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LAWRIE WILLIAMS: Gold and silver free-for-all

The precious metals follower is nothing if not serviced by a plethora of reports and analyses, many of which are designed to try and suck you in to paying for a particular newsletter or alerting service or the author’s latest book.  The newsletters or alerts they are promoting are not necessarily a waste of money, although some are, but do bear in mind the authors often have a not-so-hidden agenda whose prime purpose is to make money for themselves.  Ask yourself why, if their advice is so valuable, that they are spending their time marketing and writing newsletters or books.  If their advice was that good they’d be coining it in the markets and they wouldn’t need to be selling subscriptions and books to keep them in the lifestyle and finance the global and domestic travel to which they have become accustomed.

Now I’m not saying that some of these newsletter writers are not altruistic in their motives, but be a little wary in particular of stock tipping newsletter and alert services. Some are part of elaborate pump and dump operations, others make money through trading around their recommendations – buying ahead or them and selling if and when the stocks rise.  Some are indeed transparent about this and do try to look impartially at metal price trends, although even these tend to fall into giving nearly always consistently pro- or anti- tending advice depending on the underlying biases of the writers themselves.  (In terms of my own newsletter, www.lawrieongold.com, it is completely free of charge and doesn’t tip stocks being something of a post-retirement hobby – but I am prepared to admit I am generally positive on gold in the long term in my leanings.  Lawrieongold, however,  does also carry independent articles from some who do have their own agendas, but who otherwise are offering what I would consider good advice anyway!).

But there are some hugely comprehensive sponsored reports available effectively free of charge to those interested in precious metals which are relatively unbiased in terms of the outlook they present, and thus well worth accessing for their independent viewpoints.  Notable among these are the separate gold, silver and platinum group metals reports from Thomson Reuters GFMS, all packed with statistics, charts and tables looking at all aspects of the metals they are covering.  These are available for download at http://financial-risk-solutions.thomsonreuters.info/GFMS but require a corporate email address and company name (services like gmail, hotmail, aol and outlook will not be accepted).  The gold and silver reports run to 100 pages plus and the pgms one to 58 so there’s huge amount of data to take in.

London-based Metals Focus is a similar consultancy, formed mainly by former GFMS people following the latter’s sale to Thomson Reuters, and produces similarly detailed reports and data and analysis and the reports are equally comprehensive and they may also be downloaded direct from https://www.metalsfocus.com/annual-reports.  Metals Focus also provides the data for the World Gold Council  - www.gold.org – which itself provides a considerable amount of varied information on its website as well as its quarterly Gold Demand Trends reports which again provide regularly updated statistics on global gold supply and demand.  Although the WGC is financed by the international gold mining industry its data and publications tend to be realistic and relatively unbiased.

Both GFMS and Metals Focus publish updates to their reports throughout the year which are great for keeping up with what is going on in precious metals supply and demand.

The CPM Group in New York (www.cpmgroup.com) also publishes some excellent comprehensive reports on precious, and some other, metals, but these are only available on a paid-for basis.

Another excellent source of data on gold available free of charge is from Incrementum AG in the small state of Leichtenstein in Europe and this is the annual ‘In Gold we Trust’ publication from Ronni Stoeferle and Mark Valek – Stoeferle started publishing this some years ago when he was with Austria’s Erste Bank and it is another hugely comprehensive source of gold data, although whether it should be deemed totally unbiased is another matter given that Stoeferle and Valek are adherents of the Austrian School of Economics, and thus primarily hard money and gold advocates as the report title suggests.  But the huge amount of pertinent data included makes downloading this report, which runs to 169 pages – or at the very least its shortened version (29 pages) - well worthwhile for the keen gold follower.  Click here to download the English version – it is also available in German: Extended Version - english (169 pages) or the ‘compact’ version – 29 pages long – and the link to that is here .

This report is perhaps more opinionated than those from GFMS, Metals Focus and the World Gold Council, but perhaps it is all the better for that.

