Daily Gold Market Report Archive

Gold seesaws quietly in  a range ahead of next week’s Fed meeting
New China initiative could deliver a ‘demand shock’ in physical bullion market

(USAGOLD – 6/7/2023) – Gold continued to seesaw quietly in a range as investors took to the sidelines ahead of next week’s Fed meeting. It is down $3 at $1964. Silver is level at $23.67. In an article posted st BarChart, analyst Levi Donohue says the gold market, courtesy of China’s banking system, is about to experience “a demand shock that is not being factored into current gold futures prices.”

Chines banks will make “it easy for millions of existing renminbi bank account holders to convert these cash savings into a deliverable physical silver or physical gold bullion with a click of the mouse from within their banking applications.” He advises Western precious metals investors to “brace for a demand shock in the market which will see premiums on gold bullion bars and coins rise and decouple from the paper gold price. China is betting the prospects of its own citizens on gold and as of yet very few people in the West have noticed.”

Gold marginally higher as investors remain wary of inconclusive outlook
$1.1 trillion+ Treasury debt release muddies financial outlook

(USAGOLD – 6-6-2023) – Gold is marginally higher in early trading as investors remain wary of an inconclusive economic and financial picture. It is up $2.50 at $1966.50. Silver is up 11¢ at $23.71. One of the components of that muddied outlook is the $1 trillion+ tsunami of federal borrowing the Treasury Department is expected to unleash by the end of August. Many Wall Streeters are worried about the threat it imposes on the financial system. “This is a very big liquidity drain,” JP Morgan’s Nikolaos Panigirtzoglou told Bloomberg. “We have rarely seen something like that. It’s only in severe crashes like the Lehman crisis where you see something like that contraction.”

“Since the early 1970s, the logic for gold ownership has been inextricably bound to the cash flow problems of the federal government. As the national debt increased so did the well-documented damage associated with it – to the dollar, to financial markets and to the economy in general. Simultaneously, gold’s role as an inversely correlated portfolio hedge grew over that nearly one-half century as well.” – The National Debt and Gold: Here’s why the two have risen together since the 1970s and why the correlation is likely to continue

Cartoon courtesy of MichaelPRamirez.com

Gold starts the week on the downside driven by speculators in the paper markets
WGC: Gold prices have increased by a robust 11% annually over the past 50 years

(USAGOLD – 6/5/2023) – Gold is starting the week on the downside as speculators reacted to the prospect of higher rates, entrenched inflation, and an alarmingly (in certain quarters) strong economy. It is down $6 at $1945. Silver is down 13¢ at $23.55. While the Fed and rates have dominated the paper trade over the past year, concerns about the financial system’s stability have driven record safe-haven demand in the physical market, particularly among central banks and private investors. (See interactive chart below.)

Pointing out that gold prices have increased by a robust 11% annually over the past 50 years, the World Gold Council says, “investors want protection in tough times—and historically, this is when gold shines moving higher when equities and other riskier assets are under pressure. Unusually though, gold can also move higher when these assets are in positive territory. This ability to perform in good times and bad is based on gold’s varied demand and makes it a uniquely efficient asset for an investment portfolio.” [Source: World Gold Council/Reuters]

Chart courtesy of the World Bank

Gold’s response to this morning’s jobs numbers muted thus far
Fund giant Blackrock makes significant silver investment

(USAGOLD – 6/2/2023) – Gold’s response to this morning’s mixed payroll numbers has been muted thus far. It is down $5 at $1975. Silver is down 9¢ at $23.87. Payrolls exceeded expectations, while the unemployment rate was worse than expected. Bleakley Financial’s Peter Boockvar said that the markets are already pricing in a pause at the June Fed meeting and, as a result, today’s reports “won’t have much of an impact on markets.”

