Daily Gold Market Report

The Rising Importance of Hard Assets:
Protecting Wealth with Physical Gold Amidst Monetary Expansion

(USAGOLD – 3/18/2024) Gold prices are slightly higher this morning. This week’s significant U.S. economic event is the Federal Reserve’s Open Market Committee (FOMC) meeting, which starts on Tuesday morning and concludes on Wednesday afternoon. It will be followed by a statement and a press conference led by Fed Chairman Jerome Powell. Gold is trading at $2157.57, up $1.67. Silver is trading at $25.28, up 10 cents. Despite the implementation of what is described as one of the most restrictive monetary policies in history, the monetary base is still increasing. The situation suggests that in the event of a recession, traditional monetary policy tools may not be as effective in managing economic downturns. Tavi Costa, of Crestcat Capital suggests that with the potential for traditional fiat currencies to lose value or become less reliable in such uncertain economic times, the ownership of hard assets like physical gold becomes crucial. This perspective underscores the importance of diversifying one’s investment portfolio with tangible assets that can withstand economic fluctuations, offering a measure of financial security.

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Daily Gold Market Report

Decentralized Blockchains vs. Permissioned Networks:
The Cybersecurity Debate in Asset Tokenization

(USAGOLD – 3/15/2024) Gold prices are lower this morning after manufacturing activity in the New York region collapsed this month. Gold is trading at $2160.16, down $2.03. Silver is trading at $25.15, up 33 cents. Regulators are moving towards allowing banks to tokenize financial assets on permissioned networks rather than decentralized, permissionless blockchains, raising concerns about cybersecurity vulnerabilities. The tokenization process involves creating digital representations of real-world assets on a blockchain, and while this trend is gaining momentum, the preference for permissioned networks could lead to significant risks. Permissioned networks, controlled by a few entities, are more susceptible to hacking compared to the robust security of decentralized blockchains, which are maintained by thousands of validators and have a strong track record of resisting cyber attacks. The push for tokenization on permissioned networks by regulators and financial institutions could potentially set the stage for unprecedented cybersecurity breaches in the financial system.

USAGOLD Comment: Owning physical offline assets (gold and silver) is essential for maintaining financial security and protecting one’s wealth from potential cyber threats and vulnerabilities in digital systems.

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Daily Gold Market Report

The Undervalued Potential of Silver:
Market Experts Foresee a Breakthrough Beyond $30

(USAGOLD – 3/14/2024) Gold prices dropped to their lowest levels of the session following weaker-than-expected retail sales data for February and a significant downward revision of January’s figures. Concurrently, the Producer Price Index (PPI), a measure of inflation, increased by 0.6% in February, surpassing expectations and marking a more substantial rise than the 0.3% increase seen in January. This data suggests that inflationary pressures remain persistent, particularly in the wholesale sector, where energy prices notably surged. Gold is trading at $2163.77, down $10.64. Silver is trading at $25.03, up 3 cents. Interest is growing in the silver market as analysts predict it could be the next to rally, following gold’s surge to record highs. Despite its higher volatility, silver traditionally outperforms gold in both bear and bull markets, but has seen hesitancy from investors during rallies. Currently, silver futures are trading at $25.25 an ounce, with the gold/silver ratio remaining above its historical average, suggesting silver is undervalued compared to gold. Experts like Carley Garner and Dennis Gartman discuss silver’s potential for growth, despite its current underperformance, attributing it to factors such as market dynamics and central bank demand for gold. The global economy’s health and an expected economic rebound in China are seen as key drivers for silver’s bull market, with predictions of prices breaking through $30 and potentially reaching $50 an ounce.

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Daily Gold Market Report

Market Reacts to CPI Surge:
Gold Retreats Amid Fed Rate Cut Speculation

(USAGOLD – 3/13/2024) Gold and silver prices are back higher on Wednesday. The marketplace has mostly digested Tuesday’s U.S. consumer price index for February it seems. Gold is trading at $2170.38, up $12.04. Silver is trading at $24.48, up 34 cents. Gold prices faced downward pressure following a U.S. inflation report that exceeded expectations, leading to doubts about an imminent Federal Reserve interest rate cut. The Consumer Price Index (CPI) rose by 0.4% in February, with an annual increase of 3.2%, surpassing the forecasted 3.1%. This data caused gold to drop over 1%, with spot gold falling to $2,153.05 per ounce. The market anticipates the next Fed meeting on March 20, with a focus on potential interest rate adjustments.

