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Please note: The Frank Talk articles listed below contain historical material. The data provided was current at the time of publication. For current information regarding any of the funds mentioned in these presentations, please visit the appropriate fund performance page.

How Will Brexit Affect EU Sanctions Against Russia?
June 29, 2016

How Will Brexit Affect EU Sanctions Against Russia?

Brexit has dominated world headlines for the last couple of weeks, and with good reason: The U.K.’s historic referendum has already roiled markets around the globe; raised serious questions about immigration, trade and diplomacy; cast a harsh spotlight on the EU’s avalanche of rules and regulations; and divided member states on the best way forward. Among other far-reaching consequences, Brexit could end up causing Europe to rethink its sanctions policy against Russia, following a vote in Brussels last week to extend them another six months.

Russian Exports BreakdownNearly everyone agrees that Russia and President Vladimir Putin are among the winners because of Brexit. The U.K. is the EU’s most vocal critic of Russia’s 2014 annexation of the Crimean Peninsula and was instrumental in the decision to levy sanctions against the country’s financials, energy and defense sectors two years ago.

Several EU countries, including Austria and Hungary, have expressed interest in lifting, or at least softening, sanctions, as they can no longer afford to miss out on trade with Russia. Countries that have faced difficulty offsetting lost trade opportunities are Finland, Poland and the Baltic states—Latvia, Estonia and Lithuania. The French parliament recently adopted a resolution to urge Brussels to drop all sanctions. Italy’s Upper House of Parliament, meanwhile, approved a resolution opposing any automatic renewal of sanctions.

Britain’s exclusion from any future policy decision-making, then, could help Moscow’s chances to renegotiate terms.

In the long term, this bodes well for Russia’s economy, which has been hammered by not just sanctions but also falling oil prices during the last two years. In 2013, energy accounted for 70 percent of all exports, with crude alone representing a third. What’s helped keep oil producers profitable is the weakened ruble, which has lowered labor costs while making exports more competitive.

Double Whammy: Sanctions and Low Oil Prices

Estimates vary as to which has done more damage to the country’s currency—sanctions or the drop in Brent oil. As I’ve pointed out before, there’s a clear correlation between the ruble and oil prices.

Which Have Hurt the Russian Ruble More? Brent Prices or Sanctions?
click to enlarge

But sanctions have made their own significant impact. According to the International Monetary Fund (IMF), trade restrictions were responsible for a 1.5 percent decline in Russia’s gross domestic product (GDP) in 2015, with the effects intensifying the longer they’re in place. The Economic Expert Group, a Russian fiscal policy consultancy, estimates that between 2014 and 2017, international sanctions and the plunge in oil prices will cost Russia a whopping $600 billion. A large percent of this includes capital flight, though we’ve seen its rate slow since sanctions were first announced. Renaissance Capital believes $45 billion will leave the country this year, an improvement from the $64 billion lost in 2015 and $125 billion in 2014.

Foreign Direct Investment in Russia Has Declined Dramatically Because of Sanctions
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Exports have likewise taken a huge hit. In April, exports fell to $21 billion, a 28 percent decline from the same time a year earlier.

International Sanctions Takin Their Toll Russian Exports
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What Now?

Just as the U.K. won’t officially leave the EU for another two years, the removal of sanctions won’t happen anytime soon. As I said, EU officials already voted last week to extend them another six months. Many people, including Putin, doubt whether Brexit will materially change Russia’s relationship with the European trading bloc.

(On a side note, it’s interesting that even Putin recognizes why Brits voted the way they did: “No one wants to feed and subsidize weaker economies, support other countries, entire peoples,” he told reporters on Friday.)

However, there’s mounting pressure among individual EU member states to drop or at least soften sanctions, and with Britain, the bloc’s strongest supporter of restrictions, voting to leave, an opportunity to revisit terms could surface sooner than expected.

 

 

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

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A Classic Case of Failed Socialism: What’s Next After the Brexit?
June 27, 2016

Brexit Vote

Defying sentiment polls leading up to last week’s historic Brexit referendum, British voters said “thanks, but no thanks” to excessive EU taxation and regulation, choosing to take back Britain’s sovereignty in financing, budgeting, immigration policy and other areas essential to a nation’s self-identity. It was a momentous victory for the “leave” camp, led by former London mayor Boris Johnson and U.K. Independence Party leader Nigel Farage, who invoked the 1990s sci-fi action film “Independence Day” by declaring June 23 “our independence day” from foreign rule.

