Collectors waiting with bated breath for 2016 gold Standing Liberty centennial coins release
Posted onFollowing the April debut of the 2016-W gold Mercury Dime Centennial coin, the U.S. Mint will be releasing the next item in this celebratory series later this year: the gold Standing Liberty Centennial quarter-ounce coin.
Although the official release date has not been announced, this homage to Hermon A. MacNeils Standing Liberty Quarter design already is generating excitement. As part of its tribute to these legendary coin designs, all of which first appeared in 1916, the Mint also will be distributing a gold reproduction of Adolph A. Weinmans Walking Liberty Half Dollar in a half-ounce version. Stay tuned to Blanchard and Companys Web site for information on both of these new coins availability.
Dont forget to collect the originals: In the meantime, dont overlook the original classic coins on which these 2016 tributes are based. Blanchard and Company currently (as of June 14, 2016) has in stock a 1930 Standing Liberty Quarter with the high grade of MS67, bestowed by NGC, as well as a green CAC sticker of quality assurance. With a Philadelphia mintage of about 5.6 million, this silver quarter was produced in the final year of the series, which would be replaced in 1932 by the Washington Quarter, designed by sculptor John Flanagan for the presidents 200th birthday.
A few changes to MacNeils original design occurred over the years in fact, the prototypes even includes two dolphins at Libertys feet, to represent the Atlantic and Pacific oceans, but they failed to make the final cut.
Nudity nixed in design update: Moreover, the original design showed Libertys right breast uncovered, and more than 12 million were issued before chainmail was added in 1917, either because of complaints about the nudity or as a sign of the times of World War I.
Lady Liberty herself was reportedly modeled after actress Dora Doris Doscher, although a model named Irene MacDowell also claimed the role an assertion that is not widely believed today.
The placement of the 13 stars on the coins reverse also varies according to year. The 1916-17 versions feature stars on either side of the eagle, while subsequent issues locate three stars underneath the eagle.
A few other variants occur, with the raised date on Libertys pedestal being recessed by 1925 because of the wear and tear on earlier versions, while the 1918/7-S overdate remains the rarest of these quarters.
Building a full set is very doable: As one of our most beautiful coin designs, the Standing Liberty quarter is very popular with collectors today, NGC notes. The series is collected in its entirety by date and mint or as part of a 20th Century type set. Unlike many other series, it is still possible to complete a full set in uncirculated condition a valuable treasure that very few people will have the pleasure of owning.
Blanchard and Company also has in stock (as of June 14, 2016) a 1941-D Walking Liberty Half Dollar certified at MS66 by NGC another classic Weinman image that formed the basis of todays silver American Eagle bullion coin design.
You can have the pleasure of owning an original Standing Liberty Quarter or Walking Liberty Half Dollar by calling Blanchard and Company for any that are currently in stock. For a look at all of the current collectible silver coins available, click on this link. And please check in with Blanchards investment professionals for the release date of the gold Standing Liberty Centennial collectible!
Gold strengthens on Fed inaction as experts debate negative rates in U.S.
Posted onThe Federal Reserve did what was expected Wednesday and left its key interest rate unchanged, weighed down by growing uncertainties over the United Kingdoms June 23 Brexit referendum.
Spot gold, having already priced in the Feds inaction, bounced modestly toward $1,300 by afternoon trading, while the gold futures price touched that key psychological level as Fed Chairwoman Janet Yellen conducted her post-meeting press conference. Silver was trading near $17.50 in the afternoon.
Emphasizing a gradual and data-dependent pace for future rate hikes, Yellen told the media that “we need to assure ourselves that the underlying momentum in the economy has not diminished.
Central banks losing control: The key takeaway from the Feds statement is that it now only expects to implement a single rate hike this year. Thats a major falloff from earlier projections that saw the central bank hiking as many as four times. Not to mention the fact that back in April, most Fed policymakers were anticipating a move in June.
