Physical Gold Offers More Protection Than Mining Stocks, Says State Street’s George Milling-Stanley

Economic

Commodity

Summary:

Investors looking to weather a volatile market may want to opt for physical gold over gold stocks.

That’s according to George Milling-Stanley, one of the world’s experts in gold and the chief gold strategist at State Street Global Advisors.

“One of the reasons I own gold bar(s) is that I believe it offers me some protection against potential weakness in the equity market,” Milling-Stanley told CNBC’s “ETF Edge” this week. “When the equity market goes down, gold mining stocks remember that they’re equities, and they tend to go down with the general level of the equity market. So, they’re not offering me that extra level of protection.”

Milling-Stanley’s firm runs two exchange-traded funds that track the performance of the spot price of gold: the SPDR Gold Shares ETF (GLD) and SPDR Gold MiniShares Trust (GLDM).

They’re differentiated by their gross expense ratios — 0.40% for GLD and 0.10% for GLDM — and it’s this key distinction that also differentiates the type of investor they attract, according to Milling-Stanley.

“If you are someone who wants to trade ... or if you want to be a tactical player — that means you need to be able to move very, very quickly — then GLD’s liquidity after 20 years now means that that has very, very low trading costs compared to any other gold ETF,” he said. “If you have a million dollars and you want to put a million dollars into gold and leave it out there, then GLDM with its lower expense ratio makes more sense for you.”

As of Thursday’s close, GLD and GLDM were both up 15% year to date.

Bullion, bitcoin and boomers

The notion that gold is a “fuddy-duddy” investment no longer rings true, according to Milling-Stanley. State Street’s 2023 Gold ETF Impact Study found that millennials had greater portions of their portfolios allocated in gold than older generations.

The metal’s popularity among younger investors comes as bitcoin continues to attract assets from both millennials and Generation Z. A Policygenius survey published this week found that millennials were more likely to own bitcoin than any other generation, and Gen Z was more likely to own bitcoin than stocks, bonds or real estate.

But Milling-Stanley pushed back on the idea that gold and bitcoin are competing for assets across the board.

“Bitcoin may well be some competition for the people who want to take a tactical position in gold and just wait for the price to go up and sell. I think that bitcoin may well offer competition there,” he said. “But I don’t think that bitcoin really competes in terms of a long-term strategic allocation, and that’s where I think gold really comes into its own.”

Source：CNBC

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Alex

Economic

Political

President Joe Biden said he was committed to “deepening maritime and security ties” with Japan and the Philippines as he sought to assure allies worried about increasingly assertive Chinese actions in disputed waters.

“The United States defense commitments to Japan and to the Philippines are ironclad,” Biden said Thursday before a meeting with Japanese Prime Minister Fumio Kishida and Philippines President Ferdinand Marcos Jr. at the White House for the first trilateral summit among the nations.

“Any attack on Philippine aircraft, vessels or armed forces in the South China Sea would invoke our mutual defense treaty,” Biden added.

The Philippines under Marcos has adopted a more assertive footing to the growing number of Chinese patrols in the South China Sea, where both nations have competing maritime claims. Tensions are centered around the Second Thomas Shoal, where the Philippines maintains a grounded World War-II era ship. Chinese vessels have used water cannons to block Philippine military missions that rotate and resupply troops on the ship.

The leaders agreed to step-up military exercises, including plans for Philippine and Japanese Coast Guard members to patrol aboard a US Coast Guard vessel in the Indo-Pacific, according to a statement released Thursday evening. The nations also plan to conduct more training exercises at sea.

Maritime security topped the summit agenda following a series of incidents, including Chinese Coast Guard ships firing water cannons last month at a civilian Filipino boat. The three countries joined Australia on Sunday for military drills in the South China Sea.

“We steadfastly oppose the dangerous and coercive use of Coast Guard and maritime militia vessels in the South China Sea, as well as efforts to disrupt other countries’ offshore resource exploitation,” the three leaders said in the joint statement.

At the White House earlier, Kishida said that “as the world faces a complex crisis, it is important that we work in a multi-layered effort with like-minded countries and allies to maintain and strengthen a free and open international order based on the rule of law.”

Biden and Kishida have striven to demonstrate unity with the Philippines, part of a broader US strategy to bolster partnerships in the Indo-Pacific and encourage allies to strengthen their own ties amid growing alarm over China’s military and economic influence. A joint statement issued after Biden met Kishida at the White House on Wednesday for bilateral talks mentioned China repeatedly.

