 Hello everybody. First of all, I want to welcome you all to this webinar. Well, this is going to be my first webinar at TIKMEL. So I will take a moment to introduce myself. My name is Rabia Al-Jamal, a CFA level 3 holder since 2010. And my profession is in financial markets. As a university instructor, I work at many financial institutions as a market analyst. And when it comes to technical analysis, my favorable tool is the Elliott Waves model. So today is the 7th of March 2019, and today's webinar is about gold. Where the yellow metal is headed in 2019? Well, this is an interesting topic to discuss together, taking into consideration that this webinar is for education purposes only. So this webinar is divided into two parts. In part one, I will go through the fundamental view of the yellow metal. And then I will speak about the effect of the federal debt on gold prices. And of course, I will go through the Fed fund rate relative to gold prices. And by the end of part one, I will discuss if the yellow metal will act as a safe haven in the next financial crisis or in the coming financial crisis. So this is regarding part one. As for part two, I will define the gold technically using the Elliott Waves model. So let's start with the first part of this webinar. But first, let me explain why I choose to go into fundamentals in this webinar. Well, ladies and gents, the fundamentals analysis is important in the world of gold to examine the surrounding environment in order to determine the factors that might affect or that might have an impact on prices in the long term. Factors like what? Factors like the overall state of the economy, the interest rates level, the general sentiment of the market, the geopolitical tensions. So it is totally the opposite of technical analysis which focus mainly on historical prices to predict future movement. But of course, in part two of this webinar, I will speak deeply about gold technically. So fundamentals are mandatory and important, especially when a trader or investor want to buy or sell a specific asset for, let's say for the long run. For example, if an investor is looking to buy a company stock, then in this case, the fundamental analysis to look at are the company's financial statements. For example, the company's beta, which measures the company's risk relative to the market risk in order to estimate if the stock price is overvalued or undervalued. So the outlook of gold fundamental analysis has three categories. One, the fear. There is an English proverb that says when we have gold, we are in fear. When we have none, we are in danger. Anyway, the fear is when it comes to geopolitical tensions, threat of wars, the possibility of default on sovereign debt, instability in the financial markets is the Federal Reserve, for example, lately lowered its expectations for the US economic growth and it lowers its expectations for the US economic growth amid the signs of global slowdown. And the same goes for the Bank of England and Bank of China, lately, having tough battles trying to boost growth. We can see lately the big divergence between central banks' monetary policies around the world as it is obvious how the Fed is raising interest rates while the ECB is maintaining a zero rate policy for an extended period of time while the Bank of England is expected to start raising interest rates when they leave the Euro in order to avoid cash outflows. So in addition to this, we have the trade tensions between USA and China, which has eased lately but I do believe, I too totally believe that there will be some obstacles regarding this trade deal in the future which can continue to escalate and begin to spill over into global economic data and with all these uncertainties that fall under the fear category and in such a case, market participants will tend to move their money to safe haven assets like gold and this movement of money into gold would increase the demand for the shiny metal, which in turn increase gold prices. So the outlook created by the fundamental analysis of the gold market remains strong when it comes to fear. Now I will move to the second point which is the yield. The yield has a very important role in the value of gold because gold is a non-yielding asset. Gold is not or gold does not pay a dividend like it is the case when you along a particular stock for example and it does not have a coupon rate as it is the case when you buy a bond in the bond market and certainly it does not pay interest as it is the case when it comes to a particular currency. So gold compete in a very low yield environment because traders aren't facing a large opportunity cost by putting their money in gold instead of yielding assets like government bonds or a dividend paying stock. So when it comes to low yields, market participants becomes bullish on the yellow metal. Just have a look, if you want guys, just have a look at the 10 year government bonds for example 10 year German government bonds have dropped to a level that is never seen before. So if we take the continued slow growth and low yields in the developed world this suggests that global growth will continue to be led by emerging markets and this could lead to a weaker US dollar in the long run due to investment outflows from the developed countries or the developed world seeking higher returns in emerging markets therefore a higher gold price. One more important point to speak about regarding the yields, let's go back in time to the 70s the negative yields at that time where the reason why gold did perform well while in the 80s and 90s were periods of relatively high, very high yields so despite this higher inflation rate at that time and gold performed poorly so if we take the continued slow growth and low yields in the developed world then in this case gold will benefit and the outlook for gold prices when it comes to yields is bullish. So now let's move to the third point in this webinar, the supply and demand well I'm not going to go into deep details regarding supplies and demand but obviously the demand for gold is driven by both consumers and consumers especially from India and China and by traders who play a very important role in gold demands when they buy exchange traded funds like the SPDR, the Spider Gold Trust because this fund itself holds physical gold in proportion to the amount of assets the funds has under management in addition to the latest report coming out from Barrick's Bank sorry Barrick's Gold Corporation which is one of the largest gold companies in the world the report said that the demand for gold is increasing and it is expected to continue and I guess you all know that Russia and China have increased lately their gold reserves to record high so this shows that the demand for gold is on the rise so how about the supply now well it is well known that gold supply is constrained by the