Gold Investment Series • ASTON & SONS

Introduction

Happy Valentine's Day to all our viewers. We hope the season of love has brought you happiness and joy. Our article today provides some insights to the perspective of members of Federal Reserve banks and the tensions between Russia-Ukraine.

Federal Reserve

San Francisco Fed Bank President Mary Daly states that she is not yet prepared for a half-percentage-point interest rate hike next month.
She believes that the Fed must reduce some of its accommodation from the economy. However, the Fed should also remain cautious on the action it decides to take as history has indicated that abrupt and aggressive actions lead to a destabilising effect on growth and price stability, the very core goal they are trying to achieve.
Daly's remarks came after a hectic week as to the Fed's actions next month when the central bank is expected to raise interest rates.
Thursday's (CPI) consumer report indicates a more than an unexpected inflation rate. St Louis Fed President James Bullard has called for a minimum of one percentage point in rate hikes by the end of June.
Daly remains unsettled in an immediate move to raise the rates despite the Fed's inflation goal running well above its flexible target of 2%. She believes that the Fed should raise rates in its March meeting and should be monitoring each step of the way.

Gold

Gold has consolidated to its highest in the last four months to $1,858/ounce. Gold prices rose as investors sought safety from the Russia-Ukraine and United States fiasco.
Despite Moscow's statement denying plans of an invasion and accusing the West of creating hysteria, Russia has deployed more than 100,000 troops near the Ukraine border.
The markets are preparing themselves for turbulent times, which could see investors shying away from the US dollar to safe-haven assets such as gold. However, without such conflict occurring, gold would fall short of the higher interest rates and hawkish regime of the Federal Reserve.

Russia-Ukraine Updates

US President Joe Biden and Ukraine President Volodymyr Zelenskyy have been tirelessly pursuing diplomacy to ease tensions. The US national security adviser has stated that Moscow is searching for a pretext for the attack.
However, President Biden has made his position clear that the United States will respond swiftly and decisively with its allies and partners to prevent further Russian aggression against Ukraine.
Russia's President Putin has indicated to Biden in a call on Saturday that Washington has failed to consider Russia's primary concerns and has yet to receive "substantial answers" on critical elements of its security demands.
Putin seeks guarantees from the United States and NATO forces:

a) Blocking Ukraine's entry into NATO

b) Refrain missile deployments near Russia's borders

c) Scaling NATO military infrastructures in Europe to their 1997 levels.

Sources

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Introduction

A warm welcome to all our viewers to our news highlights. Today's article provides highlights to the recent appointment of the first Black American president in the Boston Federal Reserve & Turkey's attempt at converting under-the-mattress gold into Turkish Lira savings.

Federal Reserve

The Federal Reserve Bank of Boston appoints Susan M. Collins as the next president.
Collins, an economist and administrator at the University of Michigan, will be the first Black person appointed of the Boston Fed. She is the second Black American to be selected as one of the twelve Federal, regional banks.
Cleveland Federal Reserve President Loretta Mester indicates that the central bank will be prepared to hike rates at any meeting. Mester favours the aggressive approach that the Fed may take in reducing its balance sheet.
Mester indicates that a March hike is likely to occur but does not expect a rate rise by more than 25 basis points. She believes that the central bank should adopt a new approach in dealing with inflation compared to its historical measures that took place pre-covid.

Gold

Gold Fields, one of the largest producers of gold, has announced that in 2021, its gold production is expected to be 2,340 Kilo Ounces. It is a 5% increase in output from its previous year of 2,236 Kilo Ounces.
Gold and Silver futures prices received gains and hit a two week high on Wednesday.
Traders are awaiting the Thursday Consumer Price Index report, which expects to increase from 7% to 7.2%. The improvements this week will invite speculators to long the market.
Turkey aims to attract nearly 5,000 tons of under mattress gold into the financial system. The gold brought into the system's estimated value will be between $250 - $350 billion.
The Turkish has long believed in the tradition of holding gold to safeguard wealth and store it at home. The scheme attempts to encourage Turkish Lira savings as part of Nureddin Nebati, Treasury and Finance Minister's plans to create dynamic production capacity, strong growth performance, healthy public finance, firm banking sector, and low debt.

Sources

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Introduction

A warm welcome to all our viewers of the mid week news highlights. Today's article discusses the recent events taking place over the last few days.

