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Inflation shot up to 8.6% last month, the highest the CPI has been in over 40 years. As consumers and wage earners, our purchasing and earning power is eroding by the day—and the markets have certainly noticed.
It’s a bloodbath in the markets, including in many of the safe havens of previous bear markets, such as T-Bills, T-Bonds, and real estate. Gold, however, has stood strong. Over the past 12 months, gold is up nearly +5%—not a bad return, considering the S&P 500 index is down nearly 10% over the same period.
Here’s where precious metals investors currently stand over the last 30 days:
- Gold: -1.41% ($1,740 per ounce)
- Silver: +0.22% ($19.22)
- Platinum: -15.52% ($859.49)
- Palladium: +0.57% ($2,102.00)
The good news for gold bugs is that, despite the chaos in conventional markets, there are bullish signals for gold. Just last week the Biden Administration announced that the U.S. will soon stop all gold purchases from Russia, thereby constraining its global supply. Shortly thereafter, the leaders of the G7 economies agreed to join in the ban.
Considering that Russia exports about $15 billion worth of gold every year, an outright ban from seven of the richest countries in the world will certainly have an effect on gold prices.
In fact, we asked some of America’s foremost gold industry CEOs what they make of the recent White House announcement. Here’s what they had to say:
“The London Bullion Market Association – the world’s largest financial market for precious metals – already had suspended transactions with all six Russian gold and silver refineries back in March. And Russian exports to the West have, for all practical purposes, been over for some time. So, I don’t view this G-7 import ban on gold as terribly impactful for Russia or the price of gold. In my opinion, the biggest drivers of gold right now are the same “usual suspect” macroeconomic fundamentals we’re used to seeing, including inflation, interest-rate policy and dollar strength. You can throw “recession risk” in there, as well, although that ultimately is both a cause and an effect of changes in these fundamentals.”
- Isaac Nuriani, CEO of Augusta Precious Metals
“What the gold ban could potentially affect is the ease in which Russian gold will find its way to the buyers. And since nobody can tell by looking at an ounce of gold if it was mined in Russia, Chile, or the US, Russian gold will find its way to G7 buyers through foreign middlemen or by being sold to China and India, who are not part of the ban allowing the gold they were buying from other sources to end up here. What the ineffective G7 ban shows is how difficult it is to disrupt the gold trade or harm gold holders, even when a ban is enacted by superpowers, since gold does not need a system to exist. If you hold it and can ship it, it will find its way to the market.”
- Joseph Sherman, CEO of Gold Alliance
“The G7 ban on gold imports from Russia could put upward price pressure on gold’s spot price if other countries follow suit. However, the BRICS countries (minus Russia, of course) are likely more than happy to purchase Russian-refined gold at discount prices and then resell it on the open market. Russian gold can be sold to China, then recast and restamped as Chinese gold before being sent off to the London bullion market. The Biden administration’s announcement is more a symbolic political gesture than a truly effective blow to Russia’s economy.”
- Tyler Gallagher, CEO of Regal Assets
While the jury is still out on the impact of the G7 ban on Russian gold imports, the fact remains that the yellow metal has outperformed nearly all other asset classes throughout this most recent bear market. Savvy investors would do well to shore up their portfolios with gold to hedge against deeper dips in the stock and bond markets.
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