Mark Pey

April 22, 2020

Now that the economic fallout of Covid-19 is becoming a little clearer, we can discuss the possible effects on investing and on gold price in particular.

Each of the factors discussed below (and in Part 1) - gold’s performance during the last crisis, the further selloff of lower-quality assets, the potential for another sovereign debt crisis, and the potential for higher inflation when stimulus payments arrive – all argue in our view for a steady and continued rise in the price of gold.

Gold was already a top-performing investment

Prior to the crisis (and prior to the recent run-up in the price of gold) Price Waterhouse Coopers prepared a report for the world’s largest investors - the so-called “sovereign wealth funds” from countries like Singapore and Norway.

In that report, they pointed out that gold had already outperformed the top two major asset classes (shares and bonds) over the previous 10-year and 20-year time periods: https://www.pwc.com/gx/en/industries/sovereign-wealth-investment-funds/publications/alternative-assets-for-sovereign-wealth-funds.html

Gold tops the charts so far in 2020

So going into the Covid-19 scare, gold was already one of the world’s top-performing investment asset classes.

And so far this year gold has added even more to that winning form, outperforming everything from shares to bonds to commodities to Bitcoin. The chart above shows the year-to-date returns for 2020 (through 10 April). We believe there is a high likelihood for that outperformance to continue, for a number of reasons.

Covid-19 means governments must print the money people need

Most governments are putting through very large stimulus packages. In the U.S. the stimulus already exceeds USD $2 trillion.

But J.P.Morgan's chief economist Michael Feroli noted, "In response to the Covid-19 crisis, the U. S. Federal Reserve Bank has effectively shifted from lender of last resort for banks, to a commercial banker of last resort for the broader economy." 

This change means there is a heightened risk of a “sovereign debt crisis”, where the government itself cannot pay its bills and has to default.

It’s worth recalling that sovereign debt crises only resolve in one of two ways: either government bond investors take big losses (or get wiped out altogether) or inflation or hyper-inflation debases the currency (makes it less valuable) to the point where the size of the remaining debt is manageable.

And the lesson of the last major country sovereign debt crisis is worth noting: the world’s six biggest economies’ currencies lost between 75-95% of their value against gold over the course of less than a decade.

And what happens when the stimulus payments start arriving?

If we look ahead a few weeks or months to a time when the financial market selloffs have abated somewhat and stimulus payments begin arriving, Deutsche Bank recently made an interesting argument. They believe that this will be inflationary, and possibly even hyper-inflationary:

"This is because policymakers appear to be attempting to shift demand back to where it was a couple of months ago, at the same time as holding supply fixed. To put it another way, if the government tries to keep spending at levels before lockdowns began, while at the same time keeping lockdowns in place, there will be simply more money chasing after significantly fewer goods and services. The result of this will be inflation, and a lot of it.” 

A return of inflation would be a large positive for the price of gold.

Gold price target: USD $3000?

Today Bank of America wrote in a research note to their clients, "As the ultimate store of value, gold is a reflection of market movements across all major financial and physical assets… and the gold market has further room to run, in our view.”

The Bank of America research note continues: "Now, with the Fed committing to do whatever it takes to prevent widespread bankruptcies across the US, Congress injecting a USD $2 trillion fiscal stimulus plan, and economic growth on standstill until there is a cure or a vaccine, inflation could rise even if GDP does not. This backdrop should prove very positive for gold”.

"We have been long-term gold bulls, maintaining our constructive forecast even through the recent volatility. Hence, we are marking-to-market expectations, while at the same time anticipating further upside. Thus, we increase our 18-month gold target price from USD $2,000 to USD $3,000/oz.”

At today’s exchange rate that would mean a gold price of AUD $4,761 per ounce, up from today’s price of approximately AUD $2,700 per ounce.

Conclusion

So we reiterate our opinion from our 2020 Gold Outlook: Accumulate. SendGold makes it easy.

  Happy Earth Day from SendGold SendGold Update – Ramping up Services as Gold Demand Skyrockets Gold and the Ongoing Covid-19 Crisis, March 24 Update – Part 1 of 2

Download our new app now and BUY 100% title to GOLD in minutes


Mark Pey

April 22, 2020

Now that the economic fallout of Covid-19 is becoming a little clearer, we can discuss the possible effects on investing and on gold price in particular.

Each of the factors discussed below (and in Part 1) - gold’s performance during the last crisis, the further selloff of lower-quality assets, the potential for another sovereign debt crisis, and the potential for higher inflation when stimulus payments arrive – all argue in our view for a steady and continued rise in the price of gold.

