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Looks Like There’s a Whale Snapping Up Gold Bullion Below $1,800
Spot gold is again bobbing along near $1,800 an ounce, as it has been since mid-2020. The stickiness of that level, particularly as fundamentals turned more bearish, suggests there’s a big buyer somewhere in these waters.
Since breaking above the round number in July 2020, the gold price dipped below it 19 times on a closing basis, only to regain its footing. In the past year, the modeled value of gold, based on a regression study that includes the dollar, real rates and ETF holdings, dropped nearly 10%. Yet the metal’s price only fell around 2%. Clearly, there is a big buyer who considers the metal a long-term hold.
Such whale activity, which shows up neither in ETF holdings nor in futures positioning, would require a substantial buyer, accumulating in size in the London over-the-counter market. Yet vault holdings reported by the London Bullion Market Association, which include both ETF and some central bank-owned metal, show only a fractional increase in the year through December, from 307 million to 309 million troy ounces.
That would suggest that whoever is buying is able to buy in scale, leave little footprint in the market and then take delivery and store the metal in secure, invisible vaults. And that points strongly toward a sovereign buyer.
Mitsui & Co. to issue cryptocurrency linked to gold prices TOKYO -- Japanese trading house Mitsui & Co. plans to issue a digital currency called ZipangCoin (ZPG) as early as this month, Nikkei has learned. The currency will be linked to gold prices and sold to retail investors through cryptocurrency exchanges.
Last year saw something of a row between central bankers, who absolutely insisted that any inflation you could see around was entirely transitory (and would be gone in a matter of months) and the rest of us who weren’t so sure. Today, consumer prices in the US are rising at 7.5 per cent, the fastest since 1982. In the UK the figure is 5.4 per cent. That’s frighteningly high. Given how hard it is to imagine central bankers being able to do much about global supply problems, it’s also clearly not very short term. It’s beginning to have an all-too-obvious effect, not just on living costs but on investment portfolios as well. That’s unlikely to end soon. The market has long preferred fun tech stories and has discouraged oil and gas companies and miners from investing in exploration and production. So they haven’t. Now we find ourselves in something of a supply crunch: we need more energy, more copper, more lithium and more steel — but none of these things are readily available. So energy prices are high and rising, as are metals prices. Food prices will soon follow (they are linked to energy prices via fertiliser prices but with a delay due to long-term supermarket contracts with providers).
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If there is any part of the argument around market performance that is settled at all it is surely that over the very long-term gold is one thing you can rely on to hold its value. Best to have some.
One thing I can say about Stephanie Pomboy is that she never disappoints and always delivers. Those who are long bullion and bonds are definitely going to find solace ?in what she had to say on this webcast. And one area of total agreement between us was on how the Fed's bark will not turn to bite, and we provide a framework on how to make money by betting against the multiple rate hikes now being widely discounted across all asset classes.
