As life returns to the wonderful normality of routine, after the festive season, it is definitively worth reminding ourselves that not all may occur in a routine fashion this coming year. During times of holidays, it is tempting to take our eye off the ball of geo-political events. This is only natural as we focus in on family and loved ones, cope with visitors and even the ubiquitous seasonal bugs and flu.
But, the sun is out today and it almost, almost heralds the glimpse that Spring is on the way. Far more is on the way across the globe.
We have probably the most bizarre US President in living history – a man who defies any definition of statesmanship. Whether one’s politics are left or right, that statement is a fair and true one. As Gold is a safe haven against turmoil in markets and as the U.S. is (just) still hanging onto its role as the World Reserve Currency, let’s start across the pond as our springboard into exploring how 2018 may affect Gold.
East vs. West
“With President Trump at the helm of the US, the relationship of the US with the rest of the world is changing, especially with China, Russia and West Asia. Analysts are watching how China responds as the US evaluates its position with respect to Iran, North Korea and West Asia. Recent trends indicate that China will move to fill any leadership gaps left by the US in global politics. (It is worth remembering that this is – to be historically accurate – a resultant of the last US Presidents hands off approach to US foreign intervention.)
China has not been hesitant in opposing US decisions and is expected to continue to do so. In early 2018, China is expected to oppose the move by the US to decertify the nuclear deal that President Barack Obama struck with Iran in 2015. China is likely to have the support of the EU and Russia, thus dividing global opinion on this issue.”
What I like about this viewpoint, and why I have chosen it, is it comes from a non-Western mindset. One of the largest physical Gold markets in the world is India and so I purposely wanted to see how the East sees the U.S. The above quote is taken from The Times of India.
The authors of the article Khurana and Dasgupta continue with the focus on this region with the following observation – of which Bleyer has also previously highlighted as an axis of increased friction between US and Chinese relations:
“Disagreements between the US and China are also expected to grow in relation to the US’s role, along with that of its allies — Japan and India — in the geopolitical affairs of the Indian Ocean region.”
And The Economic Times of India continues with one final geo-political arena to which we at Bleyer encourage our readers to pay very close attention:
“In West Asia, the recent announcement of the US government to recognise Jerusalem as Israel’s capital has reignited tensions. Already China has announced its intent to play a role in the dispute between Israel and Palestine, signalling that it is willing to assume the role of a global peace-broker. The full effect of this announcement will likely become clearer in 2018.”
I believe this is one point on which it will be fair to look back and say “Mark my words, that event was pivotal.” I believe this issue alone will reveal and force geo-political events and developments that will develop rapidly. I have stood on the hills and valleys on that region and know full well the historical layers of conflict over such a tiny strip of land – the Levant crescent is a myriad of centuries of invading forces and changing tenants, tragically often relayed through violence and tragedy.
The Affect on the Gold Price for 2018?
The thorough time of research through the recent papers of Capital and Conflict once again force my mind out of our seasonal reverie of twinkling café lights and consumerism, to the following central facts in our love affair with Physical Gold:
“The long-term value of gold is only part of gold’s credentials as a wealth preserver. Thanks to the value people place on gold’s long-term stability, the price surges during crises when people rush in to buy gold. The 2008 financial crisis put that on display nicely. The thing is, wealth preservation only matters at certain times in history. Times of turmoil, war, currency debasement and financial panics. But these are too difficult to predict accurately, so it’s always a good idea to own some gold.”
2017 has seen some calm steady consolidations in the price of Gold, with a regular pattern of pull backs. At Bleyer, we always call those times “buying opportunities.” How many more will present themselves, no one can accurately say. But history always proves that those very “times of turmoil, war and currency collapse” arrive like a thief in the night. Wake up too late and your secure way out of the dramatic events unfolding around you has already left.
How Safe is Gold as an Investment? What about Bitcoin? Stocks?
Some of our readers, or indeed their family members, may well agree with the assessments that the global balance is due to change in 2018, that conflict and economic collapse, seem an almost 100% certainty. Yet they may not yet agree that Gold has a role to play. To that view I would bring the expertise of one of the many highly regarded Financial commentaries, FinFeed – sort for Financial Feed:
“Seen as a safe haven from inflation-conjuring central bank policies, the yellow metal has absorbed the brunt of investor fears and panic in recent years, with Bitcoin being the latest vehicle to tempt further safe haven gold buying. What’s clear is that the metal is still keeping hold of its allure despite a much stronger US dollar and very frothy equities across the G20. It does remain a speculative investment, however, and investors should seek professional financial advice if considering this stock for their portfolio.”
Fair and balanced advice. Please be reminded that as a trader of Physical Gold, Silver and other precious metals, Bleyer cannot legally give advice. What we can do is exactly this, research the clearest voices regarding 2018, present the facts and encourage our readers to delve into some very pleasant research and reading of their own. Many of our clients are fellow researchers, and we thoroughly enjoy the excellent comments and articles some of you send us, on particular pieces of news regarding Gold you yourselves have also found. Keep it coming in 2018 – we love to hear from you.
