Marknaden fokuserar åter på ädelmetaller. När guldpriset handlas kring 1 300 USD per troy ounce får vi en hel del förfrågningar, både vart guldprisetskall gå framöver och vilket som är det bästa sättet att investera i guld.
Generellt uppstår dessa frågor när denna tillgångsklass stiger eller när det finns stor global osäkerhet. Dessa dagar har vi lite av båda, så det är en bra tid för klarhet i frågan. Låt oss börja med för och nackdelar med att investera i guld (och andra ädelmetaller).
Fördelar
1. Kanske är den största fördelen att köpa guld att säkra deflation, samtidigt som det hjälper en portfölj att bekämpa potentiell inflation. Det finns studier som visar att guld historiskt växer med inflationen, med 1970-talet som ett utmärkt exempel. Investerare som istället för att parkera en stor summa pengar på ett bankkonto, som i allmänhet blir mindre än inflationen, kan köpa guld för att upprätthålla sin köpkraft. Därefter flockar de under deflateringstiderna när konsumenter förlorar sin tro på regeringen och ekonomin, till en beprövad värdebevarare som guld (t ex den stora depressionen).
2. Guld betraktas i allmänhet som en säkerhetsinvestering på grund av de dagar då amerikanska dollarn var fullt uppbackad av guld. Under tider med extrem osäkerhet i marknaden strömmar en enorm mängd pengar till guld (vilket tenderar att leda till uppvärdering eller ”utbudet motsvarar efterfrågan”). Även om det finns betydligt mer amerikansk valuta än guld i dessa dagar kvarstår den gamla mentaliteten som en safe haven.
3. Guld är en konkret investering som i allmänhet har sitt inneboende värde. Begreppet är: Om den globala ekonomin kollapsar, kommer guld (och andra metaller) att behålla sitt värde.
4. Guld är ett annat sätt att diversifiera en portfölj och fungera som en equity hedge.
Nackdelar
1. I domedagsscenariot av en global ekonomisk och valutakollaps, vem säger att ädelmetaller kommer att vara standardvalutan? Vad händer om ”värde” bestäms av bitcoineller byteshandel? Detta är den gemensamma fördjupningsdagen för heavy metal-investerare.
2. Investering i guld kommer inte att ge någon inkomst som ränta från obligationer eller utdelningar från aktier).
3. Som en fristående investering är guld mycket ineffektiv. Den långsiktiga förväntade avkastningen på guld handlar om inflationen. Men det kommer med en oproportionerlig mängd risk.
4. För denna avkastning har guld en hög volatilitet. Vanligtvis är det för den konservativa investeraren svårt att hantera. Det är mycket vanligt att se en 10-15% sving i båda riktningarna.
Investors poured US$42m into long gold ETPs as sentiment turned bearish following the launch of US missiles strikes on Syria in response to the chemical attack. In turn, Russian President Putin condemned the US air strikes on Syria and suspended its agreement with the US to avoid hostile standoffs in the Syrian airspace. The escalation of tensions between the US and Russia led gold price to rise 1.7% to US$1,270 an ounce on the news, the highest level since last November, posting a 10% increase year-to-date. What’s more, the 10yr US Treasuries yield is down 3bps to 2.31% also reflecting defensive strategies and a weaker-than-expected US employment report (nonfarm payrolls came at 98k versus a consensus of 180k).
After five consecutive weeks of inflows, crude oil ETPs saw US$19m of outflows as investors secure profits. The unexpected rise of US inventory by 1.6m barrels was not enough to offset the positive price-effect from the current production outages in the North Sea and Canada. Besides, oil prices jumped as much as 2% in intra-day trade in reaction to the news of US military strikes on Syria. We believe that was an overreaction as Syria is not a significant producer of oil. Market concerns may be more centered around how Syria’s allies such as Russia and Iran will react. But with Iran able to increase production while other OPEC members are cutting. Russia is still far from cutting production back enough to meet its obligations under the OPEC/non- OPEC deal. We see a short-term correction to oil prices after the knee-jerk reaction to this missile strike.