In an article posted earlier this week at FXStreet, The PckAxes’ Jon Forest Little points to the gold-silver ratio, now at 85:1, as an indicator that “something incredibly bullish” is looming in the silver market – something that has attracted the attention of the world’s largest money manager. The historical average is 40:1. “On March 8, 2023,” he writes,” BlackRock Inc., the world’s largest asset manager, disclosed in a regulatory filing that it had purchased 16.1 million shares of the silver exchange-traded fund (ETF) Sprott Physical Silver Trust (PSLV), representing a whopping 10.9% stake in the fund.” Little also cites a Citigroup analysis predicting silver will reach $30 per ounce within the next nine months. [Source: FXStreet]

Silver Annual Returns
(%, 2000 to present)
Chart by USAGOLD [All rights reserved, Data source: MacroTrends.net

Gold pushes marginally this morning as debt ceiling concerns fade
WGC survey of central bankers reveals healthy future interest in gold as a reserve asset

(USAGOLD – 6/1/2023) – Gold pushed marginally higher this morning as debt ceiling concerns faded and investors took to the sidelines ahead of Friday’s jobs numbers. It is up $5 at $1970. Silver is up 1¢ at $23.58. The World Gold Council released its annual survey of central bankers earlier this week, providing insights on the sector’s future interest in the metal as a reserve asset.

As most of you already know, demand from that quarter has been running at record levels, and according to the survey, that interest is likely to continue. Most notably, 62% say that gold will garner a greater share of reserves in the future up from 46% last year, while 24% expressed their intention to increase gold reserves over the next 12 months. In addition, says WGC, “central banks’ views towards the future role of the US dollar were more pessimistic than in previous surveys.”

Chart courtesy of World Gold Council • • • Click to enlarge

Gold level ahead of Friday’s jobs numbers, today’s debt package vote
Saxo Bank’s Hansen says gold downside fueled by long reduction, not short selling

(USAGOLD – 6/1/2023) – Gold is level this morning ahead of Friday’s jobs numbers and a vote in the House of Representatives later today on the debt package. It is down $1 at $1960. Silver is up 8¢ at $23.34. “Hedge funds were net sellers of gold for a second week,” reports Saxo Bank’s Ole Hansen in a recent client advisory, “but interestingly the reduction was driven by long liquidation with no appetite for short selling despite the recent technical breakdown. Equally in silver the selling appetite was also muted while the copper net short was reduced by 27%, the first reduction following five weeks of constant selling that saw the net drop from a 20k net long to a 22.6k net short.” 

Gold gains ground as debt drama moves to the halls of Congress
Bridgewater sees subtle shift as central banks, investors turn to gold as a store of value

(USAGOLD – 5/30/2023) – Gold gained ground this morning as the still unresolved debt drama moved to the halls of Congress. It is up $16 at $1962. Silver is up 7¢ at $25.32. After all is said and done, Bloomberg points out in its morning advisory, the deal barely dents the $20 trillion in combined budget deficits projected over the next decade.

Bridgewater Associates, the world’s largest hedge fund, writes Financial Times’ Gillion Tett, believes that “the past 15 years of quantitative easing and recent high inflation have left central banks and retail investors alike reaching for gold as a store of value.” Moreover, investors have subtly shifted from “evaluating gold as an alternative to other dollar-denominated savings to increasingly evaluating gold as an alternative to the dollar.” She concludes that “gold is now a good barometer not just of global instability, but of US dysfunction too” and that America’s economic problems will not end with a debt ceiling deal. [Source: Financial Times]

Cartoon courtesy of MichaelPRamireiz.com

No DGMR today. Below is Wednesday’s report.

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Gold trades higher reflecting the high degree of uncertainty in investment markets
This morning’s Financial Times features ‘The New Gold Boom: How Long Will It Last?’ 

(USAGOLD –5/24/2023) – Gold is trading higher in the early going as markets continued to reflect a high degree of uncertainty about the debt ceiling and the general direction of the economy and investment markets. It is up $7 at $1984.50. Silver is up 1¢ at $23.49. It was a pleasant surprise to come across a feature article in this morning’s Financial Times under the provocative headline  – “The New Gold Boom: How Long Will It Last?” Ashok Sewnarian, who manages a bulging private vaulting facility in London, sets the stage by saying clients “have a growing alertness to the new world order.… We have mistrust in the banks, huge inflation, and a global divide on reserve currencies.”

