Gold tops $1,270 as Brexit fears, bearish Soros spook markets
The metal is now firmly above $1,260 and on its way to test the $1,300 level again, probably as early as next week, Secular Investor researcher Nico Pantelis told MarketWatch. Gold prices are responding towards slowing economic activity, meager company results and monetary tensions on the rise again.
Golds upswing is sending a warning signal about stocks and the loss of faith in central banks, UCX co-funder Jack Bouroudjian told CNBC. It may have started out as a reinflation trade, but right now it is turning into that flight to quality and flight to safety. It is one of those things that is more than likely going to stop any kind of a move in equities.
Silver surges as ETFs near record: Silver enjoyed an even better week than gold, gaining more than 5% to trade near $17.29 on Friday for its best weekly advance since late April. Not only are silver American Eagle coin sales still selling at a record clip, with more than 24 million purchased this year, but holdings in silver ETFs are nearing an all-time high.
When silver sells off, it sells off faster than gold, but when it rallies, it rallies so much more, RJO Futures strategist Phil Streible told Bloomberg. The physical demand for silver is quite high. And if theres a slump in production, we might see some short squeezes come into play.
With inflation expectations falling ahead of the Federal Reserves crucial policy meeting next week, investment strategist Jim Rickards told CNBC on Thursday that the Fed wont be lifting rates anytime soon quite the contrary. The Feds gotta ease up; theres no way theyre going to raise, at least for the rest of the year, he said.
NIRP supernova to explode: The UKs Brexit referendum also is putting a bid behind gold, with one Reuters headline reading, London appetite for gold bars, coins rises on Brexit nerves.
And the European Central Banks foray into corporate even junk bond buying Wednesday prompted condemnation from several quarters, with Janus bond guru Bill Gross tweeting, Global yields lowest in 500 years of recorded history. $10 trillion of neg. rate bonds. This is a supernova that will explode one day. Meanwhile, Deutsche Bank blasted the ECBs desperate negative-rate policy, saying it would destroy the European Union.
Icahn echoes Soros bearishness: But perhaps the biggest sign that all is not well with the global economy came as The Wall Street Journal decided to profile billionaire George Soros return to active investing after a long hiatus.
Worried about the outlook for the global economy and concerned that large market shifts may be at hand, the billionaire hedge-fund founder and philanthropist recently directed a series of big, bearish investments, it reported. Gold and gold mining stocks have been among Soros most lucrative bets since his return, it noted. Soros concerns especially center on Chinas debt problems and the disintegration of the European Union.
Fellow billionaire Carl Icahn seconded Soros concerns about inflated stock values, telling CNBC, I dont think you can have [near] zero interest rates for much longer without having these bubbles explode on you. You need fiscal stimulus from Congress.
Hedge fund predicts $1,400 gold: And Soros isnt the only hedge-fund manager who is betting on bullion. Citrine Capital Management is bullish overall on gold because the global economy is pretty poor with China as an issue, founder Paul Crone told Bloomberg. Gold could go as high as $1,400 an ounce.
The macroeconomic outlook is weak and the potential for recessions in some economies remains high, he added. China in our view is much worse than people continue to think. We remain concerned that there will be lots of bankruptcies in China.
Early stages of a new bull market: Though not wildly bullish, Swiss investment bank UBS thinks the downside for the gold price is limited over a 12-month horizon, wrote its chief investment officer, Mark Haefele, citing three reasons.
Thats in stark contrast to Sarhan Capital CEO Adam Sarhan, who argues that the entire commodity complex is on the verge of a new supercycle as the dollar weakens.
We are open to any outcome, but until we see any meaningful selling in commodities ... we are in the early stages of a new bull market for commodities, he said.