ABC Bullion Provides Insight On Changes In Offshore Gold Ownership

Recent developments in asset markets means gold ownership rules will change in 2017.

Vaulting gold in Sydney is a compelling choice driven by multiple political and asset price uncertainties, with an offshore vaulting solution provided via Custodian Vaults, the sister company to ABC Bullion.

Recent changes in asset markets have been profound, with signs of an inflexion point in the US bond market’s three decade long rally, and new highs in the US Dollar index. Gold is now US$170 lower than the November highs, confounding pundits who voiced the opinion that gold could only ratchet higher. In fact, gold dropped by almost US$90 the day after the US election, underscoring what real uncertainty can look like.

Looking forward, there are many, many different changes that lie ahead or are already underway.

The possibility that the US will use a huge debt-funded fiscal boost to rebuild American infrastructure has electrified the bond market, with 10 year government debt yielding a third of a per cent more at the end of the election week, with yields almost half a per cent higher by Monday. Although there are reasons to suspect yields may calm down after the initial shock, as goes America, so goes the world. And the world is awash with debt, with substantial stocks of US dollar denominated debt held by foreign borrowers, whose repayments are now much higher as a consequence both of higher US yields and a strengthening dollar, which rallied to over 100 on the Dollar Index this week. By mid-2015, emerging nations such as Indonesia reported that they borrowed 52 per cent of their corporate debt in US dollars: Mexico has borrowed 66 per cent, Russia 29 per cent. All will feel the strain of the shift in bond yields new scenario now playing out.

The Federal Reserve and the Bank of England have had their independence questioned in the last few weeks. Be wary when politicians choose to bend both monetary and fiscal policy to their own ends, as the path of politicised monetary policy is beset by inflation.

In the Middle East, Russia has launched an offensive in Syria, quite possibly emboldened by the new US de-emphasis on regime change. This has the potential to split the US-EU stance over Syria, and the President-Elect’s views on President Putin have implications for the Ukraine and the Baltic states.

Italy is in the grip of a Eurosceptic movement, experiencing substantial capital outflows as evidenced by Target2 balances with the European Central Bank, a slow-motion domestic banking crisis, horrendous unemployment and stagnant growth – how tempting a break with the Eurozone must look…it would be a dislocation with Europe’s post war order that could make Brexit look trivial.

China is spending huge amounts of foreign reserves to halt the decline of the Yuan, as easy money in China and fears over fall-out from an asset boom encourage money to flow out of China. Internally, China faces challenges ranging from credit and banking stress, being on the wrong side of demography, and a political system that appears to seek some sort of return to the past.

Nationalistic sentiments leading to public rejection of alliances designed to engender growth, and promote security against a resurgent threat from Russia, the huge yet still unresolved strains within the Eurozone and half-perceived problems mounting within China are but three broad issues that contain significant uncertainty.

It has always been a complicated world, however simply things resolved themselves in the rear-view mirror of our receding past. Even the most worrying events have acquired a sunset glow of nostalgia, aided by our willingness to believe that we at least partly grasp the context in which those events unfolded.

Gold has a vital role to play in a world where rising yields signal a threat to an incredibly richly-valued bond market, where debt has ballooned and where growth remains stagnant across a swathe of economies. Investors the world over are hugely exposed to bond markets and to property as a consequence of rising yields.

Gold has a vital role to play in a world where politics is “the dominant driver” of currency values, to quote HSBC FX Strategy, and where the dominant driver of yields has ceased to be the market, but central banks shouldering the responsibilities of elected governments, eroding their claim on legitimacy, with consequences that are now all-too visible in the West.

Based in Sydney’s CBD, ABC Bullion is the leading Australian distributor of gold investment bars. Custodian Vaults provides vaulting and individual storage boxes in a leading-edge vault in Sydney.

Contact Info:
Name: Nicholas Frappell
Email: Send Email
Organization: ABC Bullion
Address: Level 6, 88 Pitt Street, Sydney NSW 2000 Australia
Phone: +61 2 9231 4511

Release ID: 153622