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Lithium Miners can be a Good bet for the Long-Term

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Long-term trends, if identified early can be a profitable investment. In such stories, the investor can buy and hold a stock till there is a clear visibility of earnings. One such sector that fits the bill is the Lithium miners. Let’s analyze in detail.

Key observations

  1. Electric vehicles will slowly replace the fossil fuel powered vehicles
  2. As a result, demand for Lithium-ion battery will grow exponentially for the next few years
  3. There is no replacement for lithium-ion batteries
  4. Lithium supply is unlikely to keep up with the demand
  5. Lithium miners will be direct beneficiaries

What are the uses of Lithium?

After debuting 26 years ago in a Sony CCD-TR1 camcorder, lithium-ion batteries have gained widespread use in consumer products, electric vehicles and energy storage.

Last year, lithium-ion batteries equal to a storage capacity of about 45 gigawatt-hours (GWh) were used by the consumer products, according to The Economist. In comparison, the electric vehicles (EVs) only needed about half of the capacity: 25GWh.

However, with the boom in the electric vehicles, demand will increase exponentially. Lithium prices have already doubled in just over a year.

How much demand will the electric vehicles industry generate in the future?

According to Goldman Sachs, EVs will increase their market share from 0.2% of all vehicles sold in 2016 to about 5% in 2030.

However, with advances in technology and price of EVs dropping rapidly, it is likely that the above assumption of Goldman Sachs will be reached much earlier, especially if China and India adhere to their plans.

China wants 12% of all car sales to be from battery-powered or plug-in hybrids by 2020, whereas, India wants all its vehicles to be electrically powered by 2030.

Lithium-ion battery production to skyrocket

Strong EVs sales will stoke demand for the lithium-ion batteries. The top battery manufacturers are gearing up for this challenge by increasing their capacities rapidly. Leading the way is Tesla, with their huge $5 billion gigafactory, which is expected to produce about 4GWh a year from this year. By 2018, Tesla wants to produce 35GWh, a nine-fold jump within two years.

Bloomberg New Energy Finance forecasts lithium-ion battery demand from electric vehicles to increase from 21 gigawatt-hours in 2016 to 1,300 gigawatt-hours in 2030.

Some of the other areas where lithium demand is expected to grow is shown in the table below.

Agreed that the demand for the lithium-ion batteries is going up. But, is there a shortage of Lithium?  Will the raw material prices shoot up or is there abundant supply that can push prices down?

Lithium demand and supply

Considering the huge demand for lithium, several projects have been announced that are likely to increase the supply in the near future. However, will this lead to a supply glut similar to crude oil? Let’s listen to some experts in the field.

Joe Lowry, lithium industry consultant and commentator, believes that even with all the new supply additions, “supply shortage will cause significant issues in the battery supply chain by 2023.” (“Lithium Investment at the Crossroads”, July 17, 2017).

Chile’s SQM has been a leader in lithium production for almost two decades. Its Chief Executive Patricio de Solminihac believes that the present demand for lithium is about 200,000 tonnes LCE, which is likely to grow by about 14% per year.

“We believe it is highly probable that worldwide demand will exceed 500,000 tonnes by 2025,” said Solminihac, reports Reuters.

A few analysts, however, believe that lithium supply will overtake demand as soon as next year.

Rebecca Gordon of the UK-based consultancy CRU believes that by 2018, lithium supply will meet demand if all the new projects come online. This will cause a sharp drop in prices from the current levels.

Can the demand stall due to advance in battery technology?

The popularity of electric cars is unlikely to slowdown anytime in the near future. However, is there a technology that can make the lithium-ion batteries redundant or replace them?

Recently, Bill Joy, the Silicon Valley guru and Sun Microsystems Inc. co-founder, announced a new alkaline battery that can compete with lithium-ion and better it in certain areas. Though this is a revolutionary find, it is yet years away from mass adoption. According to Joy, it may take another five years for it to gain wider acceptance.

Lithium-ion battery prices are dropping with new advances in technology. Prices fell 73% between 2010 to 2016. Therefore, any new entrant will find it difficult to displace lithium-ion from its leadership position.

Hence, lithium demand is here to stay, at least for the next decade.

Now, after having established a strong demand growth for lithium, let’s search for a stock to invest in.

What companies do we like and why?