Gold was already a top-performing investment

Prior to the crisis (and prior to the recent run-up in the price of gold) Price Waterhouse Coopers prepared a report for the world’s largest investors - the so-called “sovereign wealth funds” from countries like Singapore and Norway.

In that report, they pointed out that gold had already outperformed the top two major asset classes (shares and bonds) over the previous 10-year and 20-year time periods: https://www.pwc.com/gx/en/industries/sovereign-wealth-investment-funds/publications/alternative-assets-for-sovereign-wealth-funds.html

Gold tops the charts so far in 2020

So going into the Covid-19 scare, gold was already one of the world’s top-performing investment asset classes.

And so far this year gold has added even more to that winning form, outperforming everything from shares to bonds to commodities to Bitcoin. The chart above shows the year-to-date returns for 2020 (through 10 April). We believe there is a high likelihood for that outperformance to continue, for a number of reasons.

Covid-19 means governments must print the money people need

Most governments are putting through very large stimulus packages. In the U.S. the stimulus already exceeds USD $2 trillion.

But J.P.Morgan's chief economist Michael Feroli noted, "In response to the Covid-19 crisis, the U. S. Federal Reserve Bank has effectively shifted from lender of last resort for banks, to a commercial banker of last resort for the broader economy." 

This change means there is a heightened risk of a “sovereign debt crisis”, where the government itself cannot pay its bills and has to default.

It’s worth recalling that sovereign debt crises only resolve in one of two ways: either government bond investors take big losses (or get wiped out altogether) or inflation or hyper-inflation debases the currency (makes it less valuable) to the point where the size of the remaining debt is manageable.

And the lesson of the last major country sovereign debt crisis is worth noting: the world’s six biggest economies’ currencies lost between 75-95% of their value against gold over the course of less than a decade.

And what happens when the stimulus payments start arriving?

If we look ahead a few weeks or months to a time when the financial market selloffs have abated somewhat and stimulus payments begin arriving, Deutsche Bank recently made an interesting argument. They believe that this will be inflationary, and possibly even hyper-inflationary:

"This is because policymakers appear to be attempting to shift demand back to where it was a couple of months ago, at the same time as holding supply fixed. To put it another way, if the government tries to keep spending at levels before lockdowns began, while at the same time keeping lockdowns in place, there will be simply more money chasing after significantly fewer goods and services. The result of this will be inflation, and a lot of it.” 

A return of inflation would be a large positive for the price of gold.

Gold price target: USD $3000?

Today Bank of America wrote in a research note to their clients, "As the ultimate store of value, gold is a reflection of market movements across all major financial and physical assets… and the gold market has further room to run, in our view.”

The Bank of America research note continues: "Now, with the Fed committing to do whatever it takes to prevent widespread bankruptcies across the US, Congress injecting a USD $2 trillion fiscal stimulus plan, and economic growth on standstill until there is a cure or a vaccine, inflation could rise even if GDP does not. This backdrop should prove very positive for gold”.

"We have been long-term gold bulls, maintaining our constructive forecast even through the recent volatility. Hence, we are marking-to-market expectations, while at the same time anticipating further upside. Thus, we increase our 18-month gold target price from USD $2,000 to USD $3,000/oz.”

At today’s exchange rate that would mean a gold price of AUD $4,761 per ounce, up from today’s price of approximately AUD $2,700 per ounce.

Conclusion

So we reiterate our opinion from our 2020 Gold Outlook: Accumulate. SendGold makes it easy.

  Happy Earth Day from SendGold SendGold Update – Ramping up Services as Gold Demand Skyrockets Gold and the Ongoing Covid-19 Crisis, March 24 Update – Part 1 of 2

Download our new app now and BUY 100% title to GOLD in minutes


Jodi Stanton

April 8, 2020

As the impact of COVID-19 continues in global markets and the demand for gold continues to increase, SendGold want to let you know they are ramping up their services to you. As a SendGold customer, you are the outright individual owner of physical gold bullion, and a crisis in the banking system would not affect your rights to the gold in your account.

Record gold demand.

People around the world are seeking the safe haven of physical gold during the market turmoil, and gold prices have increased by 38% in the last 12 months and 18% since the first confirmed case of the virus.

SendGold transaction volume has grown 700%+ since January!

Many of you would know Australia is the second-largest gold producer in the world. SendGold's platform is designed to support heavy volumes to meet client demands, and they are confident they can continue to offer some of the best gold prices in the business.

SendGold has launched Level 2 accounts, allowing you to transact at higher limits for larger-scale investment.