Citing “a rush to gold by the global elite,” FT goes on to say that “the revival in gold’s fortunes has central bank officials, fund managers and retail investors wondering whether the world is on the precipice of a new gilded period. Some forecasters reckon gold could escalate towards its real record high of nearly $3,300 per troy ounce in today’s dollars, set in 1980 when oil-driven inflation and turmoil in the Middle East capped a nine-year bull run unleashed by US president Richard Nixon cutting off the dollar from bullion.” The full article is highly recommended.

Inflation-adjusted price of gold
Chart courtesy of GoldChartsRUs • • • Click to enlarge

Gold trades marginally lower as financial world awaits debt deadlock outcome
Where will the US find the buyers for the looming debt deluge if/when the deadlock ends?

(USAGOLD – 5/25/2023) – Gold is trading marginally lower this morning as the financial world awaits the outcome of the deadlocked Biden-McCarthy negotiations. It is down $10 at $1949.50. Silver is down 12¢ at $23.03. Even as Wall Street frets about a possible federal government default and all it implies, a new worry has surfaced: Where will the United States find the buyers for the deluge of debt likely to follow a settlement? MarketWatch yesterday put that figure at $1 trillion by the end of August – five times the normal issuance over a three-month period.

Granite Shares’ Will Rhind attributes gold’s positive performance thus far in 2023 – up 7.6% – to investor concerns about a potential debt default with the banking crisis, a weaker dollar, and higher inflation also acting as tailwinds for the yellow metal. “The story is all about gold,” he says in a CNBC interview. ”[It’s] the only major metal to remain firmly in the green for this year.…Gold is really serving its purpose at the moment as a way for people to park money in a noncorrelated asset as they worry about what might happen. Certainly, [to] hedge themselves against the probability of something falling out of bed with the debt ceiling.”

Cartoon courtesy of MichaelPRamirez.com

Gold pushes lower as investors remain on the defensive
Dimon, Pozsar warn of further problems in the banking system

(USAGOLD – 5/23/2023) – Gold pushed lower this morning as uncertainty prevailed over the debt ceiling, bond yields rose, and investors remained on the defensive over further problems in the banking system. It is down $14 at $1960. Silver is down 44¢ at $23.24. With bond yields rising, JP Morgan’s Jamie Dimon worries about further problems in the banking industry centered around commercial real estate loans. “I think everyone should be prepared for rates going higher from here,” he said yesterday at the bank’s investor conference. Dimon went on to say that “lenders should be prepared for benchmark lending rates to climb as high as 7%,” according to a report posted at Markets Insider.

Similarly, former Credit Suisse managing director Zoltan Pozsar described the turmoil at US banks as “basically lessons in not being able to run interest rate risk, not knowing how to make a loan that will be weathering a rising interest rate storm.” He cryptically added that the Fed is only addressing “half the problem” and likened its current rescue regime to “foaming the runway for any large banks that might be having problems.” [Source: Bitcoin Magazine]

Chart courtesy of TradingEconomics.com

Gold subdued despite breakdown in debt ceiling talks, Powell’s hint at rate pause
UBS sees gold at $2100 by year-end, $2200 by March 2024 

(USAGOLD – 3/22/2023) – Gold remained surprisingly subdued in early trading despite a breakdown in negotiations on the debt ceiling and Fed chair Powell’s hint that a rate pause was forthcoming. It is down $2 at $1978. Silver is down 3¢ at $23.90.

In a recent client update, Swiss-based UBS points out that, despite gold’s choppy trading of late, it is still 8.2% higher on the year and predicts “it’s likely to break its all-time high later this year with multiple mid-to-longer-term drivers.” Those drivers include “robust” central bank demand, “broad” US dollar weakness, and recession-related safe-haven flows. It sees gold hitting $2100 by year-end and $2200 by March 2024. “The direction of a weakening dollar is clear,” it states, “with the US Fed having signaled a pause in its current tightening cycle after 500 basis points of rate hikes over the past 14 months. Other major central banks, meanwhile, remain on track to do more to fight inflation.”

