Monthly Archives: May 2024

Today’s top gold news and opinion

5/31/2024

Taking Stock: Dollar Assets, Gold, and Official Foreign Exchange Reserves (NY Fed)
Dollar Share of Foreign Exchange Reserves Has Declined over Recent Decades.

Special market? Asia’s willingness to pay is boosting gold – Julius Baer (Investing)
Asia’s willingness to pay more for gold is motivated by not only economic but also geopolitical factors.

Is China Stockpiling Resources to Prepare for War? (Newsweek)
“Xi seems to have studied the sanctions playbook the West used against Russia over Ukraine”

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China Taps Global Silver Supply:
Solar Panel Production Skyrockets

(USAGOLD – 5/31/2024) Gold prices have risen in early trading on Friday, driven by a relief rally after a key U.S. inflation report matched market expectations and was not deemed excessive. Gold is trading at $2347.65, up $4.58. Silver is trading at $31.53, up 36 cents. Bloomberg reports that Chinese silver imports are expected to surge in the coming weeks due to a significant increase in demand driven by the solar industry, which has pushed prices above the international market average. Silver’s dual role as an industrial metal, particularly in solar panel production, and as a financial asset makes it highly attractive. Despite recent price increases, the arbitrage window between Chinese and global prices has widened, incentivizing traders to import more silver into China. This trend is likely to tighten supply for other countries. Chinese silver imports reached a three-year high of about 390 tons in December and surged again to over 340 tons in April, well above the five-year monthly average of 310 tons. The premium on Shanghai spot prices has climbed above 15%, more than offsetting the 13% import tax, while local silver inventories have dwindled due to strong demand from the solar sector.

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Silver Outshines Gold:
Breaking a 13-Year Trend

(USAGOLD – 5/30/2024) Gold prices are slightly up in early trading on a preliminary reading of Q1 GDP showed that the economy grew 1.3% in the first three months of the new year, lower than the advance reading of 1.6% and down from 3.4% reported in the fourth quarter. Gold is trading at $2343.29, up $5.17. Silver is trading at $31.44, down 54 cents. Otavio (Tavi) Costa’s tweet highlights a significant shift in the gold-to-silver ratio, which has broken down from a 13-year upward trend. This development indicates that silver is currently outperforming gold, not just on positive trading days but also on negative ones. Costa suggests that this trend could signal the onset of a silver rush, paralleling historical patterns where major gold rushes often led to subsequent silver rushes. Historically, silver rushes have followed gold rushes due to the interconnected nature of these precious metals in the market and their roles as investment assets. The tweet implies that those who overlook the potential for a silver rush in the wake of a gold rush may not fully appreciate the historical dynamics between these two metals.

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China’s Strategic Shift:
From US Treasuries to Gold, Copper, and Silver

(USAGOLD – 5/29/2024) Gold prices are slightly down in early trading on the strength of the U.S. dollar and Treasury yields, profit-taking by investors, and anticipation of key U.S. inflation data. Gold is trading at $2345.52, down $15.79. Silver is trading at $31.89, down 21 cents. The recent surge in gold prices, driven primarily by Chinese demand, has now extended to copper and silver. The Chinese market has seen a significant increase in trading volumes and open long positions in gold futures, spurred by the underperformance of the stock market and a sharp decline in property prices. This gold rush is seen as a hedge against potential currency devaluation. Concurrently, copper prices have soared despite high inventory levels, as China stockpiles the metal, removing physical stocks from the market and complicating supply chains, particularly in the West. This has led to a short squeeze, pushing copper prices higher. Similarly, silver prices have reached new highs, with trading volumes peaking on the Shanghai Futures Exchange, prompting Chinese authorities to raise margin levels to curb speculation. This trend of accumulating tangible metals coincides with China’s reduction of its US Treasury holdings, which have decreased by $76 billion over three months, reflecting a strategic shift away from dollar assets.

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Today’s top gold news and opinion

5/29/2024

Gold prices can ‘continue to make new highs,’ UBS says (CNBC)
“The risks to the upside are increasing”

The mounting strains on global shipping (FT)
Pirate attacks, Middle East instability and drought are causing disruption and congestion at the world’s ports.

Global silver deficit to rise in 2024 due to higher demand, lower supply (Mining)
The global silver deficit is expected to rise by 17% to 215.3 million troy ounces in 2024 due to a 2% growth in demand led by a robust industrial consumption and a 1% fall in total supply.

