All four precious metals outperform marketsin August

Gold posts best month since January, up nearly 4%

Gold reaches highest price since US election, climbs due to uncertainty and safe haven demand

S&P 500 marginally higher; Euro Stoxx, Nikkei lower for month

Platinum is best performing metal climbing over 5%

Palladium climbs over 4% thanks to seven year supply squeeze

Fear, uncertainty and political sanctions are amongst biggest drivers for precious metals

Never been a better time to diversify and rebalance portfolios with stocks and bonds near record highs and looking vulnerable

Editor: Mark O’Byrne

Market Performance in August (Finviz.com)

All four precious metals have made gains in the month of August.

Whilst platinum and palladium’s leading performances can largely be attributed to industrial factors they have also benefited from the safe haven demand whichis driving gold and silver prices.

Safe haven demand really came into its own this last month. Issues with North Korea have stepped up a level whilst markets have finally begun to questionthe complacency they have been feeling in regard to the US political and financial situation, geopolitical risk and the increasingly uncertain outlook for the global economy.

Ultimately very little is known about what will happen with the US debt ceiling, increasingly overvalued stocks (both the NASDAQ and the S&P500), Trump’s plans for corporate tax, dealings with North Korea and (not forgetting) Venezuela.

We are living in very uncertain times indeedand investors decided to allocate funds to the ultimate safe havens the precious metals.

Gold shines as investors rush into safe havens

This week gold rose to its highest point so far in 2017as tensions between North Korea (but really, the rest of the world)and the US ramped up. For the month of August the price is up 3.59%.

Silver was also up thanks to safe haven demand, but its 5% climb was also in part due to manufacturing demand. Currently, about 55% of all silver consumed is for industrial use.

Gold has so far risen in every month, bar June.

Gold’s climb has in part been due to ongoing demand from countries such as China and India, but it has primarily been driven by the desire in the West to own a safe haven.This is not surprising given the ongoing concerns regarding North Korea, Venezuela, the Middle East and a lack of cohesion in the Trump administration.

One of the dampeners on gold and silver has been the Federal Reserve’s plans to raise interest rates. However, when they did so it had little effect. Expectations for further hikes are falling. Going forward Yellen and teamare expected to slow down onfurther interest-rate increases which has provided an additional boost for the gold price.

In the very short-term storm Harvey in Houston, Texas has also impacted the price of gold and silver. As a result of lost income and recovery operations, US GDP is expected to be lower in the third-quarter than was initially expected.

In the long-term investors will look to gold and silver as they begin to price risk into the market. Yesterday we expressed our concerns over market complacency whilst other financial organisations havebegun to warn clients about the overpriced equity markets and lack of perceived risk.

It is also worth noting an expected climb in demand from China.Mark Tinker, Head of AXA Framlingtonwrote in a note that China’s pricing of assets in yuan (together withthe plan by the Hong Kong Stock Exchange to sell yuan-priced physical gold contracts) couldallow them to trade out of the banking system in the US

Having accepted payment for oil or gas in RMB, the seller, be it Russia or Saudi Arabia or anyone else for that matter, does not have to worry about having excess RMB, they can simply trade it back into gold, Tinker said. We are moving to a multi-polar world.

Platinum gains as Russia feels the pain

Platinum has performed very well so far in the second half of the year. This most recent surge has likely come about thanks to further sanctions being placed on Russia by the US. Russia is the world’s second biggest producer of the metal.<