We shall cover two companies in short. If the readers feel that the lithium story is compelling, we shall delve into greater detail in examining these stocks in the future.

Sociedad Quimica y Minera (NYSE: SQM)

Sociedad Quimica y Minera is one of the largest producer of lithium in the world. It is based in Chile, which has the largest lithium resources in the world.

Source: Statista

It is a dividend paying company, though the dividend amount keeps varying depending on the company’s profitability. However, with greater demand, SQM is likely to increase its earning and thereby its dividend.

Payment Year Amount
2016 $1.46
2015 $0.47
2014 $1.4
2013 $1.04
2012 $1.26

In terms of valuation, the stock is quoting at price/earnings of 35.3, which is way above its 5-year average of 21.7 and the industry average of 21.7.

Nevertheless, with its leadership position and a growing demand, the results are likely to surprise on the upside and the price/earnings multiple will look more reasonable after a few quarters.

What do the charts suggest? Is it time to buy?

SQM was stuck below the $32.8 level for more than three and half years. Finally, the stock broke out of the resistance in March of this year. The stock successfully retested the breakout levels twice and has since then resumed its uptrend. The stock doesn’t have any major resistance until it reaches $59 levels. However, periodically, every stock corrects.

Therefore, at the current levels, we shall only buy 25% of the allocation. Rest 50% should be purchased when the stock falls to the trendline support and the final 25% allocation should be done once the stock resumes its uptrend after a correction. We don’t want to hold the stock if it starts to trade below the $32 levels. That will signal a change in the fundamentals of SQM or the sector as a whole.

The stock can easily surpass its lifetime highs in a couple of years if the demand projections prove correct.

Orocobre Limited (OTCPK: OROCF)

The second stock that we like is an Australian based company Orocobre limited. The company holds 66.5% interest in the Olaroz lithium brine mine in Argentina, which is operated by them and is their flagship project.

They plan to ramp up production in the next 2-3 years, without issuing any new equity, according to the company’s latest presentation. If they are able to achieve their target, the stock is likely to get re-rated.

Currently, the stock is being punished as its production in June quarter was 2,536 tonnes of lithium carbonate compared to 2,784 tonnes in the March quarter. The company attributed the fall to bad weather. Nevertheless, the markets did not buy the argument and punished the stock.

This is a risky stock. We are not buying this for its past track record, but are expecting it to get its act together and reap the benefits of the lithium boom. Therefore, the allocation to this stock should be low.

When should one buy? Let’s look at the charts.

This is a volatile and trendless stock as seen in the charts. It is stuck in a range of $1 to $4.

Nevertheless, it has already fallen from its highs of $4, thereby reducing the risk. We can keep a stop below $1 and buy 25% of the allocation at the current levels. Next 50% can be bought if price falls to $2 levels. The last 25% should be invested once the stock breaks out of $4 and makes a new lifetime high.

We believe that the downside risk in the stock is limited, whereas its upward potential is attractive.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 9 rated postsRakesh Upadhyay is a Technical Analyst and Portfolio Consultant for The Summit Group. He has more than a decade of experience as a private trader. His philosophy is to use technical analysis for momentum trading and fundamental analysis for long-term positions. Rakesh likes to keep himself fit by lifting weights and considers himself to be a spiritual person.




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  1. fermera_dany

    September 17, 2017 at 11:37 am

    If one is to follow this articles advises, which platform shall the one choose / use to buy some stocks?
    Living in EU (Bulgaria).

    Regards,
    Daniel

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Blockchain

Your Guide to Precious Metals on the Blockchain

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Tokenized precious metals create the potential for fractional ownership of gold and greater transparency. Indeed, the world’s largest bank, JPMorgan, is prepared to use its proprietary blockchain to tokenize gold, and the Royal Mint has pursued technologies to achieve the same.

As CCN reported, some venture capitalists believe Bitcoin will replace gold as a store of value. But, what happens if you combine blockchain and precious metals? Financial powerhouses and blockchain startups alike are investigating the intersection between precious metals and blockchain.

Major Players

JPMorgan

JPMorgan, the most valuable bank by market capitalization in the world, intends to use its enterprise version of the Ethereum blockchain, Quorum, to tokenize gold bars.