Gold attempts to gain traction as we close out a less-than-stellar week
Bloomberg strategist: Current inflation lull perfect opportunity to load up on inflation hedges

(USAGOLD – 5/19/2023) – Gold is attempting to gain traction this morning as we close out what’s been a less-than-stellar week. It is up $7 at $1967. Silver is up 9¢ at $23.67. Saxo Bank‘s Ole Hansen sees gold as “consolidating within its well-established uptrend.” The bank maintains its “bullish outlook,” he says, “with the biggest short-term challenge being the risk of long liquidation from momentum-focused hedge funds, a group of speculators that have been strong buyers in recent months.”

Bloomberg macro strategist Simon White believes “the current lull in inflation offers the perfect opportunity to take advantage of cheap inflation hedges before price growth starts to accelerate again.” He goes on to say that “the stage is thus set for a renewal in inflation’s upward trend. This will shake confidence that inflation is a ‘one-shot’ problem and instead is likely to be with us for some time. This is likely to prompt a root-and-branch rethink about how to invest in an environment of persistent and entrenched inflation. Inflation hedges that look cheap today thus won’t be cheap for very long.” [Source: Zero Hedge]

Headline inflation during the 1970s

Chart courtesy of TradingEconomics.com

Gold drifts lower as debt ceiling concerns dissipate
Grant calls Fed ‘the No. 1 problem in American finance.’

(USAGOLD – 5/18/2023) – Gold drifted lower this morning as debt ceiling concerns dissipated and rate uncertainty continued to hang like a dark cloud over financial markets. It is down $6 at $1977. Silver is down 22¢ at $23.60. James Grant, the editor of Grant’s Interest Rate Observer, believes the Fed is “problem No. 1 in American finance.” He says that the “past 10 or 12 years in respect to Fed policy and the general suppression of the rate of interest has sowed the seeds for the regional-banking problems, the debt drama, the debt ceiling.”

“I think that the basic idea of buying up bonds,” he told MarketWatch in an interview last week, “and thereby suppressing longer-dated interest rates in the hopes of generating rising asset prices and thereby stimulating the economy by dint of people spending the proceeds of their capital gains, this idea that the Bernanke Fed surfaced in 2010-11 I think it is a very, very dicey proposition longer term. I don’t think it work.” Grant says he has been identifying more things to sell than own in the present environment, but he remains bullish on gold.

Gold returns and financial crises
(2000-present)

Chart by USAGOLD [All Rights Reserved] • • • Data source: MacroTrends.net • • • Click to enlarge

Gold continues to drift lower in aftermath to yesterday’s sharp sell-off
TD Securities thinks ‘selling exhaustion in precious metals could be imminent’

(USAGOLD – 5/17/2023) – Gold continued to drift lower in the aftermath of yesterday’s sharp sell-off driven primarily by less than accommodative Fed-speak and speculative selling once the metal broke below the $2000 level. It is down $6 at $1986.50. Silver is down 12¢ at $23.71. Investing.com says some called yesterday’s sell-off a “mini-crash” but contends gold’s upside “isn’t broken, but probably just chipped.” TD Securities found a positive in yesterday’s selloff. “Without an additional macro catalyst,” it says, “our positioning analytics highlight that selling exhaustion in precious metals could be imminent, barring a debt-ceiling catastrophe.…Gold prices are near all-time highs, but the positioning set-up remains inconsistent with a cycle peak.” [Source: FXStreet.com]

Gold tracks to downside, hovers just above $2000 level
Dominant triple top pattern on gold chart a positive indicator, says Invezz

(USAGOLD – 5/16/2023) – Gold is tracking to the downside this morning and hovering just above the $2000 level. It is down $12 at $2007. Silver is down 32¢ at $23.86. “The $2,000 level,” says Saxo Bank, “remains supportive as two stabs at that price over the last seven trading days saw support coming in above that psychological level, but a backup in yields [is] holding traders back from leading an assault on the all-time highs of 2,075…” Invezz sees the triple top that dominates the five-year gold chart as a positive indicator. “Triple tops are reversal patterns,” it says, “but technical traders know that they rarely hold in the long term. Even if the market retraces from the current levels, it usually only does so to ‘build energy’ to break the horizontal resistance. All in all, gold looks bullish in this context. Bulls will likely buy any dips.”

