‘The great gold bull market has begun’
Mumbai: Gold prices have hit a record high amid a rush for safe haven assets owing to the fears of a recession. Goehring & Rozencwajg, a research firm which focuses on investments in natural resources, says the great gold bull market has begun.
Gold prices have surged over 20 per cent since January 1 and touched a life-time high of Rs 38,666 per 10 gm earlier in the month.
A bull market is defined by a condition in a financial market where commodity, stock, currency or bond prices are rising or are expected to rise.
According to the Goehring & Rozencwajg’s report, this bull market will be driven by Western investors, and their buying pressure may have already started.
Recently, the UK and Germany’s economy contracted, raising fears of recession. Germany, the biggest European economy which is largely export-driven, has been hit by US-China trade tensions.
The UK, the world’s fifth largest economy, recently logged negative growth, owing to the pressure on its businesses amid political uncertainty over Brexit.
“Precious metals were strong last quarter, as more and more central bankers talked about cutting interest rates and undertaking additional quantitative easing,” the report said.
Gold rose 9 per cent while silver once again lagged, rising less than 1 per cent. Platinum fell 2 per cent and palladium (again being pushed because of restrictive diesel regulations in Europe) rose 11 per cent.
Explaining the gold bull run further, Goehring & Rozencwajg said that gold stocks were also strong during the quarter, advancing by 14 per cent.
“We have seen a large increase in physical accumulation by both gold and silver ETFs (exchange traded funds) over the last several months,” the firm said.
However, they added that the only thing that concerned them was the price of oil relative to gold.
“Over the last three years, we have been very bullish on global oil markets. We explained how we were waiting for gold to become undervalued relative to oil, just like it did back in the 1999-2000 period.
“A ‘cheap’ gold-oil ratio would give us our final signal that gold’s three-and-a-half-year corrective phase had come to a close,” the firm said.
While I applaud Modi administration for the various policy actions and bold decisions on various geo-political issues (In fact I would vote for him in the next election), I am certainly not a fan of Modi’s economic policies. He is committing one economic blunder after another. He has kicked out the able people from RBI and Finance ministry to replace them with his stooges who would do what he wanted. He has set his eyes on our USD 400 billion foreign exchange reserve to throw at the electorate. That money belongs to the financial soundness of our country and only RBI should be able to use it, not the government for its pork barrel.
If Modi continues in this direction, we will soon go the Venezuela way. Neither Modi, nor those who are close to him, seem to under understand economics. Sad but tough times ahead. And trust me, Sitaraman is the most incompetent FinMin ever India has seen. What’s surprising is that Modi is not letting one financially sound, qualified person to remain in key position. This is a really scary thought indeed.
Let me tell you how this will play out in the next 5-10 years – when nation goes bankrupt (due to Modi’s unfettered debt binge), he will blame people who have saved (be it savings in a bank or gold) and then will take dictatorial actions to confiscate them because the country will economically collapse otherwise.
He will be choice-lessly forced to turn into another Erdogan or Chavez due to the economic blunders he is committing as well speak.
Good luck India.
I was trying to find Modi’s name anywhere in the article. Is it printed in fine print? Will Fr Cedric Prakash S J know where to find it?
Drona,
Gold is the economic barometer for the underlying economy and our economy is State managed to a larger extent. Recent high gold prices is the indicator that Modi’s economic policies are not right and he has been in charge in the last 5 years. I am sure if you see the recent economic data, job losses in the automobile sector etc. you will get the picture.
This is not Modi-bashing, instead presenting a view as I see it. We are not in a cult-hero worshiping nation after all.