Precious metals attempt to regain their footing, Bloomberg’s McGlone says ‘gold appears as a resting bull’

(USAGOLD – 2/3/2021) – Precious metals are attempting to regain their footing in early trading after yesterday’s steep sell-off. Gold is up $1 at $1841. Silver is up 38¢ at $27;18. The U.S. Mint told Reuters yesterday that it was unable to meet surging demand for gold and silver bullion coins – strong investor buying that was already in motion well before the Reddit Rebellion clamor became headline news. Bloomberg is out with its February Commodity Outlook, and its chief commodity analyst Mike McGlone sees a steady bull market for gold in 2021.

“‘If you can’t beat ’em, join ’em’ is applicable to further gold-price appreciation, in our view,” he writes in the report released yesterday. “A bottom-line consideration for investors may be the need to outperform the store of value. The fact that gains for most assets trailed gold’s 25% in 2020 increases the benchmark metal’s credibility. …The unlikelihood of a reversal in rising global debt-to-GDP and quantitative easing (QE) levels adds to the potential for gold to sustain above $2,000 an ounce, we believe. The metal has had a correction in its uptrend, which puts it on sounder footings for resumption. Our graphic [not shown] depicts the initial cage in 2021 of about $1,800-$2,000. Gold appears as a resting bull. More of what has fueled the metal’s appreciation since 2001 may be all it takes to resume the rally. Risks appear tilted toward accelerating trends in rising debt and QE.”

Chart of the Day

Additions to the U.S. National Debt
(Quarterly through Q3-2020, in millions of dollars)

bar chart showing additions to the national debt thru Q3 2020

Sources: St. Louis Federal Reserve [FRED], U.S. Department of Treasury, Fiscal Service
Click to enlarge

Chart note: In getting our minds around the enormous scope of debt the United States has already taken on to rescue the economy (with more to come), it is critical to remember that the debt – however large – will need to be repaid (with interest), inflated away, or repudiated. One of those options is unlikely. The other two suggest a practical need for portfolio diversification.

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