Bart Melek, Head of Commodity Strategy at TD Securities, has highlighted the sustained and robust gold purchases made by central banks as a significant factor in maintaining the floor for gold prices during a recent downtrend. Melek predicts that these central bank purchases will be the key driver pushing the precious metal to new all-time highs in the coming year.
In his latest commentary, Melek explains that central bank buying likely prevented a significant gold selloff despite the recent higher interest rates. The yellow metal managed to recover modestly as the Federal Reserve indicated a prolongation of higher rates in its FOMC minutes, and interest rates remained elevated across the yield curve. TD Securities projects a price target of $2,100/oz for gold next year, with the official sector’s continued support playing a vital role in achieving this projection.
Melek emphasizes the importance of physical gold purchases by central banks following the Federal Reserve’s anticipated pivot, as it is expected to remove the high cost of carry as a major obstacle for discretionary traders. He believes that the US central bank will pivot even with inflation above target, but the market will require clear signs of significant economic weakening before this occurs.
Regarding China’s central bank, Melek notes that while it has been steadily purchasing gold in substantial quantities, the yellow metal’s representation of only 4% of its $3.115 trillion in reserves remains relatively low. Comparatively, the US holds around 69% of its foreign exchange reserve in gold, Germany holds 68%, and Russia holds 25%. If China were to increase its gold reserves to just 10%, it could potentially buy an additional 3,000 tons of gold.
Melek believes that central banks’ appetite for gold will remain robust for years to come. He cites the World Gold Council’s 2023 survey, which revealed that 24% of central banks intend to increase their gold holdings in the next 12 months. This indicates strong demand from the official sector in the coming years. The survey also showed that central banks view gold’s reserve status as growing while the dominance of the US dollar diminishes. Melek points out that 62% of monetary institutions believe that gold will have a greater share of total reserves, compared to 46% last year, potentially driving higher demand from the official sector. In 2022, central banks purchased a record 1,136 tons, and as of July, they have officially purchased around 224 tons.
TD Securities estimates that by September, the total would reach approximately 353 tons, indicating a prorated total of around 470 tons for 2023. Melek highlights that unreported official purchases, including non-central bank buying, have accounted for more than 50% of gold purchases over the past year, suggesting that the actual tonnage of gold purchased by the official sector could be significantly higher.
Overall, TD Securities expects central bank gold purchases to have a substantial impact on driving gold prices higher in the coming years, with the official sector playing a pivotal role in shaping the future of the precious metal.
Why One Survival Food Company Shines Above the Rest
Let’s be real. “Prepper Food” or “Survival Food” is generally awful. The vast majority of companies that push their cans, bags, or buckets desperately hope that their customers never try them and stick them in the closet or pantry instead. Why? Because if the first time they try them is after the crap hits the fan, they’ll be too shaken to call and complain about the quality.
It’s true. Most long-term storage food is made with the cheapest possible ingredients with limited taste and even less nutritional value. This is why they tout calories so much. Sure, they provide calories but does anyone really want to go into the apocalypse with food their family can’t stand?
This is what prompted the Llewellyns to launch Heaven’s Harvest. They bought survival food from multiple companies and determined they couldn’t imagine being stuck in an extended emergency with such low-quality food. They quickly discovered that freeze drying food for long-term storage doesn’t have to mean sacrificing flavor, consistency, or nutrition.
Their ingredients are all-American. In fact, they’re locally sourced and all-natural! This allows their products to be the highest quality on the market, so good that their customers often break open a bag in a pinch to eat because they want to, not just because they have to due to an emergency.
At Heaven’s Harvest, their only focus is amazing food. They don’t sell bugout bags, solar chargers, or multitools. They have one mission – feeding Americans in times of crisis.
What they DO offer is the ability for people to thrive in times of greatest need. On top of long-term storage food, they offer seeds to help Americans for the truly long-term. They want them to grow their own food if possible which is why they offer only Heirloom, Non-GMO, Non-Hybrid, Open-Pollinated seeds so their customers can build permanent food security on their own property.
