Tag: Economic scenarios

The gold price continues its upward journey, having broken the $3,500/ounce mark and now hovering around $3,300. What is happening? 

Over the past year, the price of gold has increased from approximately $2,300 to $3,300 per ounce, representing a 42% rise. This surge has broken through the psychological threshold of $3,500. Factors such as the pandemic and ongoing wars have created a volatile environment, prompting investors to seek safer options. But what exactly has led to this situation? And most importantly, is the bullish trend likely to continue?

Understanding gold prices: A premise that might help you

Understanding gold price movements requires an appreciation of the historical significance and characteristics that make this metal precious. Gold is a unique commodity that has been a part of human culture for thousands of years. The earliest evidence of its use as a medium of exchange dates back to ancient Egyptian and Sumerian civilisations, with the first gold coins minted as early as the eighth century BC. This lasting presence is due to its intrinsic physical properties, such as malleability, durability, divisibility, and rarity, which make it highly sought after. Additionally, with the rise of the electronics industry, gold’s capabilities in thermal and electrical conduction are increasingly being utilised.

Throughout history, gold has been consistently recognised as a reliable store of value, serving as a means to preserve wealth over time. Major events, such as the collapse of monarchies and empires, wars, pandemics, and financial crises, have led to significant changes in historical epochs and economic systems. However, these events have not diminished the collective perception of gold. Its association with security, stability, and wealth preservation is deeply embedded in the ordinary consciousness, which contributes to high investor confidence.

This combination of factors ensures that gold remains in high demand. However, this demand must contend with the limited supply available on our planet. As a result, the price of gold in the markets is determined by the balance of supply and demand.

Once we grasp how gold operates, we can analyse the factors influencing its market performance.

What is driving the gold price upwards?

As we have mentioned, the price of gold is influenced by the law of supply and demand, along with a complex set of underlying dynamics that involve numerous variables. However, we prefer to keep things simple. Essentially, the price of gold is directly proportional to the level of instability, whether perceived or real, in various situations, such as economic, geopolitical, or health-related issues. The greater the instability, the higher the demand for gold, which in turn increases its price. Conversely, when the situation is more stable, the price tends to be more consistent and less affected by sudden fluctuations in demand.

Remember the frantic rush at supermarkets when the lockdown was announced? In that moment of panic, people rushed to buy staples like pulses, which are considered essential survival foods due to their long shelf life, ease of storage, and nutritional value. In normal circumstances, how often do you keep borlotti beans stocked at home? Not very likely. Similarly, gold acts like legumes—it’s not something you consume, but rather the ultimate haven during times of significant stress. 

So, why has gold reached record highs this time around?

Pandemics, wars and inflation: the perfect storm

Since March 2024, the price of gold has surged from EUR 2,000 to EUR 3,300 per ounce—an impressive 63% increase—breaking through the psychological threshold of EUR 3,500. It’s remarkable to consider that just twenty years ago, the price of gold ranged between $400 and $500 per ounce. 

This trend is not surprising when we examine individual adverse macroeconomic events that correlate with gold’s price increases. For instance, during the 2008 financial crisis, the price of gold rose from $711 an ounce to $1,820 within three years. Similarly, from January 2020 to July 2020, the COVID-19 pandemic and associated lockdowns drove the price up by 30%. More recently, from February 2022 to the present, factors such as the Russian invasion of Ukraine, the escalation of the Israeli-Palestinian conflict, and the election of Donald Trump have contributed to a nearly 85% increase in gold prices.

Black clouds gather on the horizon: Covid-19 breaks out.

During the COVID-19 years, governments and central banks around the world implemented unprecedented expansionary fiscal measures to support their economies, businesses, and citizens. For instance, in Europe, the NextGenerationEU initiative amounts to EUR 806 billion, which is part of a larger EUR 2 trillion aid package. In the United States, the total fiscal stimulus approved during this period reached approximately USD 6.9 trillion. Throughout all of this, interest rates remained near zero. 

What happens when the amount of money in circulation increases so dramatically? The answer is that inflation rises. So, how do major investors typically respond to rising inflation? They tend to turn to gold to protect their capital from devaluation.

