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Gold Price at All Time High Since January 2015

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gold highest high since 2015

The gold price reached to its highest worth since January 2015.  Gold is up 22 percent this year valued at $ 1, 295.40 per ounce.

At the peak, spot gold was valued at $ 1, 303.60 an ounce. It then lowered to $ 1, 295.40.  The decrease brought it up 0.1 %. Future June delivery for US Gold is up $ 7.10 at $ 1, 2970.60 an ounce.

Gold has lifted the SPDR Gold Trust ETF (GLD) nearly 6 % in the last month. Capital Economics believe Gold could end the year around $ 1, 3500 an ounce and could increase to as much as  $ 1, 400 by the end of 2017.

Stock markets and gold

Experts are staying bullish in the gold market due to equity markets being in the midst of a bear market.

  • Bull Market – When stocks are expected to continue to increase. The Bull Market is a type of market people look for when buying in.
  • Bear Market – When stocks are falling, or the market looks bad. Profitable stocks are hard to chose during this stage.

Senior vice president at Schaeffer’s Investment Research, Todd Salamone, suggests now to be the time to sell your gains in the stock market and increase your gold exposure.

In 2016, equity markets saw the worst start to a year . Add that to the Wall Street turmoil that sent investors seeking safety, and you have the perfect combination for the gold strength.

The United States stocks turned positive for the first time in March. Since then, they have continued their climb with minor dips.

While this still factors into the price of gold, its effects are diminishing.  So, what’s mainly causing the increase in price for gold now? The U.S. dollar.

US Dollar and gold

The value of the U.S. dollar is measured using three components; exchange rates, foreign exchange reserves, and Treasury notes.

Exchange rates measure the amount of one currency that can be exchanged for another. The Foreign Exchange determines the rates  known as forex. These rates are monitored minute by minute due to constant change.

A few factors that go into deciding the exchange rate is

  • Central bank interest rates
  • Country’s debt
  • Economic strength

[seabridge]

Foreign Exchange Reserves

Foreign exchange reserves are assets held by a country’s central bank. The Bank holds multiple currencies or other monetary authority.

Banks are increasing their holds on euro-denominated assets despite the eurozone crisis. These include:

  • Gold
  • High – quality corporate bonds
  • Special drawing rights (SDR)
  • Deposits of reserve balances within the International Monetary Fund (IMF)

Treasury Notes

Treasury notes are fixed income investments. These are notes or bonds sold by the United States Treasury Department.

The Government guarantees the Treasury notes. Due to that, they have the lowest interest rates of all fixed-income security.

History of the US Dollar

The US dollar hit its lowest since 2015. The direct correlation between it and gold should be noted. Against most significant currencies the trade was set at 92.26.

Many factors led to the decline in worth. However, the most important reason is the constant expansion of the country’s money supply.

In 1913, the Federal Reserve Banking (FRB) system was adopted in America. This replaced the gold standard replacing it with a system essentially allowing an unlimited amount of paper money to be created as often as seen fit.

It then coupled with banks being capable of borrowing from reserves that did not necessarily have gold on deposit. Thus, the fiat system was born. The fiat system is also known as the faith-based system due to lack of backing by a physical commodity.

Inverse Correlation

The U.S. dollar continues to plunge. The latest sent it down 2%. The dollar hit a low with the Japanese yen falling below 106 yen. It is expected to approach 100 yen.

According to Forbes, the world trade could begin to move away from the dollar. China has spoken of plans to diversify its assets.

Gold increases when the dollar decreases due to the metal gold being recognized worldwide as the standard of value. Gold becomes the desired currency due to its stability compared to the US dollar.

As a commodity, gold is viewed as a more stable investment when stocks and the dollar’s worth is decreasing. If the United States dollar were to collapse, it is possible the currency could be backed by gold once again.

There are occasions that the dollar and gold value can increase at the same time. This increase is rare though as they typically have an inverse relationship. If a country experiences a crisis, investors will turn to a safer means of currency. This crisis could be the US dollar and gold.

While the future of stocks and the US dollar are unknown, it is predicted that the value of gold will soar through the coming year.

 

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Commodities

Latest Update On Oil – Expected to Settle Between $45 and…

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“Oil is going to a new price point because of the revolution in production,” said Bill Perkins, chief investment officer of energy-focused hedge fund firm Skylar Capital Management. Perkins believes the price of crude could fall as low as $45 a barrel. He is personally short, a bet that the price of the commodity will drop. He believes oil will settle between $45 and $80 a barrel in the next year.

“Companies are harnessing amazing new technology to destroy the traditional energy value chain,” Perkins said. “There’s a lot of money to be made on that.” “U.S. energy names remain a significant net exposure for equity long/short managers who added longs and cut shorts after October’s trough,” the report said. “If pressed, one could interpret this positioning as bullish for energy stocks.”

Andurand thinks crude might hit $50 a barrel within the half-moon of 2015 and so rebound to a high of $70 within the fourth quarter. He also said the oil market is oversupplied by between 1.5 and a couple of million barrels per day, given weak demand, low disruptions to produce and enhanced production by nations that do not belong to the Organization of the oil mercantilism Countries.

“OPEC is not the swing producer anymore. U.S. shale oil producers are, but will take more time to react to prices than OPEC—it is a game changer that will lead to more volatile prices and bigger price ranges,” he added.

Morgan Stanley aforesaid the worth would wish to fall as low as $35 or $40 a barrel to prevent production and rebalance provides.

Still, the bank noted that the worth can doubtless rise eventually.

“Oversupply is probably going exaggerated and therefore the market is also content regarding side risks,” the report aforesaid.