As I’ve been saying the last couple of weeks, British citizens and businesses have grown fed up with an avalanche of failed socialist rules and regulations from Brussels, responsible for bringing growth and innovation to a grinding halt. Even if the referendum had gone the other way, it should still have served as a wake-up call to the European Union’s unelected bureaucratic dictators. Euroscepticism and populist movements are gathering momentum in EU countries from Italy to France to Sweden, and the week before last, fiercely independent Switzerland, which voted against joining the EU in the 1990s, finally yanked its membership application for good.

American voters should be paying attention. Many have already pointed out the parallels between the Brexit movement and Donald Trump’s populist campaign for president. This connection was not lost on Trump, who tweeted early Friday morning: “They took their country back, just like we will take America back.”

Britain’s decision to leave exposes the fragility of trade right now and mounting apprehension toward globalization. The EU is mired in tepid growth, and the blame cannot be pinned on immigrants, as some have tried to do. Instead, Brussels’ policies are anti-growth. Moore’s Law says the number of transistors in a microchip doubles every two years. That’s just a fact. American entrepreneurs embrace and indeed push the limits of technological innovation, but “Eurocrats,” to a large extent, seem to be in open opposition to it. This is why many large, successful American tech firms such as Facebook and Google are treated with such hostility in Europe. The bureaucrats are so against growth and prosperity, it wouldn’t surprise me if they tried to do away with Moore’s Law.

A Legendary Day for Gold

Immediately after results were announced, the British pound sterling, one of the world’s reserve currencies, collapsed spectacularly against the dollar, plunging to levels not seen since Margaret Thatcher’s administration. The euro, the world’s only fiat currency without a country, fell more than 2 percent.

Gold, meanwhile, screamed past $1,300 an ounce to hit a two-year high, proving again that the yellow metal is sound money and fervently sought by investors worldwide as a safe haven during times of economic and political uncertainty.

Gold and British Pound Make Huge Moves Following Brexit Referendum
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Uncertainty is indeed the order of the day. As the World Gold Council (WGC) put it on Friday, “It is difficult to find an event to compare this to.” Trading blocs have fractured before, but none as large and significant as the EU. As the world’s fourth most liquid currency, gold saw massive trading volumes. At the Shanghai Gold Exchange, an all-time record amount of gold was traded following the Brexit—the equivalent of 143 tonnes in all.

“We expect to see strong and sustained inflows into the gold market, driven by the intense market uncertainty that now faces the global markets,” the WGC wrote.

The Brexit lifted not just bullion but gold stocks as well, with many of them climbing to fresh highs. Shares of Barrick Gold shot up 10 percent in early-morning trading while Yamana Gold and Newmont Mining both saw gains of over 8 percent.

I’ve always advocated a 10 percent weighting in gold—5 percent in physical gold, 5 percent in gold stocks—with rebalancing done on a quarterly basis. Gold is now up at least one standard deviation for the 60-day period, meaning now might be a good time to take some profits and rebalance. It’s been a spectacular six months!

Learn how you can take advantage of rising gold equities.

So What Happens Now?

As I said, global growth is unstable, especially in the EU, and the Brexit will only add to the instability. This will likely continue to be the case in the short and intermediate terms as markets digest the implications of the U.K.’s historic exit.

It should be noted that the country will remain a member of the EU for two more years, during which time the nature of the relationship following the official divorce can be negotiated. These negotiations will take place without David Cameron, who unexpectedly announced early Friday morning that he was stepping down as prime minister.

The results of the referendum also call into question the unity of the kingdom itself. England and Wales both voted to leave the European bloc while Scotland and Northern Ireland were aligned in their desire to remain members.