With rates practically everywhere around the world near zero or even in negative territory even as global growth falters, faith in the Fed and its peers is diminishing. Central banks are losing control and they don’t know what to do … just like the Republican establishment and Donald Trump, said DoubleLine Capital bond guru Jeff Gundlach in a presentation Tuesday. Gundlach sees gold prices heading to $1,400 in the near future.
German bund yield goes negative: Another canary in the coalmine for the global economy occurred Tuesday when the 10-year German bund fell below zero for the first time ever a sign that investors are desperate for safe havens.
Basically, safe havens are back in fashion,” PVM Oil Associates analyst Tamas Varga told Reuters. “The thought process is that if the UK leaves the EU, then the EU might slip back into recession.”
With the Feds purported plan to raise interest rates on hold for yet another month, investors are starting to ask: Can negative rates come to the U.S.?
It likely would take a major crisis for the Fed officially to impose negative rates, but weve seen negative real rates on numerous occasions and theyve been rocket fuel for gold prices.
Real rates can definitely go negative: The World Gold Council confirmed golds outperformance during low and negative rates in a March 2016 study, as has U.S. Global Investors CEO Frank Holmes, who noted that when bullion peaked at $1,900 in 2011, real interest rates were nearly -4%. Gold has historically performed best when real rates turned negative, Holmes wrote in April. To get the real rate, you subtract the current consumer price index (CPI) reading, or inflation, from the government bond yield. When yields are low or negative, as they are now it encourages smart investors to seek other stores of value, including gold.
Some investing pros appearing on CNBC on Tuesday argued that U.S. bonds could be headed for negative territory. Our bonds, by the way, have been negative a long time in a real sense, but not nominal, Max Wolff of Manhattan Venture Partners told the network. I dont see them going nominal negative, although I think theyre going to stay real negative for a while in terms of inflation-adjusted.
Upside is greater in gold: But Dennis Davitt of Harvest Volatility Management sees room for even greater negativity. I think you could see negative rates in the U.S. If Germany and other countries in the world go even further negative, it turns into a number-line game. So where zero lies on the number line, who knows?
With the negative-rate trend gaining steam, golds luster can only increase. Considering the fact that a lot of sovereign debt is negative-yielding now, and investor may say, Why dont I consider gold, for instance? It doesnt yield me anything, but neither does this sovereign debt, and perhaps the upside is greater there, Citibank Singapores Zal Devitre told CNBC.
Gold to $1,400, Barrons experts say: 6 potential catalysts
Posted onGeorge Soros return to active investing, particularly his bearish bets against the market and bullish stance toward gold, has gotten a lot of press this month.
And he’s not the only wealthy financial guru bracing for the worst with gold. Two Barrons Roundtable members DoubleLine Capital bond guru Jeff Gundlach and Zulauf Asset Management head Felix Zulauf both see at least another $100 gain for the metal.
Gold could rally to $1,400, Gundlach said in Barrons midyear update, while Zulauf concurred, adding, I am bearish on equities and constructive on high-quality bonds. Also, I expect gold to rally this year to $1,400.
Very dangerous time, billionaire says: And Elliott Management chief Paul Singer just gave an interview in which he detailed his pessimistic outlook on the economy and the necessity of gold amid today’s imbalances.
The cure for the crisis for the debt crisis, the financial crisis has been deemed by the developed world governments to be more debt, Singer told Institutional Investor in May. There has not been a deleveraging. And after seven and a half years and counting of this mix of policies, at the moment were either in a stage of stagnation or rollover, possibly in the early stages of a global recession. So I think its a very dangerous time in the financial markets.
Noting that if the Federal Reserve raises interest rates without fiscal and governmental reforms, an instant recession would result, Singer likes financial insurance in his portfolio.
Gold is under-owned, Singer confirms: Were very bullish on gold, which is the anti-paper money, of course, and is under-owned by investors around the world, he said. And we are very skeptical about markets. We hedge every equity position. Were not in the mood to be surprised surprised in the sense of losing large amounts of money ever, but in particular now with this extraordinary and unprecedented situation where the stability of financial markets is so dependent on confidence in policymakers and central bankers.
