Gold Defies Expectations with Rally:
Silver Struggles to Keep Pace

(USAGOLD – 4/18/2024) Gold prices are higher this morning. Safe-haven purchases of both precious metals persist as the market remains cautious towards the end of the week due to geopolitical worries. Gold is trading at $2377.82, up $16.20. Silver is trading at $28.44, up 22 cents. Gold prices have been hitting record highs, defying the usual relationship with interest rate expectations. Typically, gold rallies with the anticipation of rate cuts and falls with expectations of rate hikes. However, despite a reduction in the expected number of rate cuts for 2024, gold has continued to rally. This unusual behavior may be due to large investors taking long positions in gold, possibly in anticipation of unforecasted large rate cuts or increased geopolitical instability. Silver, on the other hand, has not seen a similar rally and remains far from its all-time high. This discrepancy might suggest that the gold rally could be overextended or that silver might soon catch up. The gold-to-silver ratio indicates that silver is currently much cheaper relative to gold than in the past, suggesting potential for silver to gain. However, silver’s extensive industrial use and the impact of slow growth in China and tighter central bank policies may be restraining its price.

Gold Investment in China:
TA March 2024 Overview of Premiums, Demand, and Central Bank Activity

(USAGOLD – 4/17/2024) Gold prices are higher this morning. Federal Reserve Chairman Jerome Powell in remarks on Tuesday suggested interest rates may have to remain higher for longer, to get inflation back down to a level where the Fed feels more comfortable. Gold is trading at $2392.96, up $10.06. Silver is trading at $28.69, up 58 cents. In March 2024, Ray Jia of the World Gold Council reports China’s gold market witnessed several significant developments. The Shanghai Gold Benchmark PM (SHAUPM) in RMB experienced a 10% increase, and the LBMA Gold AM Price in USD rose by 8%, with gold prices reaching record highs due to factors like strong global investment demand and geopolitical risks. Despite a slight dip in wholesale demand, the first quarter saw the highest Q1 wholesale gold demand since 2019, totaling 522t. The People’s Bank of China (PBoC) continued its gold purchasing streak for the 17th consecutive month, adding 5t to its reserves, which now stand at 2,262t. Additionally, Chinese gold ETFs saw significant inflows, pushing total assets under management to a new high of RMB35bn (US$5bn). There was a retreat in China’s gold price premium in March, reflecting weakened local demand amidst rising gold prices, although the first quarter overall recorded the highest Q1 premium ever due to strong physical demand in the initial months.

Decade of Stagnation:
Top Fund Manager Predicts ‘Dead Ball’ Era for Stocks Amid Inflation Fears

(USAGOLD – 4/16/2024) Gold prices slightly lower this morning after seeing some routine profit-taking pressure. The overall market continues to be somewhat uneasy due to increased geopolitical tensions. Gold is trading at $2374.39, down $8.75. Silver is trading at $28.28, down 59 cents. A top fund manager, Bill Smead, has warned that the stock market may be entering a “dead ball” era, potentially lasting a decade or more, with minimal returns and possible significant losses akin to those experienced during the dot-com bust and the 2008 financial crisis. Smead attributes this bleak outlook to the possibility of prolonged high inflation and interest rates, drawing parallels to the economic conditions of the 1970s. Despite the S&P 500’s 6.6% rally in 2024, Smead cautions against investing in overvalued sectors like AI and mega-cap stocks, which he believes are in a speculative bubble. Instead, he suggests that opportunities may lie in sectors that typically benefit from inflation, such as oil and gas, real estate, and gold. While Smead’s view is bearish, the consensus on Wall Street remains optimistic, with many investors bullish on stocks for the next six months.

The Cantillon Effect in Action:
Federal Reserve Policies and the Widening Wealth Gap

(USAGOLD – 4/15/2024) Gold prices are higher this morning after geopolitical tensions surged in the Middle East over the weekend. Gold is trading at $2350.29, up $5.92. Silver is trading at $28.61, up 73 cents. The recent article “The Rich get Richer. Thanks to the Fed.” from Peter St. Onge, discusses the significant increase in wealth among America’s richest due to Federal Reserve policies, particularly during the pandemic. The wealth of the top 1% in the U.S. reached an all-time high of $45 trillion, a 50% increase from 2020, largely fueled by the Fed’s massive money printing efforts amounting to $6 trillion in two years. This influx of new money primarily benefited financial markets and the wealthy, as the Fed’s method of increasing the money supply involves buying financial assets and subsidizing lending, a process known as Quantitative Easing. The article explains the Cantillon Effect, where new money benefits the rich first, with inflationary effects trickling down to impact the rest of the population, particularly harming those on fixed incomes like social security and pensioners. He concludes by stating that the Fed’s actions inherently drive inequality, serving the interests of the wealthy at the expense of the broader population.

