(Kitco News) – Gold prices are struggling due to U.S. yields and have potential to fall further, but a recovery for the metal is coming, says ABN Amro.

“The rally in gold, silver and platinum prices came to a halt on 8 September mainly because U.S. real yields bottomed out, which has provided support to the U.S. dollar,” said Georgette Boele, senior precious-metals analyst for ABN Amro, in a report Thursday.

“In the coming days and weeks, we expect the U.S. dollar to continue to recover, which will probably weigh on gold, silver and platinum prices….Gold prices could decline towards $1,250 per ounce, which will be close to the 200-day moving average.”

At the session low, Comex December gold had fallen $82 an ounce from the Sept. 8 high of $1,362.40. During that time frame, the yield on 10-year U.S. Treasury notes rose from a Sept. 8 low of 2.037% to a high so far Thursday of 2.344%.

The metals have had a rough week, with gold and silver recently hitting six-week lows. December gold futures were last seen at $1,285.50 an ounce, down $2.30 on the day. Meanwhile, December silver was last trading down 4.7 cents an ounce at $16.78.

Although a drop below Boele’s $1,250-an-ounce call would put this year’s gold rally into question, she remains optimistic.

“We expect gold prices to bottom out close to $1,250 per ounce and to move higher again,” she said. “This is because we expect U.S. real yields to edge lower. Moreover, the U.S. dollar recovery is temporary in nature in our view and we expect the U.S. dollar to weaken again at the end of the year and next year.”

ABN Amro is calling for gold to close the year at around $1,300 an ounce and to edge up to $1,450 by the end of 2018.

(Kitco News) – The Turkish people have reportedly stashed gold “under mattresses” and the government wants a piece.

Officials want to make use of the bullion by issuing “gold bonds and the gold-based rent certificates,” the Deputy Prime Minister Mehmet Simsek said on Sunday.

The bonds could attract as much as 300 billion Turkish Liras worth of gold, which converts to about US$85.9 billion.

“The first issuance of gold bonds and the gold-based rent certificates will begin between Oct. 2 and 6 in an attempt to benefit the economy with the under-the-mattress gold of citizens, which is estimated to be almost 2,200 tons in total,” Hurriyet Daily News quoted Simsek as saying.

The next day Simsek clarified that the decision to issue gold bonds has nothing to do with the Turkish Treasury’s need for money, but instead is driven by the government’s attempts to bring “under-the-mattress” savings into the economy.

“The Treasury has no borrowing problem. We [want] the economy to run faster, to increase savings and solve resource problems as well as bring out the under-the-mattress savings into the economy,” he told Bloomberg. “We know very well that there is a gold stock in Turkey which stands at around 300 billion, according to some estimates, but this gold remains idle.”

Turkey’s state-run Ziraat Bank will be in charge of estimating market value of citizens’ gold and equating it to bonds, Simsek added, noting that assets will be returned once bonds’ due dates expire, increasing savings for individuals based on rising gold prices.

People will be given back gold bullion or quarter gold coins produced by the General Directorate of Mint, according to local media reports.

Simsek added that “rent certificates based on gold” will be similar to Sukuk bonds, which aim to attract investors who are against making profit from interest rates, as they are prohibited in the Islamic banking system.

“[Gold bonds and the gold-based rent certificates] will have positive effects on the economy in the long term. They will decrease our external dependence with regard to our source need, which is necessary in the growth of the economy,” Simsek noted. “Their investments are also going to turn into savings under the guarantee of the government.”

“Cryptocurrencies are not going away anytime soon and are part of gold’s problems,” said Mohamed El-Erian, former PIMCO head and chief economic advisor for Allianz, during CME Group’s annual precious metals dinner in New York Thursday.

“If you’re in gold, you’ve had a good year up about 15%, but not really as good as you should have had given the geopolitics,” he added.

The rise in popularity of cryptocurrencies like Bitcoin has recently held back gold’s gains as investors flocked to the new asset class during times of heightened tensions.

“It’s not a substitute for gold but doesn’t underestimate when a small loyal customer base falls in love with another asset class.”

“When there is something that is new, pay attention to it to understand it. Pay attention to what cryptocurrencies are doing to your ecosystem.”

However, the longtime investor is not bullish on bitcoin, recently speaking out on the virtual currency’s price.

“I would say at least half of what it is, a third of what it is,” he told CNBC on Monday when asked what it should be valued.

Bitcoin prices dropped almost 8% on Thursday, last trading at $3,374.90. Gold prices have seen some pressure, last trading around $1,329.40 an ounce.

El-Erian’s main message at the CME event was simple: once Bitcoin cools off, gold prices should benefit.

“When cryptocurrencies hit a pothole part of the reaction will be to go back to gold,” he said. “But until that happens, gold will be affected.”