“If I’m them, I don’t want to cut too quickly. The worst thing they could end up doing is cutting, pausing and then changing direction back toward higher rates quickly. That would, in my opinion, be the most devastating course of action they could pursue.”
— Ken Griffin, founder and CEO, Citadel
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Daily Gold Market Report

Gold Glitters Amid Global Uncertainty:
Record Highs Despite Strong U.S. Economy

(USAGOLD – 3/12/2024) Gold and silver prices are lower and hitting fresh lows in early trading on Tuesday in response to a U.S. inflation report that slightly surpassed market forecasts, leading to some investors to take some profits. Gold is trading at $2160.08, down $22.67. Silver is trading at $24.03, down 44 cents. Despite a strong U.S. stock market and economy, gold prices have soared to a record high, trading at $2,195 per ounce on Friday, with significant gains both year-to-date and over the past 12 months. This rally is surprising given that gold typically spikes during economic crises, not periods of market strength. The surge in gold’s value is partly due to weaker economic growth and stock performance in non-U.S. markets, particularly in developed economies like Germany, Japan, and the United Kingdom. Chinese investors, facing a commercial real estate crisis, have shown “phenomenal” demand for gold as a hedge against economic instability. In the U.S., investors are turning to gold to bet against potential inflation, reposition portfolios after the stock surge, and protect against geopolitical instability, including conflicts involving Israel, Hamas, Russia, Ukraine, and uncertainties surrounding the U.S. presidential election.

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Daily Gold Market Report

From Historical Peaks to Future Projections:
The Evolution of U.S. Debt-to-GDP Ratio

(USAGOLD – 3/11/2024) Gold prices continue to march higher but are below Friday’s high around $2,195 per ounce. The charts for both gold and silver remain bullish to suggest still more price upside in the near term as we await February inflation data tomorrow. Gold is trading at $2183.72, up $4.77. Silver is trading at $24.48, up 17 cents. Daniel Wilson and Brigid Meisenbacherat from the Economic Research Department at the Federal Reserve Bank of San Francisco recently discussed the long-term fiscal outlook of the United States, highlighting the concern that the federal debt as a percentage of GDP is approaching its historical peak last seen at the end of World War II. After WWII, the debt-to-GDP ratio decreased significantly due to a primary surplus, rapid economic growth, and low interest rates. However, current projections for the next three decades suggest a persistent primary deficit, with the debt-to-GDP ratio potentially reaching 172% by 2054 without major policy reforms. The primary deficit is driven by mandatory spending on programs like Social Security and Medicare, coupled with an aging population. The outlook for reducing the debt ratio appears challenging, requiring either significant policy reforms, such as tax increases or spending cuts, or a scenario where economic growth outpaces interest rates.

USAGOLD Comment: The projected fiscal challenges underscore the importance of including tangible assets like gold in one’s investment strategy to safeguard against the unpredictable impacts of high debt levels and the accompanying economic policies.

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Daily Gold Market Report

Banking Sector Facing Mounting Risks:
FDIC Report Highlights Industry Trends

(USAGOLD – 3/8/2024) Gold prices to finish the week, are hovering slightly below session peaks around $2,185 per ounce following a weak jobs report. Gold is trading at $2170.89, up $11.18. Silver is trading at $24.28, down 5 cents. The FDIC’s Quarterly Banking Profile, released yesterday, revealed an increase in its “Problem Bank List” by eight banks to a total of 52, representing 1.1% of the institutions under its oversight and totaling $66.3 billion in assets. Noteworthy statistics from this report include a rise in the share of unprofitable institutions to 10.9%, the highest level since Q4 2017. Additionally, 70% of the quarterly profit decline was attributed to specific, non-recurring large bank expenses, such as a special assessment to recoup failed bank costs. US bank profits saw a significant drop of 44% in Q4 as major firms covered failed bank costs. Meanwhile, embattled lender NYCB secured a $1 billion investment to bolster its financial position. Real Estate RXR CEO Scott Rechler predicts hundreds of banks failing or being taken over by 2026, highlighting the potential risks and challenges facing the banking sector in the years ahead.

