Gold trades sideways ahead of next week’s Fed decision
Bill Blain: Buy gold now to finance future bottom-fishing in other markets
(USAGOLD – 1/27/2023) –Gold is trading sideways as we go into the weekend and next week’s Fed decision. It is up $2 at $1933.50. Silver is down 19¢ at $23.79. Morning Porridge’s Bill Blain believes having some gold stuck away to finance future bottom fishing in other markets is a good thing. “That’s when the liquidity of gold is a marvelous thing,” he says. “In times of market uncertainty it’s a beneficial asset to hold.” (In the chart below, please note the price levels during times of economic uncertainty.)
“My colleague Ashley Boolell, Shard’s head of commodities, reckons gold is going to a new record level this year,” he says in a lengthy analysis on gold posted at Zero Hedge yesterday, “fuelled by a number of factors – not least being the ongoing market uncertainty. Each time we get another unexpected market number, or a corporate shock, it chips way confidence. In uncertain markets gold is seen as the safe-haven investment – especially when there is the threat of the technical US default on the back of the debt-ceiling being blocked by the Alt-Right of the Republican Party.”
Gold annual average prices
(1971 – 2022)Chart by USAGOLD [All rights reserved] • • • Data source: Macrotrends.net
Gold retreats after bumping against $1950 level in overnight trading
Dalio says dollar-dominated world order and globalized economy are ‘fading away’
(USAGOLD – 1/26/2023) – Gold retreated after bumping against the $1950 level in overnight trading. It is down $11 this morning at $1938. Silver is down 21¢ at $23.80. A key factor in gold’s pricing of late has been the return of hedge fund interest. “Hedge funds meanwhile have been near constant buyers since early November,” writes Saxo Bank’s Ole Hansen in a report issued earlier this week, “and during this time the net long has jumped from a 3.9 million ounce net short to a 9.3 million ounce net long, a nine-month high.” With greater hedge fund involvement in play, we should not be surprised at increased volatility and technical trading at key chart numbers.
Ray Dalio, who founded the world’s largest hedge fund, says the world order is shaping up in ways similar to the pre-World War II era, with “each country’s populism and nationalism growing in preparation for greater conflicts.” In the process, he says in an article on the Modern Diplomacy website, “the era of a ‘dollar-dominated world order and a globalized economy was ‘fading away.’ We are now going to have the major powers and their allies form economic, currency, and military blocs.” Mature economies, he says, “have run up very large debts and have developed a dependence on their central banks to print money to buy the government debts,” he said. The increase in debt monetization “will mean that holders of debt assets will get bad inflation-adjusted returns.” Dalio is a long-time advocate of gold ownership.
Gold and silver prices
(October 2022 to present)
Chart courtesy of TradingView.com
Gold turns to the downside in featureless trading
Gold posts record high in Japan, Switzerland exports 524 tonnes to China in 2022
(USAGOLD – 1/25/2023) – Gold turned to the downside this morning in featureless trading ahead of next week’s Fed meeting. It is down $12 at $1928. Silver is down 21¢ at $23.53. Jerry Grantham returned to the fray this morning to predict a bleak future for the stock market – a further 17% decline in 2023.
A few gold notes to start your day…… Australia’s Perth Mint, which enjoys a strong market for its wares in East Asia, reports record bullion product sales in 2022. Switzerland, where the world’s primary precious metals refineries are located, exported 524 tonnes of gold to China last year, the highest level since 2018. Gold prices posted a record high in Japan yesterday amidst inflation and recession concerns. Goldman Sachs says China’s reopening is a gamechanger for gold and oil…and the US dollar. Last, the US national debt is now six times larger than it was at the start of the century and is expected to grow at a rate of $1.3 trillion per year for the next decade. And that is a conservative estimate…
Cartoon courtesy of MichaelPRamirez.com
Gold gains as investors worry about possible government debt default
EWT analyst Gilbert says gold is poised for major rally, sees $2428 as next target
(USAGOLD – 1/24/2023) – Gold gained ground in early trading as investors began to worry about the knock-on effects of a possible federal government debt default. It is up $8.50 at $1941. Silver is up 28¢ at $23.79. State Street CEO Ron O’Hanley told Bloomberg that a showdown in Congress over the debt limit could cause a “fair amount of damage [in the bond market] well before you saw a default.” O’Hanley says the risks of a deadlock are greater this time around because “people believe that this is the only way they can get their message across.” State Street is one of the world’s largest asset management and custodial firms.