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The Case Against Taxing Precious Metals:
Promoting Financial Stability

(USAGOLD – 5/28/2024) Gold prices are up in early trading on bullish daily outside-market forces are working in favor of the bulls to start the U.S. trading week. Gold is trading at $2360.73, up $9.76. Silver is trading at $32.16, up 53 cents. The article “Stop Taxing Bullion” by Jesse Colombo from BullionStar argues against the taxation of precious metals like gold and silver. It highlights that such taxes are counterproductive, as they penalize savers and investors who seek to protect their wealth against inflation and economic instability. The article emphasizes that precious metals have historically been a reliable store of value and that taxing them undermines their role as financial insurance. It calls for the abolition of taxes on bullion to promote financial freedom and stability. A couple of weeks ago, we wrote about introduction of the Monetary Metals Tax Neutrality Act (H.R. 8279) that would clarify that the sale or exchange of precious metals bullion and coins are not to be included in capital gains, losses, or any other type of federal income calculation. We will continue to monitor this legislation as it moves through Congress.

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DMR will be back on Tuesday May 28th. Have a great Memorial Day Weekend!

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Today’s top gold news and opinion

5/22/2024

Silver – Breaking through Key Resistance (Silver Seek)
Gold/Silver-ratio breaking out of its triangle consolidation.

China’s Gold Imports Slow as Record Prices Temper Demand (Yahoo Finace)
Overseas purchases of physical gold fell to 136 tons in April, a 30% decline from the previous month.

PRECIOUS APPRAISAL (Heraeus)
SIndia’s imports of silver in the first quarter exceeded the total for the whole of 2023.

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Safeguarding Wealth:
Geopolitical Risks and Their Impact on Financial Markets and Banks

(USAGOLD – 5/22/2024) Gold prices are down in early trading on routine corrective pullbacks and some profit taking following recent solid gains that saw gold hit a record high of $2,454.20 an ounce. Gold is trading at $2408.26, down $12.79. Silver is trading at $31.65, down 32 cents. A St. Petersburg court has seized over €700 million in assets from three Western banks—UniCredit, Deutsche Bank, and Commerzbank—following a dispute with RusChemAlliance, a subsidiary of Gazprom. The assets frozen include shares, property, and funds held by these banks in Russia. This legal action stems from the banks’ refusal to honor guarantees under a contract with German engineering firm Linde, which was suspended due to EU sanctions. The court’s decision is part of broader efforts by Russia to retaliate against Western sanctions imposed after its invasion of Ukraine. The European Central Bank has urged Eurozone banks to expedite their exit from Russia, complicating their efforts to withdraw from the country.

USAGOLD Comment: The seizure of assets from major Western banks by a Russian court underscores the geopolitical risks and uncertainties that can impact financial institutions and investments. Such actions highlight the vulnerability of assets held in foreign jurisdictions, especially in politically volatile regions. This situation exemplifies why owning physical gold is crucial for investors. Unlike financial assets that can be frozen or seized, physical gold is a tangible asset that provides a hedge against geopolitical risks and economic instability. Investing in physical gold ensures that one’s wealth remains secure and accessible, regardless of political or economic upheavals.
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Alabama’s Bold Move:
Eliminating Capital Gains Tax on Precious Metals

(USAGOLD – 5/21/2024) Gold prices are flat early in trading with routine profit taking likely occurring. Gold is trading at $2427.62, up $2.30. Silver is trading at $31.97, up 15 cents. On May 17, 2024, Alabama Governor Kay Ivey signed Senate Bill 297 (SB297) into law, repealing the state capital gains tax on gold and silver bullion. This legislation, introduced by Sen. Tim Melson, builds on previous measures that exempted sales tax on precious metals. Under the new law, individuals can exclude net capital gains from the sale of gold and silver bullion from their state income tax calculations. This move aims to treat gold and silver as money rather than commodities, aligning with sound money principles and reducing barriers to using these metals as legal tender. Enactment of Senate Bill 297 makes Alabama the 13th state in the nation that does not impose capital gains taxes on sales of gold and silver. The law will take effect on January 1, 2025.

