Gold Market

 

Gold Market Opportunities

The following chart reveals that September is gold’s favorite month. The historical outperformance of gold in September relates to India’s festival period, which extends from late August to October. The widespread use of gold in the festivals as gifts, prizes and decorations serves to boost gold demand in the coming month.

Zinc prices are on an upward trend. Sharp increases in Chinese zinc imports, up 39.3 percent through July, reveal the strong demand support system underlying future zinc prices. Trevali Mining is one the few stocks that investors can play for zinc exposure.

Gold Market Threats

The summer rally for gold may have unfortunately already peaked. While historical summer seasonal gains for the gold price and the S&P/TSX Gold Index have appreciated by 15.5 percent and 23.6 percent respectively, this year has seen an appreciation of only 3.0 percent and 17.5 percent. Although this data is cause for concern that the summer gold rally has been minute, it is worth noting that last year’s summer rally end by August 28.

This week saw a few jaw-dropping examples of poor leadership in Europe and the United States. In a shocking announcement, German Finance Minister Schaeuble stated that the beneficial effect of monetary policy is exhausted in Europe. The announcement is in response to the increased likelihood that the ECB will need to enact further stimulus to counter the growing deflation threat. If Schaeuble is correct and the ECB truly does not have the tools to fight deflation, gold could suffer. The other examples come from the United States, where two Federal Reserve presidents, William Dudley and Richard Fisher, reported substantial holdings of individual stocks and investment funds. Their extraordinary activity in financial markets is a glaring conflict of interest. Finally, as a response to the growing threat from the Islamic State in Iraq, President Barack Obama revealed he has no strategy, which should cause tremendous global concern.