It’s starting to pour: Russia invades Ukraine.e

Despite various challenges, the economy began to recover, allowing central banks to finally address the issue of inflation. In 2022, the Federal Reserve started raising interest rates, followed by the European Central Bank and other central banks and financial institutions. However, at that time, Vladimir Putin decided to invade Ukraine, leading to a significant shock in the supply of energy and raw materials, particularly food. Russia is a major exporter of gas and oil, while Ukraine, often referred to as the “Granary of Europe,” is a vital supplier of grain. 

This situation led to​​ another spike in prices, further increasing the cost of living. Do you remember how much gasoline cost in the summer of 2022? It was around €2 per litre. Setting aside the discussion about energy-intensive businesses, the rise in road transport costs alone contributed to price increases across various sectors. We know that rising prices lead to a decrease in purchasing power, which in turn fuels inflation. And when inflation rises, a “gold rush” begins, reminiscent of Scrooge McDuck’s Klondike adventures.

Lightning and thunderbolts: the Middle East catches fire

The geopolitical situation is precarious; however, overall, economies are managing to hold up, partly due to the expansive policies implemented during the COVID-19 era. Yet, less than a year after the invasion, another front of conflict emerges: the Israeli-Palestinian conflict escalates once again, igniting tensions in the Middle East. Among the events that unfold, the Houthi terrorist group begins launching missiles in retaliation near the Bab-el-Mandeb Strait, a crucial maritime chokepoint between Yemen and the Horn of Africa that leads to the Suez Canal, through which approximately 15% of global maritime trade passes. Commercial cargo ships, the primary targets of Houthi attacks, are now compelled to avoid the Suez Canal and instead sail around Africa to reach Europe, resulting in an additional 10 to 15 days of travel time. This diversion has inevitably led to a widespread increase in prices. And when prices rise, inflation follows, prompting many to rush to check the gold price in hopes of purchasing a few ounces.

The storm is now perfect: Donald Trump announces customs duties 

Just when you thought the situation couldn’t get any worse, Donald Trump won the election. He decides to create panic in the world’s economic and financial institutions by mentioning one key term: tariffs and duties. In a highly globalised and interconnected market like that of the 21st century, if the leading economy imposes significant tariffs, suspended until Jul, the situation becomes quite serious. This not only increases the risk of inflation, as the barriers to entry drive up the final prices of imported goods, but also raises fears of a recession due to a substantial slowdown in economic activity.

Since April 9, the day Trump announced the tariffs, the price of gold has surpassed the psychological barrier of $3,500 an ounce, marking a 15% increase, before retracing and stabilising around $3,300.

Gold prices in the future: Will the trend continue?

A report by Goldman Sachs highlights an intriguing fact regarding central banks’ interest in gold. Since the freezing of the Russian central bank’s assets in 2022, following the invasion of Ukraine, the average monthly demand for gold has surged from 17 to 108 tonnes. Goldman Sachs predicts that by the end of 2025, the price of gold could reach between $3,650 and $3,950 per ounce, while JP Morgan estimates it may exceed $4,000 per ounce in 2026. In summary, many authoritative sources believe that the combination of pandemics, wars, and tariffs will continue to drive gold prices upward.

Now that you’re familiar with gold, its history, and its characteristics as an anti-inflation safe-haven asset, you might be interested in learning about ‘digital gold,’ which is Bitcoin. A good starting point is our article explaining how to protect yourself from inflation using Bitcoin. Don’t forget to subscribe below to stay updated!

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Donald Trump has announced tariffs on a large number of countries. How much are they, and how have they been calculated? Spoiler: bad

Donald Trump’s announcement of duties on Tuesday sent shockwaves through various groups: politicians, citizens, companies, and especially the markets. Specific points were particularly emphasised. One notable aspect is the range of countries targeted by the US president’s decision—nearly all countries, including an island in Australia home only to penguins, except Russia, Cuba, North Korea, and Belarus.

However, the most intriguing aspect of this sovereignist, anti-globalisation decision is how the duties were calculated. This article will explore this aspect in greater detail.

A wave of global tariffs

The Trump administration’s trade offensive includes additional tariffs on nearly all goods imported into the United States, varying rates based on the country of origin. Here are some key details from the tariff plan:

• Universal Basic Duty: A 10% tariff will be applied to all imports into the U.S.