Gold

Gold has had steady gains from the 31st of January, $1792/ounce to $1829/ounce.
US treasury yields, market anticipation of the tightening of the monetary policy, US-China & US-Japan trade deals, and the Russia-Ukraine tensions are believed by analysts to have contributed to the gains in gold prices. Gold represents a safe-haven asset, especially during geopolitical tensions.
Global central banks are in a hawkish mood due to the inflation fears, mainly backed by the US jobs report issued on Friday. Last month's Consumer Price Index rose to a 40-year high of 7% in December. On Thursday (the 10th of February), the government will release the CPI data for January. Bloomberg analysts expect that the figures will have risen to 7.3% over last year.
Adrian Ash, director of research at BullionVault, has indicated that the Fed has reacted too slowly and is far behind the curve on inflation. The market believes that the Fed is facing a difficult task in combating inflationary pressures without creating a significant economic contraction.
The CME FedWatch tool anticipates with high certainty that the Fed will raise interest rates in the upcoming FOMC meeting in March. Analysts at CME expect a 28.8% probability that the Fed will announce an aggressive rate spike of 1/2% compared to a 1/4%.

Russia - Ukraine Updates

Russia has begun placing its military warships towards the Blacksea on Tuesday. The US and European officials are predicting a large-scale assault on Ukraine by Russia.
US and European officials will be keeping an eye on the next 12 days, fearing that Russia's military exercises beginning tomorrow could provide cover for a sudden strike against Ukraine.
President Biden's national security team indicates that a Russian disinformation campaign is underway to create phoney videos that could be used as a pretext for a Russian invasion.

Source

Kitco

Washington Post

NPR

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Federal Reserve Meeting

The 2-day Fed meeting did not see a rise in the interest rates. The Fed indicates that an interest rate hike may soon be appropriate. Analysts have anticipated that the Fed will implement changes in March of 2022.
Fed Chairman Jerome Powell on Wednesday did not indicate how fast or high the interest rates would climb. However, Powell states that the officials were "of a mind" to raise the bank rates in March without a blowback that could affect the recovery. Powell also believes that the Fed will be able to make swifter actions as the economy is stronger than in 2015.

Key Takeaways

The Benchmark interest rate remains unchanged. The target range stands to be between 0.00% & 0.25%
Quantitative Easing (QE) will not end early, and the balance sheet shrinkage will begin after the rate hike commences.
The Fed has indicated that the economy & employment has strengthened with wage growth increasing.

US Stock Performance

US stock performance slightly jumped after the Federal Reserve published its policy decision to push forward an interest rate hike. Investors soon reversed their decision as Powell spoke to journalists later that afternoon.
Powell suggested that the Fed would move accordingly to combat the rising prices, indicating that the inflation figures had worsened since the last policy meeting in December.
Many investors had liquidated their government bonds. The 10-year Treasury bonds rose 0.09 points to 1.87%.
US Consumer Price Inflation has almost reached a 40-year high with 7% last month. Supply chain bottlenecks have been expanding, especially in areas that the pandemic has hit.
Unemployment has also fallen to pre-pandemic levels. The labour shortages and increase in job openings have spurred wage growth.

Gold

Gold has fallen heavily following the announcement made by the Federal Reserve. The market volatility overnight saw gold prices on Tuesday (26 January 2022) $1847/ounce fall to $1820/ounce.

Sources

BBC

Financial Times

FX Street

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Introduction

A warm welcome to all our new viewers and subscribers. We do apologise for the lack of recent content and news. Our team has been preparing a new project recently that will benefit all our viewers and subscribers. Please stay tune and follow us on social media for more updates.

Today's topic provides an overview on the Gold market and a brief insight to the tensions between Russia & Ukraine.

Gold

Gold prices rose slightly higher r compared to Tuesday (25th January 2022). Investors look towards interest rate cues from the US Federal Reserve meeting.
The Federal Reserve meeting will span two days beginning Tuesday (25th January 2022). The market speculates that the central bank will implement a 25 basis points hike in the (IR) interest rates starting in March.
Spot Gold was at $1,847/ounce compared to $1841/ounce (Tuesday morning)
The implications of a rising interest rate will see investors fleeing to other interest-bearing assets apart from gold.
Gold rose slightly today due to the tensions of awaiting the results from the Fed meeting. The market has gone towards traditional risk-safety assets as a result.