A House Divided
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Keep Calm and Invest-On

Reacting to the outcome, Nicola Sturgeon, the First Minister of Scotland and leader of the Scottish National Party, said the people of Scotland see their future “as part of the European Union.” A second attempt at pulling out of the U.K., then, seems likely. In September 2014, you might remember, a referendum to quit the United Kingdom failed. Northern Ireland will become the only part of the U.K. to share a land border with an EU country (the Republic of Ireland), and it’s unclear at the moment whether a physical border, complete with passport control checks, will need to be erected.

In the meantime, it’s important to “keep calm and invest on.” We should expect volatility in the short term, but the global selloff might be a good opportunity to nibble at stocks that could rally once the initial shock has subsided.

For investors looking to minimize the volatility, short-term, tax-free municipal bonds continue to be attractive on global negative interest rates and falling currencies. Muni bond funds have seen inflows of more than $30 billion this year alone, with the week ended June 22 seeing the highest inflows in over three years at $1.4 billion.

Explore the $3.7 trillion muni market.

 

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

Standard deviation is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is also known as historical volatility.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of 3/31/2016: Barrick Gold Corp., Yamana Gold Inc.

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What Brexit Is All About: Taxation (and Regulation) Without Representation
June 20, 2016

By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors

Global slowdown worries high Indias booming economy

I want to continue the Brexit conversation from last week. With only three days left before U.K. voters head to the polls, expectations of which side might win are beginning to shift toward the “Brexiteers,” while betting markets are still putting money on the “stay” campaign. However, the probability of victory for those who favor keeping their European Union membership has weakened rather remarkably in the last month, falling from over 80 percent in mid-May to around 62 percent today, according to BCA Research.

Probability of a stay Brexit vote outcome
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One of the main grievances is the burden of EU regulations, which are decided by unelected officials in Brussels with little to no cost-benefit analysis. These rules, which regulate everything from the number of hours someone can work (48 hours) to vacuum cleaner power, ultimately stifle growth and innovation.

Consider the so-called FANG stocks—Facebook, Amazon, Netflix and Google. These four tech behemoths, not to mention Apple, rank among the most disruptive, transformative companies the world has ever seen. They also happen to be American. Nothing like them exists in Europe—or, for that matter, anywhere else across the globe.

George Soros

When’s the last time a major scientific or technological breakthrough was made in France? In Germany? Where’s Europe’s answer to Silicon Valley?

It’s not that these countries lack capable thinkers and entrepreneurs. Far from it. Europe was once at the center of everything, from science to music to business. But now that Piketty-style “envy economics” reign supreme in the EU, innovation has increasingly shifted west toward the U.S.

And it doesn’t end there. EU officials continually try to make demands on how these companies conduct their business, whether that be regulating Amazon and Netflix’s original streaming content or suing Facebook over privacy issues.

These are among the questions and concerns Brexiteers and Eurosceptics are bringing to the fore. And no matter the referendum’s outcome, they’re not likely to go away any time soon. In fact, this could very well be the beginning and should serve as a wakeup call to EU policymakers. Just as American colonists protested taxation without representation over 240 years by dumping an entire shipment of English tea into Boston Harbor, many Brits today are staging their own taxpayers’ revolt by demanding control over their own economy, budgeting, immigration policies and more.

This is more broadly a debate over common law (the U.K.) and civil law (the Continent). Under common law, there’s greater protection of wealth and intellectual property. You’re presumed innocent until proven guilty. Why are real estate prices higher in London, New York City and Hong Kong than in Rome, Paris and Berlin? Common law.

Also at issue is the EU’s immigration and open borders policy, which has brought more than 600,000 asylum seekers into the U.K. in recent years.

I invite you to watch Brexit: The Movie, a Hollywood-caliber documentary that details many of the arguments in favor of the U.K. leaving the EU. When London financial markets were deregulated in the 1980s under Prime Minister Margaret Thatcher, it led to what is known as the “Big Bang,” named for the skyrocketing growth in market activity, and the same could very well happen to the U.K.’s economy post-Brexi.

The High Cost of Indirect Taxation

The U.K.’s EU club membership, so to speak, varies year-to-year, but it averages between 8 and 10 billion pounds—the equivalent of $11 billion and $14 billion—making the kingdom the third largest net contributor after Germany and France. But the costs don’t stop there. Towering above the contribution to the EU’s budget are costs associated with the bloc’s endless regulations—what I refer to as indirect taxation.