Soros has dabbled in gold throughout the years, and Singer and Zulauf have been consistently bullish in recent years. But as economic uncertainties grow, even former gold skeptics are turning to the metal for safety. Were getting a bit bullish, Charles Newsome of Investec Wealth told CNBC. Having been pretty nervous about it for the last two and a half years or so, we’ve seen a turnaround in the gold price, a bit more strength in it. We’ve looked at gold again. It has always been an insurance asset for us. But with so many fears around, starting with Brexit and on and on, competitive devaluations by major central governments of their currencies, and exchange control from the Chinese gives us the feeling that gold might be a good place to put a small part of your portfolio.
6 events that could pay off for gold: Mohamed El-Erian hasnt been a gold cheerleader, either, but in a recent Bloomberg column, the Allianz SE chief economic adviser (and former PIMCO bigwig) outlines 6 events that could make Soros a winner.
- Brexit: A vote in favor of the U.K. leaving the European Union in the June 23 referendum could have a disruptive impact on markets, El-Erian writes.
- Chinas debt bubble: A major slip by China as it tries to implement financial policies aimed at balancing liquidity support for the economy with the orderly management of a credit boom, soaring internal corporate indebtedness and excesses in the equity markets.
- U.S. presidential election, specifically Donald Trump: Indications that the isolationist tone of the U.S. presidential primaries is more than just rhetoric and posturing, but signals a decisive change in decades of U.S. leadership for economic and financial globalization.
- Currency volatility and manipulation: Large exchange rate moves that, by reflecting wider divergences in the worlds multi-speed economic and policy conditions, spread volatility to financial markets as a whole.
- European banking woes: A renewed scare about the European banks that have lagged in raising capital and strengthening internal operating approaches and have yet to put behind them the legacy of a period of excessive risk-taking.
- Reckless investing fueled by low interest rates: Greater risk aversion among market participants who acting on their confidence that central banks are prepared to continuously step in to ensure stability now have taken on significant mismatches of maturities, assets to liabilities, benchmarks or currencies in their search for higher returns. And this is occurring in markets that have tended to experience periodic bouts of relative ill-iquidity.
With gold at six-week highs and seemingly on the move back toward $1,300 as of Tuesday thanks to rising Brexit fears, investors should continue to brace for black swans as well as the potential risk events outlined above.
2 super-rare New Orleans Mint coins snag total of $622,750
Posted onTwo 19th-century rare coins one gold, one silver from the New Orleans Mint together brought in more than a half-million dollars at a recent sale in California.
An 1856-O Liberty Double Eagle, certified at AU55 PCGS Secure and noted as a Variety 1, realized $364,250. A member of the 100 Greatest U.S. Coins compendium, the 1856-O is known as arguably the rarest coin minted at the New Orleans facility. Of just 2,250 produced, just a maximum are 30 are thought to survive.
The other top seller was another product of the New Orleans Mint: an 1895-O Morgan Dollar, certified at MS65+ by NGC and sporting a green CAC sticker, that was part of the Rev. Dr. James G.K. McClure Collection. It realized $258,500.
McClure apparently acquired the coin from a bank close to its issue date, and it had not seen the light of day since, according to a CoinWeek report.
The mint produced only about 450,000 of these, and this ones considered the third-rarest in Mint State, as well as tied for the finest specimen in CACs judgment. Its also special in the entire Morgan series because the Philadelphia Mint produced none that year except for about 880 proofs; only San Francisco also minted circulation-issue Morgans in 1895, making just 400,000.
Several other coins broke into the $100,000-plus range, including a 1921-S Walking Liberty Half Dollar, certified at MS66 by NGC, which commanded $188,000; an 1804 Capped Bust Quarter Eagle, certified at AU55 PCGS, which brought in $146,875; an 1822 Capped Bust Quarter Dollar, MS65 PCGS, which sold for $108,687.50; and a 1794 Flowing Hair Dollar, graded as VG10 by NGC, which came in at $105,750.
