Gold news

 [Music] I'm Charlotte McLoud with investing news.com and here today with me is Ross Norman of metals daily.com thank you so much for being here great to have you my show good great to talk to you yes really really excited to be speaking with you I've been following along for the last few weeks your commentary on gold over at Metals daily and you've been basically looking into what's been driving this price increase that we've seen and I think at a basic level what you found is that it comes down to to

China but of course there's a lot more Nuance than that so I'm hoping you could start by kind of explaining how you got to that conclusion yeah okay well let's just rewind s in terms of the position uh year to date goes up what 133% and um a lot of the key drivers that are occurring this year um technically should be strong headwinds not Tailwinds uh for example let's remember that the US dollar is very strong at the present time up 3.4 6% year to date 10e treasuries around nearly 20% of 4.7%

close to a 17year high both of these should provide massive headwinds of course US Federal Reserve now talking about higher for longer in terms of the rates in an ordinary Market gold would have collapsed because these are really quite significant headwinds but what's taken us um to the current levels is well first point is to remember that not all buying is equal some buying is quality and likely to remain and so is weak and Flaky and the buying that took us to about $250 $2,100 an ounce is

arguably some of the very very highest quality buying that you can have Central Bank buying off the scale running at over 1,000 tons for the last 2 years uh that's double the Run rate of the previous 5 years and I think the be the underlying remise of the Central Bank buying it's not just bricks Nations it's also the non-aligned Nations if I can call it that as well is some people suggest it's the weaponization of the US dollar dollarization but what's for sure is that there's been a significant increase

in sanctions around the world and let's just call the middle ranking central banks must be S themselves we need to have more non-dollar related assets so Central Bank buying demand is vola because it's unlikely to be sold if there's a significant price correction it's for the very long term big multigenerational the second area that's supremely strong is China and we knew that Chinese buying was very good too and that's also very high quality and the reason for that is um China is what

we call a Lobster Pot very easy in very difficult out now you can export some gold from China as jewelry but it's quite hard predominantly most metal that goes into the country doesn't come out and therefore unlikely be spooked by Price action and the buying that has underpinned um uh China has been its Central Bank who've been buying gold for 17 months in a row um last month the only bought 5 tons which is below their run rate suggesting if you like me that they are nuanced in terms of their

buying in other words if the price is high as You' expect there would throttle back a little the second area which is interesting is is um on the ETS which is a securitized form of gold in the stock exchange China normally features as something of a footnote on the what Asia does because it really is pales into insignificance compared to the Buy in the US in particular and Europe but EUR but but the US and Europe the West has been sing ETFs consist for well year to date but China's buying and in the last

um quarter they bought what's the figure they've got now um 29 tons in the last month so that's quite a high figure again not enough to move a dial entirely but enough to build a ground swell of Interest around China and then you got draw Downs on the Shanghai Gold Exchange running at 522 tons in the first quarter now that's large that's suggesting 2,000 tons a year just to remind you Global mind production only 3,000 tons if that run rate was continued so retail buying is strong central bank buying is strong

institutional buying a strongman ETF added to that China is having its Costco mement um in the sense that genz Millennials and now buying gold at high premiums I might add um in Gold beans uh 49 Purity high cish and high Premium Gold beans as a form of storing wealth us the Shanghai Comm index Stock Exchange has lost6 trillion dollar in value since its alltime high back in 2021 China's got a real estate problem it's got a shadow banking problem where do you go to well at the end of the day God is no one

else's promise to pay and so not surprisingly the young are following the traditional gold buyer who they call Dara or grandmothers so you got um Central Bank ETF you've got um draw Downs on Shanghai um it's across the board and we knew demal was good um but there was something odd about gold that started from about the 1st of March give me sh the Lord talking here you haven't any questions yet um something happened to gold from about the 1st of March six weeks ago that gave it a different meter

