Displaying items by tag: gold

Thursday, 02 August 2018 09:15

Gold Demand is Plummeting

(New York)

Those hoping the current turmoil in the technology sector may turn around the fate of gold will be upset by new data. Gold has suffered its worst start to a year in almost a decade despite the fact that the US equity market was in a correction for much of it. Now, economic data shows that demand for the shiny metal is at its lowest since 2009. The big drop in drop demand did not stem from industry, but instead from investment markets, with ETFs buying ~60% less gold in the last year than the year prior.


FINSUM: Gold is in a tough and interesting spot. On the one hand, it is easy to see why rising rates have depressed gold prices. But on the other, it seems gold have should have benefitted from all the geopolitical and market instability of this year.

Published in Comm: Precious
Wednesday, 01 August 2018 08:54

Why Bitcoin Will Never Be Gold

(New York)

The idea of bitcoin being a 21st century version of gold, a digital value store for the next generation, has become prevalent. However, Barron’s argues, and we second, the idea that Bitcoin can never be gold. The idea comes from a new paper out of the University of Chicago. The core reason why?: It is simply not as secure. If you pay close attention to the headlines, Bitcoin is being hacked and stolen left and right. Even worse, the more valuable Bitcoin becomes, the more it is stolen. The same cannot be said for gold.


FINSUM: The paper argues that bitcoin will never play more than a “bit role” in the global financial system because of its fundamental vulnerability to theft. It sounds like the cryptocurrency needs a digital Fort Knox.

Published in Comm: Precious
Thursday, 05 July 2018 09:29

Gold’s Weakness is Great News for Stocks

(New York)

Despite all the fears over a trade war, recession, and bear market, there has been relatively little media chatter surrounding gold. Gold is usually seen as a good hedge to political and market calamity, and while it has seen some gains, there isn’t the usual excitement that surrounds it. All of that may be good news, however, for stocks as the spread between gold and platinum suggests the equity bull market has more room to run, according to a pair of professors from Cornell and USC. The gold-platinum ratio reflects both industrial demand and investor anxiety, and when it is high, it tends to indicate that stocks will perform well.


FINSUM: There are a lot of factors that go into the price relationship between two commodities, so it is hard to draw a conclusion for a third asset class. That said, the logic underlying this argument seems sound.

Published in Comm: Precious
Monday, 04 June 2018 08:49

Gold Bulls Rejoice

(New York)

It might be a great time to buy gold, or at least that is what one of the top gold funds on the street is saying. VanEck International Investors Gold fund, which has routinely outperformed peers, says Gold is finally likely to break out its narrow trading range. Gold suffered a terrible bear market from 2011 to 2015, and prices are low and there is little selling pressure. This, coupled with heightened geopolitical risk and inflation, mean that gold seems likely to find a catalyst for strong performance.


FINSUM: We do agree that prices are low and there is little selling pressure, but there have been plenty of other times there were geopolitical catalysts, so it is hard for us to get behind that notion.

Published in Comm: Precious
Tuesday, 01 May 2018 02:22

JP Morgan Says Market Will Collapse

(New York)

JP Morgan has just put out a guide which may be very interesting to investors—a manual for how to navigate the end of easy money. The bank thinks the equity market’s response to earnings has been very worrisome lately, and they are very bearish. The bank recommends that in 2019, investors go underweight equities and long gold and long duration as the economic cycle ends and real rates “collapse”.


FINSUM: This is an extraordinarily bearish outlook from JP Morgan, and it seems mostly dictated by weakness in equity prices lately. Investors should take this warning seriously.

Published in Macro
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