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| Brought to you by The Oxford Club | Saturday, May 21, 2016 |
Will You Buy Any "Big-Ticket Items" in 2016?
A new car... big vacation... engagement ring... fishing boat... college tuition payments... repairs to your home?
If so, the government may owe you money.
A new law signed at the end of 2015 offers "cash rebates" to 119 million eligible Americans for purchases made in 2016.
This is a chance to collect anywhere from $1,230 up to $12,900 and perhaps beyond.
But you must prepare now to maximize your payout. Details here. |
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The Real Force Powering Gold's Bull Market
 Once again, gold is powering higher. Bears who tried to call a top are scattered and defeated.
This, despite the fact that jewelry demand dropped by 19% according to the latest quarterly report from the World Gold Council. No matter. Other buyers have stepped in with more firepower.
Those buyers? Investors. Investor gold demand surged a stunning 122% in the first quarter.
But all that investor gold buying is not necessarily giving us a happy message. In fact, it might be a "danger" flag for the global economy.
Take the Golden Bull by the Horns
We'll get to what all this gold buying might mean in a moment. First, let's take the bull by the horns. Some more stats from the World Gold Council's report... - Gold demand in the first quarter surged to its second-highest level ever. The only time it was higher was in 2012.
- Overall demand increased by 21% to 1,290 metric tons. Powering that was investment demand, which leaped by 618 metric tons. And of that, 364 metric tons poured into exchange-traded funds. That was the highest ETF inflow since 2009.
- Consumer demand fell 13%, led by a 19% decline in jewelry demand. This was partly due to a strike staged by jewelers in India.
- Central bank demand actually slowed 3% in the first quarter. Still, central banks were net buyers of gold for the 21st quarter in a row. China and Russia, among others, continue to add to their gold hoards.
- Mine supply climbed 8% in the first quarter. But prices climbed despite the rise in supply.
What's more, there is plenty of evidence that investor demand continues to ramp up.
ETF Demand Surges
Through the end of last week, holdings of gold in ETFs had surged by 25% for the year. They now stand at 1,822.3 metric tons. That's the most since December 2013.
In fact, during a two-week period that gold prices went down, gold ETFs added another 63.2 metric tons of gold. That's not how it usually works. This proves that investors see price pullbacks as an opportunity.
Take a look at this chart of holdings in the SPDR Gold Trust (NYSE: GLD) - the world's biggest gold ETF - and you'll see what I mean.
For weeks now, the number of investors piling into the ETF has outpaced the price of gold. This means investors anticipate a much bigger move in the yellow metal.
I'd say that for a barbarous relic, gold is showing a lot of life.
Good Reasons to Buy
So why are investors so gung-ho on gold, anyway?
Part of this is sheer performance. With a 20% gain so far this year, gold is leaving many other investments in the dust. The S&P 500 has gained 1% over the same time frame. That's pathetic... and a great reason to buy gold.
And there's also the fact that gold is in a new bull market. JPMorgan analysts said so, and other big banks fell in line. Even the permabears at Goldman Sachs gave up recently.
Gold, like other commodities, tends to be cyclical. It went through the wringer of a 4 1/2-year bear market. The bull market should last at least five to seven years. So for many investors, this is a no-brainer.
But greed isn't the only reason. Here's where we get to the "less happy" portion of this article.
Fear and Dread Raise Their Ugly Heads
Investors are scared. About 25% of government bonds around the world now trade with zero or negative yields. That's $9 trillion worth.
That's also up from 13% at the start of the year.
What it means is central banks are pushing the boundaries of what is possible in global financial markets. We're not even sure what the consequences might be. But investors know they want insurance. And that insurance is gold.
What's more, ultra-low rates are expected to last for at least the rest of this year. That takes a lot of the risk out of owning gold, as I explained in an article last week.
Now add in the fact that China's recent economic numbers are disappointing, Europe's economy outside of Germany isn't growing, Japan's economy is weakening again, Russia is probably going from bad to worse and the Middle East is a tinderbox primed for an explosion. Well, you can see a lot of reasons why investors might choose to buy gold.
I think owning physical gold is a smart thing to do. As an investor, I prefer to buy gold and silver miners. They're doing extraordinarily well in this environment because they are leveraged to the price of gold.
So far this year, the S&P 500 is up 1%. Gold miners are up 84% and silver miners are up 97%.
That's a heck of a move. The bears keep trying to call a top. They keep getting steamrollered.
I think we're still in the early days of this move... especially if central banks around the world continue to keep rates low, global stock markets continue to underperform and the gold supply-demand balance continues to tighten.
These three things are all taking place right now. They're laying out a path to higher gold prices... AND another rocket move by miners.
Good investing,
Sean The Dollar's Bull Run Is Over
One of the world's premier currency experts says the dollar's almost unprecedented bull market is coming to a dramatic close.
"I'm moving significant amounts of my personal net worth in anticipation of what's to come," he says.
To find out the four steps he's taking... and how a dollar bear market will hit the stock and bond markets... just go here. |
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Two things are about to boost natural gas demand... and that in turn will boost prices. Read On... |
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Each winter, U.S. refineries enter into maintenance season to prepare for the upcoming "summer driving season," which typically begins Memorial Day weekend. It's a vital trend for investors. Read On... |
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When we think of Saudi Arabia, we think of one word: oil. But the kingdom has several big problems on its hands. Read On... |
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