Industrial metals ETPs saw US$11m of inflows reflecting stronger global macroeconomic data. Industrial metals prices found support from improving economic data and rising stock markets. However, metals prices edged down slightly after the news of US air strikes on Syria, reflecting the rotation from cyclicals to defensive assets.
Last week there was US$18.8m of outflows from short EUR ETPs, while long EUR ETPs saw US$3.2m in inflows. Investors’ sentiment toward the euro may be edging upward after ECB President Draghi stated that “the recovery is progressing and now may be gaining momentum” at a conference at Frankfurt’s Goethe University last Thursday.
This week. The G7 foreign ministers will hold a press conference on Tuesday after the publication of UK inflation (Mar) and Germany ZEW survey (Apr). A strong Chinese trade report for March (Thu) will further support cyclicals. US and UK markets closed for Good Friday.
For more information contact
ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com
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Political and policy uncertainty generates safe haven demand for gold
ETF Securities Weekly Flows Analysis – Political and policy uncertainty generates safe haven demand for gold
Strong inflows into gold ETPs for 4th consecutive week, amidst political and policy uncertainty.
Profit-taking in oil continues for 4th consecutive week despite OPEC production cuts.
Natural gas ETPs received largest inflows since June 2015.
Copper bucks trend of industrial metal inflows, with largest outflows in 14 weeks.
Investors exit US Dollar positions as lack of clarity over Trump policy will keep the Fed on hold.
Strong inflows into gold ETPs political and policy uncertainty. Gold remains a firm investor favourite, notching up the 4th consecutive week of inflows. Investors have been lured to gold’s defensive characteristics as the Eurozone remains mired in political uncertainty with Dutch and French elections just around the corner. Meanwhile the ECB has hinted at temporarily moving away from its capital key in order to subvert the problems associated with its limited pool of bonds for its quantitative easing programme. Expanding its QE activities is likely to heap pressure on the Euro and investors are looking to gold as a monetary devaluation hedge. Gold inflows were at a 30 week high, totalling US$192.1mn last week
Profit-taking in oil continues for 4th consecutive week despite OPEC production cuts. OPEC Secretary General Barkindo indicated his optimism that the cartel can sustain a higher level of compliance than the 90% reported in January. Investors, however, appear less than convinced: We believe that oil prices will remain under pressure in the near term as US oil production and inventories continue to grow. Outflows from oil ETPs last week totalled US12mn mostly from WTI oil ETPs.
Natural gas ETPs received largest inflows since June 2015 after prices drop another 6.6%.Natural gas prices reached the lowest level since early November following unseasonably warmer weather in the US, leading to lower demand across all sectors. The sharp price declines have prompted bargain hunting by investors, with inflows totalling US$12.8mn – the largest inflows in 20 months.
Copper bucks trend of industrial metal inflows, with largest outflows in 14 weeks. Profit-taking by investors totalled US$21.9mn last week. The copper price has benefited from outages in mines that account for close to 12% of global capacity. If these outages last for another few weeks, we are likely to see another year of a supply deficit in 2017. The deep capex cuts we have seen over the past few years will take longer to materially bite into supply and so copper inventory could remain elevated for several years.
US Dollar ETPs record third consecutive week of outflows, totalling US$7mn. A lack of clarity over potential policy from the Trump Administration is having a negative effect on investors. We expect further softness for the USD in coming weeks as the Fed holds of on rate hikes ahead of the release of President Trump’s budget release in mid-March.
For more information contact
ETF Securities Research team ETF Securities (UK) Limited T +44 (0) 207 448 4336 E info@etfsecurities.com
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Gold Supported by Cracks in Market Confidence. Since the financial crisis of 2008-2009, markets have been obsessed with what the Federal Reserve does or doesn’t say or do. This past January, the Fed was relatively quiet, giving no indications of an early year rate increase. This silence has forced the markets to find a second obsession: The Trump Administration. It appears as if there will be at least four more years of obsessing over President Trump’s actions and statements (and perhaps even more importantly, his tweets). The good news for gold is that markets are beginning to reflect reality following the irrational euphoria that occurred after the November U.S. presidential election.
