Welcome to illuminati silver, we tell you
the truth about silver. Today is Tuesday 7th August 2018 and we are
going to highlight what we believe will be the influences on the Gold price for the remainder
of 2018 and where we predict prices will end up at the end of the year. This as with our
Silver assessment is a two-part video with part 2 being published on Thursday.
At the time of publishing, gold prices currently stand at $1,212 an ounce some 4% or $48 down
on exactly a year ago and down some 8% or $100 lower since the start of 2018. So, as
we highlighted in our recent silver videos published a couple of days ago, 2018 has also
proven to be a lacklustre year for gold so far.
In 2018, prices have oscillated between about $1,312 and $1,360 per ounce quite a tight
margin of just 4%. If we compare this with 2017 (and we admit 2018 is by no means over
as yet) we saw a price swing from a low of $1,151 to a high of $1350 and the price of
gold actually rose that year by a very respectable $145 or 12.65%.
So, what have been and may continue to be the influences on the gold price in 2018?
Well no-one will be surprised that the 5 main influencers we believe have either had, or
will have, are those similar to the ones we quoted for silver in our last 2 videos. If
you haven’t listened to them, we respectfully suggest that you do, as we do not wish to
repeat the same information verbatim, but we will provide a very brief synopsis here.
They are: 1. Geopolitical issues
• President Trump has been described as “flirting” with war with North Korea and
Iran, and has clashed with China, Canada and Europe over the issues of sanctions all of
which, until they are remedied tend to unsettle markets.
2. Interest rates • In general, higher interest rates tend
to put pressure on non-interest-bearing assets like gold, and although some studies have
debunked this over the long term, traders often respond to this in the short term. The
rate hike in June was the 7th in the past 3 years and it is envisaged that the FED will
raise rates at least once if not twice again this year. 3. Price manipulation
• Whilst there have been instances that Central banks have intervened in the Gold
market, we suggest it has been far rarer than many believe, in order to prevent spike and
crash anomalies or to normalise the market. However, we are certainly of the opinion that
trading banks and other major investors, particularly operating on the Comex, have on a number of
occasions attempted, and succeeded, in manipulating prices in order to either engineer short term
profits or prevent significant losses when they have been on the wrong side of a trade. 4. Internal US Politics
• On Tuesday, November 6, 2018, mid-term elections will take place. All 435 seats in
the United States House of Representatives and 35 of the 100 seats in the United States
Senate will be contested. In the House of Representatives, the Republicans have a majority
– holding some 236 seats and also have a very slender majority in the Senate where
they hold 51 seats. These elections could have a profound effect on the political landscape
and time will tell what this effect will be. 5. Traditional Supply and Demand
• Well the ‘go to’ location for what happens each year in the gold supply and demand
space is the World Gold Council which produces regular updates and an annual report from
information gathered by GFMS Thomson Reuters (the same people who provide the information
for the Silver Institute on Silver). • Like the Silver Institute the World Gold
Council is sponsored by, and consists of, major mining companies particularly in this
case, in the Gold space and general precious metal arenas. Therefore, once again, it is
in these companies interests to paint as positive a picture as they can – as their futures
depend on it, so when reports are produced which appear either negative or non-descript
one could to some degree associate them with a fair level of authenticity. That said, of
course, no data is ever 100% accurate but what is important to us is the trend.
• With this in mind let’s take a brief look at what happened in 2017. Well in 2017
physical demand rose by 10% the first increase since 2013. This was largely the result in
the growth of jewellery demand, but also industrial demand played an important part too especially
in the electronics sector. Demand for gold bars fell by 6 tonnes and gold bullion coins
revealed the lowest demand levels for a decade at just 248 tonnes. Many analysts put this
down to the rise in equity markets and cryptocurrency popularity.
• The overall figures for 2017 showed that mine production was down by 4 tonnes compared
to 2016, with total supply being down some 175 tonnes or 4%. Physical demand on the other
hand was up 358 tonnes or 10% but interestingly there was a net surplus of supply over demand
of some 427 tonnes and despite this, the overall price of gold went up and the average price
of gold for the year rose from $1,250 in 2016 to $1,257 in 2017.
So, unlike the situation with regard to silver, gold actually has produced for the last 2
years a surplus of supply over demand (which was admittedly preceded by 3 years of deficits).
We also wish to add an additional dimension here as to an influencer on gold which we
did not particularly cover in our silver video, and that is:
6. Alternative Investments. (1) Equity Markets
a. Lets first take a quick look at the equity markets in the US. The Dow Jones finished
2017 some 25%; higher the best year since 2013.The S&P 500 rose some 19% and the Nasdaq
rose a most impressive 28%. b. Well since the end of 2017, the Dow Jones
has risen even further, peaking to 26,149 points earlier in the year but still standing
at an impressive 25,502 today. This bull market is the second oldest and second strongest
in history, which on the face of it sounds wonderful. However, one must always remember
the old adage that what goes up also has to come down.
c. What is particularly worth remembering though is that less than 19% of Americans
own stocks directly but approximately 50% of Americans do participate in the market
through employee-sponsored retirement plans – at least according to a Pew analysis of
Census Bureau data. d. So, with such impressive growth rates one
can clearly appreciate why investors have to some extent ignore and have ignored precious
metals, and gold in particular, (being the most obvious monetary metal) when 20% plus
growth has been on the cards elsewhere in the equity space. (2) Cryptocurrencies
a. The second alternative investment opportunity as opposed to gold has, in our opinion, been
the rise of cryptocurrencies and especially bitcoin. Bitcoin was the first cryptocurrency
in the world and was launched in 2009. It is also the first wide-scale real-world application
of blockchain technology. Over the past 12 months bitcoin has vacillated between $2,963
to a peak of $20,155 and currently stands at $6,890 providing investors who bought it
just a year ago a return of over 100% – in fact 109% to be more precise. If one considers
that bitcoin could be bought for as little as $1.14 back in January 2012 one can see
what a phenomenal investment opportunity it has been and even today there are some analysts
predicting that it could easily reach $100,000 in just a few short years.
Now clearly equity investment carries potential high risk, and cryptocurrency investment to
many is a down right gamble and so, particularly the latter, has been the depository for what
we call ‘hot money’ that’s flexible high risk or easily moveable investment money
as opposed to stolen money – though one never knows for sure. So, whereas perhaps
these funds, or certainly a proportion of them, would have traditionally moved into
precious metals, they have been diverted elsewhere, and therefore one should not be surprised
to see that the physical demand for gold and silver for investment purposes has declined
in recent years. The general picture for gold therefore; has
been one of supply being higher than demand, attractive alternative investment choices
being readily available to mop up those funds which could have been directed towards gold,
demand for coins and bars falling and interest rates on a rising trend, but despite this,
average prices holding up relatively well when normally under these circumstances they
would be expected to fall quite significantly. So, has gold actually bottomed out in US dollar
terms? Is the only direction from here up? What is going to happen to gold prices in
2018? We shall cover this in our next video which will be published on Thursday.
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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