you know it was quite clearly ignoring normal F market indicators particularly dollar strength Hong all of those things the time of buying was odd early was London uh when us was asleep it didn't pause for Corrections it wasn't authenticated by mve in silver as we normally look to for a step changing gold all the normal indicators that would point to who that buyer was was absent so it was clear that there was a very significant large player in the market M Driving massively higher now it was clear to us that there

was large options buying um on the London market and um it felt it could be that and certainly that was a small part of the story on reflection and then we found out exactly where it was it was in the data there's lots of data produced by our markets the Army May produce a huge m in addition to and within that we saw where the plane was and the the um spoiler alert was well it's more China even more than we expected we keep a close monitron on flows of Gans in China we knew that it was good but not

fantastic um according to the measures that we use so it was in and we looked at the Shanghai Gold Exchange which is the normal place that you would look and it wasn't there and then we discovered it it was on the Shanghai Futures exchange and it's fresh knowledge to us because it's not an exchange which is normally heavily into gold in fact the last time that they went significantly into go was back in 2019 um and what they what they do there what you have there trading on there are

CT like PX um Pension funds and but any in particular who likes to have a massive gearing towards gold so like Shanghai Gold Exchange which quite a physical market and the physical market for for coins and bars and for beans and the ETF securitized you have this other Market which is a bit like the Cal comx which is a leveraged way of of accessing accessing gold now anecdotally I can remember giving a presentation to a group of Chinese who came to London there's about 30 of them and it was translated into into Chinese while I was

talking about the infrastructure of of the global gold markets and I can remember at the end of my presentation the um the crowd looked distinctly unimpressed and even with low expectations this was a fresh loow for me so I asked the inor what the problem was and she HED and she asked a few questions in the room and she said look they just want to know about massive leverage talk to us about options on STS with a very tall hat and that I'm afraid is a part of the Chinese culture they love to gamble they

like to bet big well this is where coming back to shiy or Shanghai Futures exchanged where the where the big move was in gold running down multiple hundreds of tons now the thing about Futures bu number one is not high quality uh why because it's easy in and by extension easy out Traders are typically agnostic towards the asset they don't care they just look to make money um it can be gold W minut it sodar rash the next it could be fish Futures the next they just look for mispricing an opportunity they're very fattish and

they move it together in size and volume and I would imagine that with all this buying at the Central Bank level ETF institutional physical retail Etc these are guys and they were fames and they must have known that there's a strong ground SWR within China um for gold and so they bet when they bet they bet big now I little about this particular webcast but I know if I show this on zeroe you would get 35 to 45,000 hits she's good Metal's da would see about 3,000 hits I don't know what you

would get by the way um but I can tell you that if this was being shown right now to a Chinese WeChat group you would have between one and one and a half million viewers and that's for one particular weap group attached to Gold so it's not only not only do they have a strong DNA attached to gold and they very her likee it's a on big p too and lots of them and that's the point so the Chinese threw themselves speculatively at Gold um they took it to an alltime high of $2,430 um 100 bucks above we beyond

now um and then the market corrected lower now the reason for that is the exchanges particularly the Chinese exchanges SG and shiffy signific significantly increased initial margin it's effectively putting it a speed bump in terms of trading goldx did the Same by the way as well at the same time the exchangers are saying these markets are too what calm down we're going to make it more expensive huge deal in them and it normally takes the steam out of those markets well it did it in China but it

did more than that already because gold trer came up very sharply and at the same time uh nickel um following news that the Chinese were to build nickel and Tin stock piles nickel went up by 6.4% that day uh primarily based upon shiy Shai Futures Exchange buying so they're very large and very powerful and they can move markets and I think gold caught this um in a nutshell if you like um gold has moved higher significantly High to around 21100 on quality buying the last $200 on top of that arguably is of a vulnerable nature is it

