TEHRAN (Iran News) One of the key challenges in trade between Iran and Africa is the lack of regular shipping routes. Currently, Iran’s maritime transport to Africa is limited to East Africa, with ships mostly heading to Zanzibar and occasionally stopping at Mombasa in Kenya. Iranian shipping companies only operate along these routes when the cargo hold is full, which leads to irregular shipping schedules. Barahman explained that this lack of consistency hampers Iranian traders, as they are unable to fulfill export commitments and risk damaging their reputations.

Barahman also criticized the Iranian Maritime Shipping Company (IRISL) for refusing to dispatch ships unless they are fully loaded, arguing that such a policy is counterproductive. He pointed out that, in contrast, countries like Turkey and China have implemented more strategic solutions to maintain a steady flow of trade. He suggested that consistent maritime shipments would not only improve trade but also help Iranian companies meet their export targets more effectively. However, the current instability in Iran’s shipping regulations, such as sudden export bans, has discouraged private shipping companies from taking on Iranian cargo, further exacerbating the problem.

In terms of overall trade volume, Barahman noted that Iran’s non-oil exports amount to about $50 billion annually, while the country’s potential export capacity stands at $350 billion. This suggests that Iran is only utilizing one-seventh of its export potential.

Discussing trade with Africa, Barahman revealed that in the past year, trade between Iran and the continent amounted to approximately $1.3 billion, with $1 billion worth of Iranian exports and $300 million in imports from Africa. He emphasized the growing economic potential of African nations, especially Ethiopia, which has seen rapid growth. Ethiopia, with a population of 125 million, offers significant opportunities for Iranian businesses. South Africa also stands out as a strong partner for Iranian exports, particularly in sectors such as technology and telecommunications. It is noteworthy that South Africa holds a 50% stake in the Iranian mobile network operator, Irancell.

Despite Africa’s status as the world’s least developed continent, Barahman pointed out that its economic growth rate outpaces the global average. Africa’s trade with the rest of the world amounted to $500 billion in the first half of the current year, with China accounting for $143 billion of that total. This indicates the continent’s increasing integration into the global economy, offering promising opportunities for Iranian businesses.

Barahman also addressed the issue of air transport, noting that there are no direct flights between Iran and Africa. Although there were initial agreements with South Africa and Nigeria to establish direct flights, no concrete steps have been taken. He emphasized that Iran lacks a unified roadmap for its trade with Africa. Despite efforts from various government agencies, such as the Ministry of Foreign Affairs, the Trade Promotion Organization, and the Chamber of Commerce, there is no coordinated strategy, leading to fragmented efforts and missed opportunities.

Reflecting on the trade potential, Barahman emphasized that African markets hold strong demand for a wide range of Iranian products, from plastic goods and imitation jewelry to home appliances, carpets, pharmaceuticals, and agricultural machinery. In return, Iran imports minerals from Africa, including phosphate, bauxite, manganese ore, cocoa, coffee, and tea. With 15 oil-producing countries, Africa also offers significant energy resources for Iran. “Gold ”

In a final note, Barahman disclosed that last year, Iran imported approximately 30 tons of gold from Africa, underlining the ongoing importance of the African market for Iranian trade.

The challenges of trade with Africa remain significant, but with more strategic planning and collaboration, there is substantial potential for growth in economic ties between the two regions.

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“Ray Dalio on ‘shocking’ tax changes: Could see new ‘prohibitions’ against gold, bitcoin”

“Because I believe that we are in the late stage of this Big Debt Cycle … I believe cash is and will continue to be trash (i.e., have returns that are significantly negative relative to inflation) so it pays to a) borrow cash rather than to hold it as an asset and b) buy higher-returning, non-debt investment assets,” Dalio wrote in a LinkedIn post.

Tax changes will play a massive role in dealing with the debt problem going forward, he elaborated. And more importantly, there might be restrictions in terms of where investors could move their capital.

“Policymakers who are short of money will raise taxes and won’t like these capital movements out of debt assets and into other store holds of wealth assets and other tax domains so they could very well impose prohibitions against capital movements to other assets (e.g., gold, Bitcoin, etc.) and other locations. These tax changes could be more shocking than expected,” the founder of the world’s biggest hedge fund said.

Dalio’s analysis is based on how things have worked in the past and what is happening with debt now.

