Connect with us

International

Will the price of gold rise? Why One Of The World’s Most Successful Hedge Fund Managers Is Sure It Will

Historically seen as a safe have asset, the gold price typically rises sharply during periods of economic stress and geopolitical uncertainty. It also…

Published

on

Historically seen as a safe have asset, the gold price typically rises sharply during periods of economic stress and geopolitical uncertainty. It also tends to do especially well over periods of high inflation and bearish stock market conditions, acting as an inflation-hedged alternative to cash or bonds when holding either means losing purchasing power.

But since big gains between October 2018 and August 2020 when the gold price rose from $1187.2oz to $2032.16oz, a gain of a little over 70%, the precious metal has disappointed.

gold price chart

Source: goldprice.org

The gold price has traded up and down around $1800oz-$2000oz since, occasionally breaking above or below but resisting any significant bull run. It briefly spiked above $2052 in early March but has since fallen back below $1832 despite inflation rates around the world continuing to tick up, interest rate rises, a stock market slump and crystalising fears over a recession.

The gold price should have, according to historical market logic, seen some significant gains over the past three months. But it hasn’t. The question becomes, why not? And will that change? Many analysts believe it will and the gold price will rise in coming months.

But let’s look at the factors that have kept gold trading in a range over the past 2-3 years and why it could be about to break out in an upwards trajectory.

Why has the price of gold recently dropped despite surging inflation, global economic weakness and geopolitical instability?

Over the latter part of 2020 and throughout 2021, gold’s upwards price momentum of the previous two years was halted by booming stock markets. Riskier, high growth companies were having capital flung at them as markets went into melt-up after putting the Covid-19 pandemic sell-off of February to March behind them. When market sentiment is risk-on, gold loses its lustre.

However, since the beginning of this year, market sentiment has become decidedly more risk averse. The high-growth tech-centric Nasdaq 100 index has lost around 30% and the kind of low revenue/no profit tech start-ups recently valued in the billions have seen their 2021 valuations devastated. British online-only second-hand-cars dealer Cazoo, which listed on the NYSE at a $7 billion valuation last August is now worth $705.55 million after losing over 90% of its market capitalisation.

Russia also invaded Ukraine in late February, sparking fears war could spill further into Europe and sending the prices of energy and core food commodities rocketing. That’s an ongoing situation that could still very conceivably get worse again in terms of its threat to European security.

Even at current levels, with the active war relatively contained to the Donbas region, it continues to wreak havoc on the global economy through a combination of disruption to supply lines, Russia’s Black Sea blockade preventing the export of millions of tonnes of grain from Ukraine’s remaining ports, and Western sanctions against Russia. And inflation levels which continue to climb have hit forty-year highs.

But despite the host of factors that would be expected to be in favour of a climbing gold price, it has fallen over 10% in the past three months. Why’s that and can we expect it to change?

The biggest factor behind gold’s recent price decline, and generally sluggish performance over the first quarter of 2022, has been a surging dollar index, which hit a multi-decade peak on June 14. Investors are favouring the U.S. dollar over gold as a safe haven and that’s a trend that many expect to continue with the Fed tightening monetary policy aggressively in an attempt to put a lid on inflation.

dxy chart

Source: TradingView

Rising U.S. Treasury yields as interest rates rise are another factor against a new bull run for gold in the near future. Analysts bearish on gold believe its price could decline over the long term with brokers Capital quoting a forecast from the Australian Bank ANZ that the price per oz could drop to $1600 by 2023.

“Aggressive monetary tightening, rising yields and a stronger dollar are key drags for the gold prices. Rising inflation failed to impress the market, instead raising fears of a more hawkish stance by the central banks. That said, the spread between the fed funds rate and CPI is at its widest, suggesting the Fed is struggling to contain inflation,” analysts at ANZ wrote in their latest gold forecast.”

“Concerns about global economic growth, fuelled by sustained inflation and heightened geopolitical risks, should protect the gold price somewhat. We expect gold to remain supported at USD1,850/oz, with upside potential of USD1,950/oz.”

