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Goldline Week in Review

Release Date:  Friday, October 18, 2019
WEEKLY SPECIAL

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METALS MARKET UPDATE – WHAT YOU NEED TO KNOW
  • A number of analysts point to rising Gold and Silver prices in the next year.
  • Institutional investors are moving to gold to diversify and protect against global risk.
  • The International Monetary Fund warned that the U.S.-China trade war will slow the world economies to its lowest point since the Great Recession.
  • Russia is seeking to replace the U.S. dollar with the Russian ruble for its massive energy transactions.
  • Gold ended the week at $1,490.60/oz. Silver closed at $17.61/oz.
METALS NEWS –
  • The Dutch Central Bank, known as the DNB, believes that gold will provide the safety net for the world economies. "Shares, bonds and other securities are not without risk, and prices can go down. But a bar of gold retains its value, even in times of crisis. That is why central banks, including DNB, have traditionally held considerable amounts of gold. Gold is the perfect piggy bank – it's the anchor of trust for the financial system. If the system collapses, the gold stock can serve as a basis to build it up again. Gold bolsters confidence in the stability of the central bank's balance sheet and creates a sense of security." https://www.dnb.nl/en/payments/goud/index.jsp#
  • Writing for Forbes, Frank Holmes affirmed his gold forecast of $10,000 per ounce given the growing global debt and negative interest rates. "Last week our office was visited by the legendary economist Nancy Lazar, co-founder of Cornerstone Macro, who commented that the growing mountain of global debt, not to mention the proliferation of low to negative-yielding debt, makes the yellow metal very attractive right now. I agree and stick by my call for $10,000 an ounce gold. Some critics believe only a major event, such as a war or famine, would be enough to push the metal up that high, but really all it takes is monetary and fiscal mismanagement. That's exactly what we're seeing right now in Europe…." https://www.forbes.com/sites/greatspeculations/2019/10/14/the-optimists-guide-to-airlines-and-gold/#5637465b7992
  • The World Gold Council states that institutional investors are moving to gold to diversify and protect against global risk. "According to WGC, gold has become more relevant than ever for institutional investors. The investors in the developed markets are likely to be impacted by the effects of quantitative easing and the low interest rates for years to come. The institutional investors are seen embracing alternatives to traditional assets. Since 2001, the worldwide investment demand for gold has grown 15% per year. Incidentally, the share of non-traditional assets among the U.S. pension funds has increased to nearly 30% over the past several years, the WGC report said." https://www.scrapmonster.com/news/-/1/73058
ECONOMIC NEWS –
  • The International Monetary Fund warned that the U.S.-China trade war will slow the world economies to its lowest point since the Great Recession. " The U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, the International Monetary Fund warned on Tuesday, adding that the outlook could darken considerably if trade tensions remain unresolved… The global crisis lender said that by 2020, announced tariffs would reduce global economic output by 0.8%. Georgieva said last week that this translates to a loss of $700 billion, or the equivalent of making Switzerland's economy disappear." https://www.cnbc.com/2019/10/15/imf-says-trade-war-will-cut-global-growth-to-lowest-since-financial-crisis-a-decade-ago.html
  • Russia is seeking to replace the U.S. dollar with the Russian ruble for its massive energy transactions. "Russia is exploring currency settlements in euros and rubles for its vast energy exports in an attempt to avoid the dollar and insulate Moscow from the U.S.-led global financial system… Moscow has looked to offset its exposure to U.S. economic sanctions through a 'de-dollarization' scheme that has seen the finance ministry's bond program issue all new debt in euros and rubles. The central bank has reduced its holdings of U.S. treasury debt from $96 billion to just $8 billion in the past 18 months." https://www.ft.com/content/704cde6c-eb53-11e9-a240-3b065ef5fc55
  • A Bloomberg editor wrote that the "recession train" has left the station. "The global economy seems headed for a recession, which the U.S. will struggle to avoid. So the Federal Reserve will probably cut rates again this month. It has already started buying bonds to fix technical problems in the overnight repo market. (It doesn't want to call this quantitative easing, notes Mohamed El-Erian, but for all practical purposes, that's what it is.)" https://www.bloomberg.com/opinion/articles/2019-10-14/a-china-trade-war-recession-is-already-on-the-way 
  • The CEO of JP Morgan Chase told reporters that a recession is in our future. "'Of course there's a recession ahead,' Dimon said during a morning call with reporters after the bank announced its third-quarter earnings. 'What we don't know is if it's going to happen soon… It does look like geopolitics, particularly around China and trade, are reducing business confidence and business capital expenditure'"  https://nypost.com/2019/10/15/jpmorgan-chase-ceo-jamie-dimon-warns-theres-a-recession-ahead/
  • Consumer spending fell in September signaling further risk of recession. "American shoppers pulled back on spending in September, signaling a key support for the U.S. economy this year could be softening amid a broader global economic slowdown… Wednesday's report suggested consumer spending was on less solid footing amid concerns that trade tensions are weighing on the global economy and dampening consumers' outlook. Consumer spending is the main driver of the U.S. economy, accounting for more than two-thirds of economic output." https://www.wsj.com/articles/u-s-retail-sales-fell-in-september-11571229234
  • A new study revealed that nearly half of Americans are unprepared for a new recession. "Whether the U.S. economy is headed for a recession is anyone's guess, but a new survey by Bankrate suggests many consumers won't be ready if it happens. In a new study, the organization found that 4 in 10 of 2000 people surveyed would be under-prepared if growth turns negative in the next six to 12 months. The data included 16% who say they're not ready at all." https://finance.yahoo.com/news/if-a-recession-hits-nearly-half-of-americans-wont-be-ready-bankrate-040137406.html