The US sees China increasing the use of coercive tactics and a growing number of countries pushing back, according to senior administration officials who briefed reporters Wednesday before the official announcements.

Biden and Chinese President Xi Jinping discussed the sea confrontations on a phone call last week and reiterated their respective positions, and the Chinese understand that the timing of Thursday’s meeting is keyed to those recent incidents, a senior administration official said in an interview earlier this week.

Biden said the leaders would also discuss cooperation on technology, clean energy, securing semiconductor supply chains and telecommunications.

Those wide-ranging infrastructure commitments speak to efforts by the US and allies to offer an alternative to Chinese investments in developing countries through Xi’s signature Belt and Road Initiative. With the Philippines, there’s an opening for the US to offer more investment and security cooperation to a Marcos administration that is re-working its ties with China.

In an address to the US Congress earlier Thursday, Kishida pointed out “growing cases” of economic coercion and debt-trap diplomacy, in an apparent reference to China. He also nodded at further US-Japan work on emerging technologies, including in sensitive areas like quantum computing.

Marcos is back in Washington less than a year after his last White House visit, showcasing how the Philippines has become an important focus for the US as it seeks to improve its diplomatic footing in Southeast Asia.

“We seek to identify ways of growing our economies and making them more resilient, climate-proofing our cities and our societies, sustaining our development progress,” Marcos said.

The US is in early-stage talks with Manila to help develop its critical minerals industry, including nickel deposits, but there is no official announcement pending, a senior administration official said earlier this week. China is a major presence in the Philippine mining industry.

In the conclusion of the joint statement, the three leaders said: “A new trilateral chapter between our three nations begins today.”

Source：Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Devin

Economic

The continuing conflicts in the Middle East are expected to have a contained effect on the region's trade activity and would only have "really severe" implications if they escalate, the World Trade Organisation has said.

Global trade is forecast to rebound in 2024, but this would be limited by geopolitical tensions and economic policy uncertainties, setting the stage for flat growth over the next two years, the Geneva-based body said at the launch of its Global Trade Outlook and Statistics 2024 report on Wednesday.

The Middle East, however, is expected to hold steady despite the Israel-Gaza war and attacks in the Red Sea, WTO's chief economist Ralph Ossa said in a press conference from Geneva.

"One thing that we see so far [is that] tensions in the Red Sea of course directly affect international trade … particularly between Asia and Europe," he said in response to a question from The National.

Talks between Hamas and Israel to end the war in Gaza are taking place in Cairo, but have hit a stumbling block as the militant group has reportedly raised several objections to proposals raised this week.

"However, so far our analysis suggests that this effect is not so severe. And for it to become really severe, what would have to happen is the crisis would have to escalate and really start to affect energy markets. So we would have to see price spikes in oil for this to unfold," Mr Ossa said.

Global trade volumes fell 1.2 per cent in 2023, but are expected to bounce back to a 2.6 per cent growth this year, the WTO said.

The decline in 2023 was driven by high energy prices and inflation, which heavily weighed on demand for trade-intensive manufactured goods, according to the WTO, which held its 13th Ministerial Conference in Abu Dhabi in February.

However, this was "relatively small" and above pre-pandemic levels throughout 2023, it said, adding that growth is expected to recover gradually over the next two years as inflationary pressures ease and household incomes improve. Middle East Conflicts Do Not Have Severe Effects on Region's Trade Activity_1

Middle East Conflicts Do Not Have Severe Effects on Region's Trade Activity_1

It also obscures strong regional variation, as import demand fell sharply in Europe, declined in North America, remained flat in Asia and increased in major fuel-exporting economies, the WTO said.

"Weak demand reduced export volumes in Europe and prevented a stronger recovery in Asia, while the picture in other regions was mixed. If the forecast is realised, Asia will make a bigger contribution to trade volume growth in 2024 and 2025," the report said.

Global gross domestic product growth, on the other hand, also slowed down in 2023, albeit not as much as trade volume growth, the WTO said.

Real GDP growth, weighted at market exchange rates, dropped to 2.7 per cent in 2023 from 3.1 per cent in the previous year. It is projected to remain mostly stable in the next two years, inching down to 2.6 per cent in 2024 before returning to 2.7 per cent next year, it said.