Could gold prices rise significantly? The bull case

There are also plenty of analysts who paint a positive picture and still expect a bull market for gold to return over the months and years ahead. In the shorter to medium term, The Telegraph’s Richard Evans expects demand from central banks to drive prices back up. He quotes James de Uphaugh of Edinburgh investment trusts, which has a stake in the American gold miner Newmont:

“Simply put, supply is all but certain to fall and demand is likely to rise. The extra demand will come from the central banks of certain countries around the world that have seen how Russia’s dollar holdings have been subject to sanctions and decide to invest instead in an asset that they can keep in their own vaults and has no ‘counterparty’.”

He expects supply to come under pressure over the next ten years because existing mines are running out of economically feasible gold to be mined and there is a lack of enthusiasm and capital for new projects.

“…gold is getting harder to find. If you want to develop a new gold mine it’s not obvious where to go.”

“All the places where gold can be taken from the ground easily have long been exhausted. Whereas once it could be found on the surface, now ever deeper mines are required. Mining companies have also lost their appetite for “prospecting” – searching for entirely new sources – and instead now concentrate on getting all the gold they can out of existing mines.”

“Searching for new mines is the glamorous side of the business and the previous generation of mining executives, their heads no doubt full of images from cowboy films, did just that. They sought to make their company the biggest by spending fortunes on seeking new sources or by buying rivals. This, of course, came at the expense of profitability.”

“Gold miners are now run by people with discipline, who are not gung ho but run their business in a systematised way. They have stricter financial criteria for going ahead with new projects.”

The result is that gold miners are becoming more profitable but fewer new sources of supply are coming online. As a result, production from existing mines is forecast to halve over the next decade and by a third according to the most optimistic estimates.

The Gold price could remain soft medium term but rise longer term

The upshot of the bear and bull cases for gold is that the precious metal’s price may well either hold roughly where it is in the short to near term, continuing the rangebound trend of the past couple of years. A recession could give it a boost.

But unless significant new deposits are discovered and mines invested in, the longer term outlook could favour gold. However, as a short-term safe haven investment amid currently turbulent conditions, the arguments in favour of gold are dubious against the backdrop of such a strong dollar and rising Treasury yields.

The post Will the price of gold rise? Why One Of The World’s Most Successful Hedge Fund Managers Is Sure It Will first appeared on Trading and Investment News.

Read More

Continue Reading

International

There will soon be one million seats on this popular Amtrak route

“More people are taking the train than ever before,” says Amtrak’s Executive Vice President.

Published

on

While the size of the United States makes it hard for it to compete with the inter-city train access available in places like Japan and many European countries, Amtrak trains are a very popular transportation option in certain pockets of the country — so much so that the country’s national railway company is expanding its Northeast Corridor by more than one million seats.

Related: This is what it's like to take a 19-hour train from New York to Chicago

Running from Boston all the way south to Washington, D.C., the route is one of the most popular as it passes through the most densely populated part of the country and serves as a commuter train for those who need to go between East Coast cities such as New York and Philadelphia for business.

Veronika Bondarenko captured this photo of New York’s Moynihan Train Hall. 

Veronika Bondarenko

Amtrak launches new routes, promises travelers ‘additional travel options’

Earlier this month, Amtrak announced that it was adding four additional Northeastern routes to its schedule — two more routes between New York’s Penn Station and Union Station in Washington, D.C. on the weekend, a new early-morning weekday route between New York and Philadelphia’s William H. Gray III 30th Street Station and a weekend route between Philadelphia and Boston’s South Station.

More Travel:

According to Amtrak, these additions will increase Northeast Corridor’s service by 20% on the weekdays and 10% on the weekends for a total of one million additional seats when counted by how many will ride the corridor over the year.

“More people are taking the train than ever before and we’re proud to offer our customers additional travel options when they ride with us on the Northeast Regional,” Amtrak Executive Vice President and Chief Commercial Officer Eliot Hamlisch said in a statement on the new routes. “The Northeast Regional gets you where you want to go comfortably, conveniently and sustainably as you breeze past traffic on I-95 for a more enjoyable travel experience.”

Here are some of the other Amtrak changes you can expect to see

Amtrak also said that, in the 2023 financial year, the Northeast Corridor had nearly 9.2 million riders — 8% more than it had pre-pandemic and a 29% increase from 2022. The higher demand, particularly during both off-peak hours and the time when many business travelers use to get to work, is pushing Amtrak to invest into this corridor in particular.

