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Gold Is on the Move | USMR Market Insights

Jan 11, 2019

Recently, the gold market has been moving in an upward direction. What will the markets do in the short and long term? In today’s episode of USMR Market Insights, Patrick Brunson and Coy Wells talk about what we could see gold do in the near future.


Gold Is on the Move- Video Transcription

Coy Wells:                           00:00
Hello, my name is Coy Wells and today we're going to be talking with Mr. Patrick Brunson and we're gonna be talking about the gold market. Recently, the gold market has been moving in the upward direction and we're now on the verge of breaking $1,300 an ounce. And we're going to talk about what we believe the gold market is going to do in the short term. And we're going to try to give long term perspectives and what we could see gold do here in the very near future. Mr Brunson, if you can kind of give us a little bit of insight on what the gold market has done in the past few months. We obviously have seen a massive turn in the stock market going from around 26,800 points, we've seen it hovering now around 23,000 points. How's that playing a role in the gold market right now?
Patrick Brunson:               00:37
Well, one of the biggest issues that we're seeing right now is the decision by the Federal Reserve to pump the brakes on raising interest rates. That's a big deal because since they've made that decision, which was Friday of last week I believe, Jerome Powell made a statement that they were going to start to back off a little bit. And since then, the dollar has come down on the dollar index. So in turn, what that's done is that sent gold up quite a bit over the last week and the last 30 to 45 days. So we've gone from around 1230 at the low and as of yesterday, the high was 1295 for the last 30 days. So there's a lot of movement going on right now in correlation to the government shut down as well.
Coy Wells:                           01:22
That's a significant move. The other thing that we saw if I'm not mistaken, it was around December, is that JP Morgan Chase signed a contract with a London based bank and they're now trading around $24 billion a day in the gold market. What kind of a indication does that give us? The American people as a whole. Why would the banks such as JP Morgan Chase, one of the biggest in the world probably, go out and trading that much money in gold right now? What's your thoughts on that?
Patrick Brunson:               01:49
Well, JP Morgan Chase is technically the second biggest bank in the world. Okay. And so you've had major banks like JP Morgan as well as citi group, Goldman Sachs. More importantly, we've been seeing that the central banks have been loading the wagons with physical gold. So they have been buying more in the last three years than they have at any other point in history since the Great Depression. And they haven't come out with any statements as to why. The only assumption that we can truly make for a financial institution to make that type of a purchase in gold is because they're trying to preserve the value of their own stability as a financial institution. Because if the dollar takes a major hit and these guys are sitting on a lot of cash, well that means they're going to take a big hit too. So they're protecting themselves.
Coy Wells:                           02:39
That would also- and you brought up a fantastic point, that they're worried about the dollar. Another indicator of somebody being worried about the dollar is we just saw the inversion curve take place with U.S. treasury bonds, which has been an indication for a recession since about 1975. So that would mean that the confidence has shifted from long term treasury bonds and it has gone to short term treasury bonds. I mean short term are now exceeding the purchase of longterm treasury bonds. That means they don't have confidence in the U.S. economy or in the U.S. dollar long term. Would that be accurate?
Patrick Brunson:               03:08
That'd be pretty spot on. Yeah. I think that one of the biggest issues with bonds right now is people are starting to realize that they are basically just a promise to pay back in dollars in the future. Okay. So the problem with that is if the dollar is 30 or 40% weaker 10 years from now, when you cash in that bond, what was the point of putting the money into that bond to begin with?
Coy Wells:                           03:35
Makes Sense. And, uh, the other thing that we saw is the International Monetary Fund had made a report back in October, I think it was October 3rd, if I'm not mistaken. Uh, they had made a recent announcement, which was a huge eyeopener for me. She had made an announcement that in the second quarter of 2018, so that's May, June, July, that the central banks around the world had reduced their holdings of US dollars by 38% and change. That's huge. If we think about that folks. The central banks around the world reduce their dependency on US dollars by about 38%. And now we're hearing it from Mr. Brunson that the central banks and our own banks are transferring into gold. That purchase in gold could have been with the reduction of US dollars at that time, which was relatively strong.
Patrick Brunson:               04:15
That's very coincidental. It could have been in correlation to each other.
 
Coy Wells:                           04:19
Okay. Fantastic information folks. And out right now, ‘25 reasons to own gold, 2019‘ fresh off the press newest edition. I'm Coy Wells with U.S. Money Reserve Market Insights.
 
Patrick Brunson:               04:31
I'm Patrick Brunson, and if you're watching from Youtube, please subscribe to the channel so you don't miss any episodes in the weeks to come. And as always, thank you for watching.
 

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