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REPORT ON THE GLOBAL PRECIOUS METALS MARKET FOR JANUARY 2019

January followed our statement of 2019 being the year of gold at the beginning of the year. The December price growth continued, and in January, gold gained another 3%. In the last year, central banks realized the largest purchases of gold since 1971 when the gold standard had been abolished. There is an increase in demand of private investors that purchased 1,018 tons of gold in 2018.

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2 February 2019, Prague – There was an increase in the price of one troy ounce of gold by almost 50 USD during January. It continued its strengthening started in December and in January, and it playfully skipped the psychological barrier of USD 1,300. At the end of the month, it moved even beyond the limit of USD 1,320 USD per troy ounce. Gold in dollars was strengthened by 3% during one month

European investors are, of course, interested in the evaluation in the currency in which they invest. The evaluation denominated in Euro was higher than 2.5% per one month. Other European currencies experienced similar evaluation. It is necessary to note that this is not a figure for the whole year, but only for one month! If strengthening continued at the same pace throughout the twelve months, the evaluation in dollars would reach 36%, and 30% in European currencies, namely at the time when banks offer ridiculous interest rates on so called saving accounts to 3% per annum.

The main reasons of strengthening of gold price are still the same – fear of weakening Chinese economy, and thus of fall in the global demand, uncertainty in the stock market and fear of so called hard Brexit, which would bring chaos in Europe and that comes closer with each session of the British Parliament. Nowadays, the situation in the financial markets could be described as the lull before the storm. Everyone already feels it in the air; however, nobody knows when the first thunder sounds and the first lightning strikes.
 
Central banks also respond to the upcoming situation. Their purchases for 2018 were the highest since 1971, i.e. since President Nixon decided on the final cancellation of connecting the value of paper money and gold. Compared to 2017, there was an increase of 74%. Central banks added 651.5 tons of gold to their inventory last year. They are getting rid of the US dollar while replacing it with the precious metal. Though, the gold is not purchased only by central banks. Last year, there was an increase in the demand for investment coins and ingots, namely by 4% compared to the previous year. Smaller investors and savers bought 1,018 tons of gold in total. This growth is supposed to be overcome this year.
 
 

Precious metals in January 2019

 
Gold
Silver
Platinum
Palladium
Highest price USD/oz
1,326.33
16.2205
831.00
1,441.40
Date
31-01-2019
31-01-2019
07-01-2019
17-01-2019
Lowest price USD/oz
1,276.24
15.1800
781.20
1,250.10
Date
04-01-2019
21-01-2019
02-01-2019
02-01-2019
GOLD
Highest price USD/oz
1,326.33
Date
31-01-2019
Lowest price USD/oz
1,276.24
Datum
04-01-2019
SILVER
Highest price USD/oz
16.2205
Date
31-01-2019
Lowest price USD/oz
15.1800
Datum
21-01-2019
PLATINUM
Highest price USD/oz
831.00
Date
07-01-2019
Lowest price USD/oz
781.20
Datum
02-01-2019
Palladium
Highest price USD/oz
1,441.40
Date
17-01-2019
Lowest price USD/oz
1,250.10
Date
02-01-2019
 
Gold – it strengthened by 3% during the month. Added to strengthening from December, it is already 8% per two months. Its price rose continuously throughout January. The main reason was uncertainty on the stock market. At the end, its growth was enhanced by the FED decision on not increasing basic interest rates while leaving them in the range from 2.25 to 2.5%, and subsequently by the statement on gradual increasing rates in response to the current situation. There are obvious concerns that increasing interest rates would raise the costs of world debts that are on their maximum levels at this moment.
 
Silver – it reached 4.5% strengthening while overcoming 16 USD per ounce. It is firmly tied to gold, i.e. it benefits mainly from its strengthening.
 
Platinum – it also strengthened in January, by 3.75%. For a moment, its decreasing trend, caused by slow beginning of ending diesel engines, had stopped.
 
Palladium – it strengthened by 8.2% in January. In the middle of the month, it exceeded 1,440 USD per troy ounce. Though, in the second half of the month, the price of palladium weakened. The reason was the news that the Chinese demand for cars had fallen for the first time in twenty years. When this fall becomes permanent with the decline in the overall economy, this smooth ride of grey metal may be over.

 

 

Libor Křapka
Chief Executive Officer of IBIS InGold®, a. s.