Gold steps back in early trading, concern lingers over Archegos fiasco

(USAGOLD – 4/7/2021) – Gold took a step back in early trading today as bond yields and the dollar both steadied. It is down $8.50 at $1737. Silver is off 23¢ at $25.02. Fueled by Credit Suisse’ disclosure that its exposure in the Archegos fiasco was $4.7 billion, not the $2 billion originally announced, there is a lingering sense in financial markets that the now-shuttered family office might be symptomatic of deeper and more widespread instability. Meanwhile, the demand for precious metals continues to run at high levels.

“For the past seven months,” says Equity Management Academy in an analysis posted at Seeking Alpha, “gold and silver have been in the news based on a short squeeze and shortages. However, they went the other way and we have seen a Fibonacci correction in gold. The fundamentals do not seem to matter. Gold and silver are experiencing shortages. The physical prices are running far above the paper market prices, so we have a discrepancy between the physical and paper markets. The futures markets are more volatile because they do lead pricing for the cash market – at least traditionally. At some point the paper markets will reflect the cash markets. But at this point, the precious metals are technical markets.” EMA says the current technical picture is lining up in gold’s favor and that once it closes above $1772 it will “probably be off to the races up to $1931.”

Chart of the Day

Line chart showing the inflation adjusted price of silver using Shadow Government Statistics version of the inflation rate

Chart courtesy of GoldChartsRUs • • • Click to enlarge

Chart note: You have probably seen the inflation-adjusted chart for silver in the past. This is the same chart only using Shadow Government Statistics’ rendition of the inflation rate. The SGS’ version of the inflation rate resurrects the same Bureau of Labor Statistics’ methodology used in the 1980s. Whereas the inflation-adjust price of silver in 1980 is about $150 on the standard chart (not shown), it is an astonishing $1,000 per ounce on this chart using SGS’ version of the inflation rate.

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