Silk Road Gold Demand

Charts Performance

Clear Movement of Gold From West To East  

Written and posted by IPM Group 19th November 2015

 

 Please note: Disclaimer at the end of this article.

As you may recall the 'Silk Road' countries are China, India, Russia, and Turkey.

Recent articles in the press have noted diminshed clearing volume for gold in London indicates a 'lack of interest' in the precious metals. Is that really the case ?

I think before making wild statements like this in the mainstream media one must first take into the context the global markets.

The 'float' of freely available, unencumbered physical gold has been declining in London and in New York, while at the same time volumes and delivery of physical bullion in Asia has been increasing.

So, has demand for gold been decline, or is the real trading action in physical bullion moving from London and New York to the increasingly robust metals markets in Asia?

Gold is moving from West to East.  

 

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Now without doubt Gold against US$ has been in an agressive bear market these last few years, this US$ appreciation has certainly been driven by several factors one of them being the unwinding of the "US$ carry-trade" which we have been warning investors about for at least 18 months now.  We wrote an article on what the carry trade is exactly read here

The despair, anguish and general gnashing of teeth surrounding the gold performance seem somewhat taken out of context.

While gold has certainly been an underperformer we should have a look at how it has performed against a selection of world currencies over the last 2 years.

I have randomly selected 5 major currencies (see below) and in fact we can see we have seen double digit gains in gold over the last 24 months.

 

Gold charts below are courtesy of goldprice.org


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Considering we are now facing a word wide debt crisis leading into a loss of confidence in sovereign debt and government control over the markets, also taking into consideration the cycles we believe the markets are extremely close to a new very dynamic bull market in precious metals; in our humble opinion.

This will engender an out-performance in precious metals against all world currencies. 

We do expect continued US$ strength in the FX markets and against Gold over the coming months, but we are very close to a final low.

 

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