Featuring top analysts. Updated regularly.

Even central banks are buying gold for the zombie apocalypse

Bloomberg/David Fickling/11-6-2022

Photo of pallettes of gold bars purchased by Hungary's central bank“Governments in developing economies are building up their bullion holdings as trust breaks down. … Central banks bought 400 metric tons of gold in the September quarter, the World Gold Council reported this week. That’s a record inflow on a par with what they’d purchase over a whole year in normal times.”

USAGOLD note: After a typically erroneous and demeaning description of gold buyers (which you can safely skip over), Fickling settles into the heart of the matter. If there is a whale or whales buying gold, who is it, and what is their rationale? He goes on to offer considerable detail on some of the top candidates and the possible rationale behind their acquisitions.

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Posted in Gold-silver price predictions, Today's top gold news and opinion |

Elliott Management warns ‘world is on the path to hyperinflation’

Financial Times/Laurence Fletcher/11-2-2022

“The world is on the road to ‘hyperinflation’ and could be heading towards its worst financial crisis since the second world war, according to Elliott Management, one of the world’s biggest and most influential hedge funds.”

USAGOLD note: The fund blames central bank policymakers for the “looming crisis,” saying they have been dishonest about the cause of the inflation problem, which, in its view, is the result of ultra-loose monetary policy, not supply chain bottlenecks. Despite the regularity of financial shocks since the 1970s, “investors should not assume they have seen everything,” says the firm. Elliot warns that hyperinflation could lead to a “global societal collapse and civil or international strife.” Singer is a long-time advocate of gold as a hedge against the kind of uncertainties covered in his firm’s latest advisory.

line chart showing gold's performance during the nightmare German inflation of the 1920s

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Wisdom Tree touts gold as a recession hedge

Wisdom Tree/Staff/October 2022

“Gold stands out as an asset that performs well in recessionary scenarios. As recessionary risks rise, we expect gold to outperform most other asset classes. Gold is facing headwinds from a strong US dollar and a bond sell-off. Despite that, it is holding value better than expected.”

USAGOLD note:  Wisdom Tree, the Dublin-based investment firm, says the inverted yield curve confirms that the United States is already in a recession. “Bear flattening inversions have been good for gold in the past,” it says. “Today, we are in one of the strongest bear-flattening inversions we have seen since 1981. That points to a source of strength for gold we have not seen in decades.”

Yield inversions and gold
(10-year Treasury yield minus 2-year, gold log scale)overlay line chart showing yield inversions and the price of gold
Chart courtesy of TradingView.com • • • Click to enlarge

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Posted in Gold-silver price predictions, Today's top gold news and opinion |

Gresham’s Law

Advisors Capital Management/Dr. Alan Greenspan/11-2-2022

photo of Alan Greenspan reviewing notes

“When the U.S. dollar was first anointed the world’s reserve currency by the Bretton Woods Agreement in 1944, it was fully backed by gold. Now that the global financial system has transitioned fully to fiat currencies, examples of Gresham’s law in its traditional formulation are rare. No longer are there difference in intrinsic (commodity) value causing one currency to be favored over another. However, foreign exchange rates do reflect some of the forces Gresham originally recognized at work. The present strength in the U.S. dollar in relation to the other traditional reserve currencies is one example of market participants choosing to hoard what they view as ‘good money’ – or at least better money.”

USAGOLD note: Greenspan sees the dollar as the best of a bad bunch and, therefore, the beneficiary of Gresham’s Law in the current fiat money mix. The former Fed chairman is a long-time advocate of gold ownership for private citizens as the preeminent store of wealth – the ultimate beneficiary of Gresham’s Law in the context of fiat money. Coincidentally, we alluded to Gresham’s Law yesterday with respect to the surprisingly strong demand for gold among central banks. Though Greenspan sees the dollar enjoying a monetary tailwind in 2023, he also sees consequences overseas and among US multinationals. “Take heed,” he concludes, “Gresham’s law can wreak havoc on currencies…”

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World Gold Council reports robust third quarter for global gold demand

World Gold Council/Staff/11-1-2022

“Healthy Q3, driven by stronger consumer and central bank buying, helped year-to-date demand recover to pre-COVID norms. Gold demand (excluding OTC) in Q3 was 28% higher y-o-y at 1,181t. Year-to-date (y-t-d) demand increased 18% vs the same period in 2021, returning to pre-pandemic levels.”