Encouraging Start for Gold As Risks Come Into Focus
The risks of a Trump presidency, which we have been highlighting since the election, are coming into clearer focus. President Trump broke with tradition (again) by indicating that a strong U.S. dollar is not necessarily in the best interest of the United States. His chief trading advisor and incoming U.S. Treasury Secretary Steven Mnuchin also made comments that were interpreted as being unsupportive of the dollar. Controversial executive orders and anti-trade maneuvering have damaged confidence and contributed to further dollar weakness. As a result, goldand gold shares have had an encouraging start to the year, bouncing off oversold yearend levels and benefitting from downward moves in the U.S. dollar. Gold gained $58.38 (5.1%) to end January the month at $1,210.65 per ounce. The NYSE Arca Gold Miners Index1 (GDMNTR) gained 13.7% while the MVIS Global Junior Gold Miners Index2 (MVGDXJTR) advanced 17.9%.
Markets are generally fairly good at pricing in demand trends, earnings expectations, technology innovations, and many other things. However, one thing markets have great difficulty putting a price on is uncertainty. Just two weeks in, and it appears that Trump’s administration will be unconventional, controversial, and unpredictable. If we could measure the level of market uncertainty over the next four years, it would likely be off the charts. Many people in the U.S. and internationally are genuinely fearful of the future. With interest rates still at microscopic levels and U.S. stocks at all-time highs, gold, in our view, is an obvious investment alternative as a hedge against the potential for uncertain outcomes that may easily damage other asset classes.
Gold Trading Explained: Physical vs. Paper
Given our gold investing expertise, we are often asked about the nature of the gold market, as some investors are perplexed by the volumes traded. Bloomberg recently released an article in which the CPM Group, a research firm specializing in precious and industrial metals, quantified the global gold market. In 2015, 310,358 tonnes (10 billion ounces) of gold were traded globally. The London over-the-counter (OTC) market amounted to 144,000 tonnes, or 46.3%, of the gold traded, while the New York futures market accounted for 130,350 tonnes or 42.0%. These numbers stand in stark contrast to the physical demand of 4,124 tonnes estimated by Reuters GFMS in 2015. The magnitude of the trading stands out further when considering that there have been approximately 170,000 tonnes of gold mined since the beginning of time.
These markets enable a huge portion of gold to trade without moving a single ounce. Participants in the futures market understand and expect this, so trades are only rarely settled with physical gold. The OTC market is a physical market and much of the gold taken for delivery globally is settled through London. However, an OTC ounce can change hands many times in a day, so only a fraction of the gold traded in London is actually moved to a new owner. Thus, the overwhelming volume of gold is traded in paper transactions, not physical metal.
Treat Gold as a Financial Asset, Not as a Traditional Commodity
Although there are many people who believe gold is a useless relic, the millions who invest in gold believe differently. To make money in this sector, it is crucial to understand the behavior of dedicated gold investors. The most important thing to recognize is that gold (and its paper proxies) is used as a financial asset, not a commodity. It is a safe haven3 store of wealth with no liabilities and has been used as such throughout human history. Therefore, the gold price is not driven by the same supply/demand fundamentals as soybeans, copper, or crude, for example.
The chart shows a traditional commodity price analysis with surpluses and deficits in the physical gold market since 1988. Notice there are many years when the gold price rose when there was a physical surplus. Likewise, there are also years when the price fell and there was a deficit. This doesn’t make economic sense, which makes a physical supply/demand analysis an unreliable price indicator. We believe there are three possible reasons for this: 1) the global physical market is difficult to measure accurately; 2) the huge above ground stores of gold; and 3) investment drivers in the paper market can overwhelm the physical market.