Futures buying the market went to 2400 and it's come off again and prly it's stuck in something with in between World between you know being driven High Specta Le but below it is the physical Market the real Market as I would see and and they're disengaged the physical Market are not buying these levels take the us there some of these mints I won't name names and embarrass them are reporting between 80 and 90 95% year decline in sales it's a major mints around the world um just before

this call I sent an email out to the second largest physical dealer in the US and at the top of the email bounc back it said Oh by please not we've got massive BuyBacks going on just now please be patient with us on the on the um on the reply to your email and that's indicum of what you'll see across Europe and across Across America um physical clients have switched off factly it turn sellers gold so you've got SW coins and bars being sent to Swiss refineries upgraded cast into Kila bar and being

shipped out to Asia that flow from the West to the east has always been known well it's a full B torrent right now the metal is just flooding out of the West the West the Western investor and indeed India too by the way what the Western investor is saying to us is yes we know about the debt issues we know about inflation but we feel go got ahead of itself um and they probably are right uh it's moved too Qui quickly and they get very nervous on Sharp moves when the market corrects lower we will buy so I

Feel the Moment the gold is sort of being driven High by speculation the physcal market which is an important one has disappeared but as the market corrects lower then so the but the physical buying will pick up and it will eventually find a floor where is that floor probably higher than most people think because I think there's a lot of interested investors didn't get didn't get didn't get into this record high it was a stealth run R they hadn't expected it so there's some frustration

and as gold corrects lower they will jump in maybe too early uh but they will jump it and that'll provide a Cushing effect for when the market bossoms out from my perspective um in terms of working out where that bosom is before go rounds out and you want to put your orders in I always watch the Indian markets because um they are Keen a sharp Traders uh um they have a sense of when the Market's bottoming out and um de in India they very sharp of pulling orders as the market goes into freeall and they

have a sense when it's going to round out so I would watch the Indian markets look watch the premiums or discounts loco loco Mumbai to work out when the Market's picking up at the moment golders are the high premium in China and a significant discount in India so there's not much change just yet suggesting to me we may have I don't know perhaps another 100 bucks to go downwards last final word on this bit now and I'll come back to you this is all short-term stuff it doesn't

fundamentally change anything in terms of the long-term outlook for God it's positive for sure but you know it's got ahead of itself the market was frothy some of that froths been blown off probably a bit more to come uh when it finds a floor it will probably have a period of consolidation as the real Market comes back into play might take three or five months uh then the market can and start to move higher again P too charlot okay thank you very much that was very well explained and and very

fascinating so thank you for for laying that all out so clearly and you did answer many of my questions but one thing I'll ask is you know does this mean I think I think when it comes to Gold we take a very Western Centric point of view in terms of looking at the dri it's all you know the FED interest rates debt etc etc should we be weighing China more heavily now or is this more of kind of a one-time or rare thing that's a really really good question I have to say too early to say um for sure

this came out of left field I mean you look at Shanghai gold index and uh exchange and you'd see flows and you we measure and monitor most things shiffy or Shanghai Futures exchange isn't one of those that would have been on your radar um but it will be now um what will interest me and I haven't done the done the exercise is is volumes on in the US on the Futures has also red during this this period of time and I wouldn't be surprised a significant portion of those trades are actually Chinese trades on

the CME in in the US they do a lot of Arbitrage between the two I don't know how much of it is I don't think your average US Speculator is significantly behind this the reason I say that is because silver hasn't mve much with it I mean it's it's um when you get a move in in the markets you can't help believe big fat muddy Footprints across the floor and you can normally tell from the direction about who it is and if you know who it is you know why they're buying you know

why they're buying you know if it's longterm or just they play a bet and you know what time do they play place their bets how do they Place their bets what do they buy there's a stack of six or eight really key indicators that give you a really good clue who might be buying as I say if you know it's a central bank back off they ain't going to back out of this trade if it's a spec it's a z some game that Mak it higher with a bit like a 12 old high on numbers they'll get bored of it and sell it off

and it'll head back to where it was they'll try and take profit on the way down it's meaningless um if it's good physical buying coming out of I don't know mention coins and bars different story again quality so the who is very important because you you get a sense of the quality of the buying know the quality of the buying you know if it's going to be spooked and Chase blur again um so so that's Central to it mat your question about do we need to be sharper on China yeah for sure um

