this currency may be the biggest driver in the gold market next year.

  • Powell, Taylor Rule, Fed’s Unwinding, and Gold

    December 1, 2017, 8:14 AM

    In the last edition of the Market Overview, we analyzed the candidates for the next Fed’s Chair. In line with our prediction, Trump nominated Jerome Powell for this position. Hence, in this issue next, we examine in detail what the Yellen’s replacement by Powell implies for the gold market. We will also discuss the Taylor Rule and its impact on the yellow metal in a more detailed way. There is still a long way to implement a more rule-based policy by the Fed, but investors should be prepared, especially if John Taylor joins the FOMC. And as the U.S. central bank started unwinding its balance sheet in October, we will analyze its hitherto and potential impact on the financial markets and the price of gold. Last but not least, we will, as usual, provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last quarter and what investors should expect in the last month of the year. In particular, we will address the recent flattening of the yield curve and whether it will support bullion prices.

  • Fed, Inflation, and Gold

    November 2, 2017, 11:56 AM

    In the special part of the current edition of the Market Overview, which has been already released, we have analyzed who, among the five candidates, would be the best and the worst for the gold market as the next Fed Chair. In the rest of the report, we will focus on the “mystery of lacking inflation” and its implication for the gold market. We will also examine the potential effects of lowering the inflation target by the Fed or of adopting a more rule-based approach, in line with Taylor’s ideas. Last but not least, we will, as usual, provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last month and what investors should expect in the last two months of the year. In particular, we will analyze whether the December curse is likely to happen, i.e. whether the gold will bottom in the last month of the year, as it did in both 2015 and 2016.

  • The Next Chair of the Fed and Gold

    October 23, 2017, 5:55 AM

    President Trump is to announce the next chair of the Federal Reserve soon. We invite you to read our today’s article about the candidates for the Fed Chair and find out who will be the best (and who the worst) for the gold market.

  • China and Gold

    October 3, 2017, 1:12 PM

    In the last edition of the Market Overview, we focused on the economic rebound in the Eurozone and geopolitical threats from North Korea. In this issue of our report, we stay in Asia, as we will analyze the link between the Chinese currency and gold. We will also examine China’s role in the gold market, as well as the recent developments in the China’s economy. Last but not least, we will, as usual, provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last quarter and what investors should expect in the last three months of the year.

  • Eurozone, North Korea and Gold

    September 5, 2017, 7:01 AM

    In the last edition of the Market Overview, we noted that “Europe has recently been among the most surprising positive economic regions in the world.” In this issue of our report, we will, as usual, provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last month and whether the sideways trend in the gold market will finally end, given the recent gold’s jump above $1,300. We will focus on the current developments in the Old Continent, examining in detail whether the Eurozone economy has really accelerated and, if yes, what it implies for the gold market. We will also study how the yellow metal has reacted historically to threats from North Korea – such an analysis should help investors to take appropriate positions in the gold market during the elevated tensions between the U.S. and North Korea.

  • Revolution in Automotive Industry and Precious Metals

    August 1, 2017, 6:28 AM

    In the last edition of the Market Overview, we analyzed the investment potential of platinum and palladium. We noted that the decline in diesel vehicles and the growth of electric cars could disrupt the demand for both these metals. In this issue of our report, we will dig into this topic, examining in detail how the looming changes in the automotive industry are likely to affect the precious metals. Last but not least, we will also provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last month. In particular, we will focus on the recent hawkish shift among the major central banks in the world.

  • Platinum and Palladium - Important but Overlooked Precious Metals

    July 6, 2017, 2:15 PM

    Investing in precious metals is generally associated with gold and silver. However, this group of chemical elements also includes the platinum-group metals, of which platinum and palladium are the most widely traded. This is why in this edition of the Market Overview we will analyze the investment potential of these two precious metals. To achieve this goal, we will examine the demand and supply outlook for these white metals and the pros and cons of adding them to one’s precious metals portfolio.

    We also provide investors with an update on recent fundamental drivers of the gold market, answering the question how the medium-term outlook for the gold market has changed over the last month. In particular, we will summarize the first half of 2017 in the gold market from the perspective of its fundamentals. This analysis should help investors draw investment conclusions for the remainder of the year.