Although global trade has been "remarkably resilient" in recent years despite a number of major economic shocks, risks to the forecast are on the downside because of geopolitical tensions and policy uncertainty.

These include the Russia-Ukraine and Israel-Gaza wars, as well as the conflict in the Red Sea, where shipments have been forcibly diverted as a result of Yemeni Houthi rebel attacks on shipping.

"It's imperative that we mitigate risks like geopolitical strife and trade fragmentation to maintain economic growth and stability," Ngozi Okonjo-Iweala, director general of the WTO, said in a statement.

Trade is one of the key pillars of the global economy as it contributes to efficiency and promotes competitiveness, allowing countries to access goods and labour forces.

But while geopolitical tensions have affected trade patterns, these have had a "marginal" effect and "have not triggered a sustained trend towards deglobalisation", the WTO said.

Wednesday's WTO report also confirms its forecast in February, in which it said global trade growth would be likely to miss its target this year.

On October 5, the WTO forecast a 3.3 per cent expansion in global trade for 2024, but this was made before the Israel-Gaza war that began two days later. Still, the new forecast is a marked rebound from the 0.8 per cent growth recorded in 2023.

However, a high degree of uncertainty remains with the current outlook, "due to the large number of risk factors present in the global economy", the WTO said on Wednesday.

Inflation, meanwhile, is expected to decline this year and would lead to a rebound in consumption of manufactured goods, which in turn should boost trade volume growth in 2024 and 2025.

Inflation, which had spiked at the start of the Russia-Ukraine war in February 2022, remained well above pre-pandemic levels by the first quarter of 2024, the WTO said.

Global energy prices, on the other hand, were down about 41 per cent on average from their peak in the first two months of 2024, but remained 30 per cent higher than in 2019, the report said.

Oil prices had recorded a strong gain in the first quarter of the year amid Opec+ output cuts and rising fears of supply disruption caused by conflict, rising about 13 per cent in the first three months of 2024.

Any consistency in the drop of inflation levels would lead policymakers to eventually cut interest rates, the WTO said. The US Federal Reserve is expected to start cutting rates at its June meeting, which would prompt other major central backs to follow suit.

Central banks in advanced economies raised interest rates beginning in 2022 to mitigate inflationary pressures, but that resulted in eroded incomes and reduced consumption of goods, the WTO said.

Cutting rates "should stimulate investment spending [albeit with a lag], which is intensive in capital goods trade," it added.

"Tighter monetary policy has largely succeeded in bringing down inflation, but correctly timing the relaxation of these policies will be challenging for policymakers."

The WTO also said that trade will not be dictated solely by the US presidential elections this year, even with presumptive Republican candidate and former president Donald Trump threatening more tariffs, particularly on China, in the event he returns to the White House.

"It's not just the US; something like 50 countries this year have elections, which of course adds to trade policy uncertainty," Mr Ossa said.

Source: The National News

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Cohen

Economic

Political

President Joe Biden has added more Chinese companies and individuals to an export blacklist than any US administration, as growing frictions between the world’s biggest economies continue to complicate global trade.

The Commerce Department added six Chinese companies to its entity list on Thursday, bringing the tally of new targets during the Biden administration to 319. That compares to the 306 entities added during Donald Trump’s time in the White House, when he oversaw a trade war with Beijing that hurt both countries’ economies.

The milestone exemplifies how the US government is increasingly using economic tools to achieve foreign policy goals, as Biden tries to kneecap China’s access to cutting-edge chips and technology, citing national security concerns. President Xi Jinping’s growing assertiveness toward Taiwan, which he claims as part of China’s territory, has increased concerns in Washington that Beijing will use American technology to advance its military prowess. Biden Surpasses Trump’s Record For Blacklisting Chinese Entities_1

Biden Surpasses Trump’s Record For Blacklisting Chinese Entities_1

“Being tough on China, including through the restriction of its access to technology, is a theme that has bipartisan agreement,” said Alfredo Montufar-Helu, head of the Conference Board’s China Center. With a US election in November, both sides “have incentives during these months of campaigning to show themselves as being as strong on China,” he said.

Biden has left in place Trump’s tariffs while adding to those measures, with a specific focus on curbs that block Beijing’s access to innovations capable of a wide swathe of applications, including those in the critical artificial intelligence sector.