the very fact that gold rid and hit an alltime high as we not only talking about higher for longer the US rates me talk about possibly some maners are talking about a possible rate rise not a rate cut um and the normal indicators that we would look to here in the in the west currently are redundant um but it may change as those um hot fast dealers in Shanghai switch to nickel and soda ash Futures and other things may become comes back to our Market again maybe as the market slipped a bit lower it

becomes a physical Market again and that remains the most fascinating thing about gold it's never one thing I mean don't want to beind to my friends in in on the Eline on the methan exchange you know copper Supply demand fundamentals a plus b and you can work out a fair value on that pretty pretty simply but gold connects into everything geopolitics economics sentiment all sorts of indicators um so it's got a range of drivers and it's constantly shifting which makes it fascinating something regard gold as the

sum of all fears in a sense you know me there lots of cods going around um and that's why Go's eternally interesting so um should we be more more wary of China yeah for sure yeah go forwards okay okay certainly yeah and you're so right there's so many different factors and and as you have also outlined sometimes they can come out of nowhere we don't see them coming so very very interesting to go into and we just on up to the point I mean who would have thought Costco um I mean

what's that about what I haven't yet done again second job to do and if any of your viewers can tell me I'd love to know the answer what premium are people play paying for these 1 out bars I try to go to the Costco website but you have to be remember in the US to get um to see the car price and then you can work out the premiums um I would venture they probably quite a high premium they're paying bullan dealers and normally price quite attractively by the way but what's interesting about that is is the whole

new demographic interestingly and again you'll see on Metals daily.com um China South Korea is having its own Costco moment it's got a convenience chain called comco um and it's again seeing massive sales of small coins and bars in South Korea in other countries I don't know what it tells us just yet but it certainly feels like a new demographic coming into gold what are we doing wrong as a bullan dealer group these guys are being satisfied through normal chance I don't really answer that question either

um so there's lot to be exp explored it's great that we're getting new people gen Zed gold beans Costco comco all these new angles coming in something's going right for sure yeah you know I I don't have a Costco card either but I've heard that part of the appeal of buying from Costco is you pay with your credit card and you get points when you buy your gold so maybe maybe Steelers need a points card I have no idea okay yeah that's that's just one thing I've heard please yeah okay okay

so this this has all been really good and I don't want to keep you too long but you know we do have coming up you know our traditional or traditional driers of gold we've got the FED meeting next week people are watching that as you mentioned people are I've seen at least one headline saying you know maybe maybe it will be another hike in the card so you know any thoughts on on these other more traditional drivers things we should be paying attention to as we Mar don't know um you know this

Rally from of the last $200 to $300 has ignored all those factors I mean you've had any number as I said earlier on of of of press releases statements figures data that technically should be deeply bearish for gold um you know Fair what's a fair value I call it that for gold right now around 2100 um back to where I was before this this this spective kicked in um maybe even lower bearing in mind we're now talking about much life longer um but you know there was always those um curveballs coming in um this is the

election year with youve got half the entire planet population going to elections this year so it naturally spews out um vulnerabilities and and um um should we say um the possibility of of of upset uh which is keeping people nervous um so you know it's it's a funny year this one the Chinese of course love it because of it's the Year of the Dragon the only sign which is a fic we saw call fictitious one but very all spicious for gold um going back to your question are there geopolitical factors

no not really I I would think that they're there but much less so um it might give us indicate to where the floor physical floor of gold is whether it's 2100 or 2200 um I don't know the that just yet I think we'll see a bit more downside before we we start to see some consolidation I think I'd be looking at Indian premiums number one when India start to buy give us the idea of when rounding out watching Chinese premiums as an indicator but less important looking at shiffy volumes to see if they

