ROSS NORMAN - Gold Headwinds Lighter - Scope For Faster Gains

Like a modern day Cassandra from Greek mythology, who was given the gift of prophecy, but cursed by never being believed, gold analysts and indeed the gold price itself, are uttering truths - as indeed are leading economic indicators.
The gold rally in the (pre-financial crisis) early 2000’s was slow to gain momentum as scepticism ruled, scrap flows rose and gold producers and some investors sold into early gold price strength … only to deny themselves the 16% year-on-year gains that were to follow. I wonder if you are reading this Gordon Brown … but let’s not go there. 
At the risk of sounding repetitive, this resonates with the price action today, although the price drivers are different.
If the darkening macro story is not enough to convince that things are amiss on the economic front, and you are in the early stages of a significant gold bull run, then allow me to give you a couple of anecdotal ones...
Firstly, silver is at long last joining the party and is authenticating the bull run. Gold did the heavy lifting by breaching the 6 year resistance at $1360, but it was silver’s intransigence that worried. Rather like the vapours emanating from the Temple of Apollo at the oracle in ancient Delphi, silver’s price action now portends well for gold. The gold/silver ratio has fallen from 95 to 87 and if you like gold you should positively love silver as there is scope for a further correction.
Secondly, the ratio of gold sellers to gold buyers at London’s leading gold showroom at Sharps Pixley is falling sharply. Confidence in the the gold bull run is rising and we are in the early stages of seeing gold going price inelastic… that is to say the higher it rises the greater the buying … the very earliest stages of a bull run and potentially a bubble in the fullness of time. In short, this bull run has legs to run.
Common sense tells me that no one has the gift of prophecy (and I say that as the leading London Bullion Market price forecaster over 20 years) … but we do have a duty to shout out when - on the balance of probability (and its only that) - when things look increasingly apparent.
Sceptics will point out to the issue of self interest - we are a leading seller of physical gold bars and coins in London - but note that we have never been perma-bulls nor indeed gold bugs … we just say it as we see it.

19 Jul 2019

About the author

Ross Norman

Ross started his business career with business guru Sir Clive Sinclair of Sinclair Research in Cambridge, before joining Johnson Matthey as Gold Refining Manager (then the worlds largest gold refiners), then as a gold trader at NM Rothschild & Sons (the Chairman of the London Gold Fixing) and later Credit Suisse, where he was a Senior Dealer in physical bullion trading.

Ross has an enviable record within the London Bullion Market in forecasting the gold price over the last decade and is frequently sought by the media for commentary on the bullion markets. Ross has made frequent appearances on TV (BBC, CNBC, CBC) in newspapers (FT. Wall Street Journal) as well as in the newswires (Reuters, Bloomberg and Dow Jones).