5 Things Every Investor Should Know Right Now

The comments below are an edited and abridged synopsis of an article by Frank Holmes

The Federal Reserve has become the latest central bank to cut interest rates. Meanwhile, President Trump escalated the trade war even further, announcing that additional tariffs would be imposed on goods coming into the US from China after another round of trade talks failed to deliver a satisfactory resolution.

5 Things Every Investor Should Know Right Now | BullionBuzz
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Gold closed out July with a fourth straight month of gains.

Five things Holmes believes every investor should know right now: August has a rocky history, and it could be time to get defensive; the Fed has capitulated, making the corporate debt bubble even more precarious; Trump’s trade war will take a huge toll on corporate earnings; tariffs are hurting manufacturing growth, both in the US and abroad; and gold demand has had its best first half of the year in three years.

Given the considerable risks we currently face, is it any wonder that gold has performed so well? The yellow metal is trading above $1,475, up 12.6% from the start of January.

Gold demand in the first half of 2019 was its best in three years, climbing to 2,181.7 tonnes, largely due to increased appetite for gold-backed ETFs as well as record buying by central banks. Bank purchases of bullion rose an incredible 47% year-over-year in the second quarter, pushing the total amount for the January-to-June period to its highest since central banks became net buyers of gold in 2010. Poland was the top buyer—ahead of Russia, even—with reserves growing 77% to 100 tonnes.

Meanwhile, investors added some 67.2 tonnes to their holdings of gold-backed ETFs in the second quarter. This took total holdings to a six-year high of 2,548 tonnes. Among the factors driving demand were geopolitical uncertainty, global negative yields and a rising gold price.

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