First announced in October 2016 as part of Ethereum Enterprise Alliance (EEA), Quorum is marketed as a blockchain-powered system that aims to “significantly reduce” the number of parties required to verify global payments, cutting transaction times “from weeks to hours.” JPMorgan’s head of blockchain initiatives, Umar Farooq, elaborated on tokenization:

“They wrap a gold bar into a tamper-proof case electronically tagged, and they can track the gold bar from the mine to endpoint – with the use case being, if you know it’s a socially responsible mine, someone will be willing to pay a higher spread on that gold versus if you don’t know where it comes from. Diamonds is another example.”

He added: “We are the only financial player that owns the entire stack, from the application to the protocol.”

LBMA

The potential for blockchain and gold market was recently underscored when, on October 19, the London Bullion Market Association (LBMA), a wholesale over-the-counter market for the trading of gold and silver, announced its plan to modernize transparency in the industry with blockchain.

While asking its 144 members (the world’s largest gold refiners, banks and dealers) for proposals on how to track gold from mines to its final destination and prevent forgery of gold bars, a common theme became apparent. Of the 26 proposals the association received “from companies ranging from startups to major technology firms” including IBM, “more than 20 of the 26 responses” reportedly used blockchain in their project drafts.

Royal Mint

The Royal Mint, Britain’s official mint, once sought to offer services that let businesses and investors buy and sell digital tokens representing physical gold via blockchain transactions. The U.K. government, to be sure, stopped such plans.

Developed in collaboration with the Chicago Mercantile Exchange and using technology from two blockchain startups, the Royal Mint system intended to transact blockchain tokens called Royal Mint Gold (RMG). The tokens digitally represent one gram of real gold stored at the Mint’s facilities. The RMG price would have tracked the spot price of gold. The Mint planned to issue $1 billion in tokens, and investors would be able to trade RMG digital tokens via an institutional trading platform.

Beyond the abovementioned institutions, many blockchain-focused projects are working on gold-related projects.

The More Established Blockchain Players (Alphabetical order)

DigixDAO (digix.global)

This decentralized autonomous organization, backed by Global Brain Corporation and Fenbushi Capital, created a digital token (DGX) backed by 99.99% gold cast bars from London Bullion Market Association-approved refiners. DGX is built on the Ethereum blockchain.

DigixDAO, whose token peaked at $553.80 according to CoinGecko but currently sits at approximately $20, began trading in late September at less than $1.

Paxos (Paxos Standard)

The New York-based Paxos creates blockchain solutions for financial institutions. Their product Bankchain, is a settlement platform transforming post-trade across capital markets. Paxos Standard remains just shy of the price at which it began trading in October.

Tradewind Markets

The New York-based Tradewind is adding physical silver to its digital trading platform six months after launching its digital gold product. “We are hearing from our network of dealers that there is a growing demand from their customers to include silver on the platform,” Fraser Buchan, co-founder of Tradewind said.

Tradewind is backed by gold industry players, such as IEX Group, an innovative stock exchange; Sprott Inc., a global alternative asset manager; and, Goldcorp Inc., one of the world’s largest gold producers.

Veritaseum

The US-based Veritaseum’s precious metals tokens VeGLD (Gold Token) and VeSLV (Silver Token) are fully redeemable to the bearer and backed 100% by gold or silver. The value of the tokens is reportedly designed to mimic the volatility of major global currencies like CNY, USD, and EUR, reducing long-term volatility.

Precious metals are securely stored and insured with reliable depositories via COMEX approved vaults for global redemption and delivery to anywhere in the world. Veritaseum was founded by Reggie Middleton. Veritaseum purports to enable software-driven P2P capital markets without brokerages, banks or traditional exchanges.

Veritaseum (VERI) reached its peak of $466 on January 8, 2018. It’s currently priced at $15.71.

 

Exchange Traded

Bitcoin Gold (bitcoingold.com) 

Bitcoin Gold spiked to $456 in December 2017 as part of the crypto bubble then, and today sits at $13.05. But, considering how many experts believe that Bitcoin itself is acting less like the “electronic peer-to-peer cash system” Satoshi Nakamoto envisioned, and more like digital gold, Bitcoin Gold seems redundant.

CEDEX

CEDEX wants individual investors to securely and easily trade gold, silver, and diamonds. Sellers could list their precious metals on the CEDEX platform and then deliver them to a custodian, who would release them to the buyer once the transaction is complete.

On September 6, 2018, CEDEX reached its all time high of 18 cents. Its current price is .04 cents.