The market for top-quality coins, such as those listed above, continues to be strong in 2016.Lesser coins, however, are seeing some valleys. As the market continues to decline for some series, it looks like dealers and collectors are heavily pursuing CAC and + graded coins, Numismedia recently noted.
If youre looking for coins with similar high-quality characteristics, search Blanchard and Companys rare coin inventory for the best numismatic selection available anywhere.
Gold tops $1,270 as Brexit fears, bearish Soros spook markets
Posted onStocks pain was golds gain Friday after a new survey showed that odds are rising of a Brexit as United Kingdom voters prepare to go to the polls June 23.
Gold was trading near $1,275 on Friday afternoon, having gained about 2.7% for the week. Meanwhile, investment giant BlackRock noted a major surge ($5.4 billion) into gold ETFs in May.
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.
1933 gold Indian Eagle rarity realizes close to $900,000
Posted onSome $5 and $10 Indian Head gold coins were the highest-priced stars of a recent numismatic sale, with the top seller commanding almost $900,000.
Designed by the renowned sculptor Augustus Saint-Gaudens, the star of the show was minted in the infamous year of 1933, before President Franklin D. Roosevelt issued his executive order calling for Americans to turn in their gold. The 1933 $10 Indian Head Eagle, certified at MS66 by PCGS and featuring a green CAC sticker of quality assurance, realized $881,250 with added buyers premium. Although 312,500 were originally minted, a maximum of only 40 are thought to have survived the government melting pots. Only one other $10 Eagle of this year is graded at MS66, rated by NGC.
Unlike the 1933 Double Eagle, the surviving Indian Eagles are legal for Americans to own, having been minted and released before Roosevelt’s executive order. Thus, they’re free of the litigation and prosecutions that have been associated with the famed 1933 Saint-Gaudens $20 gold pieces.
The second-biggest seller featured the famous incuse design of Bela Lyon Pratt: a 1909-O $5 Indian Half Eagle, graded at MS65 by PCGS and called a condition rarity in higher grades by CoinWeek. With only 34,200 minted, just 1,416 are thought to have survived, with mint-state examples very rare. This coin is among the top-three finest survivors and thus realized $517,000 one of the highest prices paid for any 1909-O.
The third-highest-priced Indian was another Saint-Gaudens, a 1907 $10 Eagle with Rounded Rim, certified at MS65 by PCGS and sporting a CAC sticker. The Rounded Rim coins were produced after the 1907 Wire Edge Eagles, but the Mint wasn’t quite satisfied and melted all but 42 of the pieces. Thus, this example achieved $376,000 at the sale.
Several other important and gorgeous $5 and $10 Indians broke through the $100,000 barrier, while a host of others sold for proportionately impressive prices. If you’re looking for high-quality Indian gold, Blanchard and Company currently (as of June 8, 2016) has quite a few in stock, for example:
- A 1910 Indian Quarter Eagle certified at PR67+ by PCGS and carrying a CAC sticker. This coin is one of just about 492,000 originally minted at the Philadelphia Mint. Lower grade examples are very easy to purchase, but in Gem condition the date becomes quite rare, NGC’s site says. Less than 175 coins have been certified at that level. Superb examples are almost non-existent with only a dozen certified as MS 66 (11/12).
- A 1911 Indian Eagle certified at MS66 by NGC and bearing a green CAC sticker. One of 505,500 produced in Philadelphia. The 1911 Indian Head $10 makes a great type coin, as most are well struck, with minimal marks, NGC notes.
- A 1911-D Indian Quarter Eagle graded at MS63 by NGC. This product of the Denver Mint is one of just 55,680 produced that year in Colorado. This date is the undisputed KEY to the series, the NGC site notes. Because of its low mintage and survival rate, this date brings a healthy price in circulated condition. The 1911D Indian Head Quarter Eagle has by far the lowest mintage and it seems that surprisingly few were saved.
- A 1913 Indian Eagle certified at MS65 by PCGS and sporting a CAC sticker. One of 442,000 such coins originally minted in Philadelphia.