USAGOLD note: Only institutionally-driven ETF demand bucked the global demand upswing – overall the strongest gains year over year since 2013.

bar chart showing overall global gold demand year over year, best since 2013
Chart courtesy of World Gold Council • • • Click to enlarge

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Mystery whales baffle gold market after central bank purchases

Bloomberg/Eddie Spence/11-3-2022

cartoon showing bad money drives out good as Gresham pointed out“A normally dry research report jolted the gold market this week, when it pointed to massive but so far unidentified sovereign buyers. Central banks bought 399 tons of bullion in the third quarter, almost double the previous record, according to the World Gold Council. Just under a quarter went to publicly identified institutions, stoking speculation about mystery buyers.”

USAGOLD note: With the amount of turmoil already evident and more uncertainty building, it should not be surprising that nation-states would move to protect their financial interests. The article mentions China and Russia as potential buyers, but one of Spence’s suggestions caught our attention – the big Persian Gulf oil exporters (Saudi Arabia, United Arab Emirates, and Kuwait). As he points out, those countries have reaped huge windfalls this year and are sitting on large piles of greenbacks received in payment for oil – not a healthy position to be in during inflationary times. For the time being, Spence’s “whales” are likely to remain a mystery, but no matter who it is, the strong central bank buying sends an important message. As Gresham summarized it, “bad money drives out good.”

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Noriel Roubini foresees ‘ugly’ mix of the 1970s and the Global Financial Crisis

Bloomberg/Joe Wiesenthal and Trach Alloway/10-20-2022

graphic image that reads stagflation ahead“Now, Roubini’s conviction is only growing that the world will be ensnared in a period of stagflation as central banks struggle to keep a lid on inflation expectations and will eventually blink in the face of things breaking in financial markets.”

USAGOLD note: Roubini says, “this is just the beginning of that pain. Wait until it’s real pain.” He is working with Atlas Capital Team to structure a digital currency backed by gold, US real estate, and US Treasuries. We like the gold part of that formula but think the other items just add unnecessary risk and instability. Stick with gold and silver coins and bullion as the chief bulwark against life’s uncertainties.

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The mystery of gold prices: Who if not what?

The Alchemist/Adrian Ash/October 2022

graphic image of the charge of the lemmings“Tail wagging dog? Perhaps. But while solving the mystery of gold pricing may continue to defy a quick sound bite analysis, and while the size of investment plus speculative flows doesn’t show any kind of consistent relationship to the size of price swings, it’s plain that the behaviour of gold ETF investors and Comex speculators, although marginal to physical demand across longer time frames, tends to map if not drive the market’s direction.”

USAGOLD note: Ash runs through the gamut of influences on the gold price and lands at the place described above. However, he leaves a step yet to be taken. What, in turn, influences the flow in and out of ETF and COMEX positions? Too often, in our view, it is a matter of crowd behavior more than a fundamental shift based on sound reasoning. That is why when the market turns in a meaningful way, so many are at a loss to explain why. The best way for the private investor to capitalize on that shift (when, not if, it comes) is to be well-positioned ahead of its inception.

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Posted in Gold-silver price predictions, Today's top gold news and opinion |

Einhorn expects an economic slump and sticky inflation – and says the risk of a global financial meltdown is growing

Markets Insider/Theron Mohamed/10-12-2022

graphic image displaying rising inflation vector“The easy-money era helped drive inflation to a 40-year high this year, and it’s likely to remain higher for years to come, Einhorn said. He added that both monetary and fiscal policy were responsible for the raging price increases, and called on both the Federal Reserve and the US government to address the issue.”

USAGOLD note: Einhorn, a long-time advocate of gold ownership, says investors should not assume a stock is cheap because it plunged 60% or 70%. It could still be hugely overvalued.

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Ray Dalio expects ‘negative or poor real returns’ in markets for the next five years

MarketWatch/Staff/10-11-2022

graphic rendering the value of money
“You are going to be talking about the value of money, the diminished value of money. You are going to be talking about low returns. You’re going to be talking about restructuring the way things are being done. You’re going to talk about internal political conflict in a greater way than we’re now hearing about it. And I think you’re going to be talking about external political conflict — the change in conflicts and power internationally.”

