Market Update GoldCore 1 July 2013

Market Update GoldCore

Review of H1; Outlook For H2, 2013 and Long Term

With the end of the second quarter it is important to take stock and review how various assets have performed in the first half of 2013 and assess the outlook for the rest of 2013 and, more importantly, the coming years.

Global stock, bond, commodity and precious metal markets have been highly volatile since Federal Reserve Chairman Ben Bernanke again suggested that the Fed would soon cut the pace of its highly unorthodox money printing and bond buying.

Gold and particularly silver had a torrid quarter and have significantly underperformed the vast majority of equity and bond markets in the quarter and in the last six months.

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Markets were volatile prior to Bernanke’s “jawboning”, particularly after the Bank of Japan said it would boost the monetary base by ¥60 trillion to ¥70 trillion ($600 billion or $700 billion) annually. This led to record gold prices in Japanese yen in April prior to a series of mini Nikkei crashes and gold falling sharply in all currencies.

Review of Asset Performance H1, 2013

• Precious Metals: Gold prices fell 23% for the quarter, their largest quarterly fall since gold began trading in 1971. The 27% fall this year is the worst first-half performance since 1981. Silver slumped 31% in the second quarter and was down 36% in the first half.
• Bonds: Bloodletting was not confined to the precious metals markets and there was considerable bloodletting in the bond market, as the yield on the U.S. Treasury 10-year note rose to 2.49% on Friday, from 1.84% on April 1 and from 1.63% on May 2, a low for the quarter.global economic recovery remains very tentative. China, Japan, the U.S. , the UK, most European countries and all major economies face major challenges and there is a real risk of double dip recessions and a global recession.
• Commodities: Commodities saw weakness in general with copper, corn and coffee all having deep declines in the quarter due to concerns about global economic growth.
• Currencies: Part of the reason for weakness in commodities was the strength of the dollar which is the strongest currency in the world year to date. The euro, Danish krone, Swiss franc and Swedish krona have also displayed strength so far in 2013.

Outlook For 2013 and Rest of Decade

• Macroeconomic: The global economic recovery remains very tentative. China, Japan, the U.S. , the UK, most European countries and all major economies face major challenges and there is a real risk of double dip recessions and a global recession.
• Systemic: Many western banks and sovereign nations are bordering on insolvency and remain very vulnerable.
• Geopolitical: Geopolitical risk from terrorism and war remains high and there are many geopolitical hot spots in the world especially in the Middle East - in Syria and between Iran and Israel. Tensions between Iran and Israel and the U.S. could lead to a military incident that degenerates into a regional conflict in the Middle East.
• Monetary: The initial skirmishes of the ‘global currency wars' have been seen in recent years. We are experiencing a mere lull in currency wars but expect them to return with a vengeance when economic growth falters.

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The short term outlook for the precious metals is, as ever, uncertain. Further weakness is possible although there is strong support for gold at the $1,200/oz level from a technical and fundamental perspective. There is robust international demand for gold at these levels and gold is becoming increasingly uneconomical to mine at these depressed price levels.

Longer term we continue to believe that gold is in a secular bull market which will continue from 2015 to 2020. We continue to believe that gold should reach and surpass its inflation adjusted high of $2,400/oz in the coming years.

"Has Gold's 'Bubble' Burst Or Is This Another Buying Opportunity?"

Are you concerned about the sharp fall in gold and silver prices in 2013? Are you unsure as to the outlook for the precious metals and to whether you should be selling or buying?

If so, don't miss this opportunity to join us for a webinar on Tuesday, July 2nd at 1300 GMT. We will look at the performance so far in 2013 and the outlook for the second half of the year and more importantly for the coming years.

Join Mark O'Byrne, Head of Research and Founder at GoldCore.

In this 45-minute webinar, discover:
Where We Are Now In The Market Cycle
The Outlook for Gold and Silver This Year And Coming Years
Learning From The 1970s Bull Market and the 1975/76 Price Collapse
The Safest Way To Own Gold and Silver
Knowing When To Reduce Allocations Or Sell

ENDS

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