- A 1911-D Indian Quarter Eagle graded at MS61 by NGC. Another example of this small run of just 55,680 coins produced in Denver.
These are just a few of our current offerings featuring the iconic images of the American Indian. In addition to Indian Head coins, our latest numismatic inventory also features numerous Indian Princess gold pieces of various years and denominations.
Brexit vote a real watershed moment that could send gold to $1,400, says ANZ
Posted onThe June 23 Brexit referendum in the United Kingdom, in which voters will decide whether Britain should exit the European Union, has been boosting gold sales there, with one Reuters headline reading, London appetite for gold bars, coins rises on Brexit nerves.
And with physical bullion sales taking off as British investors hedge against Brexit blowback uncertainty, the Australia and New Zealand Banking Group likes golds prospects.
Gold bull set to resume bull cycle, a June 10 research note reads. Last weeks unexpectedly weak U.S. jobs data and subsequent cautious tone by [Federal Reserve Chairwoman Janet] Yellen has opened the door for gold to resume its bull cycle. However, Brexit could see gold push towards USD1,400/oz.
It called the Brexit vote a real watershed moment for gold. With market attention diverting away from the Fed, the impact of the referendum on the gold market is likely to be much greater.
Opinion polls remain divided, with both Remain and Leave camps ahead at various times. What is clear though is that the price of insuring against a collapse in the pound has hit a seven-year high. If the Leave campaign is successful, the expected collapse in the GBP and resultant market volatility would likely see investors seek safe haven assets. This could provide a massive boost to investor demand and would likely push gold towards USD1,400/oz.
ANZs stance is in line with HSBCs longstanding call that a Brexit would boost gold. Gold would also likely benefit from a sizable safe-haven bid in the event of a Brexit vote, HSBC analysts wrote in April.
As far as the geopolitical element, its certainly not a chicken little atmosphere, said Jim Steel, HSBCs chief precious-metals expert. I think theres enough uncertainty facing the global economy and even some geopolitical tensions to keep buying the gold market.
All my very rich friends are holding a lot of cash, says ex-Dallas Fed chief
Posted onNegative interest rates and their growing implementation globally have dominated the financial headlines in the past couple of weeks, and investors are increasingly looking for safety.
Germanys Bundesbank on Friday joined Deutsche Banks recent criticism of the European Central Banks negative-interest-rate policy (NIRP), with President Jens Weidmann warning that asset managers might become increasingly nervous the longer monetary policymakers try to maintain the low-interest-rate policy. This, in turn, could raise the probability of a sudden hike in risk premiums, the longer that forward guidance is in place and the more aggressively quantitative easing is pursued.
German bank mulls hoarding billions: Some major banks arent standing pat as negative rates take hold. Following major reinsurer Munich Res March announcement that it would increase its gold and euro reserves to offset the effects of NIRP, another major German financial institution could be taking similar steps.
Commerzbank, one of Germanys biggest lenders, is examining the possibility of hoarding billions of euros in vaults rather than paying a penalty charge for parking it with the European Central Bank, Reuters reported. Such a move by a bank part-owned by the German government would represent one of the most substantial protests yet against the ECBs ultra-low rates.
Bankers portfolio in fetal position: And its not just banks that are protecting their wealth by hoarding physical cash and gold. With recessionary winds blowing even amid the recent stock-market highs, and with bonds yields around the world at record lows thanks to negative rates, the super-rich also are stockpiling cash.
Thats according to former Dallas Federal Reserve chief Richard Fisher, who told an economic conference in May that all my very rich friends are holding a lot of cash.
Fisher, who notably was the biggest gold investor at the Fed during his 2005-15 tenure, has long been an outspoken critic of the central banks policies. Fisher is worried about the nations $19 trillion debt and has blasted the Feds easy-money polices, which he has likened to monetary cocaine and heroin injected into the system to create a wealth effect in the stock market.
Asked to describe how he was managing his own portfolio in the current environment, Fisher responded that it is in the fetal position, that is, bracing for shocks.