To support their clients’ needs to hedge and protect larger portions of their wealth, SendGold has instituted higher transaction and total holding limits. Level 1
  • Transact up to A$5,000 at a time
  • Transact up to A$20,000 per week
  • Hold a gold balance up to A$300,000
  • No minimums
Level 2
  • Transact up to A$100,000 at a time
  • Transact up to A$200,000 per week
  • Hold a gold balance up to A$3,000,000
  • No minimums
 

SendGold's customer service remains in full operation if you need them.

SendGold is available to help with your gold investments and transactions. The SendGold team is actively engaged with you and are available to answer any questions or provide support services. They do not anticipate any service disruptions, but will quickly communicate with customers and partners if something changes that you should be aware of.

SendGold CEO Jodi Stanton adds, "Be safe and look after your loved ones".

"We’d like to extend our best wishes to you, your colleagues, and your families. We hope you all stay healthy and safe during these challenging times."   Gold and the Ongoing Covid-19 Crisis, March 24 Update – Part 1 of 2 Keep Calm and Carry On (Buying Gold) amid Covid-19 Jodi Stanton recognised as a finalist at the Women Leading Tech Awards  

Download our new app now and BUY 100% title to GOLD in minutes


Mark Pey

April 22, 2020

Now that the economic fallout of Covid-19 is becoming a little clearer, we can discuss the possible effects on investing and on gold price in particular.

Each of the factors discussed below (and in Part 1) - gold’s performance during the last crisis, the further selloff of lower-quality assets, the potential for another sovereign debt crisis, and the potential for higher inflation when stimulus payments arrive – all argue in our view for a steady and continued rise in the price of gold.

Gold was already a top-performing investment

Prior to the crisis (and prior to the recent run-up in the price of gold) Price Waterhouse Coopers prepared a report for the world’s largest investors - the so-called “sovereign wealth funds” from countries like Singapore and Norway.

In that report, they pointed out that gold had already outperformed the top two major asset classes (shares and bonds) over the previous 10-year and 20-year time periods: https://www.pwc.com/gx/en/industries/sovereign-wealth-investment-funds/publications/alternative-assets-for-sovereign-wealth-funds.html

Gold tops the charts so far in 2020

So going into the Covid-19 scare, gold was already one of the world’s top-performing investment asset classes.

And so far this year gold has added even more to that winning form, outperforming everything from shares to bonds to commodities to Bitcoin. The chart above shows the year-to-date returns for 2020 (through 10 April). We believe there is a high likelihood for that outperformance to continue, for a number of reasons.

Covid-19 means governments must print the money people need

Most governments are putting through very large stimulus packages. In the U.S. the stimulus already exceeds USD $2 trillion.

But J.P.Morgan's chief economist Michael Feroli noted, "In response to the Covid-19 crisis, the U. S. Federal Reserve Bank has effectively shifted from lender of last resort for banks, to a commercial banker of last resort for the broader economy." 

This change means there is a heightened risk of a “sovereign debt crisis”, where the government itself cannot pay its bills and has to default.

It’s worth recalling that sovereign debt crises only resolve in one of two ways: either government bond investors take big losses (or get wiped out altogether) or inflation or hyper-inflation debases the currency (makes it less valuable) to the point where the size of the remaining debt is manageable.

And the lesson of the last major country sovereign debt crisis is worth noting: the world’s six biggest economies’ currencies lost between 75-95% of their value against gold over the course of less than a decade.

And what happens when the stimulus payments start arriving?

If we look ahead a few weeks or months to a time when the financial market selloffs have abated somewhat and stimulus payments begin arriving, Deutsche Bank recently made an interesting argument. They believe that this will be inflationary, and possibly even hyper-inflationary:

"This is because policymakers appear to be attempting to shift demand back to where it was a couple of months ago, at the same time as holding supply fixed. To put it another way, if the government tries to keep spending at levels before lockdowns began, while at the same time keeping lockdowns in place, there will be simply more money chasing after significantly fewer goods and services. The result of this will be inflation, and a lot of it.” 

A return of inflation would be a large positive for the price of gold.

Gold price target: USD $3000?

Today Bank of America wrote in a research note to their clients, "As the ultimate store of value, gold is a reflection of market movements across all major financial and physical assets… and the gold market has further room to run, in our view.”

The Bank of America research note continues: "Now, with the Fed committing to do whatever it takes to prevent widespread bankruptcies across the US, Congress injecting a USD $2 trillion fiscal stimulus plan, and economic growth on standstill until there is a cure or a vaccine, inflation could rise even if GDP does not. This backdrop should prove very positive for gold”.

"We have been long-term gold bulls, maintaining our constructive forecast even through the recent volatility. Hence, we are marking-to-market expectations, while at the same time anticipating further upside. Thus, we increase our 18-month gold target price from USD $2,000 to USD $3,000/oz.”

