The answer is yes.
And not only just Gold; Silver, Platinum and Palladium bullion are safe haven assets as well. During turbulent times such as rising geopolitical tensions in key countries, investors are inclined to seek these metals for their financial portfolio.
Recently, a paper done by Dr. Brian Lucey and Dr. Sile Li from the Trinity Business School was published and examined the following topic: “Reassessing the Role of Precious Metals as Safe Havens – What Color is Your Haven and Why?”. The results?
This article extends previous literature and examines time varying safe haven properties versus equities and bonds of four precious metals (gold, silver, platinum and palladium) across eleven countries. Results suggest that the metals each play safe haven roles; there are times when one metal is not while another may be a safe haven against an asset.”
In sum, precious metals provided protection at different times across countries. No precious metal provides safe haven status consistently, over time or across asset classes. Strong safe haven status is rare. (Li, Sile and Lucey, Brian M. 2017)
To read the full article, please click here.
Li, Sile and Lucey, Brian M., Reassessing the Role of Precious Metals as Safe Havens – What Colour is Your Haven and Why? (February 8, 2017). Available at SSRN: https://ssrn.com/abstract=2906707 or http://dx.doi.org/10.2139/ssrn.2906707
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PRECIOUS METALS MARKET REVIEW.
| Weekly Spot Price (14 August – 18 August 2017) | ||||
| Open | High | Low | Close | |
| Gold | 1289.85 | 1300.61 | 1267.06 | 1284.1 |
| Silver | 17.07 | 17.27 | 16.53 | 16.93 |
| Platinum | 984.08 | 987.81 | 950.43 | 976.58 |
Precious Metals News Updates:
| · | Gold trades little changed as investors focus on geopolitics, central bank meet. Gold prices were little changed on Monday as investors sought further direction after a week of geopolitical uncertainty in the United States and Europe and ahead of a meeting of central bankers later this week. | ||
| · | All that glitters is profit in China’s gold mines as demand for safe haven boost precious metal sales. Hedging demand triggered by political uncertainty became the main driver of the periodical increases in gold price. | ||
Economic figures to monitor this week:
| Day & Date | Economic Events |
| Wednesday, 23 August 2017 | ECB President Draghi Speaks
New Home Sales (Jul) (US) Crude Oil Inventories |
| Thursday, 24 August 2017 | GDP (QoQ) (Q2) (UK)
Existing Home Sales (Jul) (US) |
| Friday, 25 August 2017 | Core Durable Goods Orders (MoM) (Jul) (US)
Fed Chair Yellen Speaks |
TECHNICAL ANALYSIS.
| Current Market mode*: Trending Up (as defined by daily ADX) | |||
| Weekly Short Term Outlook: Up (as defined by weekly CCI Indicators) | |||
 |
Short term cyclical indicators show an upward bias for the week as CCI (3) and CCI (9) continues to hover around the 100 level. | ||
| Long term trend: Up (as defined by yearly Moving Averages) | |||
 |
The nearest support level is now at USD1082 (13 period EMA) as gold prices continue to rise. | ||
NOTE:
In Non-Trending Mode markets (aka range trading markets), CCI directional Indicators have statistically demonstrated a higher correlation to market direction. Additionally, we overlay the CCIs in a format that further reveals the market cyclical structure and thus enhances market analysis.
COMMITMENT OF TRADERS REPORT (ANALYSIS)
Reportable positions as of 15/8/2017,
| Commitment of Traders Report | |||||||||
| Commercial | Non Commercial | ||||||||
|
Producer/Merchant /Processor/User |
Swap Dealers | Managed
Money |
Other
Reportables |
Non Reportable Positions |
|||||
| Long | Short | Long | Short | Long | Short | Long | Short | Long | Short |
| 32,943 | 191,174 | 71,922 | 114,046 | 196,453 | 16,916 | 80,313 | 68,019 | 44,294 | 35,769 |
| Changes in commitments from 8/8/2017 | |||||||||
| -424 | +13,652 | -2,380 | +23,283 | +29,385 | -11,586 | +3,188 | +2,170 | -23 | +2,227 |
OUR TAKE:
Commercials continued to decrease their long positions while increasing their shorts positions by -424 contracts and 13,652 contracts respectively during the period of 8/8/2017 to 15/8/2017. Gold rallied 2% to reach the 1290 level, a level last seen in June. This is the first time in 4 weeks that Commercials increased their shorts position significantly. The last time this happened, Gold rallied as well.
(Focus is only on the Producer/Merchant/Processor/User as they are hedgers and Gold producers. Non Commercials refer to CTAs and fund managers who trade (speculate) professionally. Commercial hedgers usually hold an edge over the speculators in the long run due to their “stronger hand” advantage and are usually reliable indicators of trend changes)
Call us at 6222 9703 or email at bullioninsights@goldsilvercentral.com.sg to discuss with us how to further interpret the data.