The Inevitable Decline of Fiat Currencies:
Why Gold Maintains Purchasing Power

(USAGOLD – 4/12/2024) Gold prices have hit another all time high this week of $2404/oz. The broader financial markets are exhibiting heightened uncertainty as we approach the weekend, with the recent escalation of geopolitical tensions fueling increased investor demand for safe-haven assets like gold and silver. Gold is trading at $2400.64, up $28.12. Silver is trading at $29.40, up 95 cents. The article titled “Gold and Silver Entering Exponential Phase” by Egon von Greyerz discusses the potential for gold and silver prices to rise significantly in the coming months and years, driven by a combination of technical and fundamental factors. He argues that gold maintains stable purchasing power over time, while fiat currencies inevitably decline in value. He suggests that gold and silver are currently undervalued relative to money supply and inflation, and that the financial system is on the verge of a major collapse. The article also touches on geopolitical tensions and the risk of global war, and recommends physical gold ownership as a form of wealth preservation and insurance against economic and political instability.

Credit: vongreyerz.gold

Bullion Bounces Back:
Gold Prices Defy Economic Headwinds and Central Bank Moves

(USAGOLD – 4/10/2024) Gold prices have recovered some ground Thursday. The latest economic data indicates that various components of producer price inflation in the U.S. economy have cooled down more than anticipated. Gold is trading at $2343.56, up $9.52. Silver is trading at $28.15, up 20 cents. Following the release of stronger-than-expected US CPI data yesterday, the gold market experienced a brief dip, losing $30, but quickly rebounded, demonstrating resilience even as the US dollar and treasury yields rose. This behavior suggests that gold investors are eager to buy on any dips, indicating a strong conviction behind the current rally. Despite initial expectations that the rally might be driven by options trading and associated delta hedging, the market’s response to adverse economic data suggests otherwise. The possibility of a major sovereign state purchase was considered but seems unlikely given the lack of changes in London vault stocks and the absence of transactions through the LBMA benchmark, pointing towards over-the-counter trades. The resilience of gold in the face of market headwinds suggests a higher path of least resistance, urging investors to hold onto their positions.

Surge in Silver:
India’s Imports Hit Record Levels with Increased Demand from UAE

(USAGOLD – 4/10/2024) Gold prices are lower in early trading Wednesday and sold off over 1% following another U.S. inflation report that came in higher than expected. Gold is trading at $2327.87, down $24.91. Silver is trading at $27.70, down 45 cents. In February 2024, India’s silver imports reached a record high, with a 260% increase compared to the previous month, largely due to lower import duties and significant purchases from the UAE. The country, which is the world’s largest silver consumer, imported 2,295 metric tons of silver in February alone, with 939 tons coming from the UAE. This surge in imports is expected to contribute to a 66% increase in silver imports for the year, potentially supporting global silver prices. The high volume of imports in early 2024 has led to an oversupply that pushed local prices into a discount, causing banks to reduce imports in March. Industry experts suggest that the cyclical nature of India’s silver imports, which saw a decline in 2023 after a record high in 2022, indicates a potential increase in 2024, with estimates reaching 6,000 tons. This demand is driven by the fabrication and solar industries, as well as investment purposes, with silver being seen as potentially offering higher returns than gold.

China’s Gold ETF Trading Halts:
Record Demand and Market Frenzy

(USAGOLD – 4/9/2024) Gold prices continue to hit all time highs, overnight reaching $2365.30/oz. Increasing numbers of traders across various markets are now joining the optimistic trend for gold and silver, indicating further potential for price increases in the short term. Gold is trading at $2355.39, up $16.46. Silver is trading at $28.30, up 45 cents. The China Gold-Buying Frenzy has led to significant disruptions in the trading of a gold company ETF, marking the second suspension in a week due to unprecedented demand. The ChinaAMC CSI SH-SZ-HK Gold Industry Equity ETF, managed by China Asset Management Co., saw its trading halted overnight after its price surged over 40% in four sessions, only to drop 10% upon resumption. This action was taken to safeguard investor interests as the ETF’s premium over its underlying assets soared beyond 30%. The frenzy reflects Chinese investors’ desperation for investment alternatives not tied to the struggling domestic economy, with gold ETFs attracting nearly $600 million in global net inflows in just the past week. Analysts suggest that the surge in gold and gold ETF demand is driven by investors seeking to diversify with commodities and foreign ETFs amidst China’s economic challenges, including property market woes and volatile stock markets.