At today’s exchange rate that would mean a gold price of AUD $4,761 per ounce, up from today’s price of approximately AUD $2,700 per ounce.

Conclusion

So we reiterate our opinion from our 2020 Gold Outlook: Accumulate. SendGold makes it easy.

  Happy Earth Day from SendGold SendGold Update – Ramping up Services as Gold Demand Skyrockets Gold and the Ongoing Covid-19 Crisis, March 24 Update – Part 1 of 2

Download our new app now and BUY 100% title to GOLD in minutes


Jodi Stanton

April 8, 2020

As the impact of COVID-19 continues in global markets and the demand for gold continues to increase, SendGold want to let you know they are ramping up their services to you. As a SendGold customer, you are the outright individual owner of physical gold bullion, and a crisis in the banking system would not affect your rights to the gold in your account.

Record gold demand.

People around the world are seeking the safe haven of physical gold during the market turmoil, and gold prices have increased by 38% in the last 12 months and 18% since the first confirmed case of the virus.

SendGold transaction volume has grown 700%+ since January!

Many of you would know Australia is the second-largest gold producer in the world. SendGold's platform is designed to support heavy volumes to meet client demands, and they are confident they can continue to offer some of the best gold prices in the business.

SendGold has launched Level 2 accounts, allowing you to transact at higher limits for larger-scale investment.

To support their clients’ needs to hedge and protect larger portions of their wealth, SendGold has instituted higher transaction and total holding limits. Level 1
  • Transact up to A$5,000 at a time
  • Transact up to A$20,000 per week
  • Hold a gold balance up to A$300,000
  • No minimums
Level 2
  • Transact up to A$100,000 at a time
  • Transact up to A$200,000 per week
  • Hold a gold balance up to A$3,000,000
  • No minimums
 

SendGold's customer service remains in full operation if you need them.

SendGold is available to help with your gold investments and transactions. The SendGold team is actively engaged with you and are available to answer any questions or provide support services. They do not anticipate any service disruptions, but will quickly communicate with customers and partners if something changes that you should be aware of.

SendGold CEO Jodi Stanton adds, "Be safe and look after your loved ones".

"We’d like to extend our best wishes to you, your colleagues, and your families. We hope you all stay healthy and safe during these challenging times."   Gold and the Ongoing Covid-19 Crisis, March 24 Update – Part 1 of 2 Keep Calm and Carry On (Buying Gold) amid Covid-19 Jodi Stanton recognised as a finalist at the Women Leading Tech Awards  

Download our new app now and BUY 100% title to GOLD in minutes


Mark Pey

March 24, 2020

In this two-part post, we will look at 3 things:

  1. How gold performed in the 2008 GFC
  2. Why the Covid-19 financial crisis is different
  3. How financial assets, including gold, might be expected to perform as the current crisis plays out.
We discuss the first two points in this post (Part 1).

Gold in the 2008 Crisis

The chart above shows the price of gold during and after the 2008 GFC. Of note is the initial reaction in 2008: gold declined. This was because gold is an extremely liquid asset with broad global participation and very deep markets. Investors liquidated gold in order to shore up losses elsewhere on their balance sheets and to avoid margin calls.

Once the immediate liquidity needs were offset, investors sought high-quality assets to invest in. Title to Physical Gold fit the bill because it is the safest investment asset there is: its value does not depend in any way on the performance of a counterparty. With doubts still lingering about the solvency and performance of counterparties of all kinds, including banks, funds, corporations, and even sovereign governments, investors sought out history’s best safe haven.

If we compare gold performance after the 2008 pre-crisis low to today’s gold bull run (so far) then we might expect that the current run still has a good ways to go:

But the Covid-19 financial crisis is different

The 2008 crisis started as a demand crisis as the solvency of global banks came into question. This made for an expensive but relatively straightforward fix, since the U.S. Federal Reserve Bank (and the other central banks) could inject money directly into banks.

But the Covid-19 crisis is manifesting first as a supply side crisis, as supply chains and companies shut down. So it is both the banks and their customers who require a bailout. And that supply shock is now spilling over to be a demand shock too.

And while the U.S. Federal Reserve is moving swiftly to support the financial assets of companies (through new overnight money market support and direct corporate bond purchases) they cannot support companies (and their employees) directly. That job is left to governments, who are now preparing very large fiscal stimulus and even direct payment packages.

In Part 2 we will comment on how financial assets including gold might be expected to perform as the current crisis plays out. Keep Calm and Carry On (Buying Gold) amid Covid-19 Jodi Stanton recognised as a finalist at the Women Leading Tech Awards Keeping our Clients Informed About Gold

Download our new app now and BUY 100% title to GOLD in minutes