“Worst Offenders”: Approximately 60 countries accused of unfair trade practices will face significantly higher tariffs starting April 9. These include:

•  China: 34% tariff, added to the existing 20%, for 54%.
•  Vietnam: 46% tariff.
•  Thailand: 36% tariff.
•  Japan: 24% tariff.
•  European Union countries: 20% tariff.

The following section will discuss how misleading this classification can be.

Automobile Tariffs: A special 25% tariff will be imposed on all foreign cars and their components, significantly impacting foreign car manufacturers.

President Trump did not hold back in his trade offensive; countries from Europe to China, Japan to Brazil, are all set to “pay the price.” This list includes microstates and remote territories, ranging from the Svalbard Islands in the Arctic Circle to the uninhabited Heard and McDonald Islands, home only to penguins.

“We have been robbed for more than 50 years, but that won’t happen again,” thundered Trump, asserting that jobs and factories will return to the U.S. thanks to the tariffs. He even invited foreign companies: ‘If you want zero tariffs, come produce in America.’ In summary, this is America First version 2.0, which this time criticises virtually anyone living beyond the borders, even penguins.

How are duties calculated? The confusion between duties and VAT

As you may have noticed from the quotes, Donald Trump’s narrative has consistently centred on reciprocal tariffs. The former president has referred to his tariffs as “reciprocal tariffs,” claiming that the United States will impose duties only equivalent to the tariffs other countries have on American products. On the surface, this reasoning seems almost reasonable; however, the calculation method used by the White House is flawed.

In practice, Washington classified any existing foreign levy to justify high tariffs, confusing value-added tax (VAT) with actual duties. For instance, regarding Europe, Donald Trump claimed, “The EU is charging us 39%!” However, this figure is derived from Europe’s actual duties on some American products (less than 3%) and the VAT. This consumption tax varies from country to country. This calculation also includes any environmental or technical regulatory taxes, leading to a misleading representation of the actual tariff burden.

In simpler terms, the U.S. administration interpreted every existing tax on European products as punitive tariffs against the U.S.. It used basic mathematical operations to calculate the duties we see today. 

No serious economist would equate the Added Tax (VAT), which all consumers pay, including Europeans, with a duty specifically targeting foreign goods. However, this is how it is perceived to work in the “alternative reality” of the Trump trade war.

Reverse engineering on the trade deficit

The second part of the creative process by which the Trump administration determined the duties to impose on other countries is quite intriguing. The primary focus here is the trade deficit. Trump has consistently viewed this deficit as a scorecard: if the US imports more from one country than it exports, he interprets it as ‘losing’ and believes the other country is cheating.

For instance, it is well known that the US has a trade deficit of around $2.5 billion with Russia (importing more from Moscow than it exports). Trump frequently highlighted this fact in the past to justify implementing punitive measures.

During his narrative, the president mistakenly conflated the trade deficit with subsidies and integrated it into the formula discussed earlier. The result? The duties announced by the Trump administration are simply derived from the trade deficit divided by the respective country’s total exports to the United States.

Let’s illustrate this with a practical example by calculating the duty applied to Indonesia. The United States has a trade deficit of $17 billion with Indonesia, while Indonesian exports to the US amount to $28 billion. 

Calculating it: 

17 / 28 = 0.64 → 64%, precisely the figure on Donald Trump’s chart.

This aligns with ​​the government’s Reciprocal Tariff Calculations page: you take the US trade deficit in goods with a specific country, divide it by the total imports of goods from that country, and then divide the result by two. A trade deficit occurs when a country imports more physical goods from other countries than it exports to them.

The possible impact of these decisions

We have already observed the impact of the tariffs imposed by Donald Trump, at least on the surface. During the first day following the announcement, the US stock market plummeted approximately 8% (S&P 500), while the NASDAQ dropped about 9% since the beginning of the week. 

On the other hand, Bitcoin has held up slightly better. Although it is currently down about 7%, it remains in a favourable position compared to last week. 

From a geopolitical perspective, the situation appears even more critical. It is difficult to understand the rationale behind the decisions made by the US president. Trump seems to be aiming to dismantle globalisation, which is the process that has gradually removed barriers to free trade and facilitated economic integration between countries.

