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Embracing gold’s volatility

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  Gold and silver prices have rallied sharply in the last few trading days, with the two precious metals back trading above USD $1700 oz (gold) and USD $21oz ( silver ). In Australian dollar terms, the news is even better, with gold for example now back above AUD $2,650oz. This price strength, which represents a volatile move to the upside, will no doubt have many bullion investors hoping we’ve now seen the end of the corrective period the two precious metals have endured in recent months. In our latest blog, we discuss the volatility of gold in some detail, looking at How gold’s volatility is driven by sharp upside price movements The importance of gold’s correlation with equity markets Gold’s lack of credit risk, and why drawdowns are never permanent Combined, these factors help explain why, from our perspective at least, gold’s volatility, rather than being something for investors to fear, can be something to embrace. This is especially true after the precious metal has gone th...
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Fear, Greed & Ten Reasons to Buy Bullion in 2024

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  Gold recorded solid gains in 2023, with the precious metal rising by approximately 13%, and finishing the year trading above USD $2,050 and AUD $3,000 per troy ounce (oz). While silver lagged gold performance wise across the year as a whole, it also finished 2023 on stronger footing, rising by more than 10% in the final quarter of the year. The increase in precious metal prices has been particularly notable given it has occurred against a backdrop of:A rebound in global property prices An easing in global headline inflationary pressures Continued outflows from gold ETFs, and A stunning resurgence in the stock market that has seen CNNs Fear and Greed Index (see below image) approach the end of the 2023 with an Extreme Greed reading. Investors also ended last year with an underweight position in commodities relative to bonds that has not been seen since 2009, according to the latest Bank of America Global Fund Manager Survey. Combined, the above factors bode well for...
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Gold and silver positioning: insight and analysis

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  Dear Investor, This week, ABC Refinery's Global Head of Institutional Markets, Nick Frappell, took some time to provide some insight and analysis on what drives gold and silver positioning, particularly centering around the CME. What does data tell us and what drives positioning?  Many investors invest in gold and silver via futures exchanges, usually via pooled funds operated by CTAs (Commodity Trading Advisors). Generally, the CME combines all these entities that manage money on behalf of customers into one category called ‘Managed Money’, simply because that captures what CTAs and ‘money managers’ do; additionally, this category is reported as a single category by the CFTC, the US Commodity Futures Trading Commission.  Money managers like to invest via futures exchanges for several reasons.  The exchange itself provides: A transparent price discovery mechanism  Access to liquidity  Reduced counterparty risk: participants face the exchange and no...
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