The East Rises in Gold Markets:
A Shift in Global Pricing Power

(USAGOLD – 4/8/2024) Gold prices once again hit an overnight all time high of $2354.04/oz but has since faded back this morning. Gold is trading at $2327.44, down $2.09 cents. Silver is trading at $27.64, up 14 cents. Henry Johnston of RT discusses the significant shift in the gold market, highlighting how the control of gold pricing is moving from the West to the East, particularly due to increased demand in China and central bank purchases. He outlines the historical context of gold as a store of value and its transition from being part of the Bretton Woods system to becoming a traded commodity through futures contracts. The breakdown of the correlation between U.S. real interest rates and gold prices, especially noticeable since the Ukraine conflict in 2022, indicates a profound change in the gold market dynamics. Western institutional investors have been net sellers, while Eastern demand, especially from China and central banks, has surged, driving gold prices to new highs. This shift is seen as part of a broader “hidden dedollarization” and a move towards gold as a neutral reserve asset amidst geopolitical tensions and financial instability.

The Bullish Case for Gold:
Central Banks, Rate Cuts, and Investment Strategies

(USAGOLD – 4/5/2024) Gold prices are under pressure testing initial support at $2,300 an ounce as the U.S. labor market remains red hot. Gold is trading at $2291.05, up 10 cents. Silver is trading at $26.67, down 25 cents. Bob Haber of Forbes recently wrote an article that discusses the current state and future prospects of gold investment, drawing an analogy between the unpredictability of March Madness brackets and the stock market. Despite the unpredictable nature of both, the article argues that asset allocation in investing, unlike sports betting, is based on solid mathematical principles. It highlights the recent breakout of gold prices to new all-time highs above $2,300 per ounce, despite no significant geopolitical crises or Federal Reserve rate hikes, which are typically drivers of gold price surges. Non-US Central Banks are now major buyers of gold, significantly increasing their purchases to mitigate dependence on the US Dollar. He suggests that the Federal Reserve’s indication of halting interest rate hikes and the commitment to cutting rates before inflation hits 2% could be the catalyst for the recent gold price surge.

4/4/2024

Gold plows to record high after Powell’s remarks (Yahoo)
Powell’s customary cautious approach doesn’t worry gold bulls..

Central banks bolster gold reserves further in February, albeit at a slower pace (WGC)
Demand continues to be driven by emerging market banks, such as China and India

Gold Volatility Surges Higher on Upside Call Demand (CBOE)
GLD 1M implied vol jumped over 2 pts to 13.4% as gold prices surged to a new all-time high.

Precious Metals Rally:
Gold Breaks $2,300, Silver Climbs Over $27 as Investors Seek Stability

(USAGOLD – 4/4/2024) Gold prices hit another all time high last night of $2304.95 but has since faded this morning. Gold is trading at $2275.44, down $5.23. Silver is trading at $26.53, up 39 cents. Gold breaking over $2,300 per ounce and silver surpassing $27 per ounce are significant events in the precious metals market, indicating a strong demand for these assets as safe-haven investments amid economic uncertainty. The surge in gold prices to record highs is driven by a combination of factors, including a weakening dollar, anticipation of interest rate cuts by the U.S. Federal Reserve, and robust central bank buying. Silver’s price movement, while also influenced by similar macroeconomic factors, benefits from its industrial applications and its correlation with gold, with forecasts suggesting a continued positive trajectory.

USAGOLD Comment: These price milestones reflect investor sentiment seeking stability in the face of geopolitical tensions, inflation concerns, and a volatile financial landscape, positioning gold and silver as attractive options for portfolio diversification.