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Silver Outshines Gold in 2024 Commodity Rally:
Silver’s Dual Role as Investment and Industrial Metal Drives Stellar Performance

(USAGOLD – 5/20/2024) Gold prices hit an all time high last night at $2450.10 but have since faded back this morning. Gold is trading at $2411.10, down $4.50. Silver is trading at $31.23, down 34 cents. Silver has surged over 35% this year, outpacing gold and becoming one of the top-performing commodities of 2024. Despite this rally, silver remains relatively cheap compared to gold, with a gold-silver ratio of around 75. The increase in silver’s value is driven by strong financial and industrial demand, particularly from the clean energy sector, which is expected to reach record usage this year. This demand has led to a significant supply deficit, depleting major global inventories. Over the next two years, the LBMA stockpiles may be depleted given the current pace of demand, according to TD Securities. As a result, physical silver sales have increased, and dealers are concerned about future supply shortages.

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Today’s top gold news and opinion

5/20/2024

Hot commodity silver outpaces gold as buying gains momentum (Bloomberg)
“Even clients who are interested in buying gold are starting to say ‘well, maybe I’ll buy silver first, and wait for the ratio to sort of rebalance’”

Good, not great, news on inflation (FT)
China’s own gold allocation is still very low compared to other countries, and its “buying spree” suggests it may be intent on changing that.

Gold Is at Record Levels. Its Future Still Looks Bright. (Market Watch)
So why will gold keep rallying? Experts cite the combination of lower bond yields, a weaker U.S. dollar, and geopolitical concerns around the globe.

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Today’s top gold news and opinion

5/17/2024

Gold, silver and platinum’s red-hot rally still has further to go, strategists say (CNBC)
Precious metal prices got a major boost Wednesday after softer-than-expected U.S. inflation data heightened the near-term prospect of rate cuts from the Federal Reserve.

Is the “Costco Effect” the next GLD event? (LBMA)
The timing – heading into a tense US election year where people are fearful of inflation and growing economic uncertainty – is key.

Gold rally ends: How to handle gold going forward? (Julius Baer)
The narrative of central banks switching from US Treasuries to gold has been fuelling the recent gold price rally.

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Gold Prices Stabilize After Record Highs:
What’s Next for Investors?

(USAGOLD – 5/17/2024) Gold prices are strong in early trading and silver is close to its three-year high scored in April. Gold is trading at $2388.44, up $11.48. Silver is trading at $29.93, up 35 cents. The recent gold price rally, driven by central banks shifting from US Treasuries to gold, appears to have stalled. Despite record-breaking prices, global gold demand has remained flat over the past decade, with the rally largely fueled by increased willingness to pay and speculation. Central banks, particularly in China and Russia, have increased their gold purchases, while other gold-buying central banks have also increased their US Treasury holdings since 2022. Although gold remains a hedge against economic and systemic risks, the medium to long-term outlook suggests more downside than upside. Investors should consider gold’s role as a portfolio hedge rather than chasing price gains.

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Gold Gains Over 1%:
Lower-than-Expected U.S. Inflation Data Boost Rate Cut Hopes

(USAGOLD – 5/16/2024) Gold prices are weaker in early trading as the metals pause ahead of another busy day for U.S. economic reports. Gold is trading at $2383.84, down $2.15. Silver is trading at $29.62, down 6 cents. Gold prices surged to a near one-month high on Wednesday, driven by a weaker dollar and lower Treasury yields following data that showed U.S. consumer prices rose less than expected in April. This bolstered expectations for a Federal Reserve interest rate cut. Spot gold increased over 1% to $2,386.63 per ounce. The U.S. consumer price index (CPI) rose 0.3% in April, down from 0.4% in March, suggesting a cooling inflation trend that could prompt the Fed to cut rates. The dollar fell 0.6%, making gold more attractive to holders of other currencies, and 10-year Treasury yields hit a one-month low. Traders are now pricing in a 74% chance of a rate cut in September. Other precious metals also saw gains, with silver jumping 3.6%, palladium rising 3%, and platinum climbing over 3% to a near one-year high.

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Today’s top gold news and opinion

5/15/2024

The US dollar has become so weaponized that central banks are snapping up politically-neutral gold (Business Insider)
Central banks are favoring gold as a politically neutral, safe asset, insulated from sanctions.

Is the gold boom a sign of de-dollarisation? (Unheard)
The four countries with the highest demand were Turkey, China, India, and Kazakhstan.

US sharply raises tariffs on Chinese EVs and semiconductor imports (FT)
US will quadruple the tariff on Chinese EVs to 100 per cent this year.