Chart courtesy of TradingView.com

Gold inches higher in subdued trading as unresolved issues hang over markets
Researchers predict launch of new commodities supercycle,  ‘very bullish’ on gold and silver

USAGOLD – 5/15/2023) – Gold inched higher in subdued trading this morning as a number of unresolved issues hung over financial markets. It is up $3 at $2016.50. Silver is level at $24.04. Capitalight Research’s Tom Brady and Chantelle Schieven believe we are headed for the boom phase of a new commodity supercycle that could last 10 to 20 years. Gold and silver, they show, have tracked supercycle booms in the past [Please see chart], and, as a result, they are “very bullish” on both metals over the long run.

“It is interesting to note,” they write, “that silver and gold prices appear to have increasingly trended in similar patterns to those of the industrial metals, particularly since President Nixon eliminated the backing of the US dollar with gold in 1971. Closing the gold window thus removed a very large non-industrial buyer of gold. Under the gold standard system, government could be counted upon to purchase mine production en masse at set prices, regardless of industrial growth or decline in any particular moment. Silver, with its broadening industrial demand, has been ~75% correlated with the Industrial Metals Index.” [Source: The Alchemist]

Gold, silver, and producer price index industrial metals
(1925 to present, log scale)

Chart courtesy of TradingView.com • • • Click to enlarge

Gold breaks tentatively to the upside as inflation rate moderates
Druckenmiller says recession will begin this quarter, owns gold and silver

(USAGOLD – 5/10/2023) – Gold turned tentatively to the upside this morning as the inflation rate came in lower than expected at 4.9% – a reading that raises the prospect of a rate pause. It is up $5 at $2042. Silver is up 18¢ at $25.87. The good news is that Fed tightening looks to be taking effect on inflation; the bad news is that it also raises the prospect of a recession.

Stanley Druckenmiller, the famed hedge fund manager, says the US economy is headed for a hard landing and that it will begin during the current quarter. “I am not predicting something worse than 2008. It’s just naive not to be open-minded to something really, really bad happening,” he told the Sohn Investment Conference yesterday. “Druckenmiller, who recently announced shorting the dollar, added that there are “no fat pitches” when it comes to investment ideas and that his Duquesne Family Office owns gold and silver. [Source: Bloomberg]

Gold pushes cautiously higher as Fed warns of ‘broad credit crunch’
Saxo Bank remains bullish longer term but predicts choppy trading in the short run

(USAGOLD – 5/9/2023) – Gold pushed cautiously higher this morning as tomorrow’s inflation report loomed and investors digested a Fed warning of a “broad credit crunch” brought on by the deposit drain and bank losses. It is up $10 at $2034. Silver is down 4¢ at $25.61. Adding to the general angst, Gallup released a poll this morning showing Jerome Powell as garnering the lowest confidence rating for any Fed chairman on record. Saxo Bank’s Ole Hansen has an overall bullish outlook for the investment metals. He thinks, though, that trading will likely remain choppy over the short run, “especially if inflation concerns return to challenge rate cut expectations.”

“Gold continues to trade within a 200-dollar wide upward trending channel that started back in November,” he says in a market update posted recently, “once the triple bottom was confirmed by the move above $1730. Following the strong March to April runup, triggered by a drop in short-term interest rates and yields in response to the banking crisis, gold went through a period of consolidation before the latest runup to a fresh record high. Key support remains in the $2k area ahead of trendline support, currently at $1982, while the next level of major resistance is not until the $2100 area.”

Gold Chart
(w/ trend channel per Saxo Bank above)

Chart courtesy of TradingView.com

Gold incrementally higher in quiet trading ahead of inflation data
More than a half-trillion dollars wiped out in banking crisis so far

(USAGOLD – 5/8/2023) – Gold is incrementally higher in quiet trading ahead of Wednesday’s inflation data. It is up $8 at $2027. Silver is down 2¢ at $25.72. Though concerns about the banking system have calmed for the moment, they haven’t gone away. A number of money managers, including Doubleline’s Jeffrey Gundlach, believe we are in only the early stages of the crisis. First Republic Bank, he says, was not the “last chapter in this regional banking problem.” That said, the damage already done has been significant.