Silver on the Verge:
Technical and Supply Dynamics Set Stage for Price Breakout

(USAGOLD – 4/3/2024) Gold prices hit another all time high last night of $2288.33 but has since faded this morning. Demand for safe haven assets has surged as an earthquake strikes Taiwan and geopolitical tensions in the Middle East escalate this week. Gold is trading at $2275.44, down $5.23. Silver is trading at $26.53, up 39 cents. Silver is nearing a breakout based on technical analysis. Investing Haven highlights a bullish pattern on silver’s price chart, with a significant rise in 2020 followed by a period of consolidation. For a breakout to be confirmed, silver needs to sustain a price above $26.20 USD/oz for 5 to 8 days. The analysis also points to a potential breakout on both daily and weekly charts, with a key confirmation point at $26 USD/oz. April could mark a significant movement in the silver market, potentially reaching a target of $34.70 if it surpasses $28.

Challenging the Federal Reserve:
Utah and Idaho Invest in Precious Metals Reserves

(USAGOLD – 4/2/2024) Gold prices are solidly positive in early trading Tuesday. Demand for safe-haven assets has intensified due to escalating geopolitical tensions in the Middle East. Gold is trading at $2256.59, up $5.15. Silver is trading at $25.62, up 53 cents. Utah and Idaho recently authorizing state gold and silver reserves highlight a significant movement towards financial independence and stability at the state level, which also implicitly challenges the Federal Reserve’s dominance in the monetary system. Both states have passed legislation allowing a portion of their reserves to be held in precious metals, such as gold and silver. This strategy not only serves as a hedge against inflation and potential financial turmoil but also represents a symbolic return to a “sound money” policy that many believe is more stable and sustainable than the current fiat currency system.

Navigating Economic Uncertainty:
Gold’s Attributes and Its Impact on Portfolio Resilience

(USAGOLD – 4/1/2024) Not an April fools, but gold prices again hit an all time high overnight of $2265/oz. Gold is trading at $2254.36, up $24.49. Silver is trading at $25.20, up 24 cents. The article “Gold as a strategic asset 2024 edition” by the World Gold Council presents a comprehensive analysis of gold’s role as a strategic investment. It highlights gold’s attributes such as providing long-term returns, acting as a hedge against inflation and deflation, serving as a store of value, and offering portfolio diversification benefits. The report emphasizes gold’s liquidity and its negative correlation with equities during market downturns, which can enhance a portfolio’s risk-adjusted returns. Additionally, it discusses gold’s ESG credentials and its potential to reduce exposure to climate-related risks. The document also addresses potential risks and challenges associated with gold investment, such as its non-standard valuation and lack of cash flows, while concluding that gold’s unique properties make it a valuable component of a diversified investment portfolio.

Exploring the Gold Standard:
Potential for Price Equilibrium in Modern Economy

(USAGOLD – 3/28/2024) Gold prices are again posting double digit gains early this morning, closing in on all time highs.The Bureau of Economic Analysis (BEA) reported this morning that the final calculation of the U.S. economy’s growth for the fourth quarter revealed an expansion rate of 3.4%, higher than expected. Gold is trading at $2206.44, up $11.65. Silver is trading at $24.59, down 6 cents. A study by the Federal Reserve Bank of Philadelphia suggests that a hypothetical return to the gold standard could lead to long-term price stability, with inflation and deflation being temporary. The working paper by Jesús Fernández-Villaverde and Daniel Sanches, published in February, examines the gold standard’s potential effects in a small open economy, concluding that the price level would eventually stabilize at a long-run equilibrium. While the gold standard historically collapsed due to its inflexibility, the authors note that during the transition, monetary changes would have long-term real effects, especially in response to economic integration or trade shocks. Despite these short-term fluctuations, they argue that a gold-backed economy would ultimately be stable and self-correcting.

DMR will be back on Monday April 1st. Have a great Easter Holiday!

Record Operating Loss for the Fed:
Interest Rate Hikes Lead to $114.3 Billion Shortfall

(USAGOLD – 3/27/2024) Gold prices are posting double digit gains early this morning. Gold is trading at $2190.38, up $11.58. Silver is trading at $24.55, up 9 cents. In 2023, the Federal Reserve experienced its largest operating loss ever, amounting to $114.3 billion, due to significantly elevated interest expenses, which forced it to halt remittances to the Treasury. The central bank’s interest expenses surged to $281.1 billion, nearly tripling from the previous year, while its interest income from its asset portfolio decreased slightly to $163.8 billion from around $170 billion in 2022. This financial situation arose as the Fed raised interest rates starting in March 2022 to combat inflation, leading to increased interest payments to banks for excess reserves, which reached a record $176.8 billion. To manage the shortfall, the Fed issued a “deferred asset” to the Treasury, which grew to a record $133.3 billion and has no impact on its monetary policy conduct.

