Buy Gold Before Global Slowdown – HSBC

Release Date: 
Friday, October 21, 2016

Gold rises were generally flat on Friday but nonetheless ended in positive territory for the week.

“Gold fell slightly on Friday as the dollar strengthened, but was on track for its first weekly gain in four weeks on steady physical buying from China and exchange-traded funds… ‘Gold is well supported at $1,250 and everyone is waiting for the elections and the prices are just moving according to the dollar,’ said Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo. An interest rate hike by the U.S. Federal Reserve has been already factored in the prices, Ikemizu said. ‘Even if they raise rates gold will not go down steeply.’ Fed policymakers have heavily tipped that the central bank will raise U.S. rates in December….” (“Gold price falls on dollar strength; set for first weekly gain in four,” Gold-Eagle, 10/21/16.)

Gold ended the week up $15.20, closing at $1,266.70. Silver prices closed at $17.60, up $0.12.

Buy Gold Before Global Slowdown – HSBC
“Analysts at HSBC Group Inc. are telling clients that gold may be about to have another shining moment, as the precious metal's status as a safe haven asset could boost prices, given the prospect of a looming downward shift in globalization…

“The firm's Chief Precious Metals Analyst James Steel says in a note published on Friday that ‘demand for gold is often stimulated by the same factors that fan protectionist and populist sentiment’ and that ‘abrupt declines in cross border trade, investment and immigration, the dislocation of global economic policies, and a beggar-thy-neighbor approach to trade is almost tailor-made for higher gold prices…’

“Steel argues that if these de-globalization trends continue, gold will be a good investment. He writes that ‘gold prices tend to rise during periods of contraction in world trade,’ while pointing out that the World Trade Organization cut back its expectations for global trade this year to a mere 1.7 percent…

“While Republican presidential candidate Donald Trump is considered to be more 'protectionist and populist' than Hillary Clinton, Steel says both candidates are bullish for gold. ‘She favors addressing income inequality with incremental changes on tax and spending policies. But her spending proposals are mostly offset by proposed tax increases, with little impact on the federal budget deficit.’ He adds, ‘This is gold-bullish, but not on the scale of Mr. Trump’s agenda.’” (“HSBC: A Global Trade Slowdown Is a Reason to Buy Gold,” Bloomberg, 10/14/16.)

Gold Essential To Retirement Planning – Brecht
Market analyst Kira Brecht advised investors planning for retirement to include gold in their portfolios.

“Anyone who has ever sat down with a retirement advisor, knows the news is generally not good. In America, the vast majority of citizens are not saving enough, don't have an appropriate retirement nest egg for their age and most don't even have a solid plan on how to get to where they want to be financially so they can retire…

“At the end of the day, investors want and need investments that can stabilize (and grow) the value of their current assets in future purchasing power terms –and that is where gold comes in right now.

“Investors are beginning to understanding that hard assets are where the value is… Physical gold ownership is a true hedge for one's financial security and financial future. How much of your portfolio is allocated towards gold?” (“Will You Outlive Your Retirement Nest Egg? Not If It's Golden,” Kitco, 10/14/16.)

World Debt Bullish For Gold - Valdes
Alan Valdes, Director of Floor operations and Senior Partner at Silverbear Capital, Inc., told Yahoo! Finance that the global debt crisis makes him bullish on gold.

“A couple of things I’m bullish about. Again, lot of uncertainty going into next year and the end of this year but also [gold] is building a nice base out here … it’s up 16% for the year… so gold has a way to run and there’s $184 Trillion in debt in central banks around the world, an all-time high. So, that’s all weighing on markets and boosting the price of gold I think in the long run.” (“Why it's time to buy gold right now: NYSE trader,” Yahoo! Finance, 10/2016.)

Inflation On Its Way Back – BofA
Bank of America’s chief investment strategist urged investors to acquire “real” assets such as gold as a defense to growing inflation.

“Inflation is making a comeback and it’s time investors start thinking about hedging against its corrosive effect on assets and against the monetary policy tightening that’s likely to accompany bubbling price risk, a Bank of America Merrill Lynch strategist said Monday.

“The best approach? “Buy humiliation, sell hubris,” said Michael Hartnett, chief investment strategist at Bank of America.

“He predicted inflationary pressure will build as central banks begin to scale back policy support. Ahead of that reversal, investors should rotate ... to “real” assets, given their positive correlation with inflation...

“Real assets are tangible objects such as property, commodities, precious metals and collectibles... Broadly speaking, they’re at their cheapest relative to financial assets in almost a century, according to Hartnett....” (“Bank of America tells stock investors to get ‘real’ as inflation makes its comeback,” MarketWatch, 10/17/16.)

Turkey Warns That Syrian Civil War May Lead To WWIII
As Russian and U.S. relations continue to deteriorate, Turkey is warning that escalating tension between the two countries may spark World War III.

“The US and Russia could drive the world into a global war if the conflict in Syria is not resolved, Turkey has warned. Tensions have become increasingly heightened between Washington and Moscow in recent weeks. Last week, the US and UK warned Russia and its ally the Syrian government that new economic sanctions could be imposed if the bombing of Syria's besieged Aleppo continues.

“On Sunday, Russia condemned Washington for making “unprecedented” threats of cyber attacks following accusations by the Obama administration that Moscow had hacked computers belonging to American political organisations.

“Turkish deputy prime minister Numan Kurtulmus said: ‘If this proxy war continues, after this, let me be clear, America and Russia will come to a point of war,’ the Daily Mail reports. He suggested the Syrian conflict could be the beginning of World War Three, saying it had put the world "on the brink of the beginning of a large regional or global war".

“Earlier this month a Russian newspaper warned that Russian President Vladimir Putin is playing an ‘astonishingly risky game’ in the Syrian conflict that could lead to a Third World War….” (“US and Russia could 'start Third World War over Syria conflict', says Turkey,’ The Independent, 10/18/16.)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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