USAGOLD note: MarketWatch catches up with Bridgewater’s Ray Dalio. He has some important things to say about major changes ahead at the link.

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Is it a good time to buy physical gold?

Money Week/Dominic Frisby/10-12-2022

“I remember 2008 like it was yesterday. Gold cratered along with everything else in the second half of that year. It lost around 30% – falling from close to $1,000/oz to $720. The mining companies fell by a lot more. Yet there was a scramble in the physical gold markets. Bullion dealers had never been so busy. The general public were rushing to get their money “outside the system” into an asset that was nobody else’s liability.”

USAGOLD note: We were one of the firms at the center of the 2008-2009 demand storm. The situation today is similar but not what it was then – not yet anyway. It is important, though, for would-be gold investors to understand that the time to buy gold is when market conditions are relatively stable as they are now. When the dam breaks (and the current situation in the United Kingdom is a good example), premiums rise, delivery times lengthen and sometimes there is zero availability of popular portfolio inclusions. Something to think about if you believe we are in the quiet period before the storm.

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Posted in Gold-silver price predictions, Today's top gold news and opinion |

The Wizard of Oz is a story about the dangers of the gold standard

BigThink/Marianne Hayes/9-29-2022

photograph of original cover for the wonderful wizard of oz book“The Wizard of Oz film was actually based on an L. Frank Baum novel, which was published in 1900 amid  political tension in the U.S. Previously, the Coinage Act of 1873 had effectively stomped out the policy of bimetallism in the U.S. As a result, if you held silver bullion, you could no longer use it to make U.S. coins. This was followed by an economic depression and a rallying cry from many Americans to bring back bimetallism.”

USAGOLD note: In short, removing silver as a source of minted money sharply reduced the money supply creating an economic depression. Those who advocated a bimetallic standard were the “easy money” faction while those who advocated a gold-only standard represented a tight monetary policy. Many years ago, we posted professor Quentin P Taylor’s interpretation of L. Frank Baum’s beloved book at our Gold Classic’s Library. “Money and politics in the Land of Oz” was an instant hit and continues to receive a steady stream of visitors to this day.

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UK’s Royal Mint lifted by market turmoil as demand for gold surges

Financial Times/Daniel Thomas/10-13-2022

graphic image of gold king chess piece“Market turmoil during the past year has boosted the performance of the Royal Mint as demand for gold coins and precious metals surged, pushing the UK’s oldest surviving manufacturer’s profits to a record high.”

USAGOLD note: When the chips are down, the prudent citizen reaches for gold.

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Gold coins found under kitchen floor in East Yorkshire home sell for £754,000

HullLive/Ivana Finch/10-8-2022

photgraph of 1644 Charles I gold coin“The auctioneer who sold the coins called the final sale price “absolutely extraordinary” after they were initially evaluated at a price estimate between £200,000 to £250,000. But after the story got so much attention worldwide, the coins were sold in dozens of separate lots by Spink & Son auctioneers in London, which added up to the incredible £754,000.”

USAGOLD note: This is the final chapter in the story of the gold coins found under the floorboards of house undergoing renovation in Yorkshire, UK. We first posted news of the find about three weeks ago, and thought you might appreciate the update. In explaining the widespread interest in the auction, Spink’s Gregory Edmund said the coins presented “an extraordinary opportunity to appreciate the complicated English economy in the first decades of the Bank of England and significant distrust of its new-fangled invention the ‘banknote'”. That bit of history will not be lost on those with a similar temperament in Britain now watching the pound sterling descend toward parity with the US dollar.

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The gold market’s great migration sends bullion rushing East

Bloomberg/Eddie Spence and Sing Yee Ong/10-9-2022

China bullion bar“There’s a global migration underway in the gold market, as western investors dump bullion while Asian buyers take advantage of a tumbling price to snap up cheap jewelry and bars.”

USAGOLD note: An update on an important gold market development we’ve been tracking closely over the past few weeks. The fact that the East is willing to pay the higher premiums reported in this article is in itself an interesting turn of events. Refineries report they are “trying to keep up with demand best they can.”