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Daily Gold Market Report

The Stealth Gold Rally:
Unpacking the Unseen Forces Driving Prices Higher

(USAGOLD – 3/7/2024) Gold prices are hovering slightly below session peaks around $2,164 per ounce following a weekly initial jobless claims report that met forecasts for American workers. Gold is trading at $2155.36, up $7.18. Silver is trading at $24.28, up 12 cents. Ross Norman’s (CEO of Metals Daily Ltd) article discusses the recent, unexpected rally in gold prices, suggesting that understanding the buyers and their motivations could reveal the rally’s sustainability. Unlike event-driven or speculative gains, which are often short-lived, this rally could be of a higher quality, driven by strong conviction among buyers. Despite declining interest in gold in the West, with significant drops in ETFs and physical demand, China’s robust demand seems to be compensating, driving gold prices up in a “stealth rally.” Norman speculates that the rally may not be solely due to expectations of a Fed rate cut or declining US treasury yields, as traditional market indicators like the gold/silver ratio and ETF demand don’t fully support these explanations. Instead, he suggests that official sector buying, particularly by central banks diversifying away from dollar assets in response to geopolitical tensions and financial sanctions, might be a key driver, though this remains speculative. The increase in gold prices, now reaching new highs, underscores the potential significance of these under-recognized factors.

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Daily Gold Market Report

Beyond the Numbers:
How Elections, Tariffs, and Geopolitical Tensions Shape Economic Forecasts

(USAGOLD – 3/6/2024) Gold prices continue to flirt with an all time high this morning. Gold is trading at $2142.94, up $14.90. Silver is trading at $23.99, up 32 cents. Michael Every of Rabobank recently wrote a article entitled “The End/Beginning of a Golden Age” that discusses the complex interplay of economic forecasts, political events, and global trade policies, focusing on recent comments from the Fed’s Bostic about potential rate cuts and their implications on inflation. He highlights the impact of the US election cycle, especially considering a potential Trump victory and its implications on trade tariffs and global economic dynamics. Every critiques economists’ tendencies to ignore political influences on economic outcomes, emphasizing the importance of understanding political, legal, and geopolitical factors in economic modeling and forecasts. The discussion also touches on global shifts such as China’s economic targets, BRICS’ financial strategies, and geopolitical tensions affecting economies worldwide.

“[A]s one golden age may be ending, geopolitical breakdowns are seeing more talk about the revival of a monetary golden age or a digital one.”
-Michael Every
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Today’s top gold news and opinion

3/5/2024

COT: Underinvested speculators fuel gold’s latest surge (Saxo)
What’s next after gold hits record closing high?

Why Britain is still paying the price for Gordon Brown’s gold bullion blunder (Telegraph)
It has been considered one of the worst financial blunders the Government ever made…

Gold flirts with record high as investor demand surges (Commodities Journal)
Gold flirted with a record high, surging above USD2,100/oz, as investors continued to pour into the safe haven asset.

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Daily Gold Market Report

Gold’s Latest Milestone:
Analyzing the Implications of Yesterday’s Closing Price

(USAGOLD – 3/5/2024) Spot gold prices hit an all time high this morning but has since faded. Gold is trading at $2130.70, up $16.22. Silver is trading at $24.02, up 14 cents. Yesterday’s historical daily close of gold is significant because it represents a continuation of a notable upward trend in gold prices, closing at $2,117.36. This price point is an indication of the current market dynamics, reflecting a relatively small increase from the previous close, which can be seen in the context of gold’s recent performance. This trend is indicative of broader economic factors at play, including market sentiment, inflation expectations, and global economic uncertainties, which often drive investors towards safe-haven assets like gold. The significance of today’s close, therefore, lies not just in the number itself but in what it represents about the current state of the global economy and investor behavior towards gold as a protective investment against volatility in other markets.

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Daily Gold Market Report

U.S. National Debt Skyrockets:
$1 Trillion Increase Every 100 Days Signals Alarm

(USAGOLD – 3/4/2024) Gold prices are strong in early trading Monday, this is after recent gains that saw gold hit a two-month high Friday. The U.S. national debt is escalating rapidly, with a recent pattern of increasing by $1 trillion approximately every 100 days, pushing the current total to nearly $34.4 trillion. This quickened pace of debt accumulation has been observed since June, with the debt rising from $32 trillion in mid-June to over $34 trillion by January. The acceleration in debt growth, alongside high gold and bitcoin prices, reflects market concerns about debt debasement. Bank of America’s Michael Hartnett predicts this 100-day $1 trillion growth pattern will continue. Meanwhile, Moody’s Investors Service downgraded the U.S. government’s ratings outlook to negative, citing large fiscal deficits and weakened debt affordability, especially in the context of higher interest rates and the absence of effective fiscal measures to curb government spending or increase revenues.

