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And we’re off: the breakout of precious metals, oil and bitcoin

The smell of war in the Middle East being the latest trigger.
Analysts have started revising forecasts for gold in light of the latest geopolitical disturbances in the Middle East. Image: Michaela Handrek-Rehle, Bloomberg

Iranian missiles rained down on two US military bases in Iraq last night (Tuesday) in revenge for the assassination by the US of Iran’s most senior military commander last week.

Platinum group metals (PGMs), oil and bitcoin surged on the news, with investors diving for cover and steering clear of risk. Iran’s retaliatory response has panicked investors. Much hinges on US President Donald Trump’s likely response. A tit-for-tat exchange of missiles could quickly escalate out of control and, perhaps, be ruinous for Trump’s re-election chances later this year.

Palladium prices broke $2 000 an ounce in the last two days, continuing a trend that began in 2018. It is a primary ingredient in automotive catalysts, and is in short supply as carmakers shift from diesel to petrol-powered vehicles in which palladium is used.

On Tuesday platinum traded at around $970 per ounce, less than half the palladium prices, but is still up more than 10% from this time a year ago, buoyed by strong tailwinds in precious metals. Investing News reports that platinum demand remains restrained due to soft demand from diesel manufacturers.

The gold price, a perennial hedge against turmoil, is nudging towards $1 600 an ounce, and is now at a seven-year high.

It is already higher than many predicted it would be so early in the new year, boosted by massive central bank buying in China and other emerging economies in recent years.

Read: Gold hits highest since 2013 as Goldman backs bullion in crisis

Brent oil came within a whisker of $70 a barrel yesterday on fears that the world’s oil markets will be disrupted by events in the Middle East. Iran has repeatedly threatened to close off the Strait of Hormuz, through which a third of the world’s sea-borne oil passes, should it be attacked by the US.

“The explosive moves witnessed in oil prices over the past few days highlight how sensitive the commodity is to geopolitical shocks,” says Lukman Otunuga, senior research analyst at FXTM. “Given how this development raises fears of more tensions in the Middle East, oil prices are poised to remain volatile in the near term with all eyes now on President Trump’s reaction and any signs of US retaliation.”

CNBC reported that the Dow Jones Industrial Average plunged 400 points overnight.

However, the carnage appears to have stopped there as Trump reported no US casualties from the Iranian missile attack. Trump has repeatedly pointed to his economic record – measured in lofty share prices – as a measure of his economic success as president. This may curb any appetite for a disproportionate military response against Iran.

“In many regards, the US-Iran situation has now surpassed the US-China trade war as the biggest risk to financial markets. This has been reflected in the current volatility,” says Nigel Green, CEO of financial advisory firm deVere Group. “It’s almost impossible to forecast what the market is going to do in the immediate future – and it is much too early to say what happens next and how investor sentiment will affect markets.”

Palladium prices in USD

Source: ShareMagic

The World Platinum Investment Council expects further gains for the metal, driven by increasing investor interest. The relatively subdued performance in 2019 was the result of a supply overhang, though platinum will continue to benefit from the rising value of palladium.

Bitcoin price in USD

Source: TradingView

Bitcoin, too, demonstrated its status as a digital safe haven as it surged $1 000 to break $8 400 in the last few days.

Gold price in USD

Source: ShareMagic

Analysts have started revising forecasts for gold in light of the latest geopolitical disturbances in the Middle East, with some forecasting a target of $2 000 an ounce in the coming years.

Brent crude oil price in USD

Source: ShareMagic

 

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Gold at 2000 dollars an ounce? Why? Apart from the fact that it looks pretty and doesn’t corrode, it isn’t really worth much in practical terms. According to Wikipedia, only ten percent of gold produced goes into industries of various kinds. Fifty percent is used to make jewellery and the remaining forty percent is hoarded for investment. Strikes me that its perceived value is simply a dangerous assumption based on nothing more than “but it’s valuable.” Hate to be a naysayer, but the continuing “worship” of shiny metals and stones is medieval and amounts to little more than foolishness.

Agree but as long as women love bling and rich men continue to shower them in bling, gold will remain a sort after commodity. Ignoring the Power of Women can be somewhat costly in more ways than one.

Jokes aside though, disregarding the qualities of gold, particularly durability and limited supply (unlike fiat currency that withers in so many ways and is being printed ad infinitum), is more foolish than recognising the foolishness of its pursuit.