Darico (DEC)

Based in Zug, Switzerland, the Darico Ecosystem revolves around the Darico Terminal.  The company hopes their tools with allow users to monitor trade, invest and spend cryptocurrencies all from one integrated ecosystem. DEC is currently traded on IDEX and Bilaxy. Five days after DEC trading began on October 1, 2018, the price spiked .08 cents. Its price currently stands at .07 cents.

Eidoo (EDO)

Switzerland-based Eidoo is creating a more stable ERC-20 token by tying it to the gold price. Each token, redeemable for one gram of 99.9 percent fine gold, will be stored in its vaults and audited every 90 days. Its native token is “EDO”.

“People will be able to see the gold stored in the security vaults through a video camera, we will post a link on the website so everyone can control the gold,” Natale Ferrara, the startup’s founder, told CoinDesk. “Each Ekon token will be backed by … [24-karat gold], so we will issue new tokens only if the gold is available and only if the user has completed the KYC and all the legal requirements that the Swiss law requires.” Eidoo raised $27.9 million in a token sale in October 2017. EDO peaked at $6.99 on January 8, 2018. Its current price is around 80 cents.

GoldMint (GOLD & MNT)

The Moscow, Russia-based GoldMint is a blockchain-based platform that uses GOLD digital assets, which are 100% backed by physical gold or exchange-traded funds (ETF).

GoldMint helps traders and investors manage volatility risks and gain competitive commissions on commodities sold via GoldMint to financial institutions, pawn shops, and other business and individual stakeholders. The GoldMint platform leverages the private and individual gold trading market.

The company would also like to manage larger physical stocks like those in central banks and create an electronic payment solution tethered not to the US Dollar like the crypto-network Tether, but instead to physical gold. The company also envisages a gold lending peer-to-peer lending system.

GoldMint depends on two native tokens, GOLD and MNT. The former is an investment tool and completely backed by physical gold and/or an exchange-traded fund (ETF). One GOLD token is the equivalent of one ounce of gold on the LBMA. MTN is GoldMint’s native cryptocurrency and is used to confirm GOLD transactions. GoldMint miners, the amount of MNTs reflects how many assignments or transaction blocks they can accept. GoldMint tokens are available on EtherDelta and YoBit. Listed as MNTP on CoinGecko, this token began trading in June 2018 at .80 cents, and currently is priced at .23 cents.

Global Gold Token (GGT)

Global Gold Token (GGT) began trading in late October for about $1.21, and currently trades for about .44 cents.

HelloGold (HGT) 

The Malaysia-based HelloGold lets users buy and sell instantly, send gold to anyone with a HelloGold account, withdraw your cash and redeem your physical gold on their app. The coin is on exchanges EtherDelta, Coss, and HitBTC. Since a peak price of .22 cents in January 2018, HGT has declined to .002 cents.

KaratGold (KBC)

KaratGold is based in Stuttgart, Germany. Each coin represents a certain weight of gold and can be exchanged into physical gold in the form of CashGold. On July 4, 2019 100 KBC will equal 1g of gold. Exchanges with KBC include YObit.net, Coinbe, Hitbtc, and Coinsuper. After reaching an all-time high of .02 cents in September 2018, KBC has since waned in price. Its current valuation is less than .19 cents.

PureGold (PGT and PGG)

Based in Singapore, puregold.io has two tokens. PGT is for transactions and PGG is a digitized form of physical gold. PGG is the native digital token dedicated for gold-enabled crypto transactions. PGT is available at the Token Store. PGT first traded on October 19, 2018, and, according to CoinGecko, was priced at about .20 cents. It currently is trading at .03 cents.

2019 ICO

GoldFinX (GFX)

GoldFinX (GFX) provides financing to Artisanal Small Gold Mines (ASGM) worldwide and gets in exchange of share of their production. The first production of gold will be delivered by Q2 2019, and will accumulate as well as stored indefinitely to back the value of the GiX coin. Pre-sale started July 1st, 2018 and ended no later than December 31st, 2018. The GiX ICO launches in January 2019.

TruGold ICO

The TruGold ICO is set to take place beginning February 19, 2019. TruGold is an electronic distribution system to digitize the production of gold for peer-to-peer daily transactions–or to redeem for physical gold.

