RSBL Gold Silver Bars/Coins

Monday, 29 June 2020

The scene is set for gold

Last week, gold gained significant momentum as its prices pushed to the highest level in eight years.
Gold went through another volatile week with an attempt at breaching the $1,800 an ounce level. The yellow metal wrapped up a very exciting trading week after seeing prices hit 7.5-year highs and climbing to $1,796.10 on Wednesday.

If gold continues to rally at this speed then it will soon reach the significant level of $1900- its life time high that it achieved in 2011, RSBL confirmed. This is a very significant level for Gold because it would be very close to breaking the 2011 all-time high level near $1917.90. As gold creeps higher because of perceived risk factors in the global markets, once Gold price levels break above $1850, then the rally to levels above $1900 is almost certain to drive investors into the precious metals markets at a much faster pace.

Prithviraj Kothari of RSBL believes that history repeats itself- the current situation that is being witnessed is more or less similar to what happened in 1976. In early 1976 through 1981, capital markets were suddenly awash in credit and precious metals rallied more than 700%.
Similarly currently the US Fed and global central banks are pumping financial stimulus into the markets (in the form of capital and QE functions) in an effort to support the capital markets and financial sector.

So now we can think where precious metals are heading.
Now this uncertain and risk-ff sentiment in the market has been helping the yellow maintain stay firm on bullish sentiments. Though the strengthening dollar is taking away some shine from the yellow metal, but rising Covid infections is dampening this dollar gold effect.

It was the rise of infections from the coronavirus in the United States and globally that elevated concern that the pandemic could force many countries including United States to roll back the reopening. Last week, the total cases in the US reached 2,374,282, with casualties reaching 692 on a single day, summing it up to 121809 deaths in total.

A number of states including Arizona, New York, Texas and Florida have had the largest number of new cases reported, putting US on the front with the highest number of Covid cases and deaths. As of early June 26, the U.S. has recorded 2,422,310 cases and 124,416 deaths.

Concerns around how this will impact the U.S. economic recovery has led to another major stock market selloff on Friday, pulling down equities.

Though uncertain recovery will prove to be good for gold, but a steep rise in Corona cases can hamper gold’s growth as ultimately it comes to inflation expectations. Hence gold also dropped along with equities and failed to cross $1800.

But the future is bright for gold. And we are not claiming this because of the pandemic. Apart from that there are several reasons that can set the prices high and help gold in crossing its life time high-

  • U.S. Presidential elections- the U.S. presidential elections will play an important role in shaking gold prices. 
  • Q2- There is a lot of pressure around the economic recovery in the U.S., which points to a higher price for gold going forward
  • Data-biggest market moving day is likely to be Thursday with the U.S. employment report for June and factory orders for May both being released. With all states now experiencing some form of reopening, we should see another sizeable pick-up in employment, as workers return to their jobs, but still many remain unemployed and hence the jobs report won’t be that strong. Other important data slated for release- the FOMC meeting minutes from June, ADP nonfarm employment change for June, and the ISM manufacturing PMI for June. , U.S. pending home sales and June’s CB consumer confidence

RiddiSiddhi Bullions Limited opines that the analysts believe that economic numbers coming in from US won’t be that appealing, its time to buy gold as prices is expected to rise.  We all know that since ages gold has been considered as a store of value. Currently, gold is undervalued as there are massive bubbles in asset markets and central banks continue to print money, which supports these bubbles. This is an unsustainable situation; and when the bubbles burst the gold price will rise.
The scene is set for a price appreciation towards levels last traded in 2012.  All eyes should be on the psychological $1800 mark.

Monday, 22 June 2020

Gold strikes a balance

The yellow metal has fallen around 0.3% this week. But still sentiments remain positive. Growing concerns over US China Trade war, escalating Sino-India tensions along with the ongoing Covid widespread- all these together have helped gold in maintaining its price range and has further supported positive sentiments for the same confirmed RiddiSiddhi Bullions Limited.

On one hand gold witnessed buyers at $1710 -$1750 levels, while it also some jumping into the selling bandwagon. Gold seems to have attained a balance between geopolitical and COVID-19 concerns on one side, and economic recovery hopes and dollar strength on the other.

