The Top Five Things You Need to Know About Gold
Commodities are the lifeblood of commerce and economic growth. Daily FX, the leading portal for forex trading news, has built an interactive tool showing global commodity imports and exports over the last decade.
This unique tool allows traders to spot developments in the flow of commodities and the growth of both supply and demand while comparing the changes to critical economic indicators.
‘Global Commodities’ takes the form of a re-imagined 3D globe where the heights of countries rise and fall to show the import and export levels of a range of commodities over the last decade. The data visualisation allows users to switch views from a single commodity or market and show information relevant to that commodity or market’s performance.
John Kicklighter at DailyFX has used the tool to put together his top five things you need to know about gold:
1. Will the Federal Reserve System capitulate on policy tightening?
Gold is often seen as a credibility default swap on central banks and governments, and a further reverse course of Federal Reserve Monetary Policy in 2019 or beyond could help gold shine for investors.
2. Will inflation bring back the factor that gold has historically rallied behind?
Gold has long been praised as an effective hedge in times of inflation, and more so, times of hyper-inflation when prices skyrocket out of control. While that seems unlikely, an unexpected jump in general prices could align with a resurgence in the gold price.
3. Could governments spiral out of control, leading to a hedge in gold as a haven amidst the political chaos?
Amidst noise and fears that the leaders of the state have lost their way is typically when gold does best. A recent example was the US Government shut down in 2011 when Gold traded near $2,000/oz. Recent Trade War rhetoric and other geopolitical themes seem to be fertile ground for gold investors.
4. Will central banks further ramp up gold purchases to hedge their Fiat Currency Reserves?
In late 2018 Eastern European central banks boosted their gold holdings following other purchases made by Russian and Chinese central banks as a source of stability. Estimates state that central banks hold 20% of all gold ever mined.
5. Could a bear market in stocks lead to the long-awaited boost in gold prices?
The rally in stocks since 2009 has not been kind to Gold, except at the start when the longevity of the stock market rally was in doubt. With the SPX500 near record highs and overall stock market volatility still low. Gold has had little reason to rise as a hedge, but a shock decrease in stocks and higher in volatility could give gold bulls the jolt they’ve long been without.
To learn more about Global Commodities visit: https://www.dailyfx.com/research/global-commodities