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From EVs to Semiconductors:
Biden Escalates Trade War with Comprehensive Tariffs on Chinese Imports

(USAGOLD – 5/15/2024) Gold prices are higher in early trading following a U.S. inflation report that came in a bit cooler than expected. Gold is trading at $2372.41, up $14.29. Silver is trading at $29.05, up 43 cents. President Joe Biden is intensifying tariffs on a variety of Chinese imports, including electric vehicles (EVs), semiconductors, and solar cells, as part of a pre-election strategy to safeguard American jobs and counteract China’s unfair trade practices. This move, announced in the White House Rose Garden, aims to protect strategic sectors like green technology, where the U.S. seeks to gain ground against Chinese competition. The most significant increase is the quadrupling of tariffs on Chinese EVs to 100%, aimed at preventing China from dominating this market. Additionally, tariffs on steel, aluminum, and solar cells are also seeing substantial hikes. This tariff policy is part of Biden’s broader strategy to bolster domestic manufacturing through initiatives like the Chips Act and the Inflation Reduction Act, despite criticisms from various business groups and international reactions, including potential retaliatory measures from China.

USAGOLD Comment: The increased tariffs on Chinese imports, particularly in sectors utilizing precious metals like the solar and semiconductor industries, could lead to higher production costs and affect global supply and prices. Market volatility and geopolitical tensions might drive higher demand for safe-haven assets like gold and silver, potentially increasing their prices. Strategic adjustments in stockpiling and sourcing by nations and companies in response to prolonged trade conflicts could further influence the trade flows and pricing dynamics of precious metals globally.
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Beyond the Surface:
A Deep Dive into Silver’s Market Undervaluation

(USAGOLD – 5/14/2024) Gold prices are slightly up as producer price index (PPI) for April came in hot, at up 0.5%, month-on-month, versus expectations for up 0.3%. Gold is trading at $2348.74, down $12.42. Silver is trading at $28.47, up 27 cents. The recent piece “Silver Is Ridiculously Undervalued” by Taki Tsaklanos discusses the undervaluation of silver, emphasizing its significant underperformance relative to gold over a span of 135 years, losing approximately 70 to 75% of its value when priced in gold. Despite this, silver has shown resilience, being the third-best performer on a one-year timescale with an 18.1% gain, outperforming even as crude oil faced a 40.2% decline. The article also touches on the potential impact of the silver squeeze movement and the strategic importance of investing in silver, suggesting it as a means to challenge financial elites. It highlights silver’s historical role as a store of value, akin to gold, despite facing price suppression through concentrated short positions. The discussion extends to the complexities of accurately tracking the physical silver market, given the challenges in quantifying significant portions of it. Additionally, Tasaklanos delves into the dynamics of silver’s valuation, including its relationship with the Australian Dollar, commodities, Dow Jones, Treasuries, and Bitcoin, presenting a bullish outlook based on various chart patterns. He predicts a potential surge in silver prices, supported by a detailed analysis of silver’s price expressed in these assets, suggesting a readiness for an upward movement.

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Monetary Metals Tax Neutrality Act:
A Move to Exempt Gold and Silver from Federal Taxes

(USAGOLD – 5/13/2024) Gold prices are slightly lower as traders are taking profits while everyone waits on April data for the producer price index on Tuesday and the consumer price index on Wednesday. Gold is trading at $2347.27, down $13.23. Silver is trading at $28.29, up 10 cents. U.S. Representative Alex Mooney (R-WV) has reintroduced the Monetary Metals Tax Neutrality Act (H.R. 8279), aiming to eliminate federal income taxation on gold and silver coins and bullion. This legislation seeks to exempt the sale or exchange of precious metals from capital gains and other types of federal income calculations, treating them equivalently to the U.S. dollar. The bill challenges the IRS’s current classification of these metals as “collectibles,” which subjects them to a higher capital gains tax rate of 28%. Mooney’s proposal argues that since gold and silver are recognized as legal tender and minted by the U.S. Mint, they should not be taxed as collectibles. The bill also addresses the issue of “nominal gains” which arise from inflation rather than actual increases in value, proposing that gains and losses on precious metals should not affect federal taxable income.

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Today’s top gold news and opinion

5/13/2024

Gold ETFs Endured Further Outlows In April, World Gold Council Says (Forbes)
This was due to further heavy liquidations in Europe…

Gold Monthly: Gold breaks new highs (ING)
Gold is up 12% this year despite a stronger dollar.

Inside the 21st Century Gold Rush (MSN)
Hedge funds and other speculators have begun ramping up bullish futures and options bets.

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