Avi Gilbert, the Elliot Wave Theorist who gained a significant following with his call for a sharp drop in gold after it hit record highs in 2011, now says that the metal is poised for a major rally. “Back in 2011,” he explains in an analysis posted recently at Seeking Alpha,” I utilized a 100+ year structure in gold to identify the topping target for gold. And, I used the same structure to identify a bottoming target for the correction I expected, even before that correction began. So, now I am going to provide you my next target on the upside – and that is $2,428.”
Gold, Dow Jones and Misery Index
(1970-1980 period of stagflation)
Chart by USAGOLD (All rights reserved) • • • Data source: MacroTrends.net • • • Click to enlarge
Gold starts week on a quiet note
Gold Newsletter’s Lundin says gold is in a ‘largely unrecognized’ bull market
(USAGOLD 1/23/2023) – Gold is starting the week on a quiet note as markets in general remain in a quandary over Fed policy and the possibility of a recession. It is up $2 at $1930. Silver is down 23¢ at $23.81. It is helpful to keep in mind that since gold’s triple bottom in early November, it is up almost 18%. It is up 5.5% since the start of the year. Gold Newsletter’s Brien Lundin sees gold’s steady performance of late as the start of a ‘largely unrecognized’ bull market.
“[T]he metal is consistently finding reasons to rise, as opposed to excuses to fall,” he says in a recent alert, “If you’ve been reading my stuff for very long, you know that I hold this as one of the most important hallmarks of a bull market. When the market is interpreting even potentially bearish news as bullish, that’s a bull market. Thus, even when the Dow is losing 600 points as it did yesterday, gold barely budged. All of this is good and bodes well for the future.”
Gold drifts lower in follow-up to yesterday’s dollar-driven advance
Pozsar sees US dollar’s exorbitant privilege under assault
(USAGOLD –1/20/2023) – Gold is drifting marginally lower in the follow-up to yesterday’s strong, dollar-driven advance. It is down $4 at $1931. Silver is up 12¢ at $24.03. Gold’s upside since the turn of the year, during which it has gained almost 6%, has been accompanied by a groundswell of opinion that the greenback’s strong two-year advance is in the early stages of a reversal. Zoltan Pozsar, the head of short-term rate strategy at Credit Suisse, believes that China’s deepening ties with OPEC+ and BRICs+ will alter the “existing world order” and “eventually lead to ‘one world, two [monetary] systems.'”
Investors, he says in an opinion piece published this morning by Financial Times, have to discount new risks. “In finance,” he concludes,” everything is about marginal flows. These matter the most for the largest marginal borrower — the US Treasury. If less trade is invoiced in US dollars and there is a dwindling recycling of dollar surpluses into traditional reserve assets such as Treasuries, the ‘exorbitant privilege’ that the dollar holds as the international reserve currency could be under assault.” If Pozsar is correct, it will carry important implications for gold.
Gold and the US Dollar Index
(2021 to present)|
Chart courtesy of TradingView.com • • • Click to enlarge
Gold pushes higher in cautious trading ahead of Fed speeches
Investor cash holdings near record high; Somerset Webb warns ‘it is only a temporary king’
(USAGOLD – 1/19/2023) – Gold pushed higher in cautious trading ahead of speeches from several Fed officials today, including the St. Louis Fed’s influential James Bullard. It is up $11 at $1917.50. Silver is up 3¢ at $23.57. The dollar hit a seven-month low in overseas trading adding impetus to gold’s upside and leading some to believe that the dominant trend for 2022 might be reversing. CNBC reported yesterday that investors are now holding near-record levels of cash. Merryn Somerset Webb, a senior columnist at Bloomberg Opinion, thinks that might be another dead end for investors. “If you are holding cash,” she says, “it is only a temporary king.” She says that inflation, which erodes the value of cash, will be with us for the long haul and that investors should look to gold, as an alternative.