  • The Revenge of Fed

    June 6, 2017, 11:20 AM

    In the previous edition of the Market Overview, we pointed out that “geopolitical risks clearly won with a hawkish Fed in a tug of war in the gold market.” However, the French presidential election was a turning point for the yellow metal, which started to decline after centrist Emmanuel Macron triumphed in the first round. Gold lost about 4.8 percent between April 21 and May 9, when the recent rally has begun. Does it mean more bearish outlook for the gold market?

    In this edition of the Market Overview, we will provide an investors update on recent fundamental drivers of the gold market, answering the question how the medium-term outlook for the gold market has changed over the last month. In particular, we will outline a macroeconomic outlook in the context of a ‘reflation debate’. Is reflation coming or was the recent uptick in inflation only temporary? We will also analyze geopolitical changes and their possible implications for the gold market, focusing on the impact of diminished risk premium on the yellow metal. We will also examine how the EUR/JPY exchange rate can affect the price of gold, as some analysts point out the negative correlation between this cross rate and gold price. And finally, we will find out whether gold mining production has peaked and whether it is important for gold investors at all.

  • Geopolitical Tensions 1-0 Win with Hawkish Fed

    May 3, 2017, 2:38 PM

    In the first quarter of 2017 gold gained about 9 percent. In April, the yellow metal continued its rally due to the uncertainty about French elections and due to rising tensions about Syria and North Korea. Geopolitical risks clearly won with a hawkish Fed in a tug of war in the gold market. Does it mean more bullish outlook for the gold market?

    In this edition of the Market Overview, we will provide investors update on recent fundamental drivers of the gold market. In particular, we will analyze the most important geopolitical developments – such as presidential elections in France, the formal triggering of Brexit and changes in Trump’s stance – and their possible implications for the gold market. We will also examine the macroeconomic front, focusing on the receding ‘Trump rally’ and the Fed’s plans to shrink its balance sheet. How has the medium-term outlook for the gold market changed over the last month?

  • Which Way Will Gold Go?

    April 5, 2017, 2:38 PM

    Gold started well this year: it rallied about 9 percent in the first quarter of 2017 (and about 11 percent from the bottom at the end of December 2016). Has it entered a bull market, or have we just witnessed a correction before the storm? On the one hand, fundamental factors remain rather negative for the yellow metal over the medium-term. However, gold prices have recently shown a remarkable resilience to hawkish comments and actions from the Fed. What does it mean for the gold market and which way will gold go?

    In this edition of the Market Overview, we will dig into several important changes which have happened since our latest update. In particular, we will analyze the impact of the March FOMC meeting on the yellow metal. We will also examine the Trump’s recent actions, as well as geopolitical developments in Europe, and their potential implications for the price of gold. Last but not least, we will summarize the first quarter in the gold market from the perspective of its fundamentals. This analysis should help investors draw investment conclusions for the remaining part of the year.

  • Political Uncertainty vs. Macroeconomics: Gold at Crossroad

    March 2, 2017, 11:21 AM

    In January, Gold prices were in an upward trend as investors hedged against uncertainty about Trump’s policies. On the other hand, the macroeconomic picture seems to be rather negative for the yellow metal in the medium term. Which driver will prevail?

    In this edition of the Market Overview, we will focus on the interplay of different factors on the gold market. Will gold shine as a safe-haven asset thanks to political uncertainty about Trump’s actions, and the downward risks in Europe (such as elections in France and Germany)? Or will we see acceleration in global growth led by the United States and see Fed tightening which will send gold prices south? Are we witnessing the replay of 2016 in the gold market, when the price of the yellow metal soared in the first quarter, or was the January rally only a correction in a bear market?

  • Gold and the Upcoming Reflation

    February 1, 2017, 1:34 PM

    Reflation has been one of the keywords for the markets in the last few months. More and more signals indicate that inflation is beginning to rise all over the world. What does it mean for the global economy and the gold market?

