Joe Wallace
speaker
68 appearances
2 recordings
1 series
first heard Jun 2019
last heard Mar 2021
Joe Wallace’s voice in public audio — every appearance, attributed to the second.
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Appearances
WSJ Your Money Briefing · Gold Prices Are Glittering as Fed Talks Interest Rate Cuts · 21 Jun 2019
podcast
And that means that, firstly, they don't react quite as much to central bank talk.
And secondly, it means that there are all sorts of other headwinds for the sector right now, primarily arising from the U.S.
China trade tensions and concerns about growth in China and the world economy.
Yes.
So it's no coincidence that this rally is taking part as the Fed is talking about lowering interest rates for the first time since the financial crisis.
And gold doesn't pay an interest rate.
You would only want to hold it if you think its price will rise.
And so the kind of opportunity costs, the cost of missing out on holding interest bearing assets such as government bonds will tend to fall when interest rates fall, which makes gold more attractive.
There's a kind of second mechanic as well that's going on, which is that gold, like most other commodities, is traded in terms of the dollar.
So when interest rates fall, that brings the dollar down and that makes
gold and other commodities more attractive to international buyers because they're suddenly cheaper in dollar terms.
So you have these two twin effects of the lower rates and the lower dollar.
Yeah, so this is...
especially to do with industrial metals.
So one reason, as I said, not to get too over-optimistic about them is that heading into the G20 meeting between Presidents Xi and Trump later in the month, it's really all to play for regarding the trade conflict.
Metals like copper, which are highly acutely sensitive to growth in the world economy, have really been pummeled this year on the back of the trade tensions.
So, you know, until we know whether the US and China are going to reach a deal and put off further tariffs.
Yeah, that's it's really not a time to get too optimistic about them.
On the other hand, some analysts and investors say there are kind of longer term brewing sources of strength in the industrial metal market.
The first one is that miners really haven't invested too much in new mining capacity since the commodity price slump of 2014 and 15.
Showing 41–60 of 68 · page 3 of 4
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