“[T]he regional banking crisis is already worse than the global financial crisis—by one metric, anyway,” writes US Global Investors Frank Holmes in an analysis released Friday. “More than half a trillion dollars in assets have been wiped out this year from the failures of Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank. That significantly exceeds the amount that was disrupted in 2008, when 25 U.S. banks went under.”

Total assets lost in bank failures
(2001 to present)

Chart courtesy of the Federal Deposit Insurance Corporation (FDIC) • • • Click to enlarge.

Gold gives back some of the week’s strong gains in early trading
JP Morgan touts gold as a recession hedge and ‘long-duration’ trade

UPDATE: Gold’s sudden spike to the downside coincided with the release of today’s jobs report showing notable gains in both employment and hourly wages. Silver is also sharply lower. The unexpectedly strong jobs showing raises concerns that the Fed will be forced to extend its tight monetary policy to keep a lid on inflation. As reported below, profit-taking is also playing a role in this morning’s downside.

(USAGOLD –5/5/2023) – Gold succumbed to profit-taking this morning, giving back some of the solid gains for the week. It is down $13 at $2038.50. Silver is down 22¢ at $25.90. On the week, gold is up 2.5%, and silver is up 3.6%. In a client advisory reviewed at Bloomberg this morning, JPMorgan strategists touted gold as a hedge against a recession – a “long-duration” trade with limited downside if the recession is mild but “plenty of upside” if it is deep.

“The US banking crisis,” says JPM, “has increased the demand for gold as a proxy for lower real rates as well as a hedge against a catastrophic scenario.” Institutional investors, it adds, have flocked into the metal. Similarly, in a separate analysis posted at CME Group, TJM Institutional Services finds that gold has rallied 28% and outperformed the S&P 500 by 37% on average during recessions. Importantly, it adds that gold reacts more to “the Fed and federal government’s response to the recession than the recession itself.”

Gold during recessions
(1971 to present; grey bars = recessions)

Chart courtesy of MacroTrends.net

Gold takes breather after briefly trading at an all-time high yesterday
Another bank goes to the ropes, fuels surge in safe-haven gold demand

(USAGOLD – 5/4/2023) – Gold is taking a breather this morning after briefly trading at an all-time high yesterday of $2082. It is up $2 at $2043.50. Silver is down 3¢ at $25.64. No sooner had Fed chairman Powell declared that the banking system is “sound and resilient” at his press conference yesterday that another bank – this time PacWest Bancorp – went to the ropes. The news instantly fueled another surge in safe-haven gold demand that pushed prices past the old high-water mark before settling in the $2040 range.

Reflecting the level of apprehension in the banking business, former Atlanta Fed President, Dennis Lockhart, told Bloomberg yesterday, “It looks like the markets are moving from one bank to the other and vulnerable deer in the herd are being kicked off. But I would like to believe that Jay Powell has information that suggests that the situation is contained or containable.”

A little Ramirez humor to start your day……

Cartoon courtesy of MichaelPRamirez.com

Gold drifts sideways in quiet pre-Fed decision trading
Global trading volumes for gold average $149 billion per day, second only to stocks

(USAGOLD – 5/3/2023) – Gold is drifting sideways in quiet pre-Fed decision trading. It is level at $2019. Silver is down 13¢ at $25.32. The relative calm follows sharp gains yesterday driven by growing instability in the US banking system. “It’s spooky. Thousands of banks are underwater,” Professor Amit Seru, a banking expert at Stanford University, told The Telegraph yesterday. “Let’s not pretend that this is just about Silicon Valley Bank and First Republic. A lot of the US banking system is potentially insolvent.” Such is the unsettling backdrop for the Fed’s rate decision, statement, and press conference later today.