    In this edition of the Market Overview, we will analyze the gold’s performance in the reflationary scenario. We will examine what is happening in markets right now and if such inflation is really coming. We will also delve into the causes of the current inflationary trends – are they rooted in Trumponomics and Great Fiscal Rotation only or are they independent from them? Are they merely temporary developments or lasting tendencies? Will the comeback of inflation be positive or negative for the global economy and the gold market? Is stagflation a new threat for the world and an opportunity for the yellow metal?

  • Gold Market Summary of 2016 and Outlook for 2017

    January 5, 2017, 2:04 PM

    Although in our previous annual summary, we claimed that 2015 was a “fascinating time for the global economy and the gold market”, it turns out that 2016 was even more captivating. The last year started with a Chinese bang, when the global stock markets – worried about the economic slowdown in China – plunged. Next, the Japanese shook the world by introducing negative interest rates. Investors were also preoccupied with the FOMC members’ remarks, the Deutsche Bank’s problems, the difficult situation of the Italian banking system, terrorist attacks in Europe, and the disastrous U.S. payroll employment in May. However, the biggest shocks of the last year came later, with the surprising outcomes of the Brexit vote and the U.S. presidential election. This year ended with the second Fed hike in a decade.

    In this edition of the Market Overview, we will summarize the last year in the gold market from the perspective of its fundamentals. This analysis should help investors better understand the gold market, and draw investment conclusions for the new year. We will also present our gold outlook for 2017, focusing on the impact of the Fed’s rise and Trump’s policies on the price of gold. Given that in the long run the gold trade is generally about the Fed’s actions and confidence in the U.S. economy, the path of interest rates may be the biggest driver in the gold market in the next year.

  • Is President Trump Golden?

    December 1, 2016, 9:06 AM

    Ladies and Gentleman, Donald J. Trump has been elected the 45th president of the United States! Who would have thought that a real estate mogul without political experience would win the U.S. presidential election? But this really happened, becoming the next big shock after the surprising decision of Britons to exit the European Union. Talking heads will be analyzing for months why Trump won. Some argue that Hillary Clinton was a bad choice for Democrats (she is the personification of the establishment and all the scandals around her did not help); others point out the revolt against a corrupted system and elites, political correctness and globalization; the special character of social media which paved Trump’s way for the presidency; or that Trump just listened to the American people, especially forgotten men and women from Middle America.

    In this edition of the Market Overview, we will focus not on causes, but on consequences of the Trump’s presidency for the global economy and the gold market. Most analysts believed that gold should benefit from Trump’s victory, however gold’s response to his success calls this thesis into question (we mean not the initial move in the election evening, but the following developments). We will discuss how Trump could affect U.S. monetary policy and analyze his agenda, including the first 100 days, and its potential effects for the precious metals. Will the boosted infrastructure spending and tax cuts widen the fiscal deficit and weaken confidence in the U.S. dollar, or spur economic growth and cause inflation? Will Trump’s trade and foreign policies result in geopolitical chaos and recession? Will gold benefit from the upcoming presidency as an inflation hedge, safe haven and a bet against the greenback? Or will Trump revive the economy, but without triggering the negative consequences mentioned above? Will the gold prices fall? Or perhaps Trump's policies will turn out to be irrelevant for the gold market.

  • Desperate Central Bankers and Gold

    November 3, 2016, 11:00 AM

    On the same day in September, two of the world’s major central banks held very important but very different monetary policy meetings. The Fed again did nothing, while the Bank of Japan (BoJ) adopted another non-standard policy measures. Anyway, both central banks continue their unconventional strategies, despite strong evidence that they have been failing. The current U.S. recovery is the worst since the WWII, in spite of all the rounds of quantitative easing and zero interest rate policy. The case of Japan is even more depressing, as the country has been stuck in a sluggish growth for the last 26 years, despite quantitative easing, ZIRP and NIRP.

    In this edition of the Market Overview, we will focus on the relationship between the Bank of Japan’s actions and gold. In particular, we will discuss the recent changes in the BoJ’s monetary policy framework and their consequences for the precious metals market. It is always worth analyzing the BoJ’s measures, as they are often copied by the Fed. We will also analyze the link between the yellow metal and the yen, as there is a growing conviction that both assets behave like safe havens.

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