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Today’s top gold news and opinion

3/4/2024

Hotshot Wharton professor sees $34 trillion debt triggering 2025 meltdown as mortgage rates spike above 7%: ‘It could derail the next administration’ (Fortune)
“It’s bad across the board for the country but it’s hard to avoid exposure wherever you live in the world”

3 Reasons Why The Gold Price Breakout Will Continue To Make All-Time Highs In 2024 (Investing Haven)
“Inflation expectations, the Yen, and speculators”

Is Silver a Sleeping Giant? (Barchart)
The silver-gold ratio provides few clues…

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Daily Gold Market Report

March Madness:
Financial Shocks and Shutdowns Loom Over the Economy

(USAGOLD – 3/1/2024) Gold and silver prices are higher in early trading this morning. Gold is trading at $2046.56, up $12.01. Silver is trading at $22.67, up 21 cents. March will be an interesting month. Congress approved a temporary spending bill to prevent a partial government shutdown this weekend. The measure, which extends funding for part of the government until March 8 and the rest until March 22. The Fed is going allow the Bank Term Funding Program (BTFP) to expire on March 11. Yesterday New York Community Bank stock crashed 20%+ after reporting “material weakness in internal controls.” NYCB is the same bank that acquired the collapse Signature Bank during the regional bank crisis. Adding to the liquidity crunch, Office building prices are down nearly 50% from their highs, with a Canadian pension fund just sold its 29% stake in this New York office building for $1. We are sure in for some fireworks this month

USAGOLD Comment: Owning physical gold outside the financial system offers a hedge against potential financial instability and systemic risks highlighted by recent events, serving as a tangible asset that can preserve value independently of financial markets and institutions.
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Daily Gold Market Report

The Cost of Growth:
Q4 2023 Reveals Increased Spending and Higher National Debt

(USAGOLD – 2/29/2024) Gold and silver prices are higher in early trading Thursday, with gold hitting a three-week high, in the aftermath of an important PCE inflation report that came in lower than expected. Gold is trading at $2046.56, up $12.01. Silver is trading at $22.67, up 21 cents. The first revision of the Q4 2023 GDP figures released by the Biden administration’s Bureau of Economic Analysis, indicates a 3.2% growth rate, slightly down from the initial 3.3% estimate and below the consensus estimate of 3.3%. This growth was primarily driven by increases in consumer spending, exports, and state and local government spending, despite a rise in imports which negatively impacts GDP calculations. The revised figures show higher than expected growth in personal consumption, fixed investment, and government spending, although there was a notable decrease in the change in private inventories. Additionally, the figures highlight the substantial increase in national debt, indicating that the economy’s growth was significantly leveraged by borrowing, with $2.5 in debt incurred for every $1 in GDP growth, suggesting an unsustainable financial strategy.

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Daily Gold Market Report

Investment Impact on Silver Prices:
A Decades-Long Analysis

(USAGOLD – 2/28/2024) In early trading on Wednesday, gold prices remain stagnant, influenced by negative external market factors that are unfavorable to investors betting on precious metals. These include a rising U.S. dollar index and declining crude oil prices. Gold is trading at $2033.00, up $2.52. Silver is trading at $22.39, down 7 cents. The Silver Institute recent 2024 Market Trend Report explores the impact of investment patterns and bullion stock levels on silver prices over several decades. Initially, surpluses led to large investor inventories in the U.S., followed by a period of disinvestment from 1990 to 2000 that contributed to a supply deficit and lower prices. The early 2000s saw a depletion of stocks, aiding a price recovery as investor interest surged, especially post-2009. Despite fluctuations, such as a price drop from 2012 to 2016 despite high investment levels, optimism and financial policies like quantitative easing maintained interest in silver. The role of different investor types is highlighted, showing how their strategies impact price movements. Data from 1990 to 2022 indicates a strong positive correlation between investment levels and silver prices, demonstrating the significant influence of investment on the market despite the complexity of factors involved.

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Daily Gold Market Report

Unveiling Gold’s True Value:
Stability Across Markets and Time

(USAGOLD – 2/27/2024) Gold prices are up in early trading on Tuesday. Traders are short covering in the futures markets and some are perceived to be bargain hunting in the cash markets. Gold is trading at $2036.00, down $4.76. Silver is trading at $22.65, up 13 cents. Inspirante Trading Solutions explores a unique perspective on the value of gold, arguing that it should be viewed not just as a commodity measured in fiat currencies but as a primary unit of account and a true store of value. This viewpoint highlights gold’s ability to preserve wealth against the backdrop of fiat currency devaluation due to central bank policies and monetary expansion. By comparing the ratios of the Dow Jones Industrial Average, Nasdaq, and Russell 2000 indices to gold, it illustrates gold’s consistent purchasing power, despite fluctuations in the stock market. It also examines the ratio of average U.S. home prices to gold, showing that gold has maintained its purchasing power even as real estate prices have skyrocketed. Additionally, the stable relationship between the amount of gold needed to purchase a barrel of oil over decades, despite geopolitical and economic changes, underscores gold’s reliability as a measure of value across various sectors. This comprehensive analysis suggests that gold’s enduring worth is evident in its capacity to safeguard value in the face of inflation and market volatility.

