Financial Chaos Will Drive Investors to Gold - Casey

Release Date: 
Friday, December 23, 2016

Gold prices rose on Friday on thin trading paring earlier losses.

“Gold edged higher on Friday in thin pre-Christmas trade as the dollar retreated from this week's 14-year high, tempting some buyers to take advantage of a near 10-month low in prices after six straight weeks of decline… ‘(Many) traders have closed their books. For them, the year has finished,’ LBBW analyst Thorsten Proettel said. With no real political or economic events to shock markets, and with Asian markets seeing dull demand, I would say not much will happen until January. We see gold holding around $1,130.’

“Gold remains largely driven by currency effects, he added. ‘The most important drivers for gold right now are the exchange rate from the dollar to the euro, and real U.S. interest rates….’” (“Gold edges higher but eyes 7th weekly loss,” Reuters, 12/23/16.)

Gold ended the week down $2.40, closing at $1,133.20. Silver prices closed at $15.78, down $0.39.

Financial Chaos Will Drive Investors to Gold - Casey
Professional investor and Chairman of Casey Research, Doug Casey, is warning investors that we’re approaching “the trailing edge of a hurricane” which will lead to a financial crisis.

“Doug Casey is the founder of Casey Research and well known for his forecasting prowess, having accurately called the crash of 2008 and many other trends over the last four decades. In his latest interview with Future Money Trends Casey explains what a Donald Trump Presidency will mean for financial markets, economic stimulus, and geo-politics. As he’s noted previously, 2008 was just the first part of the storm and we are rapidly approaching the trailing edge of the hurricane. This time around it’s going to last much longer and be much worse than what we experienced before…

“’I really believe him. I think that they’re going to push for doing lots of infrastructure in the U.S. and that’s going to take a lot of metals, so that’s a favorable short-term influence for metals… I can be talked into buying a copper or zinc or cobalt stock, but I want to stick with gold…

“’The one thing I feel very confident of is we’re going to have financial chaos in years to come and that’s going to drive people into gold and to a lesser degree into silver… We’re in for a huge political, financial, demographic and military upset… these people might start World War III or seem like they’re trying to with the Russians… It’s a very dangerous situation…

“’It’s extremely serious… The real fake news is what you hear on CNN, MSNBC, and even Fox… I don’t trust anything I hear… the mass media is basically the mouthpiece of the deep state… these people that have the money and have the power and basically treat the rest of the country as peons… they’re very dangerous… I actually think that the U.S. is on the ragged edge of a civil war… because the people that elected Trump are hated on a visceral level by the preachers that are around the Democratic Party and the Deep State, and that includes Republicans….’” (“Doug Casey Warns ‘We're Going To Have Financial Chaos... It's A Dangerous Situation,’ Zerohedge, 12/22/16.)

Platinum to $1075 in 2017 and $1225 in 2018 - HSBC
One of the world’s largest banks and financial services organization, HSBC, has forecast significant increases in platinum prices for 2017 and 2018 due to limited supply and growing investor demand.

“HSBC looks continued supply deficits to boost prices of platinum and palladium in 2017. Platinum is forecast by the bank to average $1,075 an ounce next year, although this is down from HSBC’s prior forecast of $1,195. In 2018, HSB sees platinum averaging $1,225...

“Platinum is expected to draw support from what HSBC described as a ‘persistent but narrowing deficit and price-sensitive investor demand.’… Analysts suggested… investment demand is likely to rise on the discount in platinum prices to gold, while increases in auto and industrial demand should be supportive…

“The main industrial use for platinum, as is the case with sister metal palladium, is catalytic converters in motor vehicles. Auto demand growth should be slightly positive for this year and 2017, but noticeably less vibrant than in years past, HSBC said.
“We expect tighter emissions regulations globally to boost platinum usage in the auto sector over time, notably in heavier vehicles,” HSBC said… Long-term auto demand growth in India and China is also platinum-supportive, in our view. This should result in modest increases in auto-sector platinum consumption in 2016 and 2017.’
“Platinum-mine production growth is limited as capital expenditure cuts and restructuring limit output from the world’s largest producing nation, South Africa, HSBC said….” (“HSBC Sees $1,075 Platinum, $790 Palladium In 2017,” Kitco News, 12/23/16.)

Three Factors Bullish for Gold – Oilprice.com
The website Oilprice.com identified three factors which should boost gold prices next year.

“Gold has subsided that last two months — giving back much of the stellar gain the metal enjoyed at the beginning of 2016, to a current price of $1,130 per ounce. But news this week suggests bullion may be about to get a lift. From a number of different markets across the world.

“Firstly, in the world’s largest gold-buying nation, India. Where reports emerged this week that the government may be about to cut import taxes on gold. Bloomberg cited unnamed sources Wednesday as saying that the government is looking to drop gold import duties to 6 percent… If the measure does pass, it should help lift gold demand across India… That would obviously be supportive of gold prices. And bullion could get an even bigger lift — from Islamic buyers, who got a go-ahead this week to begin buying gold and silver in a major way…

“As a final bonus item, gold miners also got some good news this week — in the emerging exploration destination of Nigeria - where mines minister Kayode Fayemi said the federal government has secured $150 million from the World Bank to support a national mining investment fund…

“Watch for the finalizing of Nigeria’s fund, as well as rising gold buying from the Islamic world — and a potential decision on an import tax revision in India. The next few months could be very interesting for bullion.

“Here’s to global gold.” (“Three Big Breakthroughs Sure To Give Gold Prices A Boost,” Oilprice.com, 12/23/16.)

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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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