There’s an interesting paradox: for many countries, selling goods abroad at higher prices has been a means to accelerate capital accumulation and move closer economically to wealthier nations. This is how China experienced rapid growth, and Europe has also benefited somewhat from this process. However, the real winner of globalisation has been the United States. Why is that?

The U.S. gained favour with half the world by defeating the Soviet system, which failed to provide both consumption and growth. The United States initiated this process by reducing tariffs and showcasing the strength of its market economy. Free trade allowed the U.S. to emerge as a cultural, technological, and economic superpower, contributing to the decline of both the Soviet Union and Maoist China. This approach has generated significant wealth.

Contrary to what Trump might suggest, global trade does not harm the United States today. Thanks to its technological advantages, the US has focused on sectors that yield high productivity and added value. The outcome is a wealthier nation that produces fewer low-cost goods (which it imports) while buying these products at a low price, thus maintaining a very high per capita income.

This success is primarily due to American dominance in the services sector. Consider how many digital services we use daily—such as social media, search engines, streaming platforms, and software—are designed, operated, and monetised in the United States.

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Check out NVIDIA’s quarterly data calendar and the most important companies in the stock market.

The quarterly data calendar for NVIDIA and other major stock market companies is vital for monitoring market trends. NVIDIA and all publicly listed companies must release quarterly reports every three months. These reports provide essential information about the company’s financial performance for the previous quarter, including revenues, profits, expenses, future forecasts, and more.

This article explains why these reports are essential, how they influence investors’ decisions, and provides an updated timetable for their release.

Quarterly reports: why should companies like NVIDIA publish them?

Before exploring the quarterly earnings calendar of NVIDIA and other major companies in the stock market, it is important to understand some key aspects of these reports. First, it’s essential to note that the publication of these documents is a regulatory requirement designed to ensure a certain level of transparency in the markets.

Quarterly reports are pivotal in enabling investors to evaluate a company’s performance. They help them determine whether the company is growing and generating profits and provide the necessary information to decide whether to buy or sell its shares.

These reports reflect a company’s financial health and serve as a tool for comparing it with competitors. For instance, NVIDIA’s results can be compared to those of other companies in the technology sector. Are NVIDIA’s profits, derived from its GPU production, sufficient to justify its market capitalisation? Are there emerging competitors that can produce at lower costs? The analysis of quarterly reports can partly provide answers to these questions.

How they influence the markets

Like many publicly traded companies, NVIDIA’s quarterly earnings significantly impact the markets. However, the effects are not always obvious and require experience and a thorough understanding to interpret correctly. The reality is more complex and not always linear, adding an element of intrigue to the market dynamics.

There is no precise formula for predicting how the market will react to quarterly earnings reports. Multiple factors influence reactions, with investor expectations playing a crucial role. The stock typically rises if a company’s results align with analysts’ forecasts or exceed them. Conversely, if results are positive but fall short of expectations, the stock may decline.

Another essential factor to consider is the macroeconomic environment. During market uncertainty or weakness periods, even a positive quarterly result may not receive the recognition it deserves. For instance, if the Federal Reserve raises interest rates at the upcoming Federal Open Market Committee (FOMC) meeting on January 29, favourable quarterly results might fail to have a positive impact. Conversely, in a bullish environment, the market may view even less impressive results positively.

Additionally, several other aspects are crucial in how the market reacts to quarterly results. The size of the company, its industry, its market share, and its overall reputation are all factors that can significantly influence market perception and reactions to its quarterly performance.

NVIDIA quarterlies and more: the complete calendar

2025 will be a crucial year for Big Tech and the market in general. Here is the updated calendar with the quarterly reports of the primary listed companies.

Wednesday, 15 January 2025

• JPMorgan Chase & Co. ($761 billion)
• Wells Fargo & Co. ($274 billion)
• Goldman Sachs Group, Inc. ($206 billion)
• BlackRock, Inc. ($152 billion)
• Citigroup Inc. ($153 billion)

Thursday, 16 January 2025

• Bank of America Corp. ($358.4 billion)
• Morgan Stanley ($220.15 billion)

Tuesday 21 January 2025

• Netflix, Inc. ($415.44 billion)

Monday 28 January 2025

• LVMH Moët Hennessy Louis Vuitton SE ($377.21 billion)
• T-Mobile US, Inc. ($274.5 billion)
• Alibaba Group Holding Limited (USD 174 billion)

