After seeing strong appreciation last week, gold pulled back last week from $1,085.90 to $1,077.20/oz as of closing time on the New York markets. This price is still above the multi-year low set last week of $1,053.55. Silver closed lower as well at $13.93/oz.
Some of the market movement was attributable to fears that the Federal Reserve would increase the Fed Funds rate this week. However, analysts have pointed out that rising interest rates could actually be a positive development for the gold market, as we saw rising interest rates correlate to a rising gold price in the second part of the 1970’s.
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Sovereign investors continued to show strong demand for gold, including the People’s Bank of China, which continues to build its reserves aggressively. Early in the week the PBoC announced that it increased its gold holdings by 21 tonnes in November, which is the largest increase since the PBoC began making monthly announcements. Its total holdings are reported to be 1,743 tonnes. Other central banks have been buying gold as well, including those in Russia, the United Arab Emirates, Kazakhstan, Ukraine, and Malaysia. Analysts expect that this accumulation will continue, especially in the case of the PBoC, which has only allocated ~1.6% of its foreign exchange reserves to gold. They further point out that this has been bullish for gold.
Meanwhile, the Austrian National Bank has repatriated 15 tonnes of its 280 tonne gold reserve from the Bank from London. The Austrian National Bank has announced that it wants to store 50% of its gold in Austria, 30% in London and 20% in Switzerland; meanwhile most of its gold is in London. The Austrians are not the first to announce its intention to repatriate gold, with the Netherlands doing so last year and the Germans doing so in 2013. Officials from these central banks have given various reasons for repatriating gold. The Austrian National Bank and the Dutch National Bank seem to be acting from a desire to diversify their counterparty risks, while the Germans are more concerned about the risk of a currency crisis.
WHAT DOES THIS MEAN? TIME TO ACT!
There has never been a more important time to invest into precious metals. Don’t sit on your hands when you could be acquiring physical Gold & Silver for delivery or placing it into a Home Storage IRA.
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Sincerely,
Sanford S. Mann
Chief Executive Officer
American Hartford Gold Group
(Sources: “Gold Falls as U.S. Rate Rise Bets Mount,” NDTV Profit, December 11, 2015; “China Adds Most Gold in November in 5 Months as Prices Slump,” Bloomberg, December 7, 2015; “China Goes For Gold As Central Bank Expands Reserves,” Wall Street Journal, December 10, 2015; “Austria says it has repatriated 15 tonnes of gold from London,” Reuters, December 11, 2015; “Dutch Repatriate Some Gold Reserves,” Wall Street Journal, November 21, 2014; “Germany Repatriating Gold From New York, Paris, ‘In Case Of A Currency Crisis’,” Forbes, January 16, 2013)