USAGOLD Comment: The combination of potential lower interest rates, central bank demand, gold’s status as a safe-haven asset, its role as an inflation hedge, and market sentiment all contribute to a favorable environment for gold prices.

From Experiment to Reality:
SWIFT’s Ambitious Plan for a CBDC-Connected Financial System

(USAGOLD – 3/26/2024) Gold prices are stronger in early trading on Tuesday. Gold is trading at $2188.03, up $16.20. Silver is trading at $24.0, up 2 cents. SWIFT, the global bank messaging network, is planning to launch a new platform within the next 12 to 24 months to integrate central bank digital currencies (CBDCs) with the existing financial system. This development is significant for the emerging CBDC ecosystem, as SWIFT plays a crucial role in global banking. With approximately 90% of the world’s central banks exploring digital currencies to keep pace with cryptocurrencies, SWIFT’s innovation head, Nick Kerigan, revealed that their recent trial, which included a diverse group of central banks and financial institutions, aimed to ensure interoperability of different CBDCs and reduce payment system fragmentation. The trial also explored the use of CBDCs in complex transactions and the potential for automation to enhance speed and reduce costs. The successful trial outcomes have set a timeline for SWIFT to move from experimental to practical application. SWIFT’s network, which connects over 11,500 banks and is used in over 200 countries, positions it advantageously for the CBDC rollout, despite the possibility of delays in major CBDC launches. The platform is expected to offer a scalable solution for digital asset payments, aligning with predictions that $16 trillion in assets could be tokenized by 2030.

The Dynamics of Investment:
Gold and Bitcoin ETFs in the Post-Pandemic Era

(USAGOLD – 3/25/2024) In early trading on Monday in the U.S., gold prices strengthened, buoyed by positive external market factors, including a weaker U.S. dollar index and slightly increased crude oil prices. Gold is trading at $2177.82, up $12.38. Silver is trading at $24.79, up 11 cents. The Financial Times recently disscussed the relationship between the outflows from gold exchange-traded funds (ETFs) and the inflows into bitcoin ETFs, addressing the speculation that the rise of bitcoin ETFs might be causing a decline in gold ETF investments. JPMorgan’s research indicates that this is not the case; the outflows from gold ETFs began in April 2022 and have continued steadily, unrelated to the emergence of bitcoin ETFs. Despite the outflows, central banks and private investors continue to invest in physical gold, driven by a desire for privacy and tangibility, especially post-pandemic. While bitcoin ETFs have seen significant inflows, there has been a simultaneous sell-off of bitcoin held directly on exchanges, suggesting a shift rather than new investment. The overall demand for both gold and bitcoin appears to be influenced by momentum traders, and the World Gold Council and Morningstar analysts concur that investment in gold remains robust when considering all forms of investment, not just ETFs.

From Smartwatches to AI:
The Surprising Connection Between Platinum and the Next Tech Boom

(USAGOLD – 3/22/2024) Gold prices are lower on Friday, after fading the all time high. Today, the U.S. Congress is making efforts to prevent another federal government shutdown, but the marketplace seems largely indifferent. Gold is trading at $2174.72, down $6.16. Silver is trading at $24.75, up 1 cent. A recent article from the World Platinum Investment Council discusses the increasing demand for platinum thin film coatings due to their critical role in semiconductor and sensor applications. With the generative AI market expected to grow to approximately $1.3 trillion over the next decade, the need for semiconductors, which are integral for AI functionalities like processing and data sensing, is also surging. Platinum, known for its conductivity and stability, is identified as an ideal material for sputtering targets used in creating these thin films. This technology is pivotal for advancements in microelectromechanical systems (MEMS), nanotechnologies, and in enhancing the efficiency of battery electric vehicles by improving battery life through precise temperature measurements. Additionally, platinum thin films are being used in the rapidly growing market for wearables, like smartwatches and health trackers, for continuous monitoring of vital signs. Bosch’s investment of three billion euros in its semiconductor and sensor business by 2026 underscores the importance and growth of this sector.