Russia-Ukraine Tensions

Understanding the conflict

Why did a conflict arise? Pre 1991, Ukraine was part of Russia. Ukraine gained independence in 1991 and began to shed its Russian legacy while developing a close relationship with the West. In 2014, Ukrainian President Viktor Yanukovych had rejected an association agreement with the EU to create closer ties with Moscow. The rejection resulted in mass protests that forced the president out of his position.
Russia, in protest, supported a separatist rebellion that saw conflict break out in East Ukraine. As many as 14,000 people have died in the war of Russia-Ukraine.

Will there be a full-blown war?

The West is accusing Russia of positioning 100,000 troops near the Ukrainian border to prepare for an attack. However, Russia has denied any claims that they are planning to invade Ukraine at the current movement. Russia claims that the West is aggravating the current situation by providing support to Ukraine in troops and weapons.
Analysts at Aljazeera believe that it is uncertain whether a war will break out between the two countries. Other analysts monitoring the situation believe that Russia may be swift in occupying Ukraine to increase its bargaining power in future discussions regarding NATO's expansion.

Sources

Reuters

FX Street

Al-Jazeera

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Introduction

Hello Everyone. Welcome current and new viewers to our weekly news update. Today's news article highlights the renomination of Fed Chairman Jerome Powell and the implications on Gold.

Gold

In two weeks, prices were near their lowest level due to a stronger dollar and expectations that the US Federal Reserve would accelerate its taper process to curb inflationary risks.
Spot Gold figures (Tuesday) fell further to $1,795/ounce than $1841. The fall in gold prices was a result of the renomination of Fed Chairman Jerome Powell.
The market has added confidence from the renomination of Powell that will see the Fed raising interest rates in 2022, thus increasing bond yields. The higher interest rates translated into more opportunity costs of holding gold, which pays no interest.
Analyst at Julius Baer, Carsten Menke, indicated that the Gold market had gambled the nomination of Lael Brainard to become the next Fed chairman, as she is considered to be more dovish than Powell in terms of monetary policy.

Source

Reuters

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Introduction

Happy Friday! We hope that our viewers are keeping well and safe. Today's news article highlights the Inflation issues and Gold's new high.

Inflation

Senior Federal Reserve official indicates that the US Fed could speed up the tapering process as US inflation surged to a record 30-year high.
CPI Consumer Price Index figures might push the committee in the next couple of meetings to manage inflation risk appropriately, indicated by St.Louis Fed James Bullard.
US bond yields are declining, with 10-year yields back to levels below 1.60% compared to the three weeks high of 1.65%.

Gold

Gold is currently hovering around the $1860-70 region after prospects of an early policy tightening indicated by the FED.
The market's sentiment remains disturbed by the faster than expected rise in inflationary pressure. The cautious mood surrounding the equity market served as evidence of the disturbance and supported Gold.
All eyes are the upcoming US monthly Retail Sales figures that could give insight into the economy's performance.

Source

Bol News

FX Street

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Introduction

Happy Friday! We hope that our viewers are keeping well and safe. Today's news article highlights the current US situation and its implications on investments, Covid & Gold.

US TAPER

A week after the US Federal Reserve's decision to begin "Tapering", US Consumer Price Index saw a 6.2% increase in October. The rapid pace was the fastest since the 1990s.
Fed Chair Jerome Powell has indicated that the current level of inflation is inconsistent with its price stability goals. Bloomberg Opinion Columnist Conor Sen has commented that the Fed and Biden have gotten inflation estimations wrong for the year. The price growth has outlasted the majority of assessments.
The market would expect a response from the FED to control inflation. However, Powell has indicated that the central bank will not increase interest rates while buying bonds.
Many believe that the only option that the FED can take is to speed up the reduction of its asset purchases. The implication of speeding up the process would permit the Fed to reach a comfortable level to begin increasing interest rates to combat price pressures.
The market would feel that the Fed board would need to address their errors in forecasting inflation figures and their ability to contain them.
The market is concerned about a Taper Tantrum, similar to the 2013 situation that saw Treasury yields rise to an unprecedented level. Bloomberg reports that the US treasury market is already showing a tantrum with two-year yields nine basis points higher after the consumer price index report. The five-year yields rose by ten basis points.