Read More at CNBC

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Commodities

Investing in Energy Markets Part 2: Oil, Gas and Energy

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It’s no secret that the energy industry is very profitable, with oil and gas making up 80% of the market.

 

Thus, these two resources attract the most people. They are the best energy investment resources due to high demand and wide range of options. However, with energy scares fresh in our recent memory and the climate change movement greatly affecting energy policy, new alternatives are constantly being sought.

Terror group ISIS may make $3 million a day selling oil

Everything that we do requires some type of energy. As a result, the price of energy affects the going rate for other commodities as well. When the price of oil increases, the price of transporting goods goes up as well.

That is why the cost of milk fluctuates and why your favorite imported coffee beans are more expensive than Folgers. Factors that contribute to these prices include geopolitics and natural disasters, but can never truly be accounted for in full. That is one of the underlying points to understand and accept about energy markets. Something can always go wrong. Typically, it doesn’t, but when it does things can get hairy and fast.

TYPES OF ENERGY SECTORS: That could affect your Household

Nuclear Nuclear power actually produces 1/10th of the world’s power, without emitting carbon. The United States and China have roughly 75% of the world’s nuclear plants with India and Russia also tapping into the market.

“Green” and renewable energy companies You can invest in different companies that place an emphasis on renewable resources by using the stock market. This option is optimal for investors who like the idea of green technology but do not now want to run the risk of investing in developing companies directly. This market has always been tricky from an investment perspective due to volatility. If you have an appetite for risk, however, this is a good place to look.

Modern Energy (solar, wind, geothermal, transportation, efficiency) Modern energy is made up of three major components or categories. They are wind, solar and biomass. The renewable sector is expanding at a rapid rate. We have witnessed a steady employment increase in the energy sector since 2011 with no end in sight. All types of investors and speculators are flocking to the natural resource markets in attempts to get out ahead of the renewable energy trend that could be the way of the future.

Big Oil In 2010, the world market for oil witnessed an incredible increase of 32%, to over $2,100 billion. According to estimations of oil segment professionals, the market’s value will hit $2,683 billion in 2015. The competitiveness of the global market of the crude oil is explained by its limited resources and mankind’s insatiable appetite for growth. This factor should not be disregarded easily. Our desire for more explains the majority of the energy marketplace.

Gas sector The market of natural gas reached $18.5 billion by the end of 2011. Demand for gas has recovered to match and surpass pre-recession levels. The US prices for gas are half of those in Asian countries and the EU. Gas demand decreased 3% in 2009, but at present is on the rise.

Electricity Buying the stock of electricity companies is the preferred way of entering this marketplace. The majority of the participation in electricity markets, however, takes place in the futures markets. Since power companies are constantly projecting and calibrating their loads, the futures market is the only place where investors with this sort of risk profile will feel that they belong.

Coal Many non-coal energy sectors directly depend on the performance of coal because burning coal has been proven to produce enough energy to support high demand. Due to recent regulations in the US by the Environmental Protection Agency, coal has taken a minor hit, but until a massive, institutionalized adoption of newer technology, it is highly unlikely coal will be going anywhere for the foreseeable future. In other words, coal is very much a barometer for this market. Though it is unlikely to happen any time soon, a massive dip in coal production would likely signal the emergence of a new viable energy source.

Hydro Hydropower energy is still very limited but there has been over $75 billion in investments pledged to R&D before the year 2020. There are some companies worth checking into, but for now this is very much a long term play.

Energy Funds These funds are established with companies related to the energy field. Be aware that some energy funds are more successful than others and produce a higher return than others. Often times, the energy funds are established to diversify various portfolios and minimize risk.

Read more on How Natural Resource Distribution affects your wealth

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Commodities

Oil Prices Surge As OPEC Members Agree To Cut Production

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The Organization of the Petroleum Exporting Countries (OPEC) took its first action in years to cut production on Wednesday in hopes of lifting oil prices. How big a cut did the cartel agree to? Will it really make a difference?

OPEC Members Agree To Cut Oil Production

Oil had its biggest day in more than five months as prices rose 5.3 percent. This action came after OPEC members agreed they could limit oil production – in November. While there are a lot of maybes, this is a big step forward for oil. But will it actually work?

While OPEC members agreed at a meeting Wednesday in Algeria that a production cut is needed to lift oil prices, plans for the supply cut won’t be finalized until November. Barrel output will go from 33.25 million barrels per day to 32.5-33 million barrels per day. A lot can go wrong between now and November, but for now investors love the news.

Many analysts, however, are not as optimistic.

This isn’t the first time this year OPEC has tried to cut oil supply. The committee met in April, but talks fell apart when Iran would not join the talks. In addition to that, all the OPEC countries compete against each other and the U.S. for market share. Several OPEC members, Iran, Libya, and Nigeria, all want to increase oil supply. Throw into the mix the political tensions of the group and this agreement seems very delicate.

Yet, there is a positive feeling about “this time”. Members are hoping that things are more conducive to getting a deal done. Many of the largest producers are close to maxing out capacity, so lowering output slightly wouldn’t be too much of a stretch. Additionally, Saudi Arabia and Iran are feeling pressure domestically from the drop in oil prices, and thus be willing to put aside differences to improve their finances.
Wonder why OPEC needs to cut production? Check the news here with CNNMoney!

For now, trading oil is a smart play. Exxon Mobil Corp. (XOM) rose 4.40% on the news. Chevron Corp. (CVX) rose 3.20%. Energy companies and oil shares will go up until november, and then take their cues based on that meeting.

The election is coming the Capitalist gives you the guide to thriving the election year markets. Read it all here!

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