The numbers are in…
In the second quarter of 2014, world central banks bought 117.8 tonnes of gold bullion compared to 92.1 tonnes a year earlier—a jump of 28%. Central banks have been net purchasers of gold bullion for 14 consecutive quarters!
According to the World Gold Council, “Economic and geopolitical events throughout the world are sources of ongoing instability and uncertainty. Such events reinforce the requirement for appropriate risk management by central banks through holding gold reserves for asset diversification.” (Source: “Gold Demand Trends Q2 2014,” World Gold Council web site, August 14, 2014.)
Hog wash, I say. Central banks are buying gold bullion because they are slowly moving away from U.S. dollars as their reserve currency and replacing them with gold bullion.
In the second quarter, Russia purchased 54 tonnes of gold bullion, Kazakhstan purchased seven tonnes, and Tajikistan bought three tonnes. Combined, just these three central banks made up more than 54% of all the official purchases of gold bullion in the second quarter.
You won’t see the central banks of France or Germany buying gold bullion because they already have enough (that’s if Germany can ever get its gold back from the U.S.).
So if demand for gold bullion is rising, as evidenced by central banks buying more, gold coin sales near record highs, and gold demand in India rising again now that the government is easing tariffs on gold imports, the million-dollar question is why aren’t gold prices rising?
There is plenty of discussion on the Internet about gold manipulation and how prices are purposely being kept down. I can’t comment on that, but I can tell you three things about gold bullion:
First, the supply of gold bullion in the marketplace has declined this year because gold miners have pulled back on exploration. In 2011, mining for gold when it was at $1,800 an ounce made … Read More
The stock market has an underlying strength to it, seemingly only to be undone by geopolitical events. Fed action always has the potential to shock the system. Negative economic news isn’t fazing this market.
On the back of a pretty decent second quarter, many corporate outlooks predict another year of decent growth, particularly with earnings.
While the stock market retrenched recently, positive days are still led by the Dow Jones Transportation Average, the Russell 2000 Index, and the NASDAQ components, which are traditionally positive for broader sentiment.
Some speculative fervor has come back to two stock market sectors that are traditionally volatile—biotechnology stocks and restaurant stocks.
But there really isn’t an underlying trend to latch onto. Jumping on the bandwagon of risky stocks seems unwise considering the stock market is at an all-time record-high.
This is a market where equity investors have to be highly selective and wait for the right opportunities to present themselves, if you’re considering new positions at all.
This can be in the form of a specific sector theme (like oil and gas, for example) or looking for good companies that have retrenched for their own specific reasons.
In any case, with the stock market at a record high, it’s difficult to find value, and new positions become entirely reliant on market momentum, not necessarily individual corporate achievement.
There are very few companies that I would consider now, but within the context of a long-term stock market portfolio, investors want their money to be put to work.
In equities, I still think that portfolio safety is the name of the game. This is a market that hasn’t experienced a material price correction for five years. There have been retrenchments and price consolidations, but no reset, no revaluation that would make stock market investors with cash want to jump into a m… Read More
The Chinese economy is showing signs of stalling, but there are numerous areas that continue to show decent growth metrics, including automobiles and mobile phones.
Now, if you think AT&T Inc. (NYSE/T) or Verizon Communications Inc. (NYSE/VZ) are big, take a look at China Mobile Limited (NYSE/CHL). China Mobile is the largest mobile phone operator in China, with about 790 million subscribers as of June 30—that’s more than the entire population of Europe! The company’s growth is even expected to expand as 3G and 4G networks grow in popularity.
You cannot ignore the fact that China is the top mobile market in the world with more than one billion users. Plus, you not only have the urban dwellers using these services, but we are seeing massive demand in the rural areas as well, especially when rural workers migrate to the cities, looking for jobs.
And with the mobile sector in the country being heavily regulated by the Chinese government as far as licenses and the landscape, there are currently only three major mobile operators in the country.
What’s most intriguing is the development of advanced mobile technologies. China Mobile only introduced its 4G network six months ago and already it has coverage in 300 cities and approximately 6.5 million users.
China is a key global growth market for Apple Inc. (NASDAQ/AAPL), too, which is searching for growth in the emerging markets. Apple’s deal with China Mobile will definitely help.
China Mobile is regarded as the top brand in BusinessWeek’s “20 Best China Brands.” The stock pays an annual dividend of $1.88, for a current dividend yield of 3.8% based on the prevailing stock price of $55.35 on August 13.
Chart courtesy of www.StockCharts.com
Not being happy with simply operating in its own domestic market, the major mobile provider has international expansion in its sights, something that is absent with the U.S. ca… Read More
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