Wednesday, 29 January 2025

• Meta Platforms, Inc. ($659.88 billion)
• Microsoft Corporation ($3.23 trillion)
• Tesla, Inc. ($397.15 billion)

Thursday 30 January 2025

• Apple Inc. ($3.46 trillion)
• Visa Inc. ($647.53 billion)
• Mastercard Incorporated (USD 489.65 billion)

Tuesday 4 February 2025

• Alphabet Incorporated, Google’s holding company ($1.91 trillion)

Thursday, 6 February 2025

• Amazon.com, Inc. ($2.48 trillion)

Wednesday, 26 February 2025

• NVIDIA Corporation ($2.9 trillion)

Over the past few days, it has become clear that 2025 will be a critical year for assessing artificial intelligence’s true impact. This topic is central to leading companies worldwide, including Meta, Microsoft, NVIDIA, and Alphabet. Stay tuned to our blog for the latest updates.

De-dollarisation refers to the gradual reduction in using the United States dollar as the primary currency in global trade and financial transactions. Since World War I, the dollar has reigned supreme, acting as the cornerstone of the global financial system.

However, the situation may be shifting with increasing globalisation and the rise of economies once deemed emerging but now crucial to global GDP. What does de-dollarisation truly mean, and how could it reshape the global economic landscape?

What is de-dollarisation?

Joyce Chang, chair of Global Research at J.P. Morgan, explains:

“The notion that the dollar is losing its status as a reserve currency has gained traction, particularly as the world has divided into trading blocs following Russia’s invasion of Ukraine and the growing strategic competition between the United States and China.”

In the US, the idea of devaluing the dollar to maintain economic competitiveness has even surfaced during electoral debates. But is the dollar truly losing its grip?

De-dollarisation describes the decreasing reliance on the US dollar in international transactions and reserves, a trend that could undermine its dominance over global financial markets. Currently, most international loans and investments are dollar-denominated, but this status is only guaranteed to last for a while.

The forces driving de-dollarisation

Two main factors threaten the dollar’s dominance: internal and external pressures.

1. Internal stability and US leadership
   The dollar’s status is closely tied to the United States’ economic, political, and military strength. Will the US maintain its position as the world’s leading superpower in the coming years? This is a question facing policymakers and the new US administration led by Donald Trump. Achieving this is far from certain, and any decline in US influence could erode confidence in the dollar.
2. The rise of the BRICS nations
   Externally, countries within the BRICS group—especially China, India, and Russia—actively seek alternatives to dollar reliance. For instance, China’s push to stabilise and internationalise the yuan could make it a viable competitor. Similarly, Russia has already shifted to using roubles, yuan, dirhams, and rupees for oil trade, reducing its dependency on the dollar.

The impact of de-dollarisation

Understanding de-dollarisation also involves assessing its potential consequences for the global economy, particularly for the United States.

• The shift in global power dynamics
  A diminished role for the dollar would irrevocably alter the balance of power among the world’s most influential nations. US financial assets, such as stocks and bonds, could experience slower growth, while yields on fixed-income assets like government bonds may rise due to declining demand.
• US exports and inflation
  A weaker dollar could make US exports more competitive globally, potentially boosting manufacturing. However, it may also discourage foreign investment in the US and contribute to higher inflation as import costs rise.
• Commodity markets
  This shift is already evident in the commodities market, where some nations are bypassing the dollar in favour of local currencies. Russia, for example, conducts oil trades in currencies such as the Chinese yuan, Emirati dirham, and Indian rupee.
• Increased demand for gold and scarce assets
  A move away from the dollar could drive up gold prices, as central banks may prefer gold as a reserve asset. Similarly, other scarce assets like Bitcoin could become increasingly attractive for preserving value.

Is de-dollarisation imminent?

While the United States has seen its share of global trade diminish, this does not necessarily mean de-dollarisation is inevitable.

The decline in the dollar’s share among central bank reserves, especially in emerging markets, is not yet significant enough to justify major concerns. Key factors such as bank deposits, sovereign wealth funds, and foreign investments continue to support the dollar’s dominance. Moreover, the dollar remains central to global finance due to its deep capital markets and robust financial transparency.

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