Gold & Silver Risk NotesOctober 2016

LONDON, Sept 12 Gold fell on Monday as pressure from speculation over a potential increase in U.S. interest rates this month offset the metal's safe-haven appeal amid widespread weakness across other assets. Spot gold was down almost 0.3 percent at $1,324.15 an ounce by 1400 GMT, with U.S. gold futures losing 0.5 percent to $1,328. A chorus of hawkish comments from Federal Reserve officials kept expectations alive for a September rate increase despite a recent spate of disappointing economic data. - RTRS

If it were not for Brexit, arguments could be made against the actual price of Gold. As for Oct. 5th 10am that price is $1275.80 and silver is at $17.9250

From a variability perspective, gold is a a very poor inflation hedge

By definition the nominal return of gold is the sum of the inflation rate and the real gold price return

“Over practical investment horizons, gold is an unreliable inflation hedge” - NBER 2013

The current Gold/ Silver Ratio is $67.887 (3:44PM EST 9/05/16)

In an NBER working paper from 2013, the correlation between treasury prices and the price of gold is striking and delivered with haunting words:If prominent emerging markets increase their gold holdings to average per capita or per GDP holdings of developed countries, the real price of gold may rise even further from today’s elevated levels. In the end, investors face a golden dilemma:

1) embrace a view that ‘those who cannot remember the past are condemned to repeat it’ and the purchasing power of gold is likely to revert to its mean or 2) embrace a view that the emergence of new markets represent a structural change and ‘this time is different’.

Gold to Silver Ratio Charts (Macrotrends)

99 Years 5 Years

Source Data:-Shanghai Futures Exchange-IMF-NBER Working Paper 18706-MacroTrends-Zermatt Investors Data

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Report August - October 4, 2016

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