ROSLAND CAPITAL’S SENIOR ECONOMIC ADVISOR JEFFREY NICHOLS PREDICTS ‘GOLD IS SET TO MOVE’
NEW YORK (August 16, 2010) – Jeffrey Nichols, Senior Economic Advisor to Rosland Capital (www.roslandcapital.com), had the following commentary based on recent market activity and the week ahead:
It looks increasingly likely that gold has already resumed its long upward march and before long could be registering new all-time highs.
Just in the past week or two there has been an important shift in world financial market sentiment and rising anxiety about the U.S. and global economic outlook is now prompting renewed investor interest in the yellow metal as a safe-haven asset.
Moreover, the latest news from the U.S. Federal Reserve, following last week's Federal Open Market Committee meeting, makes it clear that the Fed is resuming "quantitative easing," the Fed's code words for printing more money.
Indeed, the political impasse and lack of consensus in Washington leaves the job of reviving the economy to the Fed -- and it will do whatever it takes to get the economy moving up and unemployment moving down. Gold will benefit as more investors recognize the long-term implications of Fed policy for inflation and the dollar.
Asia on the Rise
News that China's central bank, the People's Bank of China, was a net seller of U.S. Treasury securities for the second straight month in June -- along with the recently announced liberalization of private-sector gold trading and investment policies -- suggests that the PBOC already recognizes the coming debasement of the U.S. currency.
I believe that the liberalization of China's gold trading and investment markets will soon begin supporting and amplifying this country's already strong and growing demand for gold. And, although the central bank has not reported any increase in its official gold reserves since last April, I believe that the PBOC continues to buy gold surreptitiously directly from domestic mine producers. For more on China's recent gold liberalization initiatives, see our August 10 Rosland Capital Gold Commentary at www.roslandcapital.com.
China is not the only Asian giant with a giant appetite for gold. India has historically been the world's largest gold-consuming nation. Although imports were soft last year as Indian buyers resisted higher prices, I believe that demand is set to recover and, indeed, may already be on the rise, thanks to seasonal buying patterns.
Just in the past few days we have had anecdotal reports that Indian demand is picking up ahead of the upcoming festivals later this month and continuing into the autumn.
India's farmers and agrarian sector are an important component of the country's gold-buying sector. This year's good monsoons and healthy autumn harvests should support an above-average seasonal recovery in Indian gold buying. An added positive wrinkle beginning next month will be the availability of gold coin-like investment medallions to be sold by the country's postal service at post offices in rural communities.
Technically Speaking
Technically speaking, the market also looks increasingly encouraging: Round numbers are often important support and resistance points. Just a few weeks ago, $1200 an ounce looked to many traders like an impenetrable ceiling, capping the market and the longer we stayed below that level the number of gold bears seemed to multiply with more pundits predicting further declines.
Suddenly, it seems that most technicians see $1200 as a new support level with overhead resistance in the $1225 to $1235 range. And the herd of gold bulls is again growing, with predictions of new all-time highs around the corner.
We think this year's strong seasonal increase in demand -- and a further rise in investor anxieties -- will give gold sufficient thrust to break through overhead resistance and, before long, move to new all-time highs.
To arrange an interview with Jeffrey Nichols, please contact Liz Cheek of Hill & Knowlton at (212) 885-0682 or elizabeth.cheek@hillandknowlton.com
About Rosland Capital
Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver, platinum, palladium, and other precious metals. For more information please visit www.roslandcapital.com.
About Jeffrey Nichols
Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.
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Contact: Liz Cheek
(212) 885-0682
elizabeth.cheek@hillandknowlton.com
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