There are growing concerns that the US-China Phase One trade deal is about to get ripped-off U.S. President Donald Trump on Thursday renewed his threat to cut ties with China, a day after his top diplomats held talks with Beijing amid souring relations. China has told state-owned firms to halt purchases of major US farm products, after Washington said it would eliminate special treatment for HongKong.

While this was on the global front, on the local front we saw widespread protests in the United States over racism. Furthermore, concerns of another wave of coronavirus cases has created panic. More than 8.38 million people have been reported to be infected by the coronavirus globally with China reporting 32 new virus cases on Friday, 25 of which were reported in the capital city Beijing.           
A surge in fresh infections in several U.S. states and the imposition of travel curbs in Beijing to stop a new outbreak have renewed fears of a delay in economic recovery as countries reopen after coronavirus-induced lockdowns

Adding to this were, simmering geopolitical tensions between North Korea and South Korea, and India and China also offered some support to bullion , which is often used as a safe-haven investment during times of political and financial uncertainty.

Further, in UK too gold was seen moving upwards. There was decent stimulus being pushed into the market wherein  the Bank kept overnight UK interest rates at their new record low of 0.10% and also approved another £100bn ($124bn) of quantitative easing, taking its total holdings of government bonds to £745bn – equal to one-third of GDP and 42.5% of the UK state's current outstanding debt in issue.

In the US too, negative growth sentiments was supporting gold. The Federal Reserve is targeting 2% inflation and has pledged to keep rates near record lows until the goal is achieved. This will lead to a lift in gold prices. Looking at the dollar, we saw the greenback falling to its lowest since mid-March, further supporting bullion prices the bullion king of India stated.

News coming in from various parts of the world, which is mostly negative on the geo-political and economic front, will definitely prove to be positive for gold and hence we can expect fresh highs for the yellow metal.

Tuesday, 16 June 2020

Bullish vs Bearish sentiments for gold

Recession and pandemic have been good supporters for gold this year. Gold has advanced 16.7% since March 2019. Simultaneously the dollar has dropped 6.8%

All this while, gold continued to find additional support from some of the bearish factors including concerns over a second wave of infections, and raised geopolitical uncertainty.

This week too, gold found support over Federal Reserve statements. Fed ruled out any rate hikes for the next couple of years. On Wednesday, the Fed announced that it is keeping its key interest rate unchanged at a range between zero and 0.25% while signalling no rate hikes through 2022. The Fed also said it expects U.S. GDP to contract by 6.5% this year.  Simultaneously it boosted expectations that [quantitative easing] will be in operation for the time being.

In response, gold prices rallied, reaching slightly above $1,750 an ounce on Thursday while equities saw major losses. This move benefited gold as an accommodative monetary policy is negative for the yields and for dollar, while positive for the yellow metal hence gold managed to pull through the mid-range resistance band of $1700/$1725.

Any form of strong financial stimulus is made with the intention of boosting the economy. Now given the situation, the market is once again divided into bears vs. bulls for gold.
The ones, who are bearish, have cautioned that gold will remain in a tight range. Currently it has been sustained by stimulus measures world over and hence it will require a very strong influencer to pull it back into a higher range.

The Fed’s extreme money printing igniting these unstable stock-market heights is worryingly inflationary, making upping gold portfolio allocations essential.  This ongoing capital shift is likely to keep pushing gold higher. RiddiSiddhi Bullions Limited is positive that gold prices are likely to trade higher for the most part of the year.

But still many investors continue to remain in a dilemma about portfolio diversification per se gold.

Now for the ones who are bullish believe that gold is being constantly supported by the current geopolitical crisis. There has been news that the number of U.S. coronavirus infections were rising, with recent reports indicating that Arizona and Texas are showing increased cases. Moreover, worries of a new wave of COVID-19 cases clouded hopes of economic recovery.

Just when China was grounding itself towards economic recovery, it once again saw fresh Covid cases resurfacing. After weeks with almost no new coronavirus infections, Beijing has recorded dozens of new cases in recent days.  And if this was not enough, US too witnessed Covid hospitalization in record numbers.