To reach more customers, Amtrak has also made several changes to both its routes and pricing system. In the fall of 2023, it introduced a type of new “Night Owl Fare” — if traveling during very late or very early hours, one can go between cities like New York and Philadelphia or Philadelphia and Washington. D.C. for $5 to $15.

As travel on the same routes during peak hours can reach as much as $300, this was a deliberate move to reach those who have the flexibility of time and might have otherwise preferred more affordable methods of transportation such as the bus. After seeing strong uptake, Amtrak added this type of fare to more Boston routes.

The largest distances, such as the ones between Boston and New York or New York and Washington, are available at the lowest rate for $20.

Read More

Continue Reading

International

The next pandemic? It’s already here for Earth’s wildlife

Bird flu is decimating species already threatened by climate change and habitat loss.

I am a conservation biologist who studies emerging infectious diseases. When people ask me what I think the next pandemic will be I often say that we are in the midst of one – it’s just afflicting a great many species more than ours.

I am referring to the highly pathogenic strain of avian influenza H5N1 (HPAI H5N1), otherwise known as bird flu, which has killed millions of birds and unknown numbers of mammals, particularly during the past three years.

This is the strain that emerged in domestic geese in China in 1997 and quickly jumped to humans in south-east Asia with a mortality rate of around 40-50%. My research group encountered the virus when it killed a mammal, an endangered Owston’s palm civet, in a captive breeding programme in Cuc Phuong National Park Vietnam in 2005.

How these animals caught bird flu was never confirmed. Their diet is mainly earthworms, so they had not been infected by eating diseased poultry like many captive tigers in the region.

This discovery prompted us to collate all confirmed reports of fatal infection with bird flu to assess just how broad a threat to wildlife this virus might pose.

This is how a newly discovered virus in Chinese poultry came to threaten so much of the world’s biodiversity.

H5N1 originated on a Chinese poultry farm in 1997. ChameleonsEye/Shutterstock

The first signs

Until December 2005, most confirmed infections had been found in a few zoos and rescue centres in Thailand and Cambodia. Our analysis in 2006 showed that nearly half (48%) of all the different groups of birds (known to taxonomists as “orders”) contained a species in which a fatal infection of bird flu had been reported. These 13 orders comprised 84% of all bird species.

We reasoned 20 years ago that the strains of H5N1 circulating were probably highly pathogenic to all bird orders. We also showed that the list of confirmed infected species included those that were globally threatened and that important habitats, such as Vietnam’s Mekong delta, lay close to reported poultry outbreaks.

Mammals known to be susceptible to bird flu during the early 2000s included primates, rodents, pigs and rabbits. Large carnivores such as Bengal tigers and clouded leopards were reported to have been killed, as well as domestic cats.

Our 2006 paper showed the ease with which this virus crossed species barriers and suggested it might one day produce a pandemic-scale threat to global biodiversity.

Unfortunately, our warnings were correct.

A roving sickness

Two decades on, bird flu is killing species from the high Arctic to mainland Antarctica.

In the past couple of years, bird flu has spread rapidly across Europe and infiltrated North and South America, killing millions of poultry and a variety of bird and mammal species. A recent paper found that 26 countries have reported at least 48 mammal species that have died from the virus since 2020, when the latest increase in reported infections started.

Not even the ocean is safe. Since 2020, 13 species of aquatic mammal have succumbed, including American sea lions, porpoises and dolphins, often dying in their thousands in South America. A wide range of scavenging and predatory mammals that live on land are now also confirmed to be susceptible, including mountain lions, lynx, brown, black and polar bears.

The UK alone has lost over 75% of its great skuas and seen a 25% decline in northern gannets. Recent declines in sandwich terns (35%) and common terns (42%) were also largely driven by the virus.

Scientists haven’t managed to completely sequence the virus in all affected species. Research and continuous surveillance could tell us how adaptable it ultimately becomes, and whether it can jump to even more species. We know it can already infect humans – one or more genetic mutations may make it more infectious.

At the crossroads

Between January 1 2003 and December 21 2023, 882 cases of human infection with the H5N1 virus were reported from 23 countries, of which 461 (52%) were fatal.

