Saturday , 18 November 2017


Where Do Gold & Silver Rank in Vulnerability to a Recession Among Other Commodities?

A Barclays Capital research [report] notes that gold prices are vulnerable to a recession – more so than some of the other commodities. In the last recession of 2008, gold prices appreciated the least among precious metals. Below is a table that ranks 30 different commodities. Words: 571

So says an article* posted at www.zawya.com.

Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([ ]), abridged (…) and reformatted the article below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Who in the world is currently reading this article along with you? Click here

The article goes on to say, in part:

Gold’s Vulnerability

Of all commodities, gold is placed as the 8th [ see table below] most vulnerable in a recession, according to the BarCap study, which took into account inventory levels, correlation to emerging markets and their performance in the crisis of 2008.

Notes the BarCap research:

Gold’s fairly high ranking is interesting because it performed relatively well in 2008-09. However, this time around, gold prices have been stronger than they were prior to September 2008, whilst speculative positioning is also a little higher.

Gold’s strong performance in previous economic downturns is a positive, but not enough to offset these other negatives. It is important to note, however, that gold’s high ranking is also a function of fundamental factors such as costs and emerging market exposure, which are arguably less important in influencing gold prices than they are for other commodities.

Why spend time surfing the internet looking for informative and well-written articles on the health of the economies of the U.S., Canada and Europe; the development and implications of the world’s financial crisis and the various investment opportunities that present themselves related to commodities (gold and silver in particular) and the stock market when we do it for you. We assess hundreds of articles every day, identify the best and then post edited excerpts of them to provide you with a fast and easy read.

Sign up here to begin receiving munKNEE.com’s FREE Financial Intelligence Report

In addition, gold-supportive factors that are less important for other commodities, such as being a hedge of economic and financial uncertainty, have not been taken into account in the research [causing BarCap to express caution, as follows]:

Therefore, the implication of gold’s high ranking needs to be hedged somewhat. Nevertheless, it does suggest that if the financial factors that have supported physical investment buying were to fade, then gold prices could start to look very precarious indeed.

Crude Oil’s Vulnerability

The BarCap research ranks crude vulnerability at midlevel [Brent #13 and WTI (West Texas Intermediate) #16 out of 30 commodities], primarily due to low inventory levels, noting:

A relatively low level of inventories globally is supportive, but linkage to emerging markets is relatively low, whilst it has an above-average linkage to global growth and speculative interest is relatively high. Brent crude prices appear more vulnerable to a sharp slowdown in growth and oil demand than WTI, mainly because WTI oil prices have already fallen much further.

[The report also mentions that] crude prices have [also] benefited from disruptive supplies from Libya to Iraq, Yemen, Syria, North Sea crude and underperformance in oil production in Russia, China, Canada and Nigeria, saying:

Crude oil spare capacity is very low. At an estimated 2-3m bpd, most of it held by Saudi Arabia and made up of more sour, heavy crude types, the global oil supply industry has very little slack in its system. This means that, as was the case in 2008, OPEC should have little difficulty in cutting output significantly if required. The combination of low inventories and limited spare capacity suggests a high degree of support for crude oil prices even if demand conditions deteriorate significantly.

*http://www.zawya.com/story.cfm/sidZAWYA20111006051717/Why_golds_vulnerable

Related Articles:

According to Barclays Capital, gold, silver, platinum and palladium, as well as other commodities, generally stand a better chance of handling a global economic downturn than other types of investments [because] commodities “are on a very different footing” from two years ago [which they explain in detail below.] Words: 350
 
Jim Rogers is one of the most successful investors of all-time…and he buys value. Back in 1999, he predicted that a “supercycle” commodity bull market would see raw material prices advancing for longer than in any previous uptrend led by gold and silver. Gold was trading near its low at $252 and silver at $4 at the time but with gold up 650% from its lows and silver with an even greater gain – obviously Rogers was right. Rogers has now stopped buying gold moving, [instead,] towards a greater commodity opportunity that he thinks offers the same kind of values that gold and silver did a decade ago. Words: 909
 
Question: What asset has appreciated more than any asset since the year 2000? Answer: Farmland – by 1,200%! [George Soros and Jim Rogers have recognized that fact and invested accordingly. Here is what you need to know to do likewise.] Words: 974
 
We now believe that there is at least a 50% probability of Israeli airstrikes against Iranian nuclear sites… Iran has multiple retaliatory options at its disposal…[and it begs the question:] Which options would most adversely affect the price of oil? [Let’s take a look at what those options would be.] Words: 544
 
One of the things we look for in the markets is anomalies or disconnects from historical tendencies that signal some element of a traditional relationship between two things is changing or has changed. Often, the relationship is eventually returned to “normal”, meaning money can be made if an investor is on the right side of the trade. Other times, the relationship has been fundamentally altered in some way, so understanding the reasons behind the shift can become a source of opportunity, since it can either provide understanding about relevant long-term trends or signal a shift in an existing one. [Such being the case let’s take a look at] the ratio between natural gas and crude oil [and determine how best to play this investment opportunity.] Words: 1069
 
Have you been wondering how commodities will fare in November? [Below is a chart of] how select commodities performed in the past 25 Novembers (since 1986). Words: 489
 
It wasn’t supposed to be this way. By now, Peak Oil was supposed to be a fact of daily life. People were supposed to be lined up at gas stations, struggling to buy US$10-a-gallon gas. Solar and wind companies were supposed to occupy prominent places on the Big Board instead of going out of business right and left. People were supposed to have diminished expectations – resigned to shivering in the dark. Free markets, a flawed system of commerce, were to be exposed as a misleading theoretical construct, incapable of providing for people’s needs…The world was running out of resources…Now, suddenly, there is a different tale to tell and the New York Times is up to the task. Up and down the Americas, we learn, there is an Oil Boom. Suddenly, we have gone from enforced austerity to an unheralded plenty. Middle East, watch out! [But all is not as it seems. Let me explain.] Words: 1440
 
In a recent article called There Will Be Oil in the WSJ, Daniel Yergin once again attempts to debunk the concept of peak oil and sees global production capacity growing to 110 mmbpd by 2030, followed by slow decline. In this short report I take a quick look at his key arguments in an effort to bring further convergence between the peak oil and business-as-usual camps. [Unfortunately, I failed to do so concluding that Peak Oil is still very much with us. Let me explain.] Words: 2032