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In this weekly selection, we see another record price for gold. A gold bar is worth more than a million dollars for the first time. Gold may take over the role of government bonds for investors. We also read rumors about a new technology from Samsung that could increase the demand for silver enormously. In addition, we pay attention to the new CBS figures on house prices and the once again disappointing jobs figures from the US.
Last Tuesday, the Gold price A dollar record of $2,531 per troy ounce, more than €73,300 per kilo. For the first time in history, the classic gold bar of 12.5 kg is more than $1 million worth. A tenfold increase from 2001 when it was worth $100,000.
"The West is waking up to what Asia followed earlier this year," says Ruth Crowell, CEO of the London Bullion Market Association. According to the World Gold Council, the holdings of gold ETFs have increased by 90.4 tonnes since May. Net inflows have been positive in seven of the past eight weeks. "What we've seen is that investors and speculators in the West are starting to return to the gold market," said John Reade, chief strategist at the World Gold Council.
The expectation that the Fed will announce that it will cut interest rates is now playing an important role in the rise in the price of gold. There are at least two reasons for this. Historically, gold has performed well during periods of interest rate cuts. This is not just because interest rate cuts often take place in times of increasing uncertainty. Gold has an inverse correlation with real interest rates. If it is lower, the opportunity cost of owning gold will also decrease, making gold relatively more attractive.
The second reason is that an interest rate cut can also have a negative impact on the value of a currency, in this case the dollar. If the real interest rate you can earn on debt in dollars will become relatively lower, then the demand for the currency will also fall. The U.S. dollar also reached its Lowest level since the beginning of the year. This month, the U.S. currency has fallen 2.2 percent against a basket of competing currencies. There was a breakout in the price of gold measured in dollars on Tuesday, but in other currencies, gold broke it Record not yet.
Earlier we wrote an article with Important Reasons for the recent surge in the price of gold, including increasing demand from central banks and high demand for gold from Asia. In the Holland Gold podcast, Jeroen Blokland explains why he expects the demand for gold from investors to increase in the near future. Traditionally, investors have used government bonds as temporary safe-havens. Warren Buffet did so last month after half of his stakes in Apple Sold.
Gold vs. Gold Government bonds (source: Jeroen Blokland)
Jeroen explains that the conditions on which this strategy is based are changing. He thinks that every day there will be more investors who are no longer interested in government bonds and that gold can take over this role because it has a much stronger story in the long run. He does not see a future in government bonds, because they are becoming less and less attractive in terms of return, volatility/risk and diversification.
He seems to be right about this from the Financial Times, which published an article yesterday with the title 'Gold as hedge’. It states that over the past 20 years, gold has outperformed bonds as a diversifier in an equity portfolio.
Alasdair Macleod, Head of Reasearch at Goldmoney, said in an interview with Paul Buitink this week: "The demand for gold is likely to get out of control ... before the average American, European or Brit wakes up to what it's all about". Watch the full interview here.
The price of an owner-occupied home was almost equal in July this year 11 percent higher than in July 2023. Prices rose by 1.4 percent relative to June. Prices are now 4.6 percent higher than the previous peak in July 2022. The significant increase in the number of transactions is also striking. In July, 18,610 house transactions were registered, about a quarter more than one year previously. One possible explanation for this is that Real Estate Investors For months now, more rental homes have been sold than they have been buying. This has to do with the new Affordable Rent Act. It is, in accordance with forecast, so not that owner-occupied homes will become cheaper as a result. The owner-occupied market in the Netherlands is 8 times larger than the private sector rental market.
For many first-time buyers, owner-occupied homes have become unaffordable. House prices are structural Increased faster Then the maximum borrowing capacity and salaries have increased somewhat, but not enough to keep up with the rise in house prices. In Economist's Journal ESB we read that affordability for first-time buyers is now about 25 percent worse than at the beginning of 2013.
Price development of owner-occupied houses (source: CBS)
The Bureau of Labor Statistics (BLS) revised down the total number of jobs created for the 12 months through March by 818,000 as part of the annual review. With the revisions, job growth still exceeded 2 million during this period, but the report can be seen as an indication that the labor market is not as strong as the BLS's earlier reports suggested.
This is the greatest downward revision since 2009. According to some experts, it is therefore a sign of a Looming recession. "The Fed will see these revisions as another reason to bring forward plans for rate cuts," said Bill Adams, chief economist at Comerica Bank.
Also alley The percentage of employees who expect to become unemployed within the next 4 months has risen to 4.4%. This is the highest level ever recorded and a significant increase from the 2.8% in March 2024.
Payroll Revisions BLS (source: Holger Zschaepitz)
There are going online Rumors around a breakthrough at Samsung in the development of stronger and more durable solid-state batteries. These batteries could offer an impressive 600 miles of range on a single charge and a 20-year lifespan. This new battery technology can significantly increase the demand for silver, as silver is an important part of it. The source of the rumors is Kevin Bambrough, a retired investment professional.
There are no official figures, but according to Bambrough, each new battery cell could contain an estimated 5 grams of silver. This equates to approximately 1 kg of silver per vehicle with a capacity of 100 kWh, much more than is the case now. If 20% of global EV production (about 16 million vehicles) adopts this technology, the additional annual demand for silver could reach 16,000 tons. The current global silver production is 25,000 tons per year.
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On behalf of Holland Gold, Paul Buitink interviews various economists and experts in the macroeconomic field. The aim of the podcast is to provide the viewer with a better picture and guidance in an increasingly rapidly changing macroeconomic and monetary landscape. Click here to subscribe.