Market liquidity is a crucial factor in judging any investment’s portfolio worthiness, especially when large amounts of money are at stake. Gold, says the World Gold Council in a recently released in-depth statistical profile, is “more liquid than many other major assets. Gold trading volumes averaged approximately US$149bn per day over the past five years, more than the Dow Jones Industrial Average and comparable to those of US 1–3-year treasuries and US T-Bills among primary dealers. The size of the market allows it to absorb large purchases and sales from both institutional investors and central banks without resulting in price distortions. And in stark contrast to many financial markets, gold’s liquidity has not dried up, even during times of financial stress, making it a much less volatile asset.”

Chart courtesy of the World Gold Council • • • Click to enlarge

Gold up marginally as Fed meets amidst besieged US economy
Druckenmiller shorts the dollar, his only ‘high-conviction trade.’

(USAGOLD –5/2/2023) – Gold is up marginally this morning as the Fed begins its conclave amidst a range of stubborn problems besieging the US economy. It is up $6 at $1991. Silver is down 22¢ at $24.82. Stanley Druckenmiller, the highly regarded former hedge fund manager, recently called the current market environment the most uncertain he has seen in his 45-year career. “The Fed has shown some mettle over the last year,” he recently told Financial Times, “but historically I would not say [Federal Reserve chair] Jay Powell is a profile in courage.” Druckenmiller is betting against the US dollar calling it his only “high conviction trade.” He also said that “big asset classes like equities were likely to show little if any positive direction over the next 10 years.”

US Dollar Index

Chart courtesy of TradingView.com • • • Click to enlarge

Gold bolts higher as bank failure realities sink in
Bank of America strategist sees $2500 as a possibility before year-end

(USAGOLD – 5/1/2023) – Gold bolted higher in early trading as the realities of another significant bank failure and FDIC rescue began to sink in among investors. It is up $13.50 at $2006. Silver is up 69¢ at $25.83. Strong performances in gold and silver in the first half of April instigated by problems in the banking system gave way to profit-taking and choppy market action in the second half. Nevertheless, silver ended the month 4.43% higher. Gold was up 1.31%.

A Bank of America commodities analyst believes that with the strong influences already at work in the gold market, it will not take a significant influx of new buyers to push gold to the $2500 level this year. “Influenced by the recent banking turmoil,” said the strategist in a client note reviewed at Kitco News, “markets are pricing imminent rate cuts. At the same time, core inflation has been sticky and elevated price pressures, for example in shelter, highlight the risk of second-round effects. This confirms our long-held view: central banks have no silver bullet for fighting inflation and this should ultimately bring investors back to the market. The end of the hiking cycle will be critical for the yellow metal.”

Gold and silver price performance
(% price change April 2023)
Chart courtesy of TradingView.com • • • Click to enlarge

Gold drifts marginally lower as attention turns to next week’s Fed meeting
Rosenberg predicts deflationary future, recommends ‘bond-bullion barbell’

(USAGOLD –4/28/2023) – Gold drifted marginally lower in today’s early going as markets turned their attention to next week’s Fed meeting. It is down $4 at $1986. Silver is down 14¢ at $24.90. The $2000 level for gold and the $25 level for silver have proven to be obstacles – at least for the moment. Still, as we close out April, gold is up 1.4% on the month; silver is up 7.5%.

David Rosenberg, the highly regarded Toronto-based investment analyst, says that the current trends point to “a deflationary, not inflationary environment.” He recommends Treasuries, cash, and gold as the best bets for a future that could include significant systemic risk. “The U.S. dollar,” he says In a Marketwatch interview published yesterday, “will come under downward pressure. Gold will be a great hedge against the declining greenback. I’ve been advocating the bond-bullion barbell. “

Editor’s note: As shown in the chart below, systemic crisis, not inflation, have generated the most substantial price gains for gold thus far in the 21st century.

