Nothing could be further apart than the high-tech industry and gold. The high-tech industry didn’t come about until the development of the computer. Gold has been with us for thousands of years.
Fred Hickey, editor and publisher of The High-Tech Strategist, recently turned bullish on gold. His reasons include fundamentals (production and supply/demand) and central bank activity. The latter is why most people buy gold. Yet there are times, like now, that fundamentals are relevant.
Hickey noted in his July issue that in May 82% of the gold refined by Swiss refineries (world’s largest) went to four countries: India, China, Hong Kong and Turkey. Gold continues to move from the West to the East.
He further noted that “India gold imports soared by 237% in May (the fourth consecutive month since February that gold imports have more than doubled) and year-to-date imports (five months) are already at 459 tons compared to just 584 tons imported for all of 2016.”
Additionally, he said that “Gold typically puts in a bottom sometime in July. . .” This coincides nicely with silver’s seasonal pattern, which shows a low for silver in late June.
Hickey entered the gold market in the early 2000s to “protect myself from the radical policies of the Fed. Since that time, the Fed’s policies have only become even more radical. In the early 2000s, the Fed was solely playing with interest rates (sending them to historical lows).”
After the housing bubble (created by the Fed’s artificially-low interest rates), the Fed introduced quantitative easing, which was nothing more than turning on the printing presses. Other central banks around the globe followed suit, with them having bought $1.5 TRILLION in assets in the first five months of this year. This is an annualized rate of $3.6 TRILLION or nearly two times the $2 TRILLION levels in recent years.
Traditionally, central banks bought only government bonds when attempting to fillip economies. Now, they are buying stocks, mortgage-backed securities and who knows what else.
Finally, Hickey sees the weakest economic recovery in post-WWII history. He says consumers now are tapped out, with retail sales falling at the fastest pace in a year and a half, led by declines at department stores, restaurants, electronics retailers and auto dealers.
All the reasons for owning gold and silver are still with us. I can’t name a fundamental that has changed that would make me reconsider my precious metals positions. Today’s low prices are an opportunity to get more metals for your dollars, which are increasing in number daily via the Fed’s digital printing press.