Of these fatal cases, more than half were in Vietnam, China, Cambodia and Laos. Poultry-to-human infections were first recorded in Cambodia in December 2003. Intermittent cases were reported until 2014, followed by a gap until 2023, yielding 41 deaths from 64 cases. The subtype of H5N1 virus responsible has been detected in poultry in Cambodia since 2014. In the early 2000s, the H5N1 virus circulating had a high human mortality rate, so it is worrying that we are now starting to see people dying after contact with poultry again.

It’s not just H5 subtypes of bird flu that concern humans. The H10N1 virus was originally isolated from wild birds in South Korea, but has also been reported in samples from China and Mongolia.

Recent research found that these particular virus subtypes may be able to jump to humans after they were found to be pathogenic in laboratory mice and ferrets. The first person who was confirmed to be infected with H10N5 died in China on January 27 2024, but this patient was also suffering from seasonal flu (H3N2). They had been exposed to live poultry which also tested positive for H10N5.

Species already threatened with extinction are among those which have died due to bird flu in the past three years. The first deaths from the virus in mainland Antarctica have just been confirmed in skuas, highlighting a looming threat to penguin colonies whose eggs and chicks skuas prey on. Humboldt penguins have already been killed by the virus in Chile.

A colony of king penguins.
Remote penguin colonies are already threatened by climate change. AndreAnita/Shutterstock

How can we stem this tsunami of H5N1 and other avian influenzas? Completely overhaul poultry production on a global scale. Make farms self-sufficient in rearing eggs and chicks instead of exporting them internationally. The trend towards megafarms containing over a million birds must be stopped in its tracks.

To prevent the worst outcomes for this virus, we must revisit its primary source: the incubator of intensive poultry farms.

Diana Bell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Read More

Continue Reading

International

This is the biggest money mistake you’re making during travel

A retail expert talks of some common money mistakes travelers make on their trips.

Published

on

Travel is expensive. Despite the explosion of travel demand in the two years since the world opened up from the pandemic, survey after survey shows that financial reasons are the biggest factor keeping some from taking their desired trips.

Airfare, accommodation as well as food and entertainment during the trip have all outpaced inflation over the last four years.

Related: This is why we're still spending an insane amount of money on travel

But while there are multiple tricks and “travel hacks” for finding cheaper plane tickets and accommodation, the biggest financial mistake that leads to blown travel budgets is much smaller and more insidious.

A traveler watches a plane takeoff at an airport gate.

Jeshoots on Unsplash

This is what you should (and shouldn’t) spend your money on while abroad

“When it comes to traveling, it's hard to resist buying items so you can have a piece of that memory at home,” Kristen Gall, a retail expert who heads the financial planning section at points-back platform Rakuten, told Travel + Leisure in an interview. “However, it's important to remember that you don't need every souvenir that catches your eye.”

More Travel:

According to Gall, souvenirs not only have a tendency to add up in price but also weight which can in turn require one to pay for extra weight or even another suitcase at the airport — over the last two months, airlines like Delta  (DAL) , American Airlines  (AAL)  and JetBlue Airways  (JBLU)  have all followed each other in increasing baggage prices to in some cases as much as $60 for a first bag and $100 for a second one.

While such extras may not seem like a lot compared to the thousands one might have spent on the hotel and ticket, they all have what is sometimes known as a “coffee” or “takeout effect” in which small expenses can lead one to overspend by a large amount.

‘Save up for one special thing rather than a bunch of trinkets…’

“When traveling abroad, I recommend only purchasing items that you can't get back at home, or that are small enough to not impact your luggage weight,” Gall said. “If you’re set on bringing home a souvenir, save up for one special thing, rather than wasting your money on a bunch of trinkets you may not think twice about once you return home.”

Along with the immediate costs, there is also the risk of purchasing things that go to waste when returning home from an international vacation. Alcohol is subject to airlines’ liquid rules while certain types of foods, particularly meat and other animal products, can be confiscated by customs. 

While one incident of losing an expensive bottle of liquor or cheese brought back from a country like France will often make travelers forever careful, those who travel internationally less frequently will often be unaware of specific rules and be forced to part with something they spent money on at the airport.

“It's important to keep in mind that you're going to have to travel back with everything you purchased,” Gall continued. “[…] Be careful when buying food or wine, as it may not make it through customs. Foods like chocolate are typically fine, but items like meat and produce are likely prohibited to come back into the country.

Related: Veteran fund manager picks favorite stocks for 2024

Read More

Continue Reading

Trending