ValueWalk's Raul Panganiban with Maurits Pot, Founder and CEO of Dawn Global. Before this he was Partner at Kingsway Capital, a frontier market specialist with over 2 billion AUM. In the interview, we discuss his approach to investing and why investors should look into frontier and emerging markets. Q2 2021 hedge fund letters, conferences and Read More
GOLD INVESTING prices recovered for a second session against a weakening US Dollar on Friday, again moving higher after new US economic data came in weaker than expected, cutting the odds that the Federal Reserve will raise interest rates this month.
Betting on a US Fed hike from 0.50% to 0.75% at the Fed’s 21 September meeting fell from 1-in-4 to almost 1-in-5 after the Bureau of Labor Statistics estimated only a net 151,000 jobs were added to non-farm payrolls in the world’s No.1 economy in August, sharply below Wall Street’s 180,000 forecast.
Gold erased the last of this week’s earlier 1.5% investing losses in Dollar terms as the US currency fell on the forex market, and also got back to last Friday’s finish against the Euro, Swiss Franc, Canadian and Australian Dollars.
US stock markets gained – with European shares rising 1.7% from last Friday – as did government bond prices and commodities.
Crude oil bounced 2% but still headed for a weekly loss of 8%.
Silver bullion jumped ahead of gold investing prices following the US jobs data, regaining the last 2 weeks of losses at $19.25 per ounce.
“Thursday’s data led price recovery [looked] promising for gold,” said the trading desk at Swiss refiners MKS Pamp overnight, with yesterday’s larger than expected US jobless benefits claims figure providing a “catalyst” for gold’s rebound from new 2-month lows.
“[But] the weak ISM [manufacturing] data was the key protagonist.”
“US economic growth is weak yet the labour market is tight,” writes French investment bank strategist Albert Edwards – a “juxtaposition [now] keeping the Fed in a quandary on whether to raise interest rates.
“Only the US consumer is keeping the economy out of recession…Business investment’s contribution to GDP [is] now consistent with recession.”
“Correlation over the last 60 sessions between Comex Gold contracts and the S&P500 stock index is minus 0.61,” writes Yuichi Ikemizu, head of precious metals at ICBC Standard Bank’s Tokyo office – “a very strong inverse correlation…the strongest of the past 10 years.”
A perfectly positive correlation, with two prices moving together in lockstep, would read +1.0, while a reading of -1.0 would signal a perfectly inverse relationship.
Investing stress now shows when gold goes up, says Ikemizu, but if the strongly negative correlation continues, gold’s drop could be “very strong when the US stock market goes up.”
Investing in the Next Generation of Emerging and Frontier Markets with Maurits Pot