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Pundits & Traders Back 'Trump Boom', Gold Prices -7% from US Election Spike, Silver +1.5% for Week, Copper Soars

Friday, November 11, 2016 7:40
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(Before It's News)

Adrian Ash is head of research at BullionVault, the world-leading
gold trading & ownership service online…

GOLD PRICES rallied off 3-week lows in Asian
and London trade Friday, bottoming over 7% below Wednesday’s US
election results’ spike at $1251 per ounce as European stock
markets ended their ‘Trump bump’ rally and fell with
emerging-market equities.
Crude oil fell hard despite a drop in the US Dollar on the FX
Gold priced in British Pounds flirted with its post-Brexit
shock floor at £990 per ounce as Sterling traded above $1.26, its
best level in over a month against the Dollar.
Gold prices swung 2.5% versus China’s Yuan overnight in
Shanghai, fixing at a 3-week low in the world’s No.1 miner and
consumer nation.
Buyers in China “[have] increased demand,” Reuters quotes
bullion bank HSBC’s analyst James Steel, “and if gold falls further
target="_blank">we could see more price-sensitive buying
into the market.”
Western government bond prices also sank again Friday, driving
10-year US Treasury yields to 2016 highs above 2.15% and pushing
target="_blank">10-year German Bund yields
up to 0.31% after
they touched a record low minus 0.19% following the UK’s Brexit
referendum shock in midsummer.
"" target=
"_blank">Copper prices
meantime shot to $6,000 per ton – the
highest level since mid-2015 – with a 1-week gain of 19%, the
fastest on record, amid frantic trading in Shanghai and
Silver held a 1.5% gain for the week, defying its typically
strong correlation with gold prices.
In contrast to gold, silver finds over 50% of its end-use
demand from industry, primarily in electrical and electronics but
also now photo-voltaic cells for solar energy.
“As the most-traded base metal and a barometer of economic
growth,” says Bloomberg, “copper is… ""
target="_blank">a proxy for investors’ views
that Trump’s
presidency will boost government spending on bridges, roads and
With copper prices down 10% year-on-year before the US
election, they offered “a better recession-predictor than the US
National Bureau of Economic Research,” said research from US bank
Wells Fargo into the metal’s famed status as “Dr.Copper – "nofollow" href=
target="_blank">the metal with a PhD in economics
Lagging other base metals’ 2016 gains badly in summer late
summer, ""
target="_blank">copper faced a “wall of supply”
“softening demand” said a note from commodity analysts at US
investment bank Goldman Sachs.
But now “it’s going crazy,” says Robin Bhar, metals analyst at
French investment bank and bullion market maker Societe Generale’s
London offices, “[but] it’s too early to get short.
“Don’t stand in front of a speeding train.”
“I sold all my gold on the night of the election,” former
hedge-fund manager Stanley Druckenmiller told CNBC on Thursday,
reversing a call he made public in May and saying that “All the
reasons I have owned it for the last couple of years… "nofollow" href=
target="_blank">may be ending
. And by the way, they’re ending
Thursday saw over 13 tonnes of bullion lost from the gold
needed to back the giant SPDR Gold Trust ETF (NYSEArca:GLD) as
shareholders liquidated stock.
Cutting the GLD’s holdings to 941 tonnes, that was the fourth
heaviest 1-day outflow of 2016 to date.
“The drastic reversals in the stock market, bond prices, the
US Dollar and gold tell you that ""
target="_blank">Trump no longer represents the economic
he did before the election,” says Edward Harrison
at Credit Writedowns.
“All it took was one Presidential-quality acceptance speech to
change that. [But] we will have to see who he picks to help him
govern and what ideas they press forward. Trump has one chance to
make his mark. If he misses, recession could loom and in two years’
time, voters will make him pay.”
“Commodity markets seem to believe US President-elect Trump
will quickly deliver the one thing that he probably can’t,” says
London-based consultancy Capital Economics – “a surge in
infrastructure spending.
“We therefore expect the recent gains in the prices of
industrial metals to be short-lived and gold to rally again.”
Prepare for “ ""
target="_blank">bumper US growth
” reckons former London
Times‘ columnist and now chief economist Anatole Kaletsky
at Hong Kong-based Dragonomics, telling clients that Trump’s GDP
“growth acceleration will be achieved by cutting taxes and ramping
up public spending, especially on infrastructure and defence and
probably also on healthcare.
Predicting both strong US growth and a return of inflation,
Kaletsky sees the Dollars, US equities, industrial commodities and
also gold “as the key beneficiaries” reports CityWire.

Formerly City correspondent for The Daily Reckoning in London and
head of editorial at the UK’s leading financial advisory for
private investors, Adrian Ash is the editor of Gold News and
head of research at BullionVault – winner of the Queen’s Award for
Enterprise Innovation, 2009 and now backed by the mining-sector’s
World Gold Council research body – where you can buy gold today
vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2010

Please Note: This article is to inform your thinking, not
lead it. Only you can decide the best place for your money, and any
decision you make will put your money at risk. Information or data
included here may have already been overtaken by events – and must
be verified elsewhere – should you choose to act on it.


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