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Physcial gold demand soars

Numismatic News/Patrick Heller/10-6-2022

image of 500 gram gold bar with chart in background“It turns out that physical gold demand in China and Turkey is so strong that importers are paying significant premiums above the world gold spot price to secure supplies. In China, importers are paying $20-$45 per ounce over the spot prices. In Turkey, a nation ravaged with very high inflation, importers are paying $80 per ounce above the spot price.”

USAGOLD note: Heller updates on the physical shortages developing around the globe – a circumstance he sees as boding well for October’s price action.

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Optimal investment portfolio should include 4-6 percent silver

The Silver Institute-Oxford Economics/9-29-2022

“While silver’s price movements are often closely correlated with gold, Oxford Economics’ analysis suggests that silver’s return characteristics are sufficiently different from gold to make it a valuable diversification tool that deserves its own portfolio commitment. With over half of global silver demand used in industrial applications, the price of silver tends to be more sensitive than gold to trends in the global industrial cycle, contributing to its higher volatility. Moreover, silver is likely to benefit from an increasingly positive structural demand outlook over the medium term, given its use in many green technologies, indicating that we may be entering a period where the gold-silver price ratio shifts back in favor of silver.”

USAGOLD note: The differentiation of silver from gold in their portfolio roles caught our attention – a point we have never seen made before – at least with such direct logic. Impeccably timed, TSI released this study the day silver gained 9% while gold gained 2.5% – lending support to the thesis stated above that the gold-silver price ratio might shift back to favoring silver.

Gold-silver ratio
(1970 to present)
chart showing the gold silver ratio from 1970 to present
Chart courtesy of MacroTrends.net

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London gold dealer runs out of bullion as Truss budget shocks

Bloomberg/Eddie Spence/10-1-2022

Cartoon illustration good money drives out bad ed stein“’Buying has increased exponentially,’ said Ash Kundra, who runs coin dealer J Blundell & Sons in London’s historic Hatton Garden jewelry quarter. ‘I keep running out of coins, I keep running out of bars.’”

USAGOLD note: The situation in London as reported above serves as a reminder how important it is for investors to secure their holdings before, not after, a crisis becomes headlines. If you believe that (a) a crisis is in the making, and (b) precious metals are the best way to hedge it, you should not delay putting back the hedge you think you need. If nothing else, it will save you money in the higher premiums usually attached to coins and bullion once the crisis hits. The situation in Britain has most likely become even more pronounced now that the Bank of England has returned to quantitative easing to deal with the potential collapse of several pension funds. Bad money, as Gresham taught us, drives out good.

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Gold buying once again on the agenda for central banks

International Banker/Nicholas Larsen/9-28-2022

photo image of gold bars stored at the Bank of England“In contrast to currency reserves, however, gold’s durability, scarcity and finite supply are just some features that provide central banks with surety and trust during times of uncertainty and market turmoil. As such, it provides them with crucially stable assets in their reserves. Gold also tends to have an inverse relationship with another global reserve asset—the US dollar—which means that central banks can load up on gold to protect the value of their reserves when the dollar loses value.”

USAGOLD note: One cannot help but recall, under these circumstances, Britain’s decision in the late 1990s to auction off a significant portion of its gold reserves in order, it said, to diversify into various currencies. What would it give today to have that asset still on the books – one it sold for under $300 per ounce? As it turns out, the BoE sale was among the last major liquidations before the group went from net sellers of the metal to net buyers in 2011. Since then, central banks have added over 5000 metric tonnes to their reserves.

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‘Rich Dad Poor Dad’ author Robert Kiyosaki says the ‘everything crash’ is underway – and trumpets it as a rare chance to make a fortune

MarketsInsider/Theron Mohamed/10-3-2022

photo of gold coins on newspaper graph with arrow pointing higher“He predicted [gold, silver and crypto] would tumble along with the broader market, but advised investors to take advantage of cheaper prices and purchase more of them — as he expects them to surge once the Federal Reserve ends its campaign of interest-rate hikes.”

USAGOLD note: Kiyosaki has been very aggressive about gold and silver ownership during this break which began early in 2022 based on a firm belief in assets detached from the financial system.

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Notable Quotable

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“We have a distinctive philosophy around gold. We believe gold has unique risk/reward characteristics that enable it to help preserve real value over the long term. We use gold as a potential hedge and do not speculate on its price