Gold drifts marginally higher in quiet trading
Greenspan warns that ‘inflation is likely to be a threat on a more sustained basis’

(USAGOLD – 10/27/2021) – Gold drifted marginally higher this morning in quiet trading near the $1800 mark. It is up $2 at $1797. Silver is down 4¢ at $24.19. We note that both gold and silver have quietly posted gains over the past thirty days of 3.4% and 11.25% respectively, indicating that the transitory inflation narrative might be beginning to lose its luster. That narrative was dented last week when both Treasury Secretary Yellen and Fed Chairman Powell unexpectedly warned that high inflation could extend into late 2022. Too, former Fed chairman Alan Greenspan warned yesterday in a client note posted at the Advisors Capital Management website that “inflation is likely to be a threat on a more sustained basis.”

“[W]hen ‘investors catch on,” says Sprott’s Craig Hemke of the changing inflation psychology, “the move upward in COMEX gold is very likely to be gradual and then sudden. [Canadian mining executive] Rob McEwen suggests a price as high as $3000/ounce, but that’s not a likely first target. Instead, look for COMEX gold to eventually overshoot its most recent all-time high by 10% or so—just as it did in August 2020 when it peaked at $2080 versus the September 2011 high of $1920. … So, continue to prepare for what’s to come. You’ve been granted some time here in 2021 to add physical metal to your stack at some surprisingly low prices. But this period of consolidation and faulty expectations is ending. Patient investors will soon be rewarded…gradually, and then all at once.”

Chart of the Day

bar chart showing central bank gold sales and purchases 2002 to present

Chart note: The Reserve Bank of India purchased a record 29 tonnes of gold in June and almost 150 tonnes over the past year. The Central Bank of Brazil purchased 62.3 tonnes between May and July. Poland’s central bank recently announced it would add 100 tonnes to its reserves. The World Gold Council reports central banks as a group buying 333 metric tonnes of gold in the first half of 2021. “Central banks,” it says, “are likely to continue buying gold on a net basis in 2021 at a similar or higher rate than in 2020, driven by a continued focus on diversification and risk management.”

 

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