As a commodity, gold prices fluctuate. These fluctuations can be very minor and can at times appear to be more significant. Any financial news channel you may tune into, or any financial news website you may visit will likely have the current price of gold, silver and even other precious metals readily available. While this information is great at providing a snapshot of current conditions, when investing in Gold, it is necessary to also take a macro-oriented stance.
If one has looked into the gold market in recent years, one will likely have read that central banks are net buyers of gold. After years of selling the yellow metal these powerful financial institutions are now buying gold and holding it. Central banks are the largest players in the gold market, and if they are buying gold there is likely good reason. Below, we will outline why central banks have holdings in Gold.
The U.S. dollar has enjoyed its status as the global reserve currency of choice for some time now. Since the implementation of The Bretton Woods Agreement, the dollar has been considered the anchor of the global financial system. Under this agreement, the United States guaranteed other central banks that they could sell their dollar reserves for a fixed rate of gold. Here, we examine the unique status of the US Dollar, and its role as a reserve currency within the global economy and financial markets.
Silver is a commodity, and like any other commodity, its price is a reflection of current supply and demand. Silver is somewhat unique in the precious metals space, however, as its value may be driven not only by investment demand but also industrial demand. This allows silver to potentially experience the best of both worlds. In a strong economy, industrial demand for silver may heat up and potentially drive prices higher. In a slow economy, or during times of risk aversion, silver may potentially benefit from investment demand as investors look for perceived safe havens to put capital to work in. Here, we examine the various factors that affect the Silver price.
In recent years, there has been seemingly more and more debate about the feasibility of returning to the gold standard. As concerns over the U.S. dollar mount, there may be further talk of such ideas, although whether or not they make sense and could be actually implemented is highly debatable.
China is the world’s second largest economy, and has taken steps to cement its place among the economic elite of the world. One of those steps has been the acquiring of gold. The country appears to have an insatiable appetite for the yellow metal, and has been building its gold reserves in recent years.
What a week. It’s a new year for the world’s financial markets, but it sure didn’t take long for investors to realize that the themes of 2015 are still very much prevalent. The week and the year began with Chinese regulators attempting to maintain control of their currency as the offshore market continues to discount the official rate has seen investors sell Chinese stock markets and prompt fear of further weakness in the world’s second biggest economy.
Diversification is the careful consideration and combination of a wide range of investments within a portfolio in an attempt to smooth overall volatility. Diversification is a broad term, however, and can be accomplished in different ways. Here, we will examine how this investment technique pertains to investing in precious metals.
Quantitative easing, affectionately referred to as “QE”, is a term that has been widely used in recent years. In fact, more people are likely familiar with this phrase than ever before. Given its coverage in the media, and its widespread use, we felt it prudent to provide a simple explanation of what QE is and how it can affect financial markets.
Global equity markets have been on a tear in recent years, with the benchmark U.S. SP 500 index having made solid triple digit returns over the span of the last several years. Markets have been climbing since the 2009 lows, and continue to make new all-time highs.
This run higher in the equity markets as well as current valuation levels obviously begs a few questions:
-Will the rally continue?
-Are stocks overpriced at current levels?
-Is this a set up for a nasty correction?
-What has driven such significant upside?
We feel it is important to address some of these questions, as we believe the day will come when equity investors once again run for the exits. In turn, we believe that gold and precious metals could stand to benefit handsomely if and when this does in fact occur.
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