Gold annual returns and crisis periods during the 2000s
(Year over year gains or loss, 2000 to present)

Sources: St. Louis Federal Reserve [FRED], ICE Benchmark Administration, USAGOLD • • • Click to enlarge

Gold turns to the upside on banking system worries, general economic uncertainty
Aden Forecast says ‘once gold takes off, it will skyrocket’

(USAGOLD – 4/27/2023) – Gold turned to the upside this morning as worry about the banking system and general economic uncertainty pushed back to the forefront. It is up $8.50 at $2000. Silver is up 16¢ at $25.07. The Aden sisters (Aden Forecast) have been a mainstay in financial circles for decades. Known for their straightforward market analysis, they now believe that a “big financial shift” is in the cards and that central banks and private investors are stockpiling gold to prepare for it.

“Everyone knows that gold is real money,” they say. “It has stood the test of time. It has a 5000-year track record and it’s essentially the only global currency in the world. It’s also the world’s favorite safe haven and that’s why central banks worldwide have been stocking up on gold and easing out of dollars. They see what’s happening on the economic and geopolitical fronts and they want to play it safe by accumulating real money. Private investors are starting to do the same. And once gold takes off, we believe it’s going to skyrocket.” [Source: Yahoo Finance]

2022 gold demand led by private investors and central banks matched the 2011 record

Source: World Gold Council

Gold up marginally this morning in muted reaction to run on First Republic Bank
Lombard Odier makes an important observation on changing gold market psychology

(USAGOLD – 4/27/2023) – Gold is up marginally this morning as the market reaction to the run on California’s First Republic Bank remains muted. It is up $2 at $2002. Silver is level at $25.11. In an analysis released yesterday, Lombard Odier’s Stephane Mornier makes an important observation about changing gold market psychology we thought worth passing along.

“What do the Singaporean, Turkish, and Chinese central banks have in common with jittery investors?” he asks. “Answer, they’ve been buying gold as a haven and diversifier from fears of a recession, a crisis of confidence in banking, and a weakening US dollar. We see this as an indication that economic factors are taking over from financial speculation as the main driver of demand for gold.” Real demand, it says, is pushing gold towards a new standard. The bank has raised its target price to $2100 by the end of the year.

Gold loses momentum as traders test the downside
Felder: ‘Gold may be on the cusp of another major bull market.’

(USAGOLD – 4/25/2023) – Gold turned lower this morning as momentum faltered just below the psychologically important $2000 mark and traders tested the downside. It is down $11 at $1980. Silver is down 59¢ at $24.62. Jesse Felder, the veteran market analyst and former hedge fund manager, thinks gold may be on the cusp of another major bull market driven by the federal government’s rapidly deteriorating fiscal situation.

“[I]f history is any guide, the best protection against a deteriorating fiscal situation (mathematically guaranteed by rapidly growing social security and medicare spending) is gold,” he writes in a recently posted analysis. “The last time the deficit reversed from a narrowing trend and began a major widening trend, back in the early-2000’s, it coincided with a major top in the dollar index which evolved into a major bear market for the greenback that lasted roughly a decade. This was one of the primary catalysts for a major bull market in the price of gold which rose from a low of $250 in 2001 to a high of nearly $2,000 a decade later.”

Gold and the US federal debt
(1971 to present)

Chart courtesy of Trading View.com • • • Click to enlarge

Gold off to slow start this morning in featureless trading
Sharma:  ‘Gold is now a vehicle of central bank revolt against the dollar.’

(USAGOLD – 4/24/2023) – Gold is off to a slow start this morning in featureless trading. It is up $1 at $1986.50. Silver is level at $25.16. In a Financial Times opinion piece over the weekend, Rockefeller International’s Ruchir Sharma says that there is “something new” in the gold market – “heavy” central bank gold buying driven by weaponization of the US dollar. He points out that central banks now account for a record 33% of monthly gold demand.

“[T]he oldest and most traditional of assets, gold,” he writes, “is now a vehicle of central bank revolt against the dollar. Often in the past, both the dollar and gold have been seen as havens, but now gold is seen as much safer.” Separately, the World Gold Council reports central banks picking up in the first two months of 2023 where they left off in 2022 – a record year for central bank offtake. Early-year demand was at a pace not seen since at least 2010, says WGC.

Central bank gold demand
(First two months of the year, 2010-2023)
Source: World Gold Council, IMF IFS, respective central banks