Further, The World Bank released its latest economic outlook and global GDP which is now predicted to fall by 5.2% this year. The recession could be the worst since the Second World War. Certainly, lockdowns are being eased and central banks and governments have pledged huge sums of money to support their economies. However, the economic recovery will take quite some time and even a slightest onset of a second wave of Covid infections, will once again create a panic like situation believes Mr Prithviraj Kothari of RSBL.

This comes amid enormous federal rescue efforts, with the Treasury Department aiming to borrow $3 trillion to cover the tab. To bolster the government’s campaign, the Federal Reserve intends to buy enormous amounts of the new Treasury bond supply. This manoeuvre is called quantitative easing (QE), which also is aimed at holding down interest rates.

Friday, 12 June 2020

Investors remain bullish for gold

Gold bounced sharply from its mid-March lows as central banks slashed interest rates and launched quantitative easing, while governments undertook massive stimulus measures, in an effort to combat an economic slowdown prompted by the COVID-19 pandemic. However, gold has been largely range-bound for nearly two months now.

Investors as well as industry experts like RSBL continue to remain bullish for gold mainly due to the following reasons-

  • FED - QE is “huge positive” for gold since it means a low “opportunity cost” of holding the metal. This refers to any interest income lost by holding a non-yielding asset such as precious metals instead of bonds. The Federal Reserve (Fed) will face numerous challenges in the months and years ahead. Economic output will remain below potential for years to come as we deal with the pandemic and its long-term scarring effects. An additional challenge will be a U.S. federal government budget deficit that will exceed $3 trillion this year with significant likelihood that it could be larger.                                                                                                      
  • Unemployment numbers and S&P weak earning and its effect on interest rates - Unemployment is expected to remain high and S&P companies to continue posting weaker earnings. This would lead to lower (or increasingly negative) real interest rates, which is positive for gold. Absent further action by the Fed, the deluge of Treasury securities will likely start pushing interest rates higher, threatening the overall economic expansion. The Fed cannot allow this to happen.  As I gaze into my crystal ball, the Fed’s roadmap is likely to include the following progression of policy tools as the economy remains mired in a protracted downturn                                                                                                                                                          
  • US Economy - With the Fed going all-in on financing the government deficit, the U.S. dollar could be at risk to negative speculation of its status as the dominant global reserve currency. Investing in gold may help offset this trend.                                                                                                                                                          
  • Fiscal and monetary stimulus programs across U.S., Europe, China and other countries - this action is but obvious given the damage that COVID-19 has caused globally. As we move towards the path of recovery, which will definitely be slow, gold is expected to benefit from this.                                                                                                                                                          
  • Equities - For one thing, the relief rally in equities is likely to eventually run out of steam. The economy still faces challenges, one of which is the potential for a second wave of COVID-19 infection which will further strengthen gold prices.
Gold has always been investors favourite because of its following features-
  • Historical position
  • Long term store of value
  • Performance during times of crisis
  • Effective portfolio diversifier
  • High liquidity asset
Due to this, gold has gained more prominence every time the global markets face uncertainty. And we think this sentiment will carry through in late 2020-2021 says RiddiSiddhi Bullions Limited.

Gold prices should comfortably break through $1,800 an ounce, whenever the sharp rally in equities stalls,  when gold ran up to its record high above $1,920 an ounce back in 2011, the market was in “bubble-like conditions” that did not last long before the buying dried up. But in the current situation, many more economies around the globe have been impacted, meaning a recovery will take longer, in turn meaning gold buying should be more sustained.

Tuesday, 9 June 2020

Geopolitical crisis still remains on the cards for gold

Gold has been a major beneficiary of a weak dollar and low US interest rates over the last three weeks and this looks likely to change in the short-term. The yield on the 10-year US benchmark is nearing 1%, up from 0.65% a week ago, dulling the appeal of the precious metal, while the US dollar basket may have found a temporary base around 96.50 after having fallen by four big figures since mid-May. Bullion has declined about 3% last week, on track for its biggest fall since the week ending March 13.

