The rally continues driven by a number of factors. First and foremost is the daily increase in the ETF funds. Gold ETFs today posting a new high for 2016, holding almost 67 million ounces. Silver ETF holdings are at 641 million ounces, just shy of the high in early June when it reached 643 million ounces.
What I find significant and interesting is the reported physical demand for gold out of the UK. Gold is up 40 percent in Pound Sterling terms and prior to the Brexit vote, UK firms have reported strong physical demand. What is unusual, and I hope becomes a pattern here in the States, is who is jumping into the physical gold market. Historically the average investor has been a male over 50 years of age. Recently In the United Kingdom, the major investors have been young and a good number have been women.
Another significant factor in both the gold and silver markets is the reported all time high long spec positions. Some Wall Street gold traders have shared with me this morning their concerns that historically, with these reported positions, the markets are primed for a major selloff. However, every indication we see this morning is that the rally seems to be alive and well and continuing, even without Far East and India demand, as those markets for many reasons are not involved at all in the physical market at this time.
Federal Reserve minutes to be released this afternoon 2pm EDT. I expect we will hear how concerned the FED board was over the Brexit vote and what impact they expected it to have on the world markets. Chairwomen Ms. Yellen commented that the Brexit vote was a factor in leaving rates unchanged here in the States.
Just some other noteworthy points:
- The World Gold Council reported Central Bank gold purchasing was almost 110 tonnes in the first quarter this year with the largest buyers being Russia and China.
- A third of global government bonds are now trading at a negative yield giving gold a boost as investors see the yellow metal as a good investment and a must have as part of a balanced portfolio.
Have a wonderful Wednesday.
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