And Cue the Karrat bars Speech…

Becos it’s the only thing left to trust, no counter party risks, not dependent on Eksdom ……but only buy KRs and don’t store them in a bank vault. Banks take no responsibility for the valuables you store with them, but they charge you anyway. Even some bullion has been found to be partially filled with lead. ETF’s can be fried in the fragile electronic grid from a megablast of sun spot activity. Who or what are you gonna trust?

lol id buy zim dollars before i buy KBs

KRs are regulated and registered…they will be recalled in exchange for useless paper money when the country goes to the dogs…

I would “hoard” gold any day of the week. The foolish are the ones holding paper money which has lost 90% of its value.

In time of doubt and strife, paper money loses its value fast, touching on hyperinflation, especially during war, natural disasters and when governments’ revenue cannot keep up with their expenses.

Gold ‘s value is its limited supply and that it maintains its physical weight and volume better than other elements and assets, and its tradability. It’s less risky than parking your stored value in cattle, cheese wheels, paintings and bottles of wine.

says Nigel Green, CEO of financial advisory firm deVere Group.

That name above doesn’t inspire confidence given what I’ve read on this very same site.

I suggest there is a big difference between speculative trading for short term profit, and long term investing in quality and properly diversified liquid investments… The former approach burns a lot more fingers along the way…

Under foreign exchange restrictions under Apartheid, the easiest way of getting money out the country was KRs.The same would apply today. Gold may have its negative points as an investments but it has proved that when the stuff hits the fan, it is better than any currency as an investment. Regard it as an insurance cost.

Gold def better than fiat, agreed, but is only going to help with LOCAL trading

But a Million Rand of BTC can be sent anywhere in the world in 30 minutes, to anyone, with no paperwork required

Tried sending gold in the post ?

How long before ppl wake up..seriously

I’m sure you will feel great with your BTC purchase after a couple of chinese and korean hackers clear out your bitcoin “wallet”. I tried the bitcoin thing. Doesn’t inspire much confidence. Don’t forget your password or you’re stuffed. Your BTC might as well have evaporated.

And hopefully, it’s worth the same amount when it gets there …. refer July and December in the chart.

Looks like Gin was the best bet locally ….. sales up 151% over 5 years! 😉

I wonder if it may be possible for a meteorite composed of pure or near-pure gold to be orbiting the earth somewhere in the solar system? And could a drone be guided to land on such a meteorite; take a sample to confirm its purity; affix small rocket engines to it which, when activated, will send he meteorite into an orbit that will make it crash at a convenient spot for mining on earth or under water? Would such an undertaking be profitable if for example the meteorite is twice the size of the 60000kg one that fell near Grootfontein in Namibia; or if more than one such a meteorite could be accessed by different drones from a single launch? Could minerals that are even more valuable than gold be out there? I wonder if Elon Musk has this on his bucket list? Meanwhile, unless all of my questions are answered in the affirmative, I shall continue to allocate at least 3% of my discretionary portfolio to Newgold (and be very wary of any claim that space exploration is being conducted for altruistic motives only).

There was talk of space mining

What about investing in copper? With the world going ‘green’, more electric motors wil be produced

Ah, the old gold/fiat debate…

Sure, some posters here are correct, gold IS way better than fiat in terms of value

No doubt ! [ in fact, just about anything tangible has more value than the toilet paper called fiat that the FED is printing quicker than the Zimbabweans, but a debate for another day ]

But is VERY impractical compared to the real gold, BTC

Gold will be great for local trading if any local currency collapses.

But ever tried sending gold in the post ???

And its way more difficult to store…and carry !

Hope you also packing some nice weaponry to protect your gold stash too

However, …I can send R1m of BTC anywhere in the world, to anyone, no questions asked, in 30 minutes

All stored on a usb, or walk through any airport with it in my pocket

But try walking around with R1m of gold with you….wahahaha !….good luck !

Wake up and smell the proverbial coffee piglets

PS..already BTC is showing signs of the new safe haven….it jumped around 15% now in this latest Iran crisis…along with gold

What is this telling you ???

Wont be long before everyone is piling into BTC, and gold becomes secondary haven

We’ll check in on this thread again around the end of the year

Gold is generally a safe-haven in times of turmoil. Bitcoin is too, but it is far more volatile, and high risk as a safe-haven.
Long term the bitcoin price is extremely volatile in an upward trajectory.

IMO Gold and Bitcoin do actually belong together as an investment class. Tulips and Kubus might also stage a come-back

End of comments.

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