According to Open Europe, a nonpartisan European policy think tank, the top 100 most expensive EU regulations set the U.K. back an annual 33.3 billion pounds, equivalent to $49 billion. This amount exceeds what the U.K. Treasury collects in Council Tax (a tax on domestic property) on an annual basis.

Global Manufacturing Sector Stagnates May

And remember, that’s just the top 100. The “acquis communautaire,” the EU’s body of rules, directives and regulations, is a mammoth 170,000 pages long. Among the costliest regulations are the Renewable Energy Strategy (4.7 billion pounds a year), the Working Time Directive (4.2 billion a year) and the EU Climate and Energy Package (3.4 billion a year).

Tim Congdon, a prominent British economist and businessman, shows that such regulations—again, passed by unelected officials, similar to agencies here in the U.S.—have been a significant detriment to EU growth. Writing for the pro-leave group Economists for Brexit, he states: “It is obvious that the economies of EU member states are falling behind those of other high-income countries, falling behind consistently, and by a significant amount. Too much regulation must be the main explanation.”

Euro area lags behind other high-income societies
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Of course, these rules won’t disappear overnight if the U.K. chooses to leave. But it would be a step in the right direction toward repatriating a level of autonomy over the country’s own laws.

In the meantime, investors are bracing for the referendum with gold, which has rallied 7 percent this month, breaking above $1,300 an ounce . The yellow metal has historically been favored as a “safe haven” investment during times of political and economic uncertainty. Read my latest gold commentary on Forbes.

And with interest rates at near-zero or negative levels, droves of European fixed-income investors are abandoning government debt for American municipal bonds. The German 10-year government bond yield fell to subzero levels last week for the first time ever, spurring additional European flight into munis, which still offer attractive yields, relatively low volatility and diversification benefits.

Explore the $3.7 trillion muni market!

Let’s Not Forget to Clean House Here in the U.S.

The EU is hardly the world’s only offender when it comes to passing onerous regulations. The U.S. government continues to add to the already-bloated Federal Registry, which now stands at 80,260 pages as of the end of 2015. That year, federal regulations cost U.S. businesses a staggering $1.885 trillion, or $15,000 per household, according to the Competitiveness Enterprise Institute (CEI). If U.S. regulations were its own economy, in fact, they would be the world’s ninth largest, sandwiched in between India and Russia.

U.S. regulation costs would be the ninth-largest economy in the world
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This is something our next president will have no choice but to address. 2015 was a record year for adding new regulations. We can’t continue going down this path. The problem is that I haven’t seen either Donald Trump or Hillary Clinton make a serious commitment to streamlining rules and laws that affect businesses, especially small to medium-size businesses. According to a 2015 National Small Business Association (NSBA) survey, “regulatory burdens” was near the top of the list of challenges small business owners said threatened growth and the survival of their companies. I’m convinced that the candidate with the strongest economic and deregulatory plan has the best chance at winning the election in November.

Global Manufacturing Sector Stagnates May

 

For whatever it’s worth, though, a poll in Institutional Investor found that large-scale investors appear to favor Clinton for president right now by a pretty wide margin. When asked if Wall Street will rally behind Trump, a whopping 84 percent said no.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of 3/31/2016: Apple Inc.

Diversification does not protect an investor from market risks and does not assure a profit.

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Are We Nearing the End of the EU Experiment?
June 13, 2016

Global slowdown worries high Indias booming economy

Right out of the gate, I want to thank everyone who took time out of their busy schedules to tune in to our gold webcast last Wednesday. I also want to thank Aram Shishmanian, CEO of the World Gold Council, for joining me as our special guest. His deep insights into gold investing were well articulated and highly appreciated. If you happened to miss it live, I urge you to catch the replay, which we’ll be posting on usfunds.com soon. Look for it!

If you’re a serious investor—and because you’re reading this, I have to assume that you are—gold is looking more and more like a crucial trade. Fewer than two weeks remain before United Kingdom voters decide on whether the country will continue to be a member of the European Union (EU) or become the first-ever to leave it. The “Brexit,” as it’s come to be known, is arguably the most consequential political event of 2016—perhaps even more so than the U.S. presidential election in November—with far-reaching implications.

