Mining activity continues to heat up over the next 6 quarters
In the first half of 2017, the economic outlook for the United States, Europe, Japan, China and other emerging markets has improved, and monetary policy has returned to normal, with signs of recovery in the global economy. The global economic outlook for the International Monetary Fund (IMF), the latest world economic outlook report, is expected to rise from 3.4% to 3.5% this year, and the world's mining fundamentals are improving.
Recent geopolitical crisis, the conflict warming again, panic spread. In August 29th, North Korea tested a missile in the morning, a missile that flew across Hokkaido, triggering a strong reaction from Japan, South Korea and the United states. Asian and European stock markets fell across the board, especially the Nikkei 225 index, which was trading at its lowest level in nearly 4 months. The STOXX 600 index intraday record of nearly 6 month low, evil after the stock market fell more than 1%. U.S. Dow Jones Industrial Average futures fell more than 100 points, while military enterprises such as Raytheon, Lockheed Martin, Northrop Grumman and other stock prices bucked the trend.
Hedge demand pushes up gold prices
At the same time, gold's appeal as a safe haven assets rise directly to a high position. Many international investment institutions continue to increase gold and other precious metals positions, gold prices continue to rise, and constantly refresh the peak since November 2016 levels. In August 29th, the price of gold soared to $1322.41 / ounce. The world's largest hedge fund founder Ray Dalio Bridgewater water company advises investors to configure up to 5% - 10% gold portfolio, he also warns that the United States government because of the debt ceiling expires once again faced with "shut down" crisis. The "indecisive" US Congress may refuse to raise its debt ceiling in September, which means the US government is in trouble again. By then, the U.S. government credit rating will be seriously damaged, and thus lead to unrest in the United States and the global market, raising the cost of future borrowing.
Ray Dalio is not the only investment expert who suggests buying gold immediately. Gartman News Agency (Gartman Letter), founder of "commodity king" Dennis Gartman said in a CNBC interview: affected by geopolitical risk and inflation pressure, will usher in a strong rise in gold. He believes investors should hold 10% - 15% of the gold in the portfolio.
The beginning of a new trend
In the short term, the United States is entering full employment, and its core CPI is significantly lower. The Fed's July meeting, the probability to raise interest rates during the year has dropped to 40% from 50% before, even if there are some reduced form, the Fed also vowed to slow exit will not reverse blow on the formation of the fundamentals and commodity markets.
The American people have always questioned the Trump administration's ability to govern, especially if Trump's drastic economic reform programme can be implemented, even if the implementation can achieve the desired effect. A variety of uncertainties are expected to create a rare and vulnerable environment for the dollar. 3 July - $5 consecutive monthly root line, go flat at the beginning of August. Dollar index since Trump officially took office, from 102.3 to less than 92 levels, devaluation of more than 10%. When Trump in August 16th one of the dissolution of the American manufacturing industry committee (American Manufacturing Council) and the strategy and Policy Forum (Strategic and Policy Forum) two Advisory Committee after the market tensions increased, the dollar further pressure, not only to support the price of gold rose, also boosted commodities especially industrial metals. Commodities markets beat the stock market for the first time this year in July. The chart shows that the dollar fell by 2.83% in July, the S & P 500 index rose 1.93%, the Bloomberg commodity index rose 2.17%, and commodity rose above the stock index. Commodity prices have risen sharply and the dollar has fallen since the global financial crisis. The following figure reflects the market's fears of inflation have been basically dissipated, commodity markets or have begun a new recovery.