Metals sell off after Trump win while oil recoups some losses
Metals bore the brunt of global commodity price losses after a US election win by Donald Trump on Wednesday.
Gold was trending lower for a sixth straight session on Thursday hitting fresh four-year lows, but a market desperate for bullish news could find it in Switzerland at the end of the month.
The Swiss go to the polls on November 30 in a referendum that will lay down new rules for the country’s central bank concerning its gold reserves.
Surveys are divided about support for the “Save Our Gold” camp that would force the Swiss National Bank to hold 20% of its reserves in gold, repatriate bullion held outside its borders and halt all sales, but a yes vote would be just what investors who nursing a 30%-plus drop in the price over the past two years need.
To meet the 20% requirement the SNB will have to buy between 1,500 – 1,800 tonnes on the open market, which at today’s ruling price would set the fiscus back nearly $60 billion.
Financial Review quotes Bank of America analyst Michael Widmer as saying a positive outcome may push gold above $1,350 an ounce, more than 18% higher than today’s price.
Joni Teves, an analyst at UBS AG in London, told the Australian website “it would have a major impact if it passes”:
“If they do launch a buying program, it would have effectively a constant bid in the market.”
Currently, the bank has 1,040 tons of gold, with roughly 70% stored in Switzerland, 20% at the Bank of England and 10% at the Canadian central bank.
If the SNB starts buying Switzerland, it would be placed third on the list of official gold reserves by country behind the US and Germany.
Switzerland produces no gold itself but it’s the world’s gold refining hub, a major global center for bullion vaults and boasts the world’s 8th largest official hoard of gold.
The country was also late coming off the gold standard and as recently as 1999 its constitution required the franc to be 40% backed by gold.
Image by Steve Groom
9 Comments
bobbygater
yes, buy up gold to peg to currency at all time highs, then the rest of the world can knock the gold to lower levels thereby devaluing the currency, the world has it right NOW, printed paper accepted for commerce, an endless supply- so what? you are born naked as a baby everything you get other than food from your mother is man made
rabidrightwingnation
as and when dollar collapse dragging all other fiat currencies with it… gold backed currencies will win.. in this decade
lildpropmsv .
This is nothing but a referendum and holds no legal obligation to the bank. Even if they vote yes, the bank will not engage in gold buying and has made that clear. It’s a nice feel good article for gold bugs though.
Kane
First become familiar with Swiss law and then make statements like that. Swiss referendums are legally binding and SNB will have no choice but to implement postulates of that referendum.
Michael Yates
http://www.christianfinancialadvisor.ca/
I just keep stacking, knowing it’s never different this time.
cbergner
Governments and Banks have been giving the impression that holding Gold is not important, either as a store of wealth, or as something needed for your currency’s stability? If any of this were true, why do they always insist all the Gold is there, when it is common knowledge that much of it has gone? If Gold has no value, then why do countries in the East continue to stockpile it.
Eventually these Fiat currencies will be little more than confetti, because that is what many already are. Mass printing in the form of Bond buying that is Quantitative Easing. It is only through manipulation that this charade has been able to be continued, but it won’t last forever. Eventually the numbers get so big, you run out of trees! Keep some Yellow metal, because the storm is coming!
cbergner
Here is another idea for Gold and Silver Miners. Sell only what you need to keep your company reasonably afloat, and keep the rest until the price of gold becomes more realistic. I’m sure a squeeze in supply will rapidly translate to realistic price correction, especially once news get out that this is the new norm! I think investors would welcome this strategy and it would only take a few companies to form some sort of “Gold Union for Longterm Price Support” (GULPS). Nothing to lose and everything to gain and a way to force this price manipulation into the ground; which is adversely affecting all Miners balance sheets!
John Law
capitulation is near. All we need is a final purge of the sellers.
rabidrightwingnation
naaa… i think will move 18.1% or may be 17.9%.. but not exactly 18%