Last week the news came out that April saw the true net inflows of money into gold-based (and backed) ETF’s attain their highest levels in over a year. This is significant news that breathes new life into the precious metals complex. What is most noteworthy still about it is the underlying reasoning. The World Gold Council reported several important and worrisome geopolitical explanations for why gold is on the march these days.
It gives you of a solid set of reasons for why you need a gold IRA these days. Gold offers insurance and protection during market turbulence. You need to learn what gold goes in an IRA while there is still time to add some to your retirement portfolios.
Wall Street Players Are the Real Frauds and Tricksters
Forget what you have heard about precious metals analysts. As SRSrocco has so aptly declared recently:
“There’s a very interesting notion put forth by many commentators that the precious metals analysts and dealers are the frauds and charlatans, not Wall Street or the central banks. I imagine they believe this because gold and silver prices haven’t performed as forecasted or compared to the insanely inflated stock, real estate, and crypto markets.”
Yet the truth tells a different story. Gold has increased in price from around $300 per ounce to over $1,300 per ounce since the year 2002. That means that in the last 15 years, the yellow metal has experienced an over 330 percent sustained price run (it actually was up over 450 percent when it topped $1,700 per ounce earlier in the last decade).
This 22 percent average per year gain compares favorably to the ludicrously irrational rise in stock prices over the last decade, and it is actually much greater than stocks have performed since the year 2002 (which are not really up all that much from then, thanks to the double whammy of the Global Financial Crisis and the Dotcom busts).
The Impressive Gold Stats from April Are A Harbinger of Things to Come
The strength of last month’s net inflows into gold can not be denied even by the gold haters on Wall Street. The total gold backed Exchange Traded Fund assets rose by 72.2 tons of gold in April alone, per the World Gold Council’s date release. The global total of gold holdings in the various gold backed ETFs increased to a total of 2,481 tons of the yellow metal valued at approximately $104.6 billion. This chart below shows you this year’s performance so far versus past months:
Inflows were particularly strong from Europe and North America, with secondary support coming from Asian ETFs. The North American ETFs proved the standout performers. They had already boosted their total gold assets by an impressive 22.5 tons for March. They almost doubled this performance in April with 44.2 tons added for $1.9 billion in value.
European Gold ETFs saw their outflows of 1.1 tons for March reversed to an increase of 27 tons valued at $1.2 billion for the month of April. The various Asian-based gold ETFs marked their fourth month in a row of net total inflows by increasing their holdings with an additional 2.4 tons of the yellow metal in April.
Reasons for the Surge of Gold ETF Inflows for April
The World Gold Council reported that a variety of reasons pushed money into the gold-backed Exchange Traded Funds over the last months. Even though the major worldwide stock markets increased over the month of April, a number of the key indices are still flat or even down on the year. This stems from severe geopolitical and market uncertainty that started in Syria and now extends to China.
Missile strikes launched by the United States, the United Kingdom, and France scared Middle Eastern observers who fear the outbreak of hostilities in a wider regional war (potentially involving Israel and its arch-enemy Iran). Meanwhile the ongoing hostile trade talk between the United States and China cast a long shadow over equities’ markets around the globe.
Finally, there are increased expectations for inflation this year, along with a weaker American dollar. Gold is still primarily priced in U.S. dollars despite the ongoing trend to get away from this currency in commodities trading and valuing.
2018 Gold Inflows Reverse a Several Year Downward Trend
Around the world, the total gold-backed ETF funds have notched total net inflows that were positive for the first four months of 2018 so far. This is the third consecutive year so far of positive inflows into the gold-based funds. It marks a dramatic turn around versus the years from 2013 to 2015 where money flowed out of gold consistently.
While stock markets have skyrocketed irrationally in the United States in the last three years, North American based-gold ETF funds have still boasted of the great majority of total global inflows for this year. They represent 54 percent of the total. It stands in stark contrast to the weak physical gold demand in America for the year so far.
Such ETF inflows into gold create a substantial impact on the global gold market. The reason they push the total demand for the kingpin of precious metals higher is because these ETFs have a physical gold backing based on the number of shares outstanding. They permit smaller investors to trade the gold markets without needing to acquire, store, and insure real physical gold ounces at spot price plus hefty commissions and fees.
In truth these gold ETF holdings are mere numbers on a computer screen. The advantage to this is that their owners of the shares are able to trade in and out of shares to cash repeatedly even in the same day if they wish. A great number of gold speculators love the liquidity this provides them over traditional physical gold holdings.
Gold Represents an Ideal Insurance Policy Against Out of Control National Government Debt
Precious metals like gold act in the same capacity as an insurance policy does. They protect your investment and retirement accounts from a currency crisis such as Venezuela is undergoing currently (sadly video game currency has fully seven times greater value than the Venezuelan bolivar these days). They also safeguard you from a Global Financial Crisis styled financial meltdown. These are two key reasons that you need gold as an insurance policy.
The unbelievable, all-time high debt levels of governments around the world also ought to give you pause for thought. In the United States, the debt to GDP ratio has risen to 105 percent and is on target to reach 140 percent. These days the national government adds $4 in debt for each single dollar in accompanying Gross Domestic Product growth. Clearly this is a dangerous and hopelessly unsustainable trend.
This situation is reflected around the developed world as well. The debt to GDP ratio for Japan is now at an astonishing 253 percent! This has led the Ronald Reagan administration Director David Stockman of the Office of Budget and Management to declare:
“The whole predicate for this massively inflated bubble in the equity market is going to be pulled right out from under it. So, the problem starts in the bond pits, the problem originates out of Washington, and it’s going to spread very quickly from there into the equity markets around the world. So, we’ve got some pretty challenging and unprecedented financial pressures — I call it a collision coming not too far down the road.”
Warnings from credible sources do not come any more clear cut than this.
Gold is the Ultimate Safeguard for Wealth Value When Other Financial Markets Finally Collapse
You have just come off of a full decade of so called easy money for the global economy and markets. This has created massive and simultaneous asset bubbles across the globe. The greatest of these may be the American stock market. Such bubbles like these always pop eventually. Some analysts believe that the United States’ stock markets are already mired in a bear market that the majority of investors simply have not come to grips with yet.
Gold will protect your portfolio in these dangerous times as it has repeatedly throughout history. Now is the time to start thinking about Gold IRA rollover rules and regulations as well as the various IRS-mandated storage requirements for IRA gold and other precious metals.