President Obama Inaugurated – Precious Metals To See Similar Returns As First Year Of Presidency?

Published in Market Update  Precious Metals  on 22 January 2013

By Paula Flood


Today’s AM fix was USD 1,692.50, EUR 1,268.17, and GBP 1,068.36 per ounce.
Yesterday’s AM fix was USD 1,688.00, EUR 1,269.08, and GBP 1,063.58 per ounce.

Silver is trading at $31.97/oz, €24.06/oz and £20.23/oz. Platinum is trading at $1,690.50/oz, palladium at $717.00/oz and rhodium at $1,200/oz.


Cross Currency Table – (Bloomberg)

Yesterday gold closed flat in New York at $1,687/oz and silver closed at $31.93.

Gold edged up and Tokyo gold hit a record multiyear high after the Bank of Japan announced a bold, some would say reckless, $117 billion ‘stimulus’ program as expected. The BOJ’ package included doubling its inflation target to 2% and making an open-ended commitment to asset purchases from next year.

This open ended policy surprised some that expected a small rise in the BOJ's $1.1 trillion asset-buying and lending program.

On Wednesday, there is a scheduled vote in the U.S. Congress proposed by Republicans on the U.S. borrowing limit.

India increased its import tax on gold ores and dore bars from 2% to 5%, following a tax hike on bullion yesterday, as the government tries to decrease its spiralling current account deficit. 

Global head of commodities research at Standard Chartered, said at a briefing in Seoul today that Standard Chartered are bullish on gold. They believe loose monetary policies, retail demand by India and China and central bank buying will drive prices higher.

President Obama took his oath of office and made his inauguration address yesterday. 

Almost exactly 4 years ago President Obama’s first Inauguration took place - on January 20th, 2009.  Gold prices closed on his inauguration day at $857.25/oz and silver at $11.34/oz.


Gold in US Dollars – January 2009 to January 2010 (Bloomberg)

One month later gold had risen to $992.90/oz and silver to $14.44/oz. Thus, in the 30 days subsequent to the inauguration, gold rose nearly 16% and silver by over 27%.

Exactly 12 months later on January 20th, 2010, gold had risen to $1,111.05/oz for a gain of 29.6% in the first year after President Obama’s inauguration.


Silver in US Dollars – January 2009 to January 2010 (Bloomberg)

In the following 12 months, silver had risen to $17.88/oz for a gain of 57.6% in the first year after President Obama’s inauguration.

A similar performance in the coming month would see gold rise from $1,690/oz to $1,960/oz.

A similar performance in the coming month would see silver rise from $32/oz to $40.64/oz.

A similar performance in the coming year would see gold rise from $1,690/oz to $2,190/oz.

A similar performance in the coming year would see silver rise from $32/oz to a new record high of $50.24/oz. 

This would be a record nominal high for silver. A record inflation adjusted high would be over $140/oz and we believe this is likely in the coming months and years.

We caution that these returns subsequent to Obama’s first inauguration are merely interesting statistics and should not be used as a trading tool. In and of themselves they are largely meaningless.

However, given the fact that the U.S. monetary and fiscal position is worse now than it was 4 years ago, it seems quite possible that we will see similar gains in the coming months and years.  

NEWSWIRE
Bank Of Russia Upgrades Gold Holdings by 8.5% to 30.8 Million Oz in 2012
The Russian central bank or Bank of Russia increased its gold holdings by 8.5% to 30.8 million troy ounces (958 metric tons) in 2012, central bank data shows.

As of January 1, 2012, the central bank had 28.4 million troy ounces (883 tons) in its reserves.

The share of bullion in gold and foreign-exchange reserves rose to 9.5% as of January 2013 from slightly below 9% a year earlier, the data showed.

Russia holds the world's fourth-largest gold and forex reserves. It uses the gold and foreign exchange reserves as buffers or financial insurance against external economic shocks.

What's Going To Happen To The Price Of Gold And Silver In 2013?

Join us for a webinar on Jan 30, 2013 at 1300 GMT.

●  Register now! 

Join two experts - Money Week columnist, Dominc Frisby and GoldCore's Head of Research, Mark O'Byrne for a one hour webinar as they discuss the outlook for gold and silver in 2013. 


NEWS

Weidmann Warns Of Currency War Risk – The Financial Times

Gold edges up as BOJ monetary stimulus supports - Reuters

Gold Climbs Toward One-Month High as BOJ Expands Asset Purchases - Bloomberg

India, Largest Gold Buyer, Raises Import Tax to Cut Deficit - Bloomberg

Azeri State Fund to Double Gold Reserves - Bloomberg

Oil fund delivers first batch of gold to Azerbaijan - AZERNEWS

COMMENTARY
Worried About Gold Confiscation? Why Not Buy Silver Instead? - Mineweb

This Is How Money Dies - Moneyweek

Is The Gold Price Dependent On China? – Zero Hedge

What about all the other countries in Europe: Who has their gold? - Zero Hedge

German Gold Repatriation And Surging Silver ETF Holdings Drive Precious Metals Higher – Seeking Alpha

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