fact that it is rare to find an expensive to mine which gives us more confidence for a positive outlook regarding the yellow metal okay so now let's move to the second point in the first part of this webinar will the USA federal debt affect the price of gold okay this is a table that I have done on an excel sheet on the left side shaded in red it shows the SA debt since 1992 until 2018 and it shows how much the SA debt it shows how much the SA debt have increased year over year in dollar terms and in percentage terms and on the right side of this table it is shaded in yellow and it shows the average gold price since 1992 until 2018 and it shows how much the yellow metal have appreciated or depreciated in dollar terms and in percentage terms let me explain what is in this table in 1992 the SA debt was almost four trillion dollars and in 1994 it jumped to almost five trillion dollars or in fact four trillion sixty nine four trillion sixty nine billion dollars therefore the SA debt increased by almost sixty three billion dollars over two years period which is a fifteen point fifty two percent increase as for the gold the average price was three forty three dollars per ounce in 1992 and in 1994 it jumped to three eighty four dollars per ounce in 1994 therefore the yellow metal has appreciated forty point eighteen dollars per ounce over the two years period and that is in eleven point sixty nine percent increase well now I have explained this excel sheet table with the data on it so it's obvious and well known that the SA debt and the gold price have always always been positively correlated so when the USA debt goes up so it does the yellow metal as this graph shows on the right side of this page but since 2011 we have seen a divergence from the positive correlation that we have witnessed since decades as gold prices fell to one thousand three hundred dollars per ounce after hitting nineteen twenty dollars per ounce in September 2011 as for the US debt it kept rising and I personally believe that this divergence that occurred that have occurred in 2013 happened when the Fed planned the third quantitative easing program in September 2012 so the world started to drop gold and buy companies stocks so the strong correlation between the rising US debt and gold broke down in that time so currently the US debt is over twenty two trillion dollars I believe that the trade war I personally believe that the trade war that President Trump has started with China and Europe is just a way to close the fiscal deficit since the USA is in really big troubles and at the end of the day they have to pay back this debt or to keep interest rates high so their treasury securities and treasury bonds stay attractive to investor and keeping interest rates high would cause a big damage to US corporations since they have to borrow at a higher interest rates and refinancing at even a higher interest rate or at a higher rate as well so due to this historical positive correlation between gold prices and USA debt and regardless if the USA is going to pay the debt or it is unlikely to pay it since creditors still have confidence in the US economy and the US dollar is still and remains the reserve currency in the world and regardless if the Congress is going to increase the debt ceiling to a new level I believe that gold price is undervalued since 2013 and the USA federal debt will always be a support for gold prices in the long run even if interest rate remains high since with all the rates high still the yellow metal failed to break the law of year 2015 when the gold made a bottom at $10.40 per ounce so by the way what caught my attention in this table is that gold dropped 24% in year 1997 and 1998 and this drop was followed by a huge increase in gold prices and the same scenario happened again in year 2013 and 2014 where gold prices also dropped 24% so the question is will the yellow metal witness a similar scenario as it happened almost 21 years ago well it's about time now I will move to the effect of the Fed fund rates on gold prices okay for now at the beginning of this webinar I explained the fundamental view of the yellow metal I did explain what drives the yellow metal I did speak about the fear the yields and supply versus demand I did explain the effect of the SA debt on gold prices which fall under the fear category and now I will explain the effect of the Fed fund rates on gold prices which falls under the yields category okay it is widely believed that high interest rate is bearish for gold and low interest rates are bullish for gold but in fact there is no any correlation between interest rates and the price of gold many traders around the world many traders and many investors in fact 90% of market participants believe that when the Fed high crates the price of gold is going to fall and vice versa but historically speaking that never happened well let's go back to the 70s when interest rates were at the highest level during that time the price of gold was surging and surging and surging okay let's blame it on the geopolitical tension in that time since the Soviet Union were invading Afghanistan okay I agree with it in addition to the revolution in Iran so let's move forward to 1980 then when interest rates were at 15% and over the same period of time the price of gold surged to almost $800 per ounce anyway let's forget about the past and let's have a look at this chart in front of us this is a chart that shows the gold price relative to the Fed fund rate the blue line over here represents the Fed fund rates while the candles on this chart represent the gold price okay ladies and gentlemen as you can see on this chart the Fed fund rate were near 0% from 2009 until September 2012 and in that time the gold price made a record high at $20 per ounce then the yellow metal entered a bear market in 2013 until December 15 while interest rates were still at 0% in the same period of time so the interest rate height so the interest rate were at zero level and the gold was rising and falling regardless the level of interest rate the gold made a bottom on December 2015 at $10.45 per ounce and a month later the Fed fund rates is high for the first time since 2009 so after seven years the Fed did raise the interest rate by 0.25 basis point and the gold price did not fall instead we did see the price of gold surging and now the Fed fund rate is at 2.5% and the gold failed to break the December low so this proved that the Fed rates has nothing to do with gold prices so the theory that says high rates is bearish for gold and low rates is bullish for gold is useless the golden formula is that the low yields are bullish for gold and the high yields are bearish for gold as I said earlier so will the gold act as a safe haven asset in the next financial crisis? this is an important question to speak about and to explain at the moment