Japans gold sales rocket after NIRP: And even rank-and-file investors know where negative rates are likely to take the global economy, and theyre also turning to gold. Thats whats happening now in Japan, which instituted NIRP early in 2016.
According to Tanaka Kikinzoku Kogyo, the countrys biggest bullion retailer, gold bar sales climbed by 35% y/y to 8,192 kilograms in Q1 2016, Australia and New Zealand Banking Group analysts wrote Friday. Total consumer demand climbed from virtually nothing in Q1 2015 to 6.8 tonnes in Q1 2016.
Those figures jibe with the surge in bullion buying seen by a major coin producer in the European Union, the Austrian Mint, which reported that its gold coin and bar sales jumped 45% year-over-year in 2015 to record levels, from 910,000 ounces to 1.32 million ounces. Its silver sales, meanwhile, rose to 7.3 million ounces in 2015 from 4.6 million ounces.
With the U.S. Mints silver American Eagle coin sales headed for all-time highs this year, and the Royal Mint of Canada reporting record-breaking silver Maple Leaf purchases in the first quarter of 2016, just imagine the stampede into precious metals should negative rates ever hit North America with full force.
Gold a no-brainer as negative-yielding bonds hit $10 trillion milestone
Posted onJapans imposition of negative interest rates earlier this year hammered home a bullish new paradigm for gold investors: For perhaps the first time in its history, the yellow metal has a positive cost of carry.
The biggest knock against gold, after all, is that it pays no interest to its holders. But with bond investors now getting back less money than they put down to buy sovereign debt, golds prospects are inherently brighter as more and more banks institute negative rates.
And the world just hit a grim new milestone, with almost a third of all global government debt now producing a negative yield.
Negativity rising sharply, Fitch says: The amount of global sovereign debt with negative yields surpassed $10 trillion for the first time in May, The Wall Street Journal reported June 2, citing data from Fitch Ratings.
The measure stood at $10.4 trillion on May 31, up 5% from $9.9 trillion on April 25, when the rating agency last measured the amount, according to a Thursday report. It is spread across 14 countries, with Japan by far the largest source of negative-yielding bonds. Of the total, $7.3 trillion was long-term debt and $3.1 trillion was short-term debt.
With the amount of negative-yielding debt up sharply this year because of unconventional central-bank policies, investors have been pushed into other markets, particularly U.S. Treasurys, which have positive yields that are still relatively high, The WSJ added.
However, some traders in the options market have signaled concern that even short-term U.S. yields could fall below zero.
Certain to lose money at maturity: And Germany hit a sour milestone of its own this week, with the average yield on its sovereign bonds falling below zero as the phenomenon of negative interest rates intensifies across global financial markets, the Financial Times noted.
Even corporate debt is not immune, with yields on $36 billion worth of short-term bonds sold by groups including Johnson & Johnson, General Electric, LVMH Mot Hennessy, Louis Vuitton and Philip Morris now trading negatively, according to a separate FT report.
Investors buying negative-yielding debt are certain to lose money if they hold the bonds to maturity, the FT confirmed. Well, then, why hold it at all when there is an alternative? And that alternative is not ephemeral, unbacked paper but a hard asset that an investor can actually hold: gold.
When you have to pay to have your money stored, all of a sudden it makes sense to own gold, because even though the metal doesnt pay you anything, at least you dont have to pay, strategist Alan Gayle of RidgeWorth Investments told Bloomberg on May 26.
When investors start to wake up and smell the coffee, that capital has to go somewhere. Even a small portion of the $10 trillion already deployed into negative-yielding bonds would do wonders for gold if reallocated into the yellow metal.
Gold to rocket higher under two contrarian price forecasts: $1,800 and $6,000
Posted onSo far in 2016, gold has defied conventional wisdom by soaring as much as 20% in the wake of the Federal Reserves December 2015 interest-rate increase, the first in almost a decade.
That wasnt what conventional wisdom was calling for in the months leading up to the central banks hawkish move. After all, CW holds that the yellow metal does best in low-rate environments. Thus, those who took the contrarian stance that gold would rise after a Fed hike have profited.