have moved on to nickel and other things or whether that whether their intention is still on gold whether it's a longer ta phenomena um half an eye on us elections um there's a feeling in the market that they if you look at the Bing odds it certainly seems to suggest that Trump May well win I follow the money rather than should we say Gallop Pauls because you know quite sure people say p on the money and the besting Arts are slightly in favor of trump and were that to happen I think that would be go negative

um you can't disgu the fact that in in the West in Germany and in the US Gold is associated should we say with right of Center rather than left of center politics and if you had your own man in power then what's you need for protection and it happened last time with Trump's first presidency it certainly came off so so quite possibly towards the end of the year we might see a little bit of price softness on the election um that would be worth watching as well um and watch Central Bank Bame

it's been one of the key drivers I would think I would expect a bit more fade on that really high quality buying I think they're much more nuanced now they they don't tend to chase markets higher know a program and just buy 120 tons they now look at the market and just budget um uh shame Gordon Brown the UK Chancellor of the day didn't follow that advice uh when he sold off half the UK's reserves but there we go move on um so so there there's a few keys and clues out there

um if that you can follow to give you an indication of when the market started to fight a flaw when the real Market's engaging but the specs are still happy enough to be engaged as well uh what's India doing are they still engaged a lot of that and forgive the P the the pushing the the brand a lot of that you will F on metal.com okay and one small question before I let you go on Silver so you know you mentioned fair price for gold 2100 I think is is the level that you mentioned is silver fairly priced right

now because I think a lot of people are looking at Gold historically high and they know that gold or sorry silver follows gold eventually although it lags behind but they're they want to see silver higher but if gold is you know actually should be priced lower how how is silver looking in that case you know just five minutes before we went live I thought you know what he's going to ask about Sil and do you know why I knew that by the way uh because I talked to Western um um interviewers and

Asian ones and they never raise um silver but Americans always trace and there's a reason for that um American speculators and investors love silver in the way that we don't just to be clear by the way in Europe physical silver attracts tax v as we call it at 20% so making physical ownership and not matter you don't do it you got high premiums plus tax of 20% so makes it uh unattractive of course you can buy as an ETF but that's another the story so so I think silver is very much a and that's

why by the way historically youd look for silver to authenticate the moving gold so move first because the speculators especially in North America would get behind silver because it has is it normally regarded as a leverage play on gold it normally starts me Silver I've got to declare this Prejudice up front um I don't like silver very much because it's boring it tends to follow gold around and a bit like the inter at the Christmas party you know it's very quiet all year round till the Christmas party

disgraces itself on a glass of Sherry too many and that's silver but it's worth watching because when C moves it tells you that the whole complex is going through uh um an inflection point but it didn't happen this time it didn't happen on this move on the 1st of March and the reason for that is because unusually it wasn't the US that developed the rad and gold it was China and they don't have the same attitude towards silver that you do anyway back your question I mean Gold's up 133% year

to date uh Sil was up 15% year to date slightly outperformed it um if you failed so in an ordinary Bull Run yes you'd buy silver because it would outperform gold to the upside and we bullish gold but is not a US Centric rally so yeah temper that slightly the Chinese don't have the same love of silver like the Indians and the Americans do so yeah we remain positive towards it but perhaps not as outrageously as you might be if it was an American fun rally okay okay thank you for going into

silver sorry to make make you talk about that one very funny that you anticipated that question though okay this was really good thank you so much I will let you go unless you had any final thoughts or you want to know or let people know where to find you to learn more yeah so my name is Ross as you got Ross Norman uh I'm leading gold price for ker within the of 24 years proud post forgive me for that um so we have a website which we believe is the largest and fastest source of precious metals news come on

have a look it's all free and hope you enjoy it as well and thank you Charlotte for your time today really enjoyed talking to you oh of course this was great thank you so much hope to have you on again and once again I'm Charlotte McLoud with investing news.com and this is Rost storman with Metalist daily.com thank you for watching if you like this video make sure you subscribe to our Channel we'd also love to hear your thoughts so leave us a comment below we'll see you next [Music]

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