“I am confident that tax changes will also play an important role in driving capital flows to different investment assets and different locations, and those movements will influence market movements,” he said.

As an example, Dalio reminded investors that during the 1930-45 period, the Fed was able to control yields by “outlawing gold and the movement of capital elsewhere.”

He continued: “While I want to be short bonds (because they have the most terrible fundamentals), I do know that central bankers can keep cash more terrible, and I do know that they might have to prevent the movement to other store holds of wealth assets and other countries … History and logic show that central banks when faced with the supply/demand imbalance situation that would lead interest rates to rise to more than is desirable in light of economic circumstances, will print the money to buy bonds and create ‘yield curve controls’ to put a cap on bond yields and will devalue cash.”

When talking about tax changes, Dalio also alluded to Elizabeth Warren’s proposed wealth tax, saying that its unprecedented size would trigger capital outflows to evade higher taxes.

“The United States could become perceived as a place that is inhospitable to capitalism and capitalists. Though this specific wealth tax bill is unlikely to pass this year, the chances of a sizable wealth tax bill passing over the next few years are significant. Conflicts can increase in such difficult times when accompanied by large wealth, values, and political gaps, and the environment can become inhospitable to capitalists leading them to run from less hospitable places to more hospitable places,” he explained.

This is the new investing paradigm Dalio is talking about, and for him, the solution is “a well-diversified portfolio of non-debt and non-dollar assets along with a short cash position is preferable to a traditional stock/bond mix that is heavily skewed to U.S. dollars.”

He also sees Asian emerging countries’ markets outperforming developed reserve currency countries.

“The economics of investing in bonds (and most financial assets) has become stupid,” he pointed out. “Rather than get paid less than inflation, why not instead buy stuff — any stuff — that will equal inflation or better?”

The COVID-19 pandemic and all the fiscal and monetary policy stimulus that followed created a lot of debt as well as classical signs of bubbles across many assets, Dalio added.

“These circumstances created a lot of government debt—i.e., because there wasn’t enough free-market buying of this debt, central banks had to buy it and had to print a lot of money to buy it with—so much so that they drove rates down to ‘artificially’ low levels, which ‘artificially’ supported financial asset prices,” he wrote. “Now, there’s just so much money injected into the markets and the economy that the markets are like a casino with people playing with funny money … You have stocks that have gone up, and you have classic bubble dynamics in so many different assets.”

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Spot gold rose 0.1% to $1,854.95 per ounce by 0329 GMT, recovering from a 0.9% decline in the previous session. U.S. gold futures eased 0.1% to $1,854.30.

President Joe Biden’s administration tried to head off Republican concerns that his $1.9 trillion pandemic relief proposal was too expensive on a Sunday call.

“We’re seeing bigger question marks over the passage of Biden’s stimulus package, Senate Republicans are starting to stand a bit more objectionable with particular parts of the package,” said Lachlan Shaw, National Australia Bank’s head of commodity research.

“So it does raise the question about the speed and the timing of the package. (Although,) some of the issues of the vaccine delays in the U.S. are perhaps tilting the balance in odds of favor of that stimulus,” Shaw added.

The dollar was down 0.1% against rival currencies, making gold cheaper for holders of other units.

Gold is considered a hedge against inflation, likely from the widespread stimulus. Also supporting the precious metal, global coronavirus cases rose to more than 98 million as countries struggled to increase the pace of vaccinations.

Investors now await the U.S. Federal Reserve’s policy meeting due on Jan. 26-27.

“The Fed is likely to take the conservative course and wait for additional data and assume fragility, given the short-run effects of tackling COVID in the U.S. more aggressively could weaken sales and domestic economic activity,” said Nicholas Frappell, global general manager at ABC Bullion.

“The longer-term outlook and technical support remain bullish so above $1,840, look for moves back to $1,870-$1,880.”

Silver gained 0.7% to $25.58 an ounce, platinum rose 0.1% to $1,099.61, and palladium added 0.1% to $2,354.47.

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One of the reasons why November was such a difficult month for gold was a clear loss of interest in the precious metal, especially when it came to ETFs, which saw a hefty reverse in inflows.

“Heavy redemptions have replaced the strong inflows, cumulating in the heavy outflow of about 4 million ounces of gold from the ETF tonnage across November. This drying up of gold ETF demand was seen as a key reason for gold price weakness across November,” UOB head of markets strategy, Heng Koon How, and markets strategist, Quek Ser Leang, wrote in a report on Monday.

