Gold's Uptick Webinar Slides 09-29-2016
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The document discusses recent trends in the gold market. It analyzes gold as a commodity, currency, inflation hedge, and its relationship to interest rates. The document also examines gold as a safe harbor asset and provides three scenarios for the gold outlook: 1) continued uptrend to $1550, 2) market panic dropping gold to $1400, and 3) a crash to $1000 if the Fed raises rates aggressively. The key takeaways are that delaying rate hikes allows for gold's uptick, gold is more of a currency than commodity, it doesn't hedge non-existent inflation, and gold volatility matches the S&P 500.
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Gold's Uptick Webinar Slides 09-29-2016
- 1. Gold’s Uptick 29 Sept 2016 War Room
- 2. HiddenLevers War Room Open Q + A Macro Coaching Archived webinars CE Credit Idea Generation Presentation deck AccountabilityScenario Updates
- 3. Market Update Nature of Gold Gold as Safe Harbor Scenario: Gold Outlook Gold’s Uptick UPDATED
- 5. Market Update sources: HiddenLevers, Bloomberg, Financial Times, Bloomberg 2 Mexico Border Wall Art Market Crash European Banks
- 6. Market Update – US Election sources: HiddenLevers, Bloomberg, Bloomberg 2 - 2016 US election: establishment vs outsider - October: highest volatility month in election years - Less volatility in 2016 = market pricing in gridlock - Fed: Now a politicized body
- 8. NATURE: Gold as Commodity sources: HiddenLevers Gold – Oil Correlation? • Trended together to bottom and in 2016 rebound • Short-term correlation still negative Oil-Gold Ratio • Historical average in teens • Set new record in Q1 2016 • Are recent levels setting a new trend?
- 9. NATURE: Gold as Currency USD is inverse to Gold source: HiddenLevers, CNA Finance, Bloomberg China diversifying reserves from USD Yuan will be in IMF special fund – 01 Oct China has doubled Gold reserves since 2009 Shanghai Exchange = physical delivery
- 10. NATURE: Gold as Inflation Hedge sources: HiddenLevers CPI GOLD No Gold Rise with CPI Gold Rises with CPI
- 11. NATURE: Gold + Interest Rates sources: HiddenLevers, Bullion Vault, Interest Rates tend to be inverse to Gold YATZEE! Dec 2016 rate hike
- 12. HiddenLevers GOLD AS SAFE HARBOR
- 13. 2y T 10y T USD GOLD SAFE HARBOR: Gold Pulse Check sources: HiddenLevers, World Gold Council FUNDAMENTALS TECHNICALS Gold Demand (Q2 YoY) Central Banks -40% Jewelry/Industry -12% Investment +141% Total +15%
- 14. SAFE HARBOR: Gold + Geopolitics sources: HiddenLevers, HiddenLevers 2 Financial Crisis S&P + Gold had similar volatility Bonds true safe-haven Brexit Aug 2015 Volatility Commodity Crash Gold tends to provide some protection in average market corrections.
- 15. SAFE HARBOR: Volatility Comparison sources: HiddenLevers S&P 18.5 GLD Gold ETF 18.25 GDX Miners ETF 38.7 Gold Bullion 15.8
- 17. baseline SECENARIO UPDATE: Gold Outlook source: HiddenLevers
- 18. GOOD: 1550 Uptrend source: HiddenLevers Commodities Uptrend with Fiscal Spending Indian jewelry demand recovers China underlying bid US infrastructure spending
- 19. BAD: 1400 Market Panic source: HiddenLevers European banks spook global markets Gold spiked in 2016 Brexit Gold spiked in 2012 Greek Crisis Short term spike due to EU banks
- 20. UGLY: Crash to 1K source: HiddenLevers Fed becomes more aggressive after US Election Gold underperforms S&P more rapid rate hikes double bottom at 1k
- 21. Scenario: Gold Outlook Good: Uptrend Bad: Market Panic Ugly: Crash to 1k Gold -25% S&P -20% Gold +6% S&P -5% Gold +15% A further slide in the dollar, Chinese buying, and a recovery of (Indian) jewelry demand could all be catalysts causing gold to outpace stocks in a calm market. Similar to Brexit, an event causing a short term equity markets drop and VIX spike could showcase gold’s role as a safe haven. If the Fed or other Central Banks cut easing programs or are forced to let rates rise faster than expected, both gold and equity markets could contract rapidly. S&P +5%
- 22. Gold’s Uptick – Take Aways Rate hike postponed = Gold Uptick Gold currently more currency than commodity Don’t use Gold as a hedge for non-existent inflation Gold Volatility = S&P Volatility