Well-Regarded Projects

Anthem Gold (Anthemgold.com)

Anthem Gold is a cryptocurrency developed by Anthem Vault Inc. Each ANTHEM (AGLD) is backed by one gram of physical gold, securely vaulted with a nonbank operator and fully insured. Anthem Gold is a related to Anthem Vault, which has been buying and selling cryptocurrency for gold since 2011.

EmTech

US-based Emergent Technology Holdings in February 2018 announced its “Responsible Gold” supply chain along with “G-coin,” a digital token allegedly based upon “responsibly sourced gold.” Emtech’s blockchain-powered, gold supply chain platform tracks “responsibly sourced gold from the miner-to-refiner-to-vault.” The company’s partners include key industry players like Valcambi Sa, Asahi Refining and Yamana Gold to structure its G-Coin tokens.

In an interview with CNBC, Emergent’s chief commercial officer, Mitchell Davis, told CNBC that the company’s approach was “fundamentally different” than others in the space because of their focus on “responsibly sourced gold.”

“G-coin,” is reportedly created with NYSE-listed Canadian mining company called Yamana Gold. One coin equals one gram of “responsibly sourced gold,” and is pegged to gold’s spot price. G-Coins are invitation only.

Which Blockchain-based gold projects are best?

The industry seeking to place gold on the blockchain is nascent, and large players are positioned to ensure that, should blockchain become a viable way to manage gold trading, they have the tools and technologies to participate in the market. Its hard to recommend a new gold project when JPMorgan is working on a platform designed to do the same.

Still, projects like Paxos have been around long enough, and made sufficient progress over that time, to be considered a leader in the gold on the blockchain space. Veritaseum and Digix both have enjoyed media coverage and are live for trading at this time, but neither have made so much progress in tokenizing gold to be a sure bet. For now, I will stay on the sidelines of the crypto-gold market. Considering that Bitcoin has long been called “digital gold”, I would participate instead in that market first.

Other Mentions

AgAu
Zug, Switzerland
agau.io

*

Airgead
Ireland
Airgeadcoin.io

*

Cyronium

Indonesia
Cyronium.com

*

DGE
Switzerland
digitalgoldxchange.com/

*

EAU-COIN
Sweden
Eau-coin.com

*

Golden Currency
Singapore
Goldencurrency.world

*

GOLDFUND
Australia
goldfund.io

*

GoldVein
Russia
Goldvein.io

*

Jinbi
UK
Jinbitoken.io

*

Karatcoin
UK
Karatcoin.co

*

Kinesis
Cayman
Kinesis.money

*

Sudan Gold Coin
Dubai
Sudangm.com

*

Tiberius Coin (TCX)
Zug, Switzerland
Tiberiuscoin.com

*

AurumCoin (AU)
Aurumcoin.com

*

Egold (EGD)
London, UK
egold.trade

*

OneGram Coin (OGC)
Dubai, United Arab Emirates.
onegram.org

*

Orocrypt (OCG)
Zurich, Switzerland.
orocrypt.com

*

Pecunio (PGX)
Dubai, United Arab Emirates.
pecun.io

*

The Midas Touch Gold (TMTG)
Seoul, South Korea.
dgex.io

*

Xaurum (XAUR)
Crystal Palace, BTC City, Ameriška ulica 8, Ljubljana, Slovenia
Xaurum.org

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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5 stars on average, based on 1 rated postsJustin O'Connell is the founder of financial technology focused CryptographicAsset.com. Justin organized the launch of the largest Bitcoin ATM hardware and software provider in the world at the historical Hotel del Coronado in southern California. His works appear in the U.S.'s third largest weekly, the San Diego Reader, VICE and elsewhere.




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Commodities

Oil Rises as Saudi Plans to Cut Exports; Long-Term Price Forecast Still Mediocre

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Oil prices rose sharply on Monday, buoyed by speculation that Saudi Arabia is planning to curb petrol exports in a further attempt to balance the market. The OPEC kingpin is looking to bring crude back toward $80 a barrel to have any semblance of a balanced budget this year.

Crude Rallies

U.S. crude extended its recovery to five days on Monday, with the West Texas Intermediate (WTI) benchmark reaching a high of $49.79 a barrel on the New York Mercantile Exchange. The U.S. futures contract was last seen trading at $49.26 a barrel, up $1.30, or 2.7%.