Global slowdown worries high Indias booming economy

Should the U.K. leave, it will certainly underline the question many people have about the EU’s viability. And remember, this is a group of countries that collectively has the world’s second largest gross national product (GDP), followed by China.

But whatever happens, “the European Union is not going to remain the same,” as Aram put it during the webcast. “The euro is still very unstable, and I think we could easily see an environment in which trade barriers will increase and currency wars will increase. Regrettably, we could have a weaker global economy.”

With this as the threat, “gold’s role is one of wealth protection,” Aram said.

Taking Precautions Against an Unknowable Future

Even Europeans are beginning to lose confidence in the European experiment. The Pew Research Center recently polled nearly 10,500 Europeans from 10 separate EU countries on their favorability of the 28-member bloc. Nearly half of all respondents—47 percent—held an unfavorable view.

Global Manufacturing Sector Stagnates May
click to enlarge

Trust in the European Central Bank (ECB) continues to falter as well. In a blistering note titled “The ECB must change course,” Deutsche Bank called out the central bank for “threatening the European project as a whole for the sake of short-term financial stability.” The ECB’s actions have “allowed politicians to sit on their hands with regard to growth-enhancing reforms.” The longer the bank persists with a negative interest rate policy, the more damage it will inflict upon Europe, Deutsche added.

Meanwhile, Frankfurt-based Commerzbank is considering stashing physical cash in pricey vaults instead of keeping it with the ECB, whose policies are cutting into bank profitability.

Speaking to the World Gold Council’s Gold Investor newsletter this month, former Governor of the Bank of England Mervyn King criticized the ECB’s negative rate policy, saying: “If you repeatedly bring down interest rates to try and persuade people to spend today rather than tomorrow, it works for a while. But they become increasingly resistant to being asked to spend their resources now rather than save for the future.”

Like Aram and others, Governor King sees gold as a likely solution. “There is clearly a need to take some precautions against an unknowable future,” he said, which is the same argument for having health insurance.

Negative rate policies are having a huge effect on bond yields, as you can see below. Over $10 trillion worth of government debt across the globe carried a negative yield as of the end of April. (In a tweet last week, legendary bond guru Bill Gross called it “a supernova that will explode one day.”) In Switzerland, three quarters of all government bonds right now actually charge investors interest. Real harm is being done to retirees, who have had to pick up part-time work at Walmart or become Uber drivers to offset lost interest on their savings and pensions.

Global Manufacturing Sector Stagnates May
click to enlarge

This is prompting investors to look elsewhere, including the U.S. municipal bond market, which has attracted $632 billion in assets this year alone as of June 1. Of that amount, more than $22 billion has flowed into muni mutual funds, the best start to a year since 2009. Between that year and the end of 2015, the amount of U.S. municipal debt held by foreign investors climbed 44 percent, validating its appeal as an investment with a history of little to no drama, even during times of economic turmoil and periods of rising and lowering interest rates.

$1,400 Gold this Summer?

George Soros

Joining Aram in seeing the Brexit as further proof of impeding economic troubles is billionaire investor George Soros. After a hiatus of conducting any personal trading, the 85-year-old is back in the game—this time with some bearish investments. In the first quarter, he purchased a $264 million stake in Barrick Gold, the world’s largest gold producer, and a million shares in precious metals streaming company Silver Wheaton. It appears he’s added to both positions, indicating a bet against the broader equity market.

Now, with a Federal Reserve rate hike looking more and more unlikely this month, gold is expected to resume its bull run, according to Australia and New Zealand Bank Group (ANZ) commodity strategist Daniel Hynes. This, along with a possible Brexit, could push the yellow metal to $1,400, a price we haven’t seen in three years this month.

Paradigm Capital also sees the rally picking up where it left off in May, noting that gold’s trajectory so far this year resembles the one it took in 2002, the first full year of the last bull market, which carried the metal to $1,900 in 2011. “The resemblance is rather striking,” Paradigm writes.

Global Manufacturing Sector Stagnates May
click to enlarge

The investment dealer forecasts gold to reach nearly $1,400 by year-end after a dip in October. It also maintains its position that this particular bull run will peak at $1,800 sometime during the next three to four years.

