NEW YORK, Sept. 16 /PRNewswire/ -- Jeffrey Nichols, Senior Economic Advisor to Rosland Capital (www.roslandcapital.com), had the following commentary based on recent market activity and the week ahead:
It should come as no surprise to regular readers of this Rosland Capital Gold Commentary that gold and silver are up sharply this week -- with gold scoring a new all-time high near $1275 an ounce while silver rose to nearly $20.50 an ounce, its highest level in several years.
Proximate factors that may have contributed to gold's breakout include:
- News from China that its economy continues to grow smartly with industrial production up 13.9 percent in August from a year earlier -- suggesting that private-sector income and gold accumulation will continue to rise unabated.
- U.S. dollar weakness against the stronger Asian currencies -- particularly the Japanese yen and signs from the Chinese central bank that it is allowing the yuan to creep up against the greenback.
- Last week's announcement that Bangladesh had bought some 10 tons of gold from the IMF, not a big purchase in the scheme of things but a lot for this little country (whose total gold holdings are now 13.5 tons) -- but a reminder that central banks are looking favorable on gold as a reserve asset.
- Expectations that the Shanghai Gold Exchange will soon introduce a new Exchange-Traded Certificate designed to facilitate to facilitate gold investment by institutional investors including banks, funds, and insurance companies. It will track the spot price on the Shanghai Gold Exchange and will be fully backed by physical bullion held in trust by the exchange.
- Rising retail investment demand in the United States and Europe with more money again going into gold and silver bullion coins, small bars, and gold exchange-traded funds.
Will gold and silver go straight up? Probably not, and the market could be in store for a small correction before heading higher. But the long-term, multi-year trend is definitely bullish. Here's our list of nine bullish reasons we expect gold and silver to shine in the next few years:
- First, inflationary U.S. monetary and fiscal policies -- past, present, and future. With continuing recession-like economic conditions -- a "double dip" or "stagflation" --policymakers in Washington will spend more and print more money, eroding the dollar's value at home and overseas.
- Second, Europe's simmering sovereign debt crisis, which has not only undermined the euro's appeal as an official reserve asset ... but has also pushed the European Central Bank to pursue its own inflationary monetary policies ... and has pushed more investors in Europe and around the world to seek the safety of gold.
- Third, continuing -- if not growing -- interest by the official sector. In particular, the central banks of a number of newly industrialized emerging nations are seeking to diversify official reserve assets into dollar alternatives.
- Fourth, rising long-term saving, investment, and jewelry demand for gold from China, India, and other gold-friendly nations enjoying healthy growth in business activity and household incomes -- growth that is likely to continue at least several years.
- Fifth, rising private-sector investment demand in the older industrialized nations reflecting fear of inflation, currency depreciation, and a loss of confidence in governments to deal effectively with today's economic challenges.
- Sixth, the continuing maturation of what I call the "gold-investment infrastructure" -- in other words, the development of new gold-investment products and channels of distribution in many important geographic markets.
- Seventh, the relatively small size of the world gold market compared to other capital markets -- such as equities or currencies -- so that even small shifts in portfolio preferences away from currencies, or equities, or real estate, for example, may have little price effect on these big markets but will have a relatively large, indeed profound, effect on gold.
- Eighth, the recent onset of global food and agricultural inflation.
- Ninth, stagnant world gold-mine production for the next five years or longer.
To arrange an interview with Jeffrey Nichols, please contact Liz Cheek of Hill & Knowlton at (212) 885-0682 or email@example.com
About Rosland Capital
Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver, platinum, palladium, and other precious metals. For more information please visit www.roslandcapital.com.
About Jeffrey Nichols
Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.
SOURCE Rosland Capital LLC