In February, the US added eight companies to the entity list, quietly taking Biden past Trump’s record, with six more added this week. The entity list has increasingly become one of Washington’s main weapons for sanctioning and punishing people, companies or other organizations in China and elsewhere on national security grounds.

Beijing has branded that policy an attempt to thwart its development. Imposing export controls on Chinese companies “is typical economic coercion and unilateral bullying behavior,” He Yadong, spokesman of the Chinese Ministry of Commerce, said at a briefing in Beijing on Thursday when asked about the latest US actions.

“The US should immediately correct its wrongdoings and stop the unreasonable suppression of Chinese companies,” He said. “China will take all necessary actions to defend the lawful rights and interests of Chinese companies.”

In a seemingly tit-for-tat move, China sanctioned two US companies on Thursday, announcing that all the assets of the defense contractors in China would be frozen and their executives denied visas. That marked the latest in a series of largely symbolic sanctions against American companies involved in sales of weapons to Taiwan, with such measures to have little effect as the firms likely have no assets in China.

Once added to the US list, entities are rarely removed, although in an unusual concession, the Biden administration withdrew a Chinese government laboratory as part of a deal to combat the fentanyl crisis, around the time of last November’s summit between Biden and Xi.

Four of the firms added to the entity list this week were included for buying US-origin goods to support China’s military modernization efforts, the Department of Commerce said in statement. Another was targeted for supporting Russian military procurement, while the sixth firm had tried to help Iran buy components for unmanned aerial vehicles, according to the statement.

There is a “presumption of denial” for applications to export to the four companies, according to the statement, meaning they will likely be unable to purchase US-origin items in the future. The companies are involved in providing AI chips to the Chinese military, according to a Reuters report of comments from Kevin Kurland, an export enforcement official.

“The US will do whatever is necessary to maintain its technological competitive advantage, especially on technologies that are considered dual use,” said Montufar-Helu, expressing skepticism over the “small yard, high fence” description officials have used to defend that policy.

“Over the past months it seems that the yard has expanded a little bit,” he said.

Source：Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Ukadike Micheal

Economic

Commodity

China faced a sharp contraction in exports and an unexpected decline in imports in March, both falling significantly below forecasts. This dour data signifies a setback for the world's second-largest economy, highlighting the challenges policymakers encounter as they endeavor to bolster a fragile economic recovery.

The dismal export and import figures represent a reversal of fortunes for China, following a generally better-than-expected start to the year. The country's struggle to achieve a sustainable post-COVID rebound is evident, exacerbated by persistent issues such as a protracted property crisis, mounting local government debts, and subdued private-sector spending.

In March, China's exports plummeted by 7.5% year-on-year, the largest decline since August last year, significantly below the 2.3% decline forecasted by economists. Meanwhile, imports unexpectedly shrank by 1.9%, undershooting expectations for a 1.4% rise. These disappointing figures underscore the deep-seated challenges facing the Chinese economy and the urgent need for effective policy responses.

Analysts speculate that Chinese exporters are resorting to price cuts to maintain sales amidst sluggish domestic demand, as evidenced by a decline in export values despite record-high export volumes. Moreover, a higher base of comparison last year may have contributed to the export drop, as production surged in March 2023 following a wave of COVID-19 infections.

The weak export and import data reflects sluggish domestic demand and underscores the uneven nature of China's economic recovery. Despite policymakers' efforts to stimulate household consumption, private investment, and market confidence, the economy's growth remains uneven, with significant headwinds posed by the prolonged property sector crisis.

As China grapples with challenges in traditional growth engines like property and trade, policymakers are striving to pivot towards new drivers such as hi-tech and clean energy. However, analysts caution that this transition will take time and may not yield immediate results.

In response to the economic slowdown, China has unveiled a series of stimulus measures, including issuing special ultra-long term treasury bonds and promoting large-scale equipment upgrades and consumer goods sales. These initiatives aim to revive demand and support key sectors of the economy, but their effectiveness remains uncertain amidst lingering uncertainties.

Overall, the disappointing export and import data for March underscore the fragility of China's economic recovery and the complex challenges policymakers face in navigating through uncertain times. Effective policy responses, coupled with structural reforms to address underlying issues, will be essential in ensuring sustainable and balanced growth in the world's second-largest economy.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Thomas

Central Bank

Economic

Shipments from China slumped 7.5% year-on-year last month, marking the biggest slump since August last year and compared with a 2.3% decline forecast in a Reuters poll of economists. They rose 7.1% in the January-February period.