COVID

US Covid-19 cases of the recent delta strain have declined by 57%. The average number of cases has dropped from 172,500 to 74,000.
Progression in treatments and vaccinations will aid the US in transitioning from a 'pandemic' to an 'endemic'. The result of the transition would make the virus more manageable.
Pharmaceuticals Merck and Pfizer have introduced antiviral Covid pills that help reduce the risk of hospitalisations and death by 89% in higher-risk adults. Dr Scott Gottlieb, a Pfizer board member, has indicated that antiviral medications also offer more excellent protection for individuals at risk for severe Covid complications.
Pfizer has pushed health regulators in the US to authorise booster jabs its Covid 19 vaccine in individuals above 18. The request comes amid concerns that infections could rise during the holiday season and colder weather that brings more people indoors for large gatherings.
President Biden has mandated that businesses with more at least 100 employees are required to ensure their personnel is fully immunised against Covid by January 4th. Employees that are unwilling to be vaccinated will have to wear a mask and get tested regularly.
The latest CDC figures indicate that only 70% of US adults are fully vaccinated, with only 21.5mil booster doses administered. The Pfizer booster study has suggested that the booster jabs can restore protection against symptomatic infections to near 96%
The US has permitted Pfizer to begin vaccinating children between the ages of 5 and 11.

GOLD

Spot gold prices have spiked to $1850/ounce in response to the latest US Consumer Price Inflation report.
Spot prices rose by 1.7% from their earlier session of $1823.
Over the summer months, the spot prices have not been able to break the range of the $1835 level. However, due to the market's concerns about inflation, many have flocked towards gold.

Source

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Introduction

Welcome new and existing readers to our blog. Today, we will discuss the difference between "Physical Gold" & "Digital Gold" investment. We hope this article helps you understand the differences between both investments and aids in your decision-making process on which is more suitable.

What does it mean to invest in Gold?

We believe it is vital to discover your investment goals. Each investor has a different set of goals that they would like to achieve. Some investors may prefer short-term investment to mitigate currency fluctuations or inflation risks, while others prefer longer-term. Discovering your investment requirements will help tremendously in deciding on what type of gold investment should one pursue.

Physical Gold Investment

There are several types of physical gold investment that an investor can pursue. The most common types of physical gold investment come in the form of bars, coins, wafers or jewellery. Once you have understood your goals and requirements, it comes down to several things: -

a) "Premium": - The additional cost on top of the Gold spot price influenced by market demand & supply, manufacturing cost and logistics.

b) Investment Size: - How much are you planning on investing. Generally, we adopt the approach that investors with stable income should support at least 8% of their net worth into Gold. Investors with inconsistent income can invest within 3% to 4% of their net worth.

c) Available Products: - As mentioned earlier, there are various physical gold forms that one can invest in. We have segregated the products into two forms: -

i) Minted Bars: - These types of bars, as indicated below, are the ones with design on the front side of the bar. They usually command a higher premium as the manufacturing of these bars require precision to produce and maintain consistency.

ii) Cast Bars: - Cast bars are more on the traditional side of gold investment. These types of bars are usually for the investor that is strictly interested in the investment of Gold. These bars are hallmarked with the manufacturer's brand rather than a unique design.

iii) Gold Coins: - Gold coins have an addition to the premium in terms of rarity. Some gold coins are more expensive as they become scarce, which can value add to the value of the Gold.

If you are keen on learning more about the difference between these types of physical gold bars, you can check out our previous article.

Digital Gold Investment

Our brand E-Aurum 79 is an example of a digital gold investment that offers direct ownership of physical Gold without delivery and fabrication fees associated with bars or coins. The Gold that you purchase under E-Aurum 79 is kept in a fully secured and insured vault.

How does it work?

When you purchase AME Digital Gold, an equivalent amount of physical Gold is stored in our secured vaults on your behalf. Storage in our vaults resolves the trouble of physical Gold ownership, which is necessary to keep it safe.

Is digital Gold a good investment?

Yes, Digital Gold is a good investment option. Clients can mitigate the disadvantages of physical gold ownership, such as theft, secure storage, and liquidation.

Digital Gold serves to provide a diversification of one's investment portfolio. Gold has historically been an advantageous asset to combat economic uncertainty, inflation and to create wealth over a long-term period.

What are the Pros & Cons of Physical Gold Vs Digital Gold?

A) Pros of Physical Gold

Look & Feel: - Investors will be able to see and feel the Gold physically. Our past experiences have indicated that a large majority of investors prefer to buy physical Gold for this reason.
High Liquidity: - Physical golds are highly liquid due to their demand being sorted after. Many parties are willing to take the other side of the trade as Gold has many uses. Established gold bar brands such as PAMP, Perth Mint, Metalor, and others are even more accessible to liquidate due to their global recognition.