if you expect gold to fly on everybody news or in every geopolitical event then you are misusing the word safe haven for example many traders and investors expected the yellow metal to jump high a few days ago after the failure of President Trump and the Korean leader Kim whatever after the failure of President Trump and the Korean leader summit in Vietnam well this is not how safe havens react to such news a safe haven like gold should be uncorrelated or negatively correlated with equity in extreme periods so it is neither a safe haven nor a hedge therefore if you see the price of gold falling after some bad news coming out of the market this does not automatically imply that gold has lost its safe haven status so gold perform well in times of extreme turmoil but of course not at all times or over a long period of time so it provides shelter at the beginning of a severe crisis or turmoil and as long as the shelter is needed but not forever because bad news comes out of the market every second and every moment for example the price of gold let me give you an example when gold did act as a true safe haven the price of gold for example rose immediately after the September 11 attack but it didn't continue rising during the whole war on Afghanistan right so one more example the same scenario happened during the collapse of Lehman Brothers in 28 the gold did rise for three to four days but it won't rise forever so guys you should take into consideration that gold is not the only safe haven on earth as well because the US dollar has been shown to appreciate in periods of crisis and the same goes for the Swiss franc and the Japanese yen in addition to government bonds and treasuries so here comes the risk of the gold as a safe haven because the US dollar and US treasuries often outperform gold in risk of events and that is the only risk that I personally can see reducing the gold of shining during any coming financial crisis so yes the gold is still a safe haven and will always act as a safe haven as long as there are no alternatives just have a look at the stock indices worldwide it's obvious how stocks are at all time high while the gold is still maintaining December 2015 so guys here we are done with the first part of this webinar with a bullish fundamental review regarding gold now let's move to the second part where I will be analyzing the gold technically using the Elliott waves techniques and try to find out where the gold could be heading in 2019 in fact until the last economic quarter of 2019 well some of you might not be familiar with the waves principles and waves techniques so now I will show you the big figure and tell you where do I see the gold heading in the long run by the end of 2019 probably until the last economic quarter of 2019 until March 2020 but first why did I choose the Elliott waves technique to analyze the yellow metal in this webinar well because the Elliott waves technique is in art based on psychology and I believe that analyzing any specific financial instrument is psychological why psychological? well I will ask you a question who drives the market? those who drives the market are traders, investors, banks, hedge funds and so on so conclusion the market is driven by human and the human mood while trading turns from pessimism to optimism vice versa creating patterns on a specific chart and these patterns are identifiable in nature so let's move to the chart and have a look at the latest patterns obviously when it comes to the wave structures we should always have two counts primary counts and an alternative count so my primary count is that the gold ended five waves down from the top made in September 2011 at $19.20 per ounce to $10.45 per ounce in December 2015 so now we have a bottom in place at $10.45 per ounce where gold did rise nicely to $13.75 per ounce in July 2016 to complete wave A in red between two brackets and then the gold entered a consolidation phase in the form of A in red between one brackets B in red between one brackets and wave C in red between one brackets and wave D in red between one brackets in red color and now the gold is falling to complete wave E between one brackets in red color as well in order to finish the consolidation phase that started since July 2016 for the triangle pattern to be completed so now we are in leg E where the gold price is expected to find a bottom around $1,230 per ounce to $1,240 per ounce in order to complete wave B in red between two brackets which is going to be the last wave down before breaking higher outside the triangle for wave C up in red between two brackets around $15.20 per ounce by the end of 2015 so this is my first count this is my primary count my preferable counting scenario so five waves down from the top to $10.45 per ounce in December 2015 then we are in a corrective phase and it's clear that these movements are corrective here we are done with wave A in July 2016 then we have this triangle pattern wave A B C and D and now the gold is falling and will fall to around $1,240 per ounce to $1,230 per ounce to complete wave E then technically I believe that the gold would break higher to complete wave C around $15.20 per ounce by the end of 2019 the alternative count suggests that five waves from the top ended at $10.45 per ounce and we are in a consolidation phase in the form of a triangle with wave A then wave B then wave C then wave D wave E has finished around $13.46 per ounce two weeks ago and we are on the verge of a breakdown but I suggest that this count is not feasible for now I prefer the first count which says that the gold is falling for wave E down it will break higher to complete wave C up so in this case this fall from the top from the record high at $19.20 to the low of $10.45 is wave A is wave A between three brackets and this consolidation phase will bring gold higher to complete wave B between three brackets between three brackets because this is an intermediate wave before gold starts to fall again so my technically view for the yellow metal in 2019 is that this consolidation phase would end soon and a break up higher is expected in the coming month until March or February under the last quarter of 2019 to February of 2020 so that was the final part of this webinar I hope that you found this webinar interesting and I hope as well that by now you got a better outlook regarding the yellow metal thank you for attending this webinar thank you for attendance I'm looking forward to be with you again soon in a different webinar and a new topic thank you all and I'm ready now to take your questions so does anyone have a question regarding this webinar any question regarding gold price technically or fundamentally any question okay it seems that there are no questions thank you for attending this webinar hope to see you soon again in a new webinar and a new topic thank you all and bye bye