Gold shows signs of further weakness amidst election confusion, fatigue

(USAGOLD – 10/29/2020) – Gold continues to show signs of weakness this morning after yesterday’s more than $30 rout. With Washington now in pre-election political lockdown and concern growing that the impasse over a stimulus package could continue even after November 3rd, the markets look confused and suffering from fatigue – precious metals included. The yellow metal is down $7 in the early going at $1872. Silver is down 54¢ at $22.93. Some analysts see this extended period of consolidation for gold – that has gone on for over a month now – as a hopeful sign.

“[I]t’s possible the metal has already bottomed,” says analyst Taylor Dart posting at the ETF Trends website, “and is simply shaking out more weak hands while we await the Presidential Election results. For investors bullish on the metal long-term, there is no reason to give up positions because of a run-of-the-mill 11% correction. In fact, we typically see corrections of this magnitude on gold twice a year, and even during bull markets. Some investors might have forgotten this after being hypnotized by calls of $3,000/oz by year-end. However, I find it very encouraging that the usual suspects slapping lofty price targets on gold have quieted down, and many investors have begun to turn bearish just because gold is consolidating.”

Chart of the Day

map showing locations of the world's largest operating gold minesChart courtesy of • • • Click to enlarge

Chart note:  A little known fact – the highest production globally comes from mines located in the state of Nevada, according to this Statista article. “The levels of demand for gold,” says Statista, “are now prompting questions about whether reserves of the commodity are being exhausted and if humanity has reached ‘peak gold’. Some experts believe we have indeed reached that point, a view that is supported by annual gold production statistics. Mining has largely leveled off in recent years.” Though in pre-production development for what might amount to many years, Russian producer Polyus recently announced the world’s largest in-ground gold reserve located in Siberia. When brought into production, it could challenge Nevada output. Even so, it is not likely to appreciably alter the ‘peak gold’ argument.

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