We all know that Gold prices have fallen, not catastrophically but neither encouragingly if we bought at the previous peak, nonetheless.
Now, we can believe and see that the fundamentals within the geopolitical landscape are still there, still growing. And we write about this every week, encouraging our clients to hold your Physical long. But let’s take a look at the price fall head-on.
Has the Gold price reached bottom?
First of all, no one can say for sure. But we have researched some interesting expert voices this week, notably John Hathaway from Tocqueville in his Gold Report interview. It is a wide ranging subjec that requries a wide reaching knowledge of both the markets and the geopolitical factors that should be affecting price. We encourage our readers to do their own research on these topics also. Here are some of the recommended “signs”:
1) Do people in general (and by that we mean the main stream media) “scoff at gold”? This is often a sign that the bottom of a consolidating market is close to being reached. Are we there yet? Is there blanket scoffing so to speak? We’re not sure but we are certainly in the part of the gold cycle where many commentators and I.F.A.’s scoff at holding more than 5% of one’s portfolio in Physical Gold. And we would say from experience, even less in Physical Silver.
Now this view goes against all the fundamentals of high demand and low supply etc. But mainstream views very often are not backed up by fact and research, otherwise no one would ever get caught out in the financial’s market would they? Everyone would be holding Physical Gold and Silver BEFORE every currency collapse. And history shows that that is not the case.
2) Is a fundamental change of the World Reserve Currency on the horizon and how does this affect the price of Gold and Silver? “God forbid the dollar ever loses its monopoly on reserve currency status. It would change the world. People would have less of an interest in owning U.S. Treasury bonds, for one thing. It may mean that inflation numbers could turn less favourable. The impact on gold is due to a loss of trust in the dollar-reliant system.”
Jim Grant, publisher of the Interest Rate Observer, says it very well: “The price of gold in the inverse of confidence in central banking”.
3) How is the Euro holding up? “What is going in Europe is very unsettling to those with savings and capital in that part of the world. If Greece pulls out of the euro or if the Eurozone makes huge concessions to Greece, then it would become increasingly difficult to view the euro as a serious currency.” (The Gold Report, John Hathaway)
I explored this question in greater detail last month and the full blog can be seen here. But suffice to reiterate, there’s been a lot of noise in the mainstream media this week, which has overlaid a very strange occurrence in Greece; the one country who’s economic lack of health could affect the whole of the Eurozone and beyond in the most immediate short term. Greece just had their general election and has formed a coalition government, a term we here in Britain now understand. But bizarrely, Greece’s new government is made up of both the extreme right and the extreme left! That would be similar to Britain’s upcoming elections giving the result of the British National Party (BNP) forming a coalition with the Liberal Democrats! Just bizarre. They wouldn’t agree on anything. And the sense of citizen insecurity would be understandably high. The only reason these two extremes are now in power ‘together’ is the one thing they have in common – they both hate austerity. As stated in the Guardian: “The only thing left-wing Syriza and the right-wing Independent Greeks (Anel) have in common is economic populism.”
However, even the one thing they have in common is a point on which they are already disagreeing: “I’m optimistic that the problem will be resolved” (I personally love the way the Greek Finance Minister Yanis Varoufakish says this, as if Greek debt is merely as troublesome as a broken down boiler. “The other day I had favourable feedback from the British financial community and they understood very well what our problems are. They were surprised that a radical leftist had come up with a plan worthy of a bankrupt lawyer.” It doesn’t sound as if it’s going to end well, does it? (Wall Street Journal)
Now, the reason the question of whether Gold has reached bottom price is being asked, (and it IS often asked when clients ring in to buy but who can really answer with 100% accuracy?) But the question behind the question is this: “Is it a good time to buy?”
“It seems to be a good time. Gold is already strong in every currency other than the dollar. Negative interest rates in much of the world and the overly strong dollar should eventually result in political pressure to cheapen the dollar, but against what? The only monetary asset standing will be gold.” (J Hathaway)
It may seem an odd time to buy ie: when Gold and Silver are not being shouted about in the mainstream media. But that is always the more opportune time to buy. We have a saying in the office: “If you hear about it on the BBC, you’re the last to know.” Meaning, it’s the individuals who research when a market is quiet and when the prices are consolidating, that historically receive the greatest gains. It make sense. If you buy half way up the rise, your return won’t be as great.
Bleyer stocks and can source for you a very wide variety of both Gold and Silver Bars and Coins. Bleyer currently offer the lowest price on 1kg Silver in the United Kingdom. To find out more please visit our Special Offer page. If you are looking to purchase a particular bar or coin, and in specific numbers, call the Bleyer Team on 01769 618618 as we offer price breaks on larger quantities.
Bleyer also offer the option of holding Gold in a Pension, together with a variety of Storage options from offshore secure facilities to home safes. If you would like to learn more about buying tax efficiently, our in-house bullion experts can help you to save both on VAT and Capital Gains Tax. Call Bleyer today for bespoke customer care – we take pride in our approachable and well informed business team.