Gold prices dipped more than 2% on Friday as investors’ hopes of a rebound in the global economy got a boost from stronger-than-expected U.S. non-farm payrolls data, reducing demand for safe havens.

RiddiSiddhi Bullions Limited opines that a record surge in US employment on Friday sent gold into a tail spin and back to lows seen at the beginning of May. Just over 2.5 million jobs were added in May compared to market expectations of 8 million lost jobs, the largest month of job creation since the data series began. Last month the US economy lost just over 20 million jobs. Today’s positive data boost added to an already upbeat market tone and helped push gold back into the early $1,680s, its lowest level since May 2.

The May payrolls report confounded economists who had predicted a job loss of 8 million in May as the coronavirus kept parts of the U.S. economy closed for a third straight month.

The report also jarred with separate data released a day earlier by the Labour Department, which said it received weekly unemployment claims for the first time from 1.9 million Americans, bringing to nearly 43 million the number receiving jobless insurance since the Covid-19 hit home in March. Gold prices jumped 1% on Thursday, reacting to the jobless claims numbers.

We had significantly stronger-than-expected U.S. payroll numbers - an increase of 2.5 million versus an expectation of a decline of 7.5 million - that 10-million swing has brought forward expectations of the economic recovery in the United States.

A kick-start to another rally in the gold price remains elusive. The market’s confidence that the most acute stage of the pandemic has passed in many countries has seen risk appetite improve. With investors now betting stimulus measures will bridge the gap to more normal growth. RSBL is positive and has hopes pinned to an improved economy.
The central bank has injected massive stimulus and cut interest rates to near zero to cushion the blow from the coronavirus pandemic. The Federal Reserve, the U.S. Treasury and Congress have jointly approved and disbursed trillions of dollars in loans, grants and outright aid to businesses and individuals in recent months because of the Covid-19-triggered economic downturn.

But investors still remain bullish over the medium-term. Prithviraj Kothari and many other top gold dealers in India believe that Gold might not get much more support from the Fed, but geopolitical risks, second wave concerns, and an eventually weaker U.S. dollar should keep the longer-term bullish outlook intact The macro backdrop is challenging, despite market confidence in the trend towards normalised growth. The expansion of central banks’ balance sheets shows no sign of abating, while geopolitical tensions escalate.

The otherwise safe-haven known as gold is rallying right alongside an equities markets surprisingly chock-full of momentum even as protests sweep the U.S. and deaths from COVID-19 continue to climb.

Some analysts, however, remained optimistic that gold would regain some upward momentum in the near-term despite the risk rally in stocks.

The reason being uncertainty- geopolitical issues and trade tensions (in the U.S) still remain on the cards and for the longer term these factors will definitely influence gold prices positively and those who strongly believe this and are still favouring gold are expected to benefit in the long run.

Sunday, 7 June 2020

Gold - A simple investment in complicated times

As the last decade draws to a close, gold has once again demonstrated its safe haven status  and alerted the keen observer that the general situation in the financial markets is about to change fundamentally.
Gold is a clear balance to stocks, bonds and alternative assets for well-balanced investor portfolios. As a store of wealth and a multi-faceted hedge, gold has outperformed many major asset classes while providing strong performance in both rising and falling markets. Bullion dealers in India are optimistic about the continued run of gold as a safe haven for investors.

Gold can add value to your portfolio in more than one way-
  • It gives long term returns
  • When times are uncertain , gold acts as an effective diversifier
  • It is very high on liquidity 
  • It strikes a perfect balance and improves overall portfolio performance

The market continues to struggle with the elevated level of market optimism versus the real economy, creating a psychological mismatch. And while the anarchy is the US street is likely to be a short-term phenomenon believes Prithviraj Kothari from RSBL.

Gold was supported over concerns about the unrest in the United States and at the moment appear to be weighing on market sentiment along with rising tensions between the world’s top two economies.