Commodities outperforming stocks: Perhaps the global head of commodities at the S&P Dow Jones Indices should be counted as a contrarian. As Jodie Gunzberg has noted in recent interviews, the overall commodities complex is doing what it hasnt done in quite some time, that is, beat stocks in the wake of the Feds rate hike, no less.
For example, the S&P 500 gained 3.22% year-to-date though June 6, while the S&P GSCI Index of commodities returned 10.69%. And in the past three months alone, the S&P GSCI increased by 18.1%.
If this outperformance holds through the year, it will break the longest number of consecutive years that stocks outperformed commodities, Gunzberg told The Ticker Tape. Following the last time stocks outperformed commodities for near as long in 1980-86, seven consecutive years, commodities returned almost 300% through 1990 when the trend reversed.
Rising rates good for gold: Contrary to conventional wisdom, Gunzberg told Indias Business Standard in late 2015, historically, rising rates have been good for commodities, for two reasons. One is that the return on collateral, a component of the total returns in commodities, increases as interest rates rise. The other direct and measurable impact of interest rates on commodities can be observed from the formal relationship between spot and futures prices. The theory of storage equation defines the futures price in terms of the spot price, the interest rate, the cost of storage and the convenience yield. All else being equal, commodities futures prices rise as interest rates rise.
Industrial metals have been more sensitive to interest rates than precious metals from their economic sensitivity and term structures. For a gold bull market to form, high inflation and a weak dollar would be useful, in addition to higher interest rates. Plus, ETF (exchange traded fund) buying that takes physical supply off the market is a positive indicator.
U.S. election fears boosting gold: Now that the gold bull market has returned, at least so far this year, Gunzberg thinks momentum is with the yellow metal thanks in part to the uncertainty over the U.S. presidential election, with Republican Donald Trump likely to face Democrat Hillary Clinton.
Investors love to feel the safety of gold in the volatile times, not only for the factors that I just mentioned but also the extra uncertainty and volatility coming around the election year is making the demand for gold pick up, and based on the history, again, if I look at the past index performance, it looks like gold could go well into the $1,800s, she told Bloomberg. So theres still a ways to go potentially if gold continues its pattern in the volatile times.
Yen to thrive under NIRP?: Gunzbergs $1,800 target, as well as her argument that rising rates are good for gold, could be considered contrarian, but apparently a professional investor in Japan is ready to go even further in his price prediction.
Wakabayashi FX Associates Co. President Eishi Wakabayashi has gone contrarian in his forecasts for both the Japanese yen and gold. Despite the Bank of Japans imposition of negative interest rates earlier this year, Wakabayashi thinks the yen is going to strengthen, not weaken. Hes predicting that the yen will strengthen almost 20% to 90 per dollar by early next year as Bank of Japan Governor Haruhiko Kurodas negative interest rates fail to weaken this years best-performing Group of 10 currency, according to a recent Bloomberg interview.
He has a respectable track record, having already predicted the yens record high in 1995, its faltering in 2012, and its advance so far this year.
Buy gold to preserve wealth, trader says: But Wakabayashi is even more bullish on golds prospects for the long haul. He foresees an era of global deflation, and recommends investors seek capital gains and buy gold. The metal may climb to $6,000 in the next six years as U.S. stocks collapse and the nation struggles to spur inflation, he said.
Like some other analysts, Wakabayashi touts the contrarian stance that gold can perform well during deflation, versus the conventional wisdom that bullion does best during inflation. During the Great Depression, when the price of gold was fixed, mining stocks of the commodity jumped sixfold in the five years from 1930, Bloomberg reported in summarizing his stance.
Under deflation, asset values fall across the board, Wakabayashi said. How do you protect your financial assets? Its easy: Buy gold.
Two different investors, two contrarian stances on gold, commodities, and currencies. With 2016 so far being the year of the contrarian, it might not be the time to bet against Gunzberg and Wakabayashi.