To give an impression of some of the key findings, topics and takeaways of the latest ‘In Gold we Trust’ report, these are as follows:

  • High expectations of President Trump's growth policy dampened the gold price increase in 2016 – Still up 8.5% in 2016 and 10.2% since Jan. 2017.
  • The further development of the normalization of monetary policy in the US will be the litmus test for the US economy.
  • Bitcoin: Digital gold or fool's gold?.
  • White, Gray and Black Swans and their consequences for the gold price.
  • Exclusive Interview with Dr. Judy Shelton (Economic advisor to Donald Trump) about a possible remonetization of gold.
  • 5 Reasons why the gold bull market will continue

On price they come up with four scenarios, out of which they expect the third and fourth to be the most likely outcome:

Scenario A: “Relatively strong real economic growth” The proposed economic policy initiatives are implemented and take hold, the US economy begins to grow strongly (>3% p.a.) and price inflation remains in an acceptable range (<3%). Monetary policy normalization succeeds. The central bank's “experiment” pays off. The gold price should trade in a range from USD 700 to USD 1,000 Scenario B: “Muddling through continues” Real US GDP growth and consumer price inflation remain in a range of 1-3% p.a. In this case we would not expect the gold price to enter into the second phase of the secular bull market we currently anticipate. The gold price should remain in a range from USD 1,000 to USD 1,400 in this scenario. Scenario C: “High inflationary growth” Trump's economic policy initiatives are put into place, a large infrastructure spending program is launched, US economic growth accelerates significantly (>3% p.a.), but so does the consumer price inflation rate (>3%). Monetary policy normalization succeeds. The central bank's “experiment” pays off. The gold price should trade in a range from USD 700 to USD 1,000

Scenario B: “Muddling through continues” Real US GDP growth and consumer price inflation remain in a range of 1-3% p.a. In this case we would not expect the gold price to enter into the second phase of the secular bull market we currently anticipate. The gold price should remain in a range from USD 1,000 to USD 1,400 in this scenario.

Scenario C: “High inflationary growth” Trump's economic policy initiatives are put into place, a large infrastructure spending program is launched, US economic growth accelerates significantly (>3% p.a.), but so does the consumer price inflation rate (>3%). Monetary policy normalization succeeds only partially, as real interest rates remain very low or even negative, due to the elevated consumer price inflation rate. In this scenario, the gold price should trade in a range from around USD 1,400 to USD 2,300.

Scenario D:  Recession, stagflation and/or significant weakness in the US dollar push the gold price up noticeably. In the wake of another US recession and the cessation of the monetary policy normalization effort, significant changes to the global monetary order cannot be ruled out. A very large gold price rally has to be expected in such an environment. Gold prices between USD 1,800 up to USD 5,000 appear possible in this scenario.

Well all bets are hedged in the above, but the report’s authors anticipate C and D to be the most likely outcomes here although no timescale for this to occur has been predicted.  The Scenarios will be very much event driven by U.S. economic performance and/or what they describe as black swan or grey swan events elsewhere.   They do foresee a looming U.S. recession as ‘inevitable’.

 To put the report in perspective, though, a year ago Stoeferle and Valek were predicting gold at $2,300 by the end of June 2018, but the yellow metal’s poor performance in H2 2016 has led them to believe that this level is now not achievable on this timescale. So they remain bullish on the gold price, but perhaps not overly so.

There is plenty of other information available out there – some free of charge like that from the Gold Anti Trust Action Committee (GATA) www.gata.org which follows a particular agenda (primarily that the bullion prices are managed (suppressed) by central banks, their bullion bank allies and thus, effectively by governments which see a rising gold price as a threat to their own economic agendas.  GATA links to articles which support or dismiss their views, often with some pithy accompanying comment from GATA secretary Chris Powell.  While much of the mainstream may disagree with GATA’s findings it does come up from time to time with some historical factual data which would appear to support its basic viewpoint as well as ongoing circumstantial evidence.

But to keep abreast of what is going on and on all viewpoints – bullish and bearish – there can be few sources of information which are more comprehensive on a day to day basis than info.sharpspixley.com  which picks up news items on precious metals – both pro and con - from all kinds of sources from around the world.  Probably information overload if one tries to stay abreast of everything that is going on and of every opinion!  There’s certainly no shortage of information available.  But some of this can be downright misleading so it’s important to be able to sort the wheat from the chaff.  Thus the relatively impartial, and hugely comprehensive, data available in the reports noted at the beginning of this article, should probably be considered the fundamental basis from which all other news and opinions are judged.

17 Jul 2017

About the author

Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London – recently described as the World’s No. 2 University (after MIT).

e: lawrie.williams@sharpspixley.com

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