B) Cons of Physical Gold

Theft: - Possession of physical has some element of robbery for the investor. Investors will have to find a secure facility to store their physical Gold.
Zero-interest & Dividend: - Gold does not yield interest or dividends similar to a stock's performance. Capital gains for gold investment come strictly from the gold price.

A) Pros of Digital Gold

Authentication: - Digital gold investments makes it easy for you to authenticate your Gold. A third party regularly audits the Gold that is stored in the vaults by E-Aurum 79. Investors do not need to search for a way to verify the authenticity of their Gold when owning digital Gold.
Cost of Ownership: - The price an investor pays for digital Gold is much lower than physical gold ownership. The "Premium" paid is lesser because there is no need for manufacturing and delivery.
Liquidity: - Even though physical Gold is highly liquid, investors will still have to search for a party willing to take the Gold of their hands. Digital Gold means that investors do not need to search for a buyer, E-Aurum 79 is the buyer of Gold for you.
Storage: - Digital Gold mitigates the risk of theft and the requirement to secure Gold in a safe location. E-Aurum 79 provides storage facilities for all digital gold purchases made. Any gold that you buy is physically kept in a secured and insured vault. If we were to analyse the costs of renting a safety deposit box at a bank versus the cost of our storage facilities, it would be a no brainer to store your Gold with us. Rentals for safety deposit boxes range from RM 800 to RM 2,500 per month compared to our small fee of 2%.

Want to know more on E- Aurum 79 Digital Gold? Click Here

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Introduction

Welcome viewers to our latest article featuring our new product "E-Aurum 79 Digital Gold".

A brief introduction to E-Aurum 79 Digital Gold:

E-Aurum 79 is our latest financial product that enables investors to invest in physical gold kept in a secured vault. Investors of Aurum-79 will receive documents (invoice & payment confirmation) entailing details of the purchase and entitlement of gold held by our vault operators.

The article today is designed for individuals or investors that are: -

a) Interested in learning how to invest

b) Learning how to get the best out of their investments

c) Have yet to decide on whether to invest or not

Why are you investing?

One of the most common questions that many other investment guides, books or investors have iterated is "What are you investing for?". We share a similar perspective that this is the #1 question one must ask themselves before investing. We have included some investment goals below: -

a) Retirement Planning

b) Emergency Fund

c) Portfolio Diversification

d) Children Education Fund

e) Marriage (Yourself/Children)

f) Travelling

g) Buying a home or car

h) Jewellery Purchase

i) Hedging against inflation, currency fluctuations or political uncertainty

Deciding on your investment goal, whether it is listed above or not, enables you as an individual to gauge a few key things:

a) Time Horizon (How long do you plan on investing for?)

b) Risk Level (Determined your risk levels based on time horizon)

c) Estimated amount desired at the end of time horizon (Pre-Inflation Consideration)

d) Investment Amount (Initial Investment + Monthly commitment)

How Much to Invest?

After determining the questions above, the next question on our list is "How much to Invest?". There are various opinions from investors, financial consultants, institutions, and others on deciding how much to invest. At AME, we adopt two simple approaches that work based on a client's net worth.

Salaried Individuals/Individuals with a consistent source of income

Our advice for this group of individuals would be to invest roughly 8% of their net worth. The term "Net Worth" here indicates the total value of an individual's assets (cash, real estate, stocks)

So why 8%?

a) Gold is a stable investment (Low - Medium Risk)

Gold price itself has increased year on year except for 2013 and 2015. The last five years from Gold has risen from 2015 to 2020. An average of 10% every year over the previous five years.

b) Opportunity cost of investing 8% is relatively small compared to how much one would invest in stocks or bonds. (i.e. general standard of 50/50)

c) The margin of safety (Safety Net)

The amount of buffer one need to indicate to invest in Gold is relatively small for a total of 8% investment.

Inconsistent Income (4%)

We recommend an investment of 4% for individuals that have varied incomes every month. 4% is a conservative investment amount for individuals requiring additional funds for emergencies, businesses or other cash-hungry activities.

Tips

To keep things sweet and short, we offer only two tips for you to take away after determining your investment needs above:

#1 Pick an investment strategy that allows you to meet your goals successfully

#2 Tip 2 comes from one of the essential investment books of today, "Psychology of Money". "For every plan made, one must plan on one's plan not going according to plan".

Thank you for listening in on our digital gold investment guide. We hope to see more of you engaging with us on our platforms.

Want to know more on E- Aurum 79 Digital Gold? Click Here

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