It was quite a week last week. For the bears of gold and silver, it was the distance between the slip and the lip. Trump’s Russia connections and a hawkish Federal Reserve came to the rescue of gold and silver bulls. Low inflation will reduce the pace of interest rate hikes. Interest rates in the USA will rise at a faster pace if and only if the Federal Reserve ignores inflation and focusses on other macro factors of the US economy. Global central banks and not just the Federal Reserve do not have room to reduce liquidity by much. If they increase interest rates at a quicker pace till next year, then a lot of so called ‘too large to fail’ banks could be get. There are also certain sectors in every nation which are nearing bubble zone and could get busted due to quicker interest rate hikes. Gold and silver will zoom once traders perceive that interest rate hikes have formed a medium term top.
China is on a land encroachment spree with most of its neighbors. Other than its northern borders with Russia China is unofficially increasing its land boundaries. Some nations have succumbed to China while others like India under an able political leadership are now trying to counter China. War/skirmishes with China are imminent as far as India is concerned. Chinese land encroachment policy will result in increase in the pace of rise in physical gold demand from Asia. Chinese government policies ensure that gold buying reaches to each and every strata of its people. (Unlike Indian government which is trying to take all steps to dissuade Indians to buy gold).
The effects of the Islamization of Europe are being felt in a big way. In my view the UK more or less has a state support to Islamic terrorists. All global terror organizations openly raise funding in the UK. The Scotland Yard knows the terrorists and supports the global Islamic terrorists as long as they are able to use them. So called British exit from the EU will be more peaceful for the Eurozone as UK terror imports will reduce. Europe’s daily rise in terror threats will ensure that gold and other safe havens demand will be on the boil over the coming years.
This post was published at GoldSeek on 16 July 2017.