Whether or not this turns out to be the case is beside the point. Savvy investors—not to mention central banks and governments—recognize gold’s historical role in minimizing the impact of inflation, negative rates and currency depreciation. This is what I call the Fear Trade, and I always advocate up to a 10 percent weighting in gold that includes gold stocks as well as bullion, coins and jewelry.

Catching Up with Sectors and Industries

Because we’re near the halfway mark of 2016, I thought you’d be interested to see what the top performing sectors and industries were for the year so far.

As for sectors, utilities is on top, delivering more than 15 percent so far. Jittery investors, worried about slow global growth and geopolitical threats, have moved into defensive stocks such as water and electricity providers and telecommunications companies, many of which offer steady dividends in a low-yield world. Financials, as you might imagine, have been hurt by interest rate uncertainty.

Global Manufacturing Sector Stagnates May
click to enlarge

Below I’ve highlighted the 10 best performing industries for the year, and interestingly enough, metals and mining companies, particularly those involved in the gold space, lead all others. Spot gold is up 20 percent so far, but amazingly gold miners have doubled investors’ money. Metals and mining companies have rallied more than 53 percent.

Global Manufacturing Sector Stagnates May
click to enlarge

Many of the top-performing companies this year had some of the biggest declines last year because of impaired balance sheets. To maintain their performance long-term, they will need to show earnings.

 

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

There is no guarantee that the issuers of any securities will declare dividends in the future or that, if declared, will remain at current levels or increase over time.

The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of 3/31/2016: Barrick Gold Corp., Silver Wheaton Corp.

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Top 10 Countries with Largest Gold Reserves
May 25, 2016

Beginning in 2010, central banks around the world turned from being net sellers of gold to net buyers of gold. Last year they collectively added 483 tonnes—the second largest annual total since the end of the gold standard—with Russia and China accounting for most of the activity. The second half of 2015 saw the most robust purchasing on record, according to the World Gold Council (WGC).

lucara diamond at a nine-year high

click to enlarge

Not every top bank is a net buyer. The Bank of Canada has liquidated close to all of its gold, mainly in coin sales, while Venezuela is in the process of doing the same to pay off its debts.

But most of the world’s central banks right now are accumulating, holding and/or repatriating the precious metal. As of this month, they reportedly owned 32,754 tonnes, or about 17.8 percent of the total amount of gold ever mined, according to the WGC.

It’s worth noting that this global gold-buying spree coincides perfectly with the rise of unconventional monetary policies following the financial crisis—massive bond-buying programs, rapid money-printing schemes and near-zero or, in some cases, negative interest rates. The jury’s still out on whether these measures have been a success or not, but for now, it appears as if banks are hedging against their own policies.

Investors would be wise to do the same. Confidence in central banks’ ability to stem further economic deterioration continues to deflate.

Below are the top 10 countries with the largest gold holdings, beginning with India.

 

10. India

Tonnes: 557.7

Percent of foreign reserves: 6.3 percent

It’s no surprise that the Bank of India has one of the largest stores of gold in the world. The South Asian country, home to 1.25 billion people, is the number one or number two largest consumer of the precious metal, depending on who you ask, and is one of the most reliable drivers of global demand. India’s festival and wedding season, which runs from October to December, has historically been a huge boon to gold’s Love Trade.

Construction on the Golden Temple in Amritsar, India, concluded in 1604

9. Netherlands

Tonnes: 612.5

Percent of foreign reserves: 61.2 percent

The Dutch Central Bank is currently seeking a suitable place to store its gold while it renovates its vaults. As many others have pointed out, this seems odd, given that the bank fairly recently repatriated a large amount of its gold from the U.S.

The Gold Souk building in Beverwijk, The Netherlands, houses a marketplace for gold dealers and goldsmiths

8. Japan

Tonnes: 765.2

Percent of foreign reserves: 2.4 percent

Japan, the world’s third largest economy, is also the eighth largest hoarder of the yellow metal. Its central bank has been one of the most aggressive practitioners of quantitative easing—in January, it lowered interest rates below zero—which has helped fuel demand in gold around the world.

