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Gold Demand Trends Bullish!

Hard Assets Alliance was created as a cooperative of investment professionals who believe there’s a better way to invest in precious metals. This is a guest perspective on the markets from one of these partners; we hope you enjoy it.


The World Gold Council just released the latest addition of its widely read Gold Demand Trends report, and its fundamental findings are very bullish for higher gold prices dead ahead.

That’s in addition to the bullish technical indicators for gold, which I alerted you to last week. Let’s dive into the details.

Holdings of gold-backed ETFs grew 401t during 2019

• Massive inflows into gold-backed ETFs in 2019 boosted holdings to a record total of 2,885.5 tons!

Gold ETF holdings grew by 12.9 million ounces last year — that’s a staggering increase of $19.1 billion worth of gold! Inflows were heavily concentrated in the three months ended September 2019 as the U.S. dollar gold price rallied to a six-year high.

Central Banks were net buyers for a tenth consecutive year

• Central banks were net buyers of gold for the 10th straight year!

Global central bank gold reserves grew by 20.9 million ounces in 2019, an increase of $30.9 billion worth of gold, the second-highest annual total for 50 years.

• The gold price averaged $1,481 per ounce in Q4.

This was the highest average price since 2013. And even though gold prices closed out the year slightly below the September high in dollar terms, gold priced in various international currencies — including the euro, yen, pound sterling and the Chinese yuan — hit the highest level in history.

Gold Price and 2019 return in key currencies

It’s crystal clear to me that gold demand by retail investors, ETFs and global central banks is an unstoppable force that’s bound to push gold prices much higher in 2020 and beyond.

In fact, gold has already exceeded it’s 2019 high in the very first month of this year, trading above $1,613 an ounce in January. And you can bet your bottom dollar there’s a lot more upside to come.

Here’s proof positive in just one easy-to-understand chart!

The gold price has tracked the expansion of global negative yielding debt

Perhaps THE most important driver of gold prices is the level of interest rates. That’s because unlike bonds or stocks, gold pays no interest or dividends.

But in today’s upside-down world where 90% of global government bonds are trading with NEGATIVE real yields (bond yield minus inflation) gold is quite literally the best game in town!

And sure enough, as you can clearly see in the chart above, gold prices have perfectly tracked the amount of negative-yielding global bonds over the past several years. And guess what — governments are issuing more and more debt with reckless abandon.

That makes gold practically a one-way upside trade for savvy investors to profit from!

Bottom line: Sit tight with all your open Hard Asset Profits positions and be ready to pull the trigger on a new batch of trades very soon!

 

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