Gold in recovery mode post-Fed
Kranzler sees  precious metals “monster move” potential on market fundamentals

(USAGOLD – 11/4/2021) – Gold went into recovery mode right after the Fed’s tapering announcement – a mini-trend that extended into overnight trading and this morning’s U.S. open. It is up $22 at $1793 and up $33 from yesterday’s bottom at the $1760 level. Silver, behaving similarly, is up 34¢ at $23.93 on the day, and up 85¢ from yesterday’s bottom at $23. Financial markets reaction to the Fed’s well-telegraphed taper policy has been notably benign thus far, but it’s early in the game. We will know more once the Fed actually begins applying the brake in mid-November.

“The fundamentals supporting a monster move in gold and silver have never been stronger,” writes long-time gold market analyst Dave Kranzler at the Gold-Eagle website. “This includes extraordinarily negative real interest rates, Government debt outstanding that seems to be increasing at an increasing rate, the continued devaluation of fiat currencies from Central Bank money printing and escalating geopolitical risks. These are just the primary fundamental factors. Gold and silver are at their cheapest levels relative to other commodities since 2009. Institutional investment allocation to the precious metals sector is at a historical low at well less than 1%. In 1979 institutions had 5% in the sector. Imagine the effect on prices if big funds were to allocate just 2% to the precious metals sector.”

Chart of the Day

overlay chart showing silver in various currencies

Chart courtesy of • • • Click to enlarge

Chart note:  An interesting revelation in this chart, if you look closely, is how well silver performed during times of economic uncertainty. Gold has a reputation for being a safe haven and store of value, but silver also has a history of delivering when the chips are down. Too, as this chart shows, it has performed well in all the major currencies, albeit with considerably more volatility.

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