“Bitcoin is challenging gold: Gold price outlook is ‘no longer overwhelmingly bullish,’ says UOB”

Gold ETFs witnessed an impressive rise in demand this year, which seems to have peaked in October, the strategists said.

“The COVID-19 pandemic … boosted the safe-haven demand for gold … From just a minuscule 4% of total demand in 4Q19, gold ETF demand jumped to as high as 55% of total demand by 2Q20,” they said. “Unfortunately, total gold ETF tonnage appears to have topped out just above 110 million ounces by late October this year.”

A possible explanation behind this drop in ETF demand could be bitcoin’s record-high rally, which intensified last month with the cryptocurrency hitting a new record high of $19,850 on November 30.

“There is an increasing challenge from bitcoin as the ‘new digital gold’,” the strategists pointed out. “From its low of around the USD 10,000 level in early Sep, Bitcoin double in value to just under USD 20,000 by late Nov.”

Wider acceptance and a surge in demand from investment managers have been driving the recent rally in the cryptocurrency.

“As Bitcoin rallied from strength to strength, various commentators have started to declare that Bitcoin is the “new digital gold” and suggested that investors switch their investments from gold to Bitcoin. We do not know for sure the precise amount of this allocation switch into Bitcoin, but this may well be one possible explanation for the contraction in gold’s ETF tonnage in recent weeks,” the strategists explained.

On top of the bitcoin distraction, central banks have put their gold buying on pause in the last few months, which UOB describes as a “disturbing development” that could be impacting the overall sentiment.

“From a net purchase of 120 and 111 tons each across 1Q20 and 2Q20 respectively, global central banks net purchase of gold flipped into an unexpected net sale of 12 tons in 3Q20,” the report said. “This may well be due to the higher gold price over the past few years. Besides, with the broad USD weakness, central banks, particularly from EM and Asia, may well revert to more USD allocation to limit the extent of appreciation of their respective domestic currencies.”

“Bitcoin is challenging gold: Gold price outlook is ‘no longer overwhelmingly bullish,’ says UOB”

Longer-term, however, UOB projects to see a resumption in buying as central banks need to periodically allocate some reserves into gold for diversification.

In light of all of this, UOB has lowered its 2021 price outlook for gold to just $2,000 by the end of next year. Earlier, the bank projected to see $2,200 gold by the second quarter of 2021.

“Our updated gold forecasts are now USD 1,850 / oz for 1Q21, USD 1,900 / oz for 2Q21, USD 1,950 / oz for 3Q21 and USD 2,000 / oz for 4Q21,” the bank said.

However, UOB still describes its outlook as a positive one in the medium term but does admit that it is “no longer overwhelmingly bullish.”

The macro drivers are still supportive of higher gold prices, which include loose monetary policies around the world.

“The U.S. Federal Reserve and other leading global central banks continue their ultra-easy monetary policy, aggressive quantitative easing, and unprecedented expansion of their balance sheets. This is a very important positive medium-term driver for gold and it will not go away anytime soon,” the strategists reminded their clients.

“Bitcoin is challenging gold: Gold price outlook is ‘no longer overwhelmingly bullish,’ says UOB”

From a technical perspective, a steeper drop to $1,670 support seems to be ruled out for now as gold prices managed to rebound back $1,860 an ounce on Monday. But, it is still uncertain whether or not gold can hold here. At the time of writing, February Comex gold futures were trading at $1,866, up 1.41% on the day.

“Odds for a deeper decline towards the long-term support at $1,670 have diminished, but it is too soon to expect a major reversal,” the report noted. “On a shorter-term note, $1,720 can be viewed as a strong support level. Overall, while we maintain our positive medium-term outlook for gold, we need to take note of near term challenges as well as the weaker technical outlook.”

On the way to $2,000, gold will encounter several key resistance levels, including $1,899, $1,930, and $1,965, the strategists added.

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“Gold Weekly Price Forecast – Gold Markets Have Tough Week”

Furthermore, if we get some type of big move against the US dollar, that could have gold turning around as well. With that being the case, I think that a simple amount of patience may be what it is that this market calls for. After all, central banks around the world will continue to throw liquidity at the markets, so I do think it is only a matter of time before gold comes back into play. I have no interest in shorting the market, we are clearly in a major uptrend and there is no point in trying to fight that. As the US Dollar Index is struggling at the 92 levels to find support, it is possible that we can see some type of bigger move, so keep that in the back of your mind as well.