The nation's exporters endured a tough period for much of last year due to soft overseas demand and tight global monetary policy. With the Federal Reserve and other developed nations showing no urgency to cut interest rates, Chinese manufacturers may be faced with a further period of challenges as they try to shore up goods sales overseas.

The China Beige Book survey said the recent improvements in business conditions, including better corporate revenue, profits and capital spending, were "more of a return to mediocre from genuinely poor."

Analysts warn Western concerns over China's overcapacity in some industries may bring more trade barriers for the world's manufacturing hub.

Imports for March also declined 1.9% from the 3.5% growth in the first two months, missing an expected 1.4% rise.

The imports figure underlined the sluggish domestic demand conditions, which were also highlighted by Thursday's data showing consumer inflation had cooled more than expected last month.

China's economy got off to a relatively solid start this year after policymakers rolled out support measures to revive household consumption, private investment and market confidence since the second half of 2023.

Yet, growth in the Asian giant remains uneven and analysts don't expect a full-blown revival anytime soon mainly due to a protracted property sector crisis.

Rating agency Fitch cut its outlook on China's sovereign credit rating to negative on Wednesday, citing risks to public finances as the economy faces increasing uncertainty in its shift to new growth models.

The economy likely grew 4.6% in the first quarter from a year earlier - the slowest in a year despite signs of stabilisation, another Reuters poll showed on Thursday, maintaining pressure on policymakers to unveil more stimulus measures.

Some analysts say the central bank faces a challenge as more credit is flowing to production than into consumption, exposing structural flaws in the economy and reducing the effectiveness of its monetary policy tools.

On the fiscal front, China plans to issue 1 trillion yuan ($138.18 billion) in special ultra-long term treasury bonds to support key areas. It also raised the 2024 special bond issuance quota for local governments to 3.9 trillion yuan from 3.8 trillion yuan in 2023.

Moreover, in an attempt to revive demand, the cabinet last month approved a plan aimed at promoting large-scale equipment upgrades and sales of consumer goods. The head of the country's economic planner estimated the plan could generate market demand of over 5 trillion yuan annually.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Ukadike Micheal

Economic

Forex

The UK economy's growth in February marks a significant milestone in its recovery journey, indicating a positive trajectory after a shallow technical recession. With GDP rising by 0.1% from January, in line with economists' expectations, and January's figure revised upwards to show a 0.3% increase, there are clear signs of economic resilience.

Paul Dales' assessment that the recession lasted only two quarters, resulting in a modest GDP decline of around 0.4%, suggests a relatively mild downturn compared to historical recessions. This highlights the economy's capacity to rebound swiftly, driven by factors such as robust consumer spending and resilient business activity.

Despite the encouraging growth, concerns about inflationary pressures persist. The modest expansion in February is seen as staying within the margins necessary to prevent excessive price increases, a factor that could influence the Bank of England's future monetary policy decisions. The anticipation of rate cuts in the coming months underscores the delicate balance between supporting economic recovery and managing inflationary risks.

The impact of economic developments on political dynamics is also noteworthy. Prime Minister Rishi Sunak's decision to delay calling an election amidst polling deficits for the Conservative Party reflects the importance of economic stability in shaping political strategies. The pound's depreciation following market volatility further underscores the interconnectedness of economic and political factors in driving market sentiment.

The recalibration of market expectations for UK interest rate cuts reflects the complex interplay of domestic economic indicators and global economic trends. The shift from anticipating three rate cuts to expecting two, with the first cut fully priced in for September, suggests a nuanced assessment of the UK's economic outlook and its implications for monetary policy.

Looking ahead, economists' forecasts of a solid rebound in first-quarter GDP indicate cautious optimism about the UK's economic recovery. The recent uptick in the housing market and private sector activity, coupled with improving living standards due to wage increases and lower energy prices, provide further grounds for optimism.

However, challenges remain, including the persistent threat of inflation and the lingering effects of past interest rate increases. These factors underscore the need for vigilance and proactive policymaking to navigate the complexities of the economic landscape.

The UK economy's growth in February is a positive development, uncertainties persist, and strategic decision-making will be crucial for both policymakers and investors. By closely monitoring economic indicators and responding flexibly to changing conditions, stakeholders can effectively support the UK's ongoing recovery efforts.