Brent crude, the international futures benchmark, notched a session high of $58.93 a barrel for its sixth consecutive gain. It was last seen hovering at $57.99 a barrel, having gained 93 cents, or 1.6%.

Commodity markets were aided by a sharp drop in the U.S. dollar at the start of the week. The U.S. dollar index (DXY) fell 0.5% against a basket of currencies to reach 95.72.

Saudis Keen on $80 a Barrel Oil

Saudi Arabia is planning to reduce oil exports to 7.1 million barrels per day in January as part of a broad effort to rebalance the market, The Wall Street Journal reported Monday. That represents a cut of 800,000 barrels per day from November levels. These efforts go hand-in-hand with a decision by OPEC+ in December to reduce production by 1.2 million barrels per day.

The Saudis would like to bring crude prices back to $80 a barrel, the level identified in its 2019 budget, to cover a surge in government spending. Riyadh plans to increase government spending 7% this year. Astonishingly, the budget blueprint assumes a 9% increase in revenue despite massively drop in oil prices in the fourth quarter. According to Ziad Daoud of Bloomberg, the forecast “defies the laws of arithmetic.”

Saudi Arabia wields tremendous power in the energy market but its days of manipulating prices almost singlehandedly are over. The period since the oil-price collapse of 2014 has highlighted the extent to which low-cost producers in the United States have been able to take market share from traditional players. The United States is not only the world’s biggest energy producer, its shale-fracking sites have achieved tremendous efficiency gains in the last five years.

Against this backdrop, Goldman Sachs forecasts only a slight recovery in crude prices this year. The Wall Street mega bank expects WTI to average just $55.50 a barrel in 2019. Brent is expected to see an average price of $62.50 a barrel. Prices are then expected to decline somewhat in 2020.

As per WSJ, Goldman says:

“We expect that the oil market will balance at a lower marginal cost in 2019 given: (1) higher inventory levels to start the year, (2) the persistent beat in 2018 shale-production growth amidst little observed cost inflation, (3) weaker than previously expected demand growth expectations (even at our above consensus forecasts) and (4) increased low-cost production capacity.”

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 735 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Commodities

Gold Rises on Signs of China Weakness

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Gold prices continued upward on Thursday after grim revenue guidance from Apple Inc. shined the spotlight on China’s ongoing growth woes. The iPhone maker slashed its quarterly revenue forecast for the first time in more than 15 years and said the decline was entirely attributed to weak demand from the world’s second-largest economy.

Gold Aims for $1,300

The price of bullion notched a new six-and-a-half month high of $1,294.30 a troy ounce, moving closer to the all-important $1,300 level. At the time of writing, gold’s February contract was up $6.70, or 0.5%, at $1,290.80 a troy ounce on the Comex division of the New York Mercantile Exchange.

The yellow metal has gained more than 7% since mid-November, a period marked by extreme swings in stock prices. The S&P 500 Index officially entered bear-market territory last month, highlighting the extent of the market turmoil since October.

This environment has also benefited silver, which is currently trading at more than four-month highs. Silver’s March contract rose 7 cents, or 0.4%, to $15.72 a troy ounce.

Precious metals were aided by a sharp drop in the U.S. dollar. The U.S. dollar index (DXY) declined 0.5% to 96.31. A weaker dollar makes greenback-denominated assets like gold and silver more attractive for foreign buyers.

Apple Shines the Spotlight on China

Apple’s CEO Tim Cook issued a letter on Wednesday explaining why his company will badly miss its quarterly revenue forecast. In the letter, Cook attributed the slowdown in sales to a badly performing Chinese market, which is currently grappling with weak consumer demand and an uncertain trade outlook.

“Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall,” Cook said.

Apple’s share price has taken a beating on Thursday, falling more than 9% in New York trade. Since peaking at more than $1 trillion, Apple’s market cap has fallen more than $300 billion.

China’s economic slowdown has major implications on global markets. The country’s central bank has enacted new policies to stimulate business lending but has instead fueled unprecedented bubbles in housing and government bonds.

Beijing announced several years ago that it would like to transition its economy away from exports and traditional smokestack industries toward consumption. However, government data last month showed the slowest pace of retail sales growth in 15 years. At the same time, separate PMI reports released this week confirmed that the country’s manufacturing sector contracted in December, leaving the economy bruised on several fronts.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 735 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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