Gold Supply vs. Price Change
(click to enlarge)
Western Investment Demand is Behind the Wheel
As 88% of global trading volume occurs in New York and London, we believe the dominant driver of gold prices is Western investment demand. Western investors and others use gold to monetize their views on currencies, interest rates, geopolitical risk, systemic financial risk, central bank policies, inflation, deflation, and tail risk.4 These are the primary factors that help drive the gold price. Technicals are also important, as many investors make decisions based on chart patterns. Prices can be volatile, and this volatility is another aspect that tends to attract certain investors. Commercial players, such as jewelers and producers, use these markets to trade metal or hedge, although we suspect this to be a relatively minor driver compared with investment demand.
According to the CPM Group, China and India are the two largest gold consumers with 1,803 tonnes of combined physical demand in 2015. While this is 44% of physical metal consumption, these two countries account for just 7.9% (24,518 tonnes) of global gold transactions. India has no modern gold exchanges and the Shanghai Gold Exchange and the emerging Chinese futures market have a very long way to go to rival the Western trading hubs. As such, even though Asia accounts for the majority of physical demand, this region tends to be a secondary driver of gold prices. The local markets in India and China typically trade at a premium or discount to Western markets depending on local demand levels. Asian investors are sensitive to rising prices, as demand tends to increase during periods of price weakness. Asian buying typically helps establish a floor for gold prices, while Western investment demand is usually responsible for driving it higher.
Manipulation in Gold Market? Maybe. But No Lasting Effect.
We are also asked, because of the unusual structure of the gold market, if the gold market is manipulated. We would not be surprised to find that the gold market has been manipulated, but to a lesser extent than other markets. For example, currency markets are often manipulated by governments. Bond markets have been manipulated by the central banks since the financial crisis. Some governments, banks, and hedge funds may occasionally derive some benefit from lower gold prices. We periodically have seen curious price movements caused by large paper market orders at times of thin trading. This has happened especially in weak markets. It would be naïve, however, to dismiss the gold market as “rigged” based on this. While the magnitude of the paper market is remarkable, it is still driven by gold fundamentals. We believe any attempts at manipulation, if successful, can only influence prices over short periods. The gold market is too large for any manipulation to have a lasting effect.
by Joe Foster, Portfolio Manager and Strategist
With more than 30 years of gold industry experience, Foster began his gold career as a boots on the ground geologist, evaluating mining exploration and development projects. Foster is Portfolio Manager and Strategist for the Gold and Precious Metals strategy..
Please note that the information herein represents the opinion of the author and these opinions may change at any time and from time to time.
1NYSE Arca Gold Miners Index (GDMNTR) is a modified market capitalization-weighted index comprised of publicly traded companies involved primarily in the mining for gold.
2MVIS Global Junior Gold Miners Index (MVGDXJTR) is a rules-based, modified market capitalization-weighted, float-adjusted index comprised of a global universe of publicly traded small- and medium-capitalization companies that generate at least 50% of their revenues from gold and/or silver mining, hold real property that has the potential to produce at least 50% of the company’s revenue from gold or silver mining when developed, or primarily invest in gold or silver.
3Safe haven is an investment that is expected to retain its value or even increase its value in times of market turbulence.
4Tail risk is a form of portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution.
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Gold’s role as a safe haven remains Proven in 2016, again in 2017?
Gold’s role as a safe haven in a time of rising uncertainty was bolstered in 2016 as it returned +9% in USD and +30% in GBP1 with gold ETPs seeing $19.6 USD global inflows2. 2017 looks no different. Gold’s role as a safe haven remains
Goldhas already strengthened in 2017, as the “Trump rally” and expectations of US Federal Reserve policy tightening have moderated, while political risks are again coming to the fore. Brexit negotiations, European elections and contentious US foreign policy will impact global markets throughout 2017.
Investors may consider adding gold to their portfolio in preparation for 2017. Beyond capital protection, through its traditional role as a haven asset and portfolio diversifier, gold also offers the prospect of capital growth.
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