Welcome to illuminati silver, we tell you
the truth about silver. Today is Sunday 25th September 2016 and we
are providing our views on the future direction of gold prices for the remainder of the year.
As with the silver video published last week, we had planned to produce this as a single
episode, however due to its length we have broken it down into 2 parts. Part 1 being
broadcast today and Part 2 will be broadcast on Tuesday. We apologise for this but we wish
to try and keep each video within 10 minutes maximum.
At the time of writing this report, gold stands at $1,337 an ounce. It’s one year high has
been $1370 its 3 year high $1385 and its 5 Year high $1795. On Tuesday 6th Sept 2011
late Asian trade had seen the wholesale gold price rise 1.4%, reaching $1921 per ounce
its all-time high. This compares with a 5 year low of $1049 achieved in 2015 and an
all-time low of $34.78. We can see that at today’s price, gold is not that far off
its 3 year high, a figure we can see it beating in the last quarter of 2016.
In our silver report we mentioned that Investment decisions are often based on psychology as
well as mathematics, trend analysis and opportunity cost. We then continued to mention the Industrial
drivers for silver and then the economic ones. Well with silver demand vacillating around
50% Industrial and 50% Investment, we can understand the importance of each. However,
with the case for gold, according to the World Gold Council, the main demand drivers for
gold are jewellery and technology; Central Banks and Investors. In 2015 demand can be
broken down as follows: jewellery representing 57% of demand; Technology 8%, Investment 21%
and Central Bank net purchases 14%. With 4212 tonnes of gold being demanded (very slightly
lower than 2014) compared with a supply of 4358 tonnes of which 74% was mined and 26%
recycled. So one can see that the supply of gold was a little over 100 tonnes more than
its demand – according to the World Gold Council at least. It is estimated that there
is some 186,700 tonnes of above ground gold. In the first half of this year however the
situation has reversed with demand exceeding supply by almost 30 tonnes; with demand reaching
2336 tonnes and supply 2307 tonnes. Interestingly the demand breakdown has also changed with
jewellery demand accounting for 40% of total demand, Investment accounting for 45%, Technology
7% and Central Banks 8%. We can see therefore, at least for the first half of this year a
considerable shift towards Investment demand for gold away from the other areas, except
technology which remains more or less constant in percentage terms.
Gold is used as a standard of value for currencies all over the world. The price of gold gets
stated as a currency value, often in U.S. dollars, and the price of gold can fluctuate
with market conditions. Apart from the actual issue of supply costs,
there are 7 significant influences on the gold price that any investor with an interest
in gold trading should understand and although there are more than these 7 influences, they
are the main ones we take into account 1. Fear of a Global Crisis
Gold prices tend to rise when people lack confidence in governments or financial markets.
World events often have an impact on the price of gold because gold is viewed as a source
of safety amid economic or geopolitical turmoil and uncertainty.
2. Inflation and currency devaluation A common reason cited for holding gold is
as a hedge against inflation and currency devaluation. Currency values fluctuate, but
gold values, in terms of what an ounce of gold can buy, might stay more stable in the
long term. Gold is seen as a low-risk, solid investment in the midst of floundering currencies.
Investors may feel encouraged to buy gold when they believe the value of their paper
money will decline. 3. Value of the U.S. Dollar
The U.S. dollar is still the world’s dominant reserve currency, making it one of the main
currencies that different countries hold for international trade. The price of gold and
the strength of the dollar have a pretty clear inverse relationship; when the dollar is strong,
gold is weaker, and vice versa. Although this isn’t always the case it’s a reasonable
assumption to make based on past experience. 4. Interest Rates and Negative Interest rates.
Gold does not pay interest like treasury bonds or savings accounts, but current gold prices
often reflect increases and declines in interest rates. As interest rates increase, gold prices
may soften as people sell gold to free up funds for other investment opportunities.
As interest rates decrease, the gold price may increase again because there is a lower
opportunity cost to holding gold when compared to other investments. This is why we frequently
see gold prices soften when the FED threatens interest rate rises on the horizon, and then
harden when they do not happen. 5. Central Bank Instability
Bank failures and irregular economic policies make buying gold seem like a safe haven investment.
Once again, people flock to gold when the current paper money system experiences uncertainty.
6. Government Reserves Central banks, like the U.S. Federal Reserve,
hold both gold and paper currency in reserve. In fact, the United States and several European
countries hold the bulk of their reserves in gold, and they have been buying more gold
for these reserves in recent years. 7. Jewellery and Industry
Gold is not just a valuable hedge and a safe haven investment; gold is also used in jewellery
and industry. As mentioned earlier, in 2015, 57% of gold demand came from jewellery, and
China, India, and the United States are three countries with the largest such demand.
Manufacturers also use gold in all sorts of electronic devices, from computers to GPS
systems, and medical devices such as heart stints. Again in 2015 this represented some
7% of gold demand. So we have mentioned prices; highs and lows,
we have covered demand and supply so where do we see the next 3 months heading and why.
Please tune in to part 2 which will be published on Tuesday to obtain our forecast.
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updates and offers. Our Facebook page which is updated daily can be found at facebook.com/illuminatisilver Disclaimer: Illuminati Silver owners come from a background
of Banking, International Wealth Management and Economics. Having now retired from these
worlds we are not qualified to give investment advice. Therefore, this and other productions
must not be deemed to be giving such advice and merely represent the personal views of