Gold pared gains on Thursday, having risen 1% earlier in the session, pressured by an advance in Wall Street, but escalating tensions between the United States and China kept the bullion supported. Spot gold rose 0.2% to $1,712.35 per ounce during Thursdays trading hours.

Gold prices were, however, supported by fresh signs of the economic blow from the coronavirus, as well as brewing U.S.-China tensions with the Trump administration looking at options to punish China over its tightening grip on Hong Kong.  We're seeing tensions increase between U.S. and China. We see the market froth still with this bevy of negative economic data and that's clearly supportive for the gold market said the bullion king of India.

Protesters have flooded the streets in the United States over the death of George Floyd in police custody, in a wave of outrage sweeping a politically and racially divided nation.
The closely packed crowds and demonstrators not wearing masks have sparked fears of a resurgence of COVID-19, which has killed more than 101,000 Americans.
Rioting in major US metropolitan neighbourhoods got pretty gnarly over the weekend.

Adding to it were the underperforming jobless numbers coming in from the US. The latest U.S. unemployment benefits data held above 2 million last week for a 10th straight week, signalling a deeper economic hit from the pandemic. Hence investors believe that more stimuli is expected from the Federal Reserve and other central banks
Large stimulus measures tend to support gold, which is often considered a hedge against inflation and currency debasement.
Meanwhile, in Asia, China’s state media and the Hong Kong government lashed out on Sunday at U.S. President Donald Trump’s pledge to end Hong Kong’s special status if Beijing imposes new national security laws on the city.

Gold is often used as a safe store of value during times of political and financial uncertainty.
Geo political risk remains supportive amid a plethora of bullish for gold themes while anarchy in the street in the US could dent the nascent recovery. But gold investors are also taking more that early re-opening states are seeing a rebound in new cases.

On May 30, California increased 3273 claims, the highest one day increase ever. Texas increased in 1714 cases. On the margin, the United States: three-day growth of infection numbers increased to 4.2%, the highest in 1-week (vs. 3.4% three-days ago).

Gold rallied right out the gate, going higher as anarchy in the streets is not only threatening to derail the re-opening optimism but could severely dent President Trump’s approval ratings, which will heighten US election risk and could drive more demand for gold.

Gold has come down off its recent highs to trade somewhere in the middle of the range it’s been in since mid-April. This has caused many traders and investors to begin to question whether they should start looking for dips to buy, or whether there is a further downside in store for the precious metal. We’re now halfway into the year and barring any other significant global events in H2 it’s almost certain that 2020 will be remembered as the year of the virus. The question remains, though, will 2021 be the year of the recovery?

Friday, 5 June 2020

Gold continues to strengthen in second half of 2020

Gold is always considered as a valuable diversifies in times of economic and geopolitical uncertainty

A couple of months ago, the economic upswing was still firmly established, production expanded, and unemployment was declining. It all changed with the advent of the coronavirus or, to be precise: things turned really sour with the politically dictated lockdowns. As a reaction to the spread of the virus, governments in many countries ordered shops and firms to shut down and people to stay home. The inevitable result was a close-to-complete breakdown of the economic system. Whether it were smalls MSEs or giants like RSBL businesses were hit completely and so were the lives of hundreds of millions of people who were thrown into outright despair; in India alone 120 million workers lost their jobs in April 2020.

In US too, jobs numbers weren’t quite appealing.  Even though the U.S. ADP private jobs reports were stronger than expected for May and there was a decline in initial jobless claims. Still investors believe that the numbers won’t remain positive for long. RiddiSiddhi Bullions Limited agreed with the numbers projected by a survey of Bloomberg. Nonfarm payrolls are expected to drop by 7.5 million in May (compared with a 2.76 million private job losses estimated by ADP) and jobless rate is anticipated to jump to 19.1% from 14.7% in April, as per the Bloomberg's survey estimates.

Further, the precious metal was lifted by the European Central Bank's decision to expand its pandemic emergency purchase programme by 600 billion Euros

According to the bullion King of India, if the world economy continues to slip into weakness, then we can expect gold to hit a record high in the second half of 2020. A challenging economic environment and an increase in risk appetite has been a strengthening headwind for the yellow metal.