If you have that family member who is difficult to persuade, it is worth noting that even the greatest advocates of owning Physical Gold may not have always felt that way:
“Some people will tell you gold is the only true form of money, while others will decry its uselessness because you can’t spend it. Some will tell you about how gold was money for thousands of years, while others will point out that we finally managed to get rid of it last century. The same facts lead people to opposite conclusions. The same people who were once staunch advocates of gold can go to being its harshest critics and then return to favour it over the course of their career. The best example of this is former Federal Reserve chair Alan Greenspan.
A few thousand years ago, an ounce of gold would’ve bought you a toga and sandals in Rome. Today, an ounce of gold is worth about the price of an Italian suit and shoes. That is the immense power of gold. It’s why wealthy families own the stuff – wealth preservation. There is no asset that does it better. (Capital and Conflict)
West vs East
Yes, you didn’t see that title right… I’m not repeating myself but switching the place of perspective. I’d now like to conduct a fascinating experiment, which I believe illustrates a facet of our Western worldview that many of you will have also experienced – the insular nature of the US world view. As visitors to the US I have come across truly lovely Americans who have no idea where the United Arab Emirates are on the globe, or even Japan for that matter. When one’s own continent spans 3000 miles and involves pretty much every geographical delight and climate, that is completely understandable. But let’s take that into an average economic outlook and use that to our advantage. If our friends in India are seeing geo-politically, what can our friends in the States teach us by seeing internally?
Here is what Forbes had to say this morning: “The price of gold and gold mining stocks were very competitive in 2017. The yellow metal ended the year up a little more than 13% — its best year since 2010 — while gold stocks, as measured by the NYSE Arca Gold Miners Index, gained more than 11%. All of this occurred even as large-cap stocks regularly closed at all-time highs and crypto-currencies invited massive speculation. We can thank the Fear Trade for much of Gold’s performance last year. The Fear Trade, of course, is driven by low to negative real interest rates—when inflation erodes away at government bond yields — deficit spending, a weaker U.S. dollar and geopolitical uncertainty. I believe these forces will only intensify in 2018. With inflation finally showing green shoots and President Donald Trump’s $1.5 trillion tax reform law expected to increase deficit spending, this year could provide the right conditions to spur Gold prices higher.”
An entirely internal view to the US economy – no mention of geo-political events – but also true none the less. What’s more the US author believes that “The risks inherent in the Federal Reserve’s monetary policy tightening is a good place to start. Since the Fed lifted rates, gold has behaved just as it did following the last two December rate hikes—that is, it’s begun to appreciate. On the final trading day of 2017, gold broke above $1,300 an ounce, a psychologically important level, and has since climbed an additional 1%. This is the first year since 2013, in fact, that gold has started the year above $1,300. I’ve seen this move before. In July 2016, the yellow metal peaked close to $1,370 an ounce, a 29 percent surge since the December 2015 rate hike. (If you remember, this represented Gold’s best first half of the year since 1974.)”
I’ve highlighted that last sentence because it’s what interests me. That is a stunning piece of fact. So, both views, the self-focussed – if you will – western view vs. the global eastern view both have a great deal to teach us. This is because, historically, other economies have learned through experience the old adage that when the US economy sneezes the rest of the world catches a cold. So, the rest of the world has learned to look outwardly, in regard to what is about to happen to their own economy, whereas the US tends to look inwardly to see the health of its own body. This only makes complete sense if the East vs. West power structure remains the same. And any reader with an interest in global politics and Gold knows a bear has been waking up for the last two decades and is extremely well positioned in both its Eastern and Iranian allies, together with its gold reserves, to join with those allies in seriously challenging the US’s role as the global super-power. So, to conclude, let’s return to the more wide ranging eclectic view of our friends in India:
“Key political events have the power to reshape the world economy. The relationship between Russia and US is also expected to develop in 2018. It is still unclear whether the US will impose sanctions on Russia. This would likely impose limitations on transactions with banks and impact energy companies in Europe, such as Russia’s undersea Nordstream pipeline between Russia and Germany, which involves financial stakes of many European energy companies. The impact could be exacerbated if Russia responds to any such sanctions through actions in conflict zones where the US is involved, such as in Syria, Iran, Yemen and in Palestine. These moves have the potential to move Russia closer to China.”
Why not position yourself extremely well in Physical Gold and Silver by acquiring coins from each of these countries? Gold is international money. Designs come from the Bank of China, India, England, the US, indeed every continent, many countries and designs. So, we encourage our readers to enjoy a thorough browse, at home or in your lunch hour at work.
Call or email the Bleyer team to begin owning your own Gold and Silver before this year heats up on 01769 618618 or firstname.lastname@example.org. Watch for all the events and developments listed and keep up to date with your own Gold research via Bleyer’s Twitter Page, more articles from the Bullion Academy and the links included in Bleyer’s weekly newsletter.