By Sarah Benali

(Kitco News) – Even though geopolitical tensions could push gold to much higher levels, currently the precious metal remains overpriced, says one expert.

“Gold has the ability to test $1,400 by the year-end,” Barry Canham, CEO of INTL FCStone Commodities DMCC and global head of the Precious Metals division, told Kitco News in a phone interview last week.

The rally has pushed gold well above $1,300 in the last few weeks, with the new price levels looking quite sustainable at this point, Canham noted, explaining that once gold broke the key psychological level, it locked into some positive momentum.

“There is safe-haven demand in the market. Gold is performing really well. This rally doesn’t surprise me and it wouldn’t be a shock to see higher prices before year-end,” he said.

“Instability in the world could fuel prices higher — gold could see $1,500. A few underlying issues around gold could drive it there, with geopolitical tensions being the main area of concern.”

Yet, Canham is a believer that gold is currently overpriced by around $50 due to geopolitical tensions, which are propping the precious metal higher. “Gold trading around $1,275-$1,300 would be a fair price for the year. But, the last $50 dollars is really on the tensions side,” he said.

Canham also described the physical gold trading action this year as pretty “dull,” noting that it is what surprised him the most. “There hasn’t been as much interest as I have anticipated,” he stated.

“We are seeing more supply than demand this year. With gold price [above $1,330] there is not a lot of demand. I don’t think the gold price is being driven by demand, it’s being driven by safe-haven buying,” Canham explained. “One of the biggest buyers of gold is the jewelry industry, which often seasonal and is the most prominent in Asia. Occasionally you get a slowdown because people are price-sensitive. Asian buyers look at gold more as an investment that they can use down the line to pay for their house.”

Gold traders are only seeing such returns because of the weak U.S. dollar, he added.

Plus, the U.S. Federal Reserve is being perceived as less aggressive these days, with many market participants questioning the possibility of a December rate hike. Canham agreed, stating that the Fed has been toning down its rhetoric. “December hike might not be a possibility. Can’t see real need for another rate increase.”

Canham’s comments on INTL FCStone’s gold outlook come as the company reports impressive results from its unique online gold trading platform PMXecute+, which more than tripled the amount of gold traded since its last results in June.

“It’s an online physical premium-based gold trading platform that allows participates to fix the premiums on gold in various locations around the world,” he said.

Since its launch in February, the platform already saw 39 tons of gold traded, which represents more than $1.6 billion in value. The results are also three times more than the 10-ton figure revealed in June.

“It’s the world’s first platform that allows the professional bullion market to trade gold in various locations around the world,” Canham pointed out. “Clients can agree on delivery date and method of transport online.”

The key technological breakthrough of the platform is that it acts as a middleman, saving users lots of time and limiting odious paperwork.

“At the moment, for someone, for example, in Hong Kong to order gold from Switzerland could require as many as 25 phone calls between all the parties, including refineries, security companies, shipping agencies, etc. Then, you have to create manual invoices,” he noted. “The platform does it all through the system a lot quicker. Actual time is cut down to the minimum.”

With a fast-growing user base, the most active regions are currently Hong Kong, Thailand, and Singapore, according to INTL FCStone.

Canham added that future plans involve making the platform more accessible and attractive to smaller gold trading bar markets, which are currently more predominate in the U.S., Canada and a number of European countries.

(Kitco News) – Bitcoin is not a safe haven, gold is.

This was famed precious metals expert Jeff Christian’s main message to investors.

Instead, the managing director of CPM Group called the leading cryptocurrency the “ultimate fiat currency.”

“I don’t know anybody who believes that bitcoin is a safe-haven asset,” he said in an interview with BNN this week. “Bitcoin is no tangible asset, it is based on the full faith and credit of anonymous people who create it on the internet, some of whom may well be criminal.”

As North Korean missiles flew over Japan earlier in the week, both gold and bitcoin saw significant increases in demand. Gold prices managed to hit an 11-month high on safe-haven demand while bitcoin continued to trade at all-time highs. Gold was last seen at around $1,324.10 an ounce, while bitcoin traded at around $4,723.

However, to Christian, the cryptocurrency is no more than a speculative play and is no threat to gold’s safe-haven status.

“What we find with our gold investors around the world is that there are some people who will trade Bitcoin on a speculative basis, on an intraday basis, but they will go home neutral every night,” he noted. “They don’t see Bitcoin as a substitute for gold, they don’t see it as a tangible asset, they see it as a speculative play – kind of like going to the casino.”

Affirming his faith in the yellow metal, Christian said the “optimal portfolio” had up to 30% of its assets in gold, and the rest in stocks and bonds.

“We think gold will back off in the near-term, but in the next five years, we’re looking for record nominal annual gold prices,” he said. “We’re looking for gold prices on the nominal annual average basis to be north of $1,700/oz. by 2020 or 2021.”

By Sarah Abu-Shaaban