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BullionVault Weekly Update
Monday, 11 June 2018


In the markets this morning...
For up-to-the-minute live spot gold and silver prices use the BullionVault chart

Bored, Bored, Bored
from Adrian Ash
Head of Research, BullionVault

"WITHOUT GOLD I would have starved to death," says Austria's central-bank boss Ewald Nowotny.

"But with gold, I might die of boredom," investors seem to reply today.

A handful of gold coins, Nowotny says, enabled his family to get through Austria's economic wipe-out and hyperinflation after WWII ended in defeat for the Axis nations.

"Silver cutlery was also traded at the market," Nowotny adds in a new interview...showing Die Presse a shiny pile of bars in Vienna.

But here in 2018...and even with silver prices edging higher...trading volumes in silver dropped back. Indeed, iinvestors who haven't fallen asleep are tip-toeing away from the once-monetary metal as well as gold.

Volatility in silver prices has fallen to a 17-year low...

...and volatility in gold is more boring still...drifting down to the smallest 3-month trading range (low to high) since the doldrums of the mid-1990s.

Little wonder then that the number of people trading precious metals on BullionVault has eased back.

Tighter price ranges offer smaller gains if you call it right. And the number of people buying or selling on the world's No.1 gold and silver market has dropped below 10% of metal-owning customers.

New interest from new investors has also retreated, as we explained in the latest Gold Investor Index update.

Last month saw the fewest first-time users of BullionVault in 4 years.

But we did very much better than the broader 'retail bullion' market worldwide.

The largest gold-backed ETF for instance...the giant SPDR Gold Trust (NYSEArca:GLD)...shrank 4% across May, erasing the previous two months of growth with the heaviest 1-month outflow since August last year.

The US Mint meantime reported selling 24,000 ounces of American Eagle gold coins...up sharply from April's 10-year low as dealers re-stocked inventory...but still barely half the last 5 years' average for May.

The killer stat, however, comes from Google.

Because the number of internet searches for the phrase "buy gold" last month sank to new multi-year lows...

...back to the lowest level since July 2007...

...the very eve of the global financial crisis.

"Gold it seems to me is sending a signal at the moment," wrote Financial Times columnist John Authers last week, commenting on BullionVault's latest update.

"It looks very much like a contrarian signal of complacency."

"This is the sort of thing I’d normally take as a pretty decent contrarian signal," agrees John Stepek, editor of the UK's best-selling MoneyWeek magazine.

The search-volume data from Google are, the two Johns think, flashing a red warning sign.

People are ignoring gold like the financial crisis never happened.

Anyone considering an allocation to gold as a form of financial insurance should pay attention, I think.

But everyone else? Back to sleep.

Because it's only when the crowd is distracted that a real opportunity can open up.

That's maybe what is happening in precious metals so far this summer.

Adrian Ash
Head of Research, BullionVault

Key data and market events, times in Greenwich Mean Time (CET-1, EST+5):
  • New Zealand manufacturing sales steady in Q1. May then saw commodity boom added to weak NZ Dollar equal 5% month-on-month boost to natural resources' export prices...
  • Australia Q1 GDP blew past forecasts with 3.1% annual growth but trade showed a deficit, sales of new home fell again in May, down over 4% from April...
  • Japan GDP shrank again in Q1, services sector now slowing (Markit PMI) as household spending falls, bank lending weakest in 4 years...
  • China consumer prices +1.8% per year in May but factory prices +4.1% as imports surged 2x as fast as exports, strong Dollar boosted trade surplus in Yuan terms...
  • India money-supply growth accelerates to 10.7% per year as bank lending +13.1%...
  • Eurozone Q1 GDP confirmed at 2.5% annual growth but investor confidence slumps (Sentix) as France budget deficit widens, Germany factory order flat year-on-year in April (analysts expected +3.6%), Italy retail sales -4.6% per year, Spain new jobs creation weaker than forecast as industrial output slows hard...
  • UK house prices regained half April's 3% plunge in May, construction sector steady + services stronger (PMI surveys) as retail sales rebounded (BRC)...
  • US labour costs rose 2.9% per year in Q1, factory orders fell April but job openings hit new all-time high even as new consumer borrowing slowed hard, defying analyst forecasts. Services boom continued in May (ISM PMI)...
  • Canada exports up, imports down in April to trim trade deficit as new building permits sank 4.6% from March. New home building then -10% in May as national business boom (Ivey PMI) slowed hard, number of people in work fell again...
  • Central-bank watch 3 changes in 8 decisions last week as Kazakhstan cut, but both India (+0.25 to 6.25%) and Turkey (+1.25 to 17.75%) hiked in defend weakening currencies. No change from Australia at record-low 1.25%...
  • Central banks this week 11 decisions due, incl. the big 3 with US Fed on Weds (set to raise), Eurozone on Thurs (wants to end QE but data? Italy?) then Japan on Friday (set to stay crazy). Also Russia on Friday (No.3 gold miner currently has rates at 4-year low but Ruble is already recovering from sanctions sell-off. Central bank has other fish to fry anyway...)
  • So far Monday Japan machinery orders +10% year-on-year in April, tool orders +15% as money-supply growth holds 3.2% per year; Italy industrial output sank 1.2% in April from March; UK manufacturing output -1.4% as UK trade deficit widened to 3rd worst of last 5 years...
  • Later today UK GDP 3 months to May (NIESR estimate). Unlikely to be good...
  • Tuesday Australia mortgage lending + business confidence (NAB); Japan corporate goods prices; China bank lending, UK jobs + wages, Germany investor sentiment (ZEW); US consumer-price inflation + Washington's latest spending deficit...
  • Wednesday Australia consumer confidence (Westpac), China Q1 GDP, UK inflation in consumer, factory-gate + house prices; Eurozone industrial output; US factory-gate inflation and then Federal Reserve June rate hike plus new forecasts...
  • Thursday Australia jobs data; Japan industrial output; China retail sales, industrial production + fixed-asset investment; Germany + France inflation, then ECB "no change" central-bank decision; UK retail sales; US retail sales, weekly jobless benefit claims; Canada new house prices...
  • Friday New Zealand business activity (PMI), China house prices, Italy industrial sales + orders, Eurozone inflation, US industrial output + consumer sentment (Michigan)...
PLEASE NOTE: This email is published to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events - and must be verified elsewhere - should you choose to act on it.

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