The Gold Pavilion in Kyoto, japan, features beautiful gold-leaf coating

7. Switzerland

Tonnes: 1,040

Percent of foreign reserves: 6.7 percent

In seventh place is Switzerland, which actually has the world’s largest reserves of gold per capita. During World War II, the neutral country became the center of the gold trade in Europe, making transactions with both the Allies and Axis powers. Today, much of its gold trading is done with Hong Kong and China. Just last quarter, the Swiss National Bank posted a $5.9 billion profit, largely a result of its sizable gold holdings.

Credit Suisse gold bars and coins

6. Russia

Tonnes: 1,460.4

Percent of foreign reserves: 15 percent

Russia has steadily been rebuilding its gold reserves in the last several years. In 2015, it was the top buyer, adding a record 206 tonnes in its effort to diversify away from the U.S. dollar, as its relationship with the West has grown chilly since the annexation of the Crimean Peninsula in mid-2014. To raise the cash for these purchases, Russia sold a huge percentage of its U.S. Treasuries.

Gilded domes of the Annunciation Cathedral in Moscow, Russia

5. China

Tonnes: 1,797.5

Percent of foreign reserves: 2.2 percent

In the summer of 2015, the People’s Bank of China began sharing its gold purchasing activity on a monthly basis for the first time since 2009. In December, the renminbi joined the dollar, euro, yen and pound as one of the International Monetary Fund’s reserve currencies, an expected move that required the Asian country to beef up its gold holdings. (The precious metal represents only 2.2 percent of its foreign reserves, so it’s probably safe to expect more heavy buying going forward.) And in April, China, the world’s largest gold producer, introduced a new renminbi-denominated gold fix in its quest for greater pricing power.

Over 2,000 ancient Buddha statues have been excavated in China

4. France

Tonnes: 2,435.7

Percent of foreign reserves: 62.9 percent

France’s central bank has sold little of its gold over the past several years, and there are calls to halt it altogether. Marine Le Pen, president of the country’s far-right National Front party, has led the charge not only to put a freeze on selling the nation’s gold but also to repatriate the entire amount from foreign vaults.

Anne of Brittany's wedding crown

3. Italy

Tonnes: 2,451.8

Percent of foreign reserves: 68 percent

Italy has likewise maintained the size of its reserves over the years, and it has support from European Central Bank (ECB) President Mario Draghi. The former Bank of Italy governor, when asked by a reporter in 2013 what role gold plays in a central banks portfolio, answered that the metal was "a reserve of safety," adding, it gives you a fairly good protection against fluctuations against the dollar.

Detail of a gold lion in St. Mark's Basilica in Venice, Italy

2. Germany

Tonnes: 3,381

Percent of foreign reserves: 68.9 percent

Like the Netherlands, Germany is in the process of repatriating its gold from foreign storage locations, including New York and Paris. Last year, the country’s Bundesbank transferred 210 tonnes, and it plans to have the full 3,381 tonnes in-country by 2020.

A variety of Germman coins

1. United States

Tonnes: 8,133.5

Percent of foreign reserves: 74.9 percent

With the largest holding in the world, the U.S. lays claim to nearly as much gold as the next three countries combined. It also has one of the highest gold allocations as a percentage of its foreign reserves, second only to Tajikistan, where the metal accounts for more than 88 percent. Donald Trump made headlines recently, claiming “we do not have the gold,” but from what we know, the majority of U.S. gold is held at Fort Knox in Kentucky, with the remainder held at the Philadelphia Mint, Denver Mint, San Francisco Assay Office and West Point Bullion Depository.

The US holds most of its gold at the US Bullion Reservatory at Fort Knox

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lucara diamond at a nine-year high

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Net Asset Value
as of 11/22/2017

Global Resources Fund PSPFX $5.97 0.03 Gold and Precious Metals Fund USERX $7.36 No Change World Precious Minerals Fund UNWPX $5.76 0.03 China Region Fund USCOX $12.18 0.03 Emerging Europe Fund EUROX $7.09 0.04 All American Equity Fund GBTFX $24.06 -0.05 Holmes Macro Trends Fund MEGAX $21.36 -0.06 Near-Term Tax Free Fund NEARX $2.21 -0.01 U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change