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Daily Gold Market Report

Gold’s Call Options Volatility Hits Historic Lows:
A Prelude to a Market Rally?

(USAGOLD – 2/26/2024) Gold prices are down slightly to start the week. Traders are looking for a fresh fundamental spark to drive price action. Gold is trading at $2026.89, down $8.51. Silver is trading at $22.55, down 40 cents. Tavi Costa of Crescat Capital recently highlighted on Twitter/X a significant drop in the implied volatility of call options on gold, marking one of its lowest points in history. This scenario is reminiscent of a past period that preceded a 75% rally in gold prices over subsequent years. Despite such potential gains seeming modest in the current speculative climate, the tweet suggests that a similar movement now could trigger long-awaited significant trends. Furthermore, Tavi points out a historical pattern where gold cycles align with those of other commodities, positively affecting the valuations of resource-rich emerging markets.

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Daily Gold Market Report

The Evolution of Gold Investing:
From Anti-Bubble Asset to Bitcoin’s Partner in the BOLD Index

(USAGOLD – 2/23/2024) Gold prices continue to trade sideways to end the week. The gold market continues to struggling as expectations for the start of the Federal Reserve’s easing cycle continue to be pushed back. Gold is trading at $2025.73, up $1.43. Silver is trading at $22.75, down 1 cents.  Charlie Morris of ByteTree recently wrote an article entitled “The Golden Anti-Bubble“, which explores the evolving relationship between gold, the Nasdaq, and other financial assets over the past decades, focusing on gold’s role as a diversifier and a ‘risk-off’ asset. Initially, during the dotcom bubble of the late 1990s, gold and the Nasdaq were uncorrelated, with gold entering a bull market following the Nasdaq’s peak in 2000. However, recent times have seen gold displaying correlations with both equities and bonds, particularly during the pandemic, challenging its traditional role as a diversification tool. He discusses gold’s performance in relation to various financial models, including TIPS (Treasury Inflation-Protected Securities), monetary versus consumer inflation, and the global money supply, suggesting that gold remains a valuable asset despite being currently undervalued according to some metrics. It also highlights the ByteTree’s Bitcoin and Gold Index (BOLD) (60% Bitcoin/ 40% Gold) strategy, which leverages rebalancing between bitcoin and gold to optimize returns, suggesting a modern approach to investing in gold. Despite gold’s strong fundamentals and central banks’ interest, investor engagement with gold ETFs has declined, presenting a paradox in gold investment behavior.

 

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Daily Gold Market Report

Echoes of the 1970s:
Wall Street Braces for Inflation and Geopolitical Risks

(USAGOLD – 2/22/2024) Gold prices continue to trade sideways in early trading Thursday. Gold is trading at $2025.51, down $0.48. Silver is trading at $22.87, down 2 cents. A team of J.P. Morgan quantitative strategists, led by Marko Kolanovic, warns that the current market narrative, favoring a stable and balanced “Goldilocks” scenario, might shift towards a 1970s-style stagflation, with significant asset allocation implications. The 1970s were characterized by high inflation, geopolitical tensions, energy crises, flat equity markets, alongside superior bond performance, and an era that solidified gold’s reputation as a crucial asset for investors seeking to protect their wealth. The analysts highlight similarities with the present, including inflation waves and geopolitical conflicts in Eastern Europe, the Middle East, and the South China Sea, potentially leading to a second wave of inflation and market selloffs. They suggest that tensions, especially with China, could trigger a global economic impact, reviving the conflict inflation scenario of the 1970s. In such a situation, investors might pivot from equities to fixed-income assets seeking higher yields, as was the case from 1967 to 1980 when bonds outperformed stocks. By the end of the decade, gold prices had reached unprecedented levels, peaking at over $800 per ounce in January 1980. This represented an extraordinary rise from the $35 per ounce price fixed under the Bretton Woods system at the beginning of the decade.

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