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Gold is viewed by many as the archetypal haven asset, inevitably driven higher in times of turmoil. By that logic, a beginning of the end of the crisis would signal a turning point for the rally. But the precious metal also serves as a hedge against inflation. And with the massive amounts of money being poured into the global economy this year, any signs of rising consumer prices could send investors diving back to bullion.

For most of 2020, conditions could hardly have been better for gold, as the deluge of money printing, weaker dollar and global uncertainty spurred demand, driving up prices. Tumbling real U.S. Treasury rates sparked steeper gains in July and August, eventually sending spot gold to a record above $2,075 an ounce.

While prices have fallen a bit since then, investors continued their rush into exchange traded funds, which at their peak in October had sucked in nearly 900 tons of metal this year, more than double the final inflow in 2019.

In a matter of weeks, everything changed.

Gold suffered its second-biggest drop in seven years on the day that Pfizer Inc. announced early results showing its vaccine was 90% effective. Political wrangling in the U.S. is raising doubts about future stimulus. ETFs, which were so crucial to this year’s rally, have seen outflows for at least six straight days, while hedge funds bullish bullion bets were near the lowest level in 17 months in the week to Nov. 17.

“The strongly positive vaccine news augurs the real prospect of a return to normality perhaps by spring,” said Tai Wong, head of metal derivatives trading at BMO Capital Markets. While low rates and the potential for more government support will help boost bullion over time, “the velocity of gold’s rise has likely been tempered in the short term,” he said.

So can the bull market stay alive?

The inflation question will be key to any outlook now, and it’s not the first time. Gold surged to its former record in 2011, just after the financial crisis when central banks began widespread quantitative easing, sparking fears of Weimar Germany-style hyperinflation. However, bulls were ultimately disappointed then, as inflation was kept in check.

This time could be different, according to Oliver Harvey, a macro strategist at Deutsche Bank AG.

“When we come out of Covid there is a huge amount of liquidity. Saving rates have gone through the roof because people have been stuck at home, still earning money,” he said. “If inflation ticks up to 3% to 3.5% in the developed world, a lot of people will notice.”

Bulls point to a weaker dollar, which almost always helps bullion, and central bank action to boost the economic recovery that should also be supportive.

“Risks to gold prices remain skewed to the upside given expectations of loose monetary policy, with real rates remaining low or negative globally,” said Suki Cooper, a precious metals analyst at Standard Chartered Plc. She also sees elevated government debt stoking inflation expectations.

Also in gold’s favor: while prices plunged on the first Pfizer news, subsequent announcements haven’t provoked the same sharp reaction and the metal closed little changed after Moderna Inc.’s news on Nov. 16.

Still, the bears’ camp is undoubtedly growing. Macquarie Group Ltd. this week declared the “end of the cyclical bull market” and said prices have probably peaked.

The bank pointed to the increased likelihood of a vaccine being introduced in the coming months, as well as its outlook for higher 10-year Treasury yields, which hit the highest since March on the first Pfizer announcement.

The prospect of a vaccine rollout may also lower the potential for future government stimulus, especially while control of the Senate remains pending.

“It’s unlikely now with a split Senate that this serious level of fiscal spending goes on,” said Darius Tabatabai, head of trading at Arion Investment Management.

Gold may also suffer as investors put money into other asset classes that stand to benefit from the recovering economy. And even in a scenario where the dollar keeps weakening or inflation picks up, gold may be at risk of losing out to Bitcoin as investors’ hedge of choice.

As the virus is brought under control and confidence returns, money managers will probably rotate toward risk and value, which means “gold’s bull run comes to an end and likely goes into reverse,” said Rhona O’Connell, head of market analysis for EMEA and Asia at StoneX Group Inc.

“But the to-ing and fro-ing over the past fortnight is a fair reflection of the fact that this is a vaccine, not a cure, and there is a long way to go before we are out of the woods.”

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Gold remains short with silver and still look weak. We have been short for an extended period. We look for a breakout to the downside with some acceleration. The key here comes at the end of the month, both gold and silver could have key reversal patterns to the downside which could extend the selling.

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