“As Alex Chartres of Ruffer recently said on my podcast,” she writes in a recent opinion piece, “there aren’t many other things you can turn to as a long-term safe haven in today’s markets. A year ago, some thought Bitcoin might be a rival – a digital gold even. The market has now ‘kneecapped’ that idea. These days, if you want gold, you will need to buy, well, gold. That being the case, the question is not have you too much, but have you enough — the very same question the head of the PBoC is clearly asking himself right now.
Inflation-adjusted price of gold
Chart courtesy of MacroTrends.net
No DMR today – 1/18/2023; Yesterday’s report follows.
Gold tracks lower as recession, possible government shutdown dent sentiment
Roubini sees gold at $3000 by 2028 as Fed ‘wimps out’ on inflation
(USAGOLD – 1/17/2023) – Gold tracked to the downside this morning as recession and a possible federal government shutdown dented investor sentiment. It is down $6 at $1912.50. Silver is down 24¢ at $24.14. Nouriel Roubini, who has become increasingly vocal about investors including gold in their portfolio mix, believes that the Fed will “wimp out” on the inflation fight as it faces the possibility of an economic crash and a new financial crisis.
He says gold is the best protection for investors and predicts it will rise to $3000 by 2028, providing investors with an average annual return of 10% over the next five years. “If I am right, that we will have a hard landing, the inflation is going to be persistent, the central banks are in a dilemma, and therefore, both equities and bonds will do poorly … Gold should do better,” he said in a recent Kitco News interview.
A little Ramirez-style humor to start your week –
Cartoon courtesy of MichaelPRamirez.com
Gold edges higher to close out productive week
Hathaway says gold built solid technical base in 2022, setting stage for strong advance in 2023
(USAGOLD – 1/13/2023) – Gold edged higher in early trading as it looks to finish out what’s been a productive week. It is up $3.50 at $1903. Silver is down 7¢ at $23.77. On the week, gold is up 1.84%, and silver is down .83%. It’s beginning to look like gold might be running into some resistance at the $1900 level. Long-time market analyst John Hathaway says that gold spent 2022 building “a solid base” in technical terms that has set the stage in 2023 for “a strong advance to new record highs against the supposedly invincible U.S. dollar.”
“2023 will reveal that the gross mispricing of financial assets that led to the worst performance of financial markets since 2008 has been only partially resolved,” says Hathaway in an analysis posted earlier this month. “We believe the bear market [in stocks and bonds] is far from over, even though investment sentiment is more negative than at the market lows of 2002 and 2008 (AAII Investor Sentiment Survey). With the economy likely to slump into a protracted recession, the Federal Reserve (‘Fed’) will be forced to abort its anti-inflation campaign. A Fed reversal could give temporary respite to financial assets. More importantly, it could underscore the dependency of public policy on money printing and provide a significant boost to the precious metals sector.”
Gold and silver price gains
Chart courtesy of TradingView.com
Gold pushes toward $1900 mark in advance of CPI data
‘Once you get into the 1900s, it becomes a gravitational pull toward $2000.’
(USAGOLD – 1/12/2023) – Gold pushed toward the $1900 level in advance of today’s inflation data. It is up $10 at $1888. Silver is up 37¢ at $23.85. The consensus view is that the CPI will come in at 6.5% – a significant drop from the 7.1% reading in November that might inspire a more dovish Fed. Financial Times attributes gold’s 15% rise since early November to expectations that the Federal Reserve “will slow the pace of its increases in borrowing costs as inflation eases off its highs.” It quotes Blue Line’s Phillip Streible as saying gold could break through $1900 if today’s inflation reading comes in weaker than expected. “Once you get in the 1900s,” he says, “it becomes a gravitational pull towards $2,000.”
Gold drifts sideways ahead of tomorrow’s inflation data
Credit Suisse foresees the possibility of $2300 gold and ‘likely beyond’
(USAGOLD – 1/11/2023) – Gold drifted sideways in early trading as investors awaited tomorrow’s Labor Department inflation data. It is up $1.50 at $1881. Silver is up 20¢ at $23.89. Trading Economics forecasts a 6.7% inflation reading for December – a sharp drop from November’s 7.1% and a number the markets would likely interpret as a dovish influence on the Fed. Technical analysts at Credit Suisse foresee the possibility of gold trading at $2300 in 2023.
“We look for further tactical gains to test the 61.8% retracement of the 2022 fall and June 2022 high at $1,876/96, which ideally caps for now,” says the bank In a report posted this morning at FXStreet. “Should strength directly extend though we see resistance next at the 78.6% retracement and April 2022 high at $1,973/1,998. Whilst on a big picture basis this strength is seen as a rally within a broader long-term sideways range, should the rally ever extend above the record highs from 2020 and 2022 at $2,070/2,075, this would be seen to mark a significant and long-term break higher, opening up we think $2,300 and likely beyond.”
Gold drifts sideways ahead of inflation data, Powell speech
Saxo Bank says gold has been the “star performer” during the first week of commodities trading
(USAGOLD – 1/10/2023) – Gold drifted sideways ahead of tomorrow’s all-important inflation report and Jerome Powell’s speech later today. It is level at $1874.50. Silver is down 19¢ at $23.56. Saxo Bank’s Ole Hansen offers a solid assessment of the developing demand for gold among futures traders in an analysis posted this morning. To sustain the momentum, though, he thinks gold will need further support from central bank and ETF investors. “Both of which are playing out,” he adds, “after China’s PBoC added 62 tons during November and December while ETFs last week saw its first back to back week of buying since last April.”
“Demand for gold,” he says, “which started to recover after the yellow metal made a triple bottom around $1620 back in November (See chart), extended into the new year with funds raising their net long by 8% to 7.8k lots, a seven-month high. Supported by momentum and the outlook for a friendlier 2023 for investment metals gold has been the star performer during the first week of trading. While many wise traders over the years have refrained from getting involved during the first few weeks of a new year, the continued rally has increasingly forced technical focused traders to get involved.”
Chart courtesy of TradingView.com
Gold extends new year rally
China announced adding another 30 tonnes to its reserves in December
(USAGOLD –1/9/2023) – Gold extended its new year rally this morning as investors prepped for Thursday’s inflation data release, and commodities, led by oil, turned to the upside on the prospect of economic recovery in China. It is up $9 at $1877.50. Silver is up 10¢ at $24.02. Adding to the momentum, China announced the acquisition of another 30 tonnes of the yellow metal in December – the second month in a row it added to its coffers. Credit Bubble Bulletin‘s Doug Noland sees bubbles everywhere, each in its own unique stage of inflation or deflation. The one non-bubble in his scenario is gold at a time of “acute currency market uncertainty and instability.”
“[Will 2023] be the year of precious metals?” he asks. “Precious metals were generally out of the blocks quickly to begin the new year. Metals performed relatively well last year in the face of dollar strength and rising rates. A year of currency market uncertainty, persistent inflation, and ongoing expansion of non-productive Credit would seem to support the precious metals. After a 2022 inflection point, I would expect 2023 to provide more New Cycle momentum. There will be ebbs and flows, but the cycle of hard asset outperformance versus financial assets is in its infancy.”
Gold annual returns
Chart by USAGOLD [All rights reserved] • • • Data source: MacroTrends.net • • • Click to enlarge
Gold marginally higher ahead of jobs report
Saxo Bank foresees strong gold demand from central banks and ETFs in ‘price friendly’ 2023
(USAGOLD – 1/6/2023) – Gold moved marginally higher as financial markets traded cautiously ahead of this morning’s jobs number. It is up $4 at $1849.50. Silver is up 19¢ at $23.52. The World Gold Council reports central banks added another 50 tonnes of gold to their collective holdings in November. Saxo Bank’s Ole Hansen sees 2023 as “price friendly” for investment metals as central banks continue buying and ETF demand turns to the plus side.
“This de-dollarization and general appetite for gold,” he says in a client update posted this morning, “should ensure another strong year of official sector gold buying. Adding to this we expect the friendlier investment environment for gold to reverse last year’s 120 tons reduction via ETF’s to a potential increase of at least 200 tons. Hedge funds meanwhile turned net buyers from early November when a triple bottom signaled a change away from the then prevailing strategy of selling gold on any signs of strength. As a result, the net position during this time flipped from a 38k contract net short to a 67k contract net long on December 27.”
Chart courtesy of GoldChartsRUs
Gold gives back some of its early-year gains
The lack of dovish indicators in Fed minutes plays on market sentiment
(USAGOLD – 1/5/20230) – Gold drifted to the downside this morning, giving back some of the gains since the start of the year. It is down $7 at $1849.50. Silver is down 32¢ at $23.52. Pressing on market sentiment was the lack of any dovish indicators on rates in December’s FOMC meeting minutes released yesterday. In fact, the FOMC reported that “no participants anticipated that it would be appropriate to begin reducing the federal funds rate target in 2023.” Yet, traders, for their part, cling to the notion that a weakening economy will force the Fed to step back.
“Gold is having a great start to the New Year,” writes senior market analyst Ed Moya at the Oanda website. “Wall Street continues to pile into gold as global bond yields continue to slide and recessionary risks remain elevated. Many traders are growing confident that the end of the Fed’s tightening cycle is nearing and that rate cuts could happen at the end of the year. Gold is eyeing the $1900 level, but for that to happen we’ll need to see the bond market rally remain in place a while longer.”
Cartoon courtesy of MichaelPRamirez.com
Gold extends new year rally into second day
Napier says rate increases will not keep up with inflation; gold will benefit
(USAGOLD – 1/4/2023) – Gold took its new year rally into its second day on rising hopes that inflation is on the fade and the Fed will begin dialing down interest rate increases. It is up $16 at $1858. Silver is up 20¢ at $24.27. Russell Napier, the highly regarded markets analyst, is at odds with the building sentiment on inflation and rates. He says inflation will not be matched by rate increases – a process he calls “financial repression” that will remain in place for at least a decade. Gold, he believes, will be among the beneficiaries.
“Gold has long seemed a better bet in an environment when inflation would be rising faster than interest rates,” he writes in an analysis published Monday in the Toronto Star. “Going forward, the more investors focus on governments’ need to ensure that interest rates remain below the rate of inflation, the more the price of gold is likely to rise. This will be particularly true when central bankers begin to reduce interest rates. Should a financial repression require capital controls to coral investors into local currency government bonds, the rise in the gold price will accelerate.”
Gold average annual price
Chart by USAGOLD [All rights reserved] • • • Data source: MacroTrends.net
Gold, silver off to respectable start for the New Year
Silver Institute reports record overall demand, 194 million ounce supply shortfall
(USAGOLD – 1/3/2023) – Gold is off to a respectable start for the new year as investors weighed the possibility of another troubling year in financial markets. It is up $12 at $1838. Silver is up 32¢ at $24.36. The metals gained despite a stronger dollar. Gold finished 2022 up 1.19%, but silver, after a see-saw struggle for much of the year, ended up posting the stronger gain – up 4.61%.
The Silver Institute reports record overall silver demand and static supply in its year-end summary released last week. The result was a 194 million ounce shortfall in 2022 – four times the 2021 deficit and a new record. “Physical silver investment (purchases of silver coins and bars) in 2022 was forecast to jump 18% to 329 Moz, a new record high,” reports SI. “Support was due to investor fears of high inflation, the Russia-Ukraine war, recessionary concerns, and buying on price dips. The rise was boosted further by a near-doubling of Indian demand, with investors often taking advantage of lower rupee prices.”
Silver surplus or deficit
(Millions of troy ounces)
Chart by USAGOLD [All rights reserved] • • • Data source: The Silver Institute
Gold attempts to regain its footing this morning
‘The Fed is not your friend,’ says CNBC’s Cramer; Goldman predicts big 2023 for commodities
(USAGOLD – 12/16/2022) – Gold is attempting to regain its footing this morning as investors continue to weigh future Fed policy, the prospects of a recession, and the stubbornly high inflation rate. It is up $8.50 at $1788. Silver is down 12¢ at $23.04. CNBC’s Jim Cramer, the widely followed market analyst, told his audience yesterday that “investors have to learn that the Fed is not your friend, it’s not your pal – if anything, it’s your enemy.” Goldman Sachs says commodities will follow up 2022’s solid performance with another strong year in 2023, according to a Bloomberg report yesterday. Goldman predicts commodities will climb another 43% in 2023 as part of a multi-year super cycle that began in 2020. The ongoing rally, it says, will be fueled by supply shortages.
This is the final DMR for 2022. Happy holidays! The next report will be the morning of Monday, January 2, 2023.
Gold plunges in overnight trading on Fed concerns
Austrian Mint is unable to keep up with the demand for gold coins
(USAGOLD – 12/15/2022) – Gold plunged overnight in an Asia-led selloff as the Japanese yen, Chinese yuan, and Korean won all dropped sharply against the US dollar. It is down $28 in early trading at $1782. Silver is down 83¢ at $23.20. The overseas reaction was a far cry from yesterday’s more muted response on Wall Street, where a good many still believe that a cooling economy will force the Fed to tone down its hawkishness at some point in 2023.
The Austrian Mint is “unable to keep up with demand [for its gold coins] as people rush to find a safe haven for their money amid surging inflation and economic fears caused by the war in Ukraine,” according to a Reuters report yesterday. The Mint’s Chief Executive Gerhard Starsich said, “every gold coin that comes off the coining press has already been sold. Right now we could sell three times as many as we are able to produce.” Gold is roughly level in dollar terms on the year, but it is up 5% against the euro. Starsich says that customers for its gold bullion coins are of all ages and from all walks of life.
(Editor’s note: What would the chart below look like if global mints and refineries could keep up with demand?)
Chart courtesy of the World Gold Council • • • Click to enlarge
Gold trades quietly to the downside ahead of today’s Fed festivities
Gold, after a long, nine-month struggle, is now level on the year.
(USAGOLD – 12/14/2022) – Gold is trading quietly to the downside after yesterday’s solid run-up and ahead of today’s Fed festivities. It is down $4 at $1809.50. Silver is down 8¢ at $23.75. We note with interest that gold, after a long nine-month struggle, is now level on the year. (See chart below.) Stocks, by way of comparison, are down almost 15% on the year; bonds are down 27.6%, and bitcoin is down 65%. In an analysis released Monday, Kinesis Money’s Dave Kranzler says it is likely that “the next cyclical, sustainable move higher in the precious metals sector has begun.”
“Certainly the technical picture for the precious metals sector is more than supported by several fundamental factors,” he says. “It’s been well-documented that the banks have been reducing their net short-exposure to gold and silver futures contracts on the COMEX. This move has been mirrored by the BIS, the Central Bank of Central Banks, which has nearly eliminated its gold swap transactions (BIS gold swaps) after the swaps outstanding reached an all-time high in February.” He adds that “an investor who likes to use charts as part of the tool-kit for investing and trading would be hard-pressed to find a more bullish chart set-up than the charts for gold, silver and the mining stocks.”
(%, year to date)
Chart courtesy of TradingView.com
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