Source: Adrian Day 04/10/2024
Global Analyst Adrian Day looks for signs that investors are finally turning to gold, and provides an update on developments at a couple of stocks on his list.
Central Bank Buying Continues to Drive Gold Prices
Over the past four weeks, gold prices have risen by $150, building on the momentum gained from a $190 increase in the previous month. Central bank buying remains a major driver behind the increase in gold prices. However, there are increasing indications of a shift in interest from institutional and retail investors towards gold, potentially propelling the price even higher.
Recent reports on various gold buying avenues show that central banks have been actively buying gold, with almost 19 tonnes of net buying reported so far. Notable buyers include China, the Czech Republic, Kazakhstan, Qatar, Turkey, and Mauritania, offset by a significant sale from Uzbekistan. This trend, although strong, represents a slowing compared to the previous two years.
Retail Buyers Lagging Behind
Anecdotal evidence suggests that there has been a slight shift towards buying gold in recent weeks among retail customers, although coin dealers still report neutral to weak sales. On the other hand, gold ETF flows have shown some fluctuation, with recent inflows on specific days as gold prices surpassed $2,300. Despite these inflows, overall ETF selling has continued this year.
It appears that retail and institutional investors are not the primary drivers of the current gold price surge.
Wealthy Families and Institutions Driving Gold Demand
There seems to be a new source of demand for gold, primarily from wealthy families and institutions in the Middle East, Asia, and Europe. These buyers are likely seeking gold as an insurance asset against financial instability. Gold’s resilience in the face of typically adverse factors like a strong dollar and high interest rates indicates a different type of demand from traditional investors.
Anticipation of potential Federal Reserve rate cuts also favors gold, as investors sense a looming rate cut due to economic conditions. Despite recent indications of a more hawkish stance from the Fed, gold prices have continued to rise.
Gold Stocks and Silver Outperforming Gold
Interestingly, gold and silver stocks have outperformed gold itself in recent weeks, signaling increased market strength and investor interest. This outperformance could be an early indicator of a potential shift in assets towards gold equities, leading to significant gains if the trend continues.
Recent Developments in Gold Stock Investments
Franco-Nevada Corp. FNV made a small royalty purchase from Scottie Resources in British Columbia. This acquisition, along with equity investments, demonstrates a strategic shift towards smaller transactions in the current market environment.
Altius Minerals Corp. ATUSF faced a setback in its takings claim over a royalty, but the impact on the company’s share price is believed to be minimal. Altius continues to offer broad exposure to commodities and remains a core holding.
In addition to the above, Adrian Day’s top buys this week include Nestlé SA NSRGF, Gladstone Investment Corp. GAIN, and Orogen Royalties Inc. OGNRF.
In conclusion, while central banks and wealthy investors are driving the recent surge in gold prices, a potential shift in interest from retail and institutional investors could lead to explosive movements in the coming weeks. The performance of gold stocks and silver compared to gold itself also hints at a strengthening market, signaling opportunities for investors to capitalize on the shift towards gold assets.
Important Disclosures:
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Franco-Nevada Corp., Altius Minerals Corp., and Orogen Royalties Inc.
- Adrian Day: I, or members of my immediate household or family, own securities of: All. My company has a financial relationship with: All. I determined which companies would be included in this article based on my research and understanding of the sector.
- Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
Adrian Day Disclosures
Adrian Day’s Global Analyst is distributed for $990 per year by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. Publisher: Adrian Day. Owner: Investment Consultants International, Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. © 2023. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.
Additional Insight:
The observed trends in gold buying behavior, with central banks and wealthy individuals driving demand while retail and institutional investors lag behind, suggest a shifting landscape in the gold market. The performance of gold stocks and silver relative to gold itself is a key indicator of potential market strength and opportunities for investors to capitalize on the changing dynamics. As gold prices continue to rise amidst economic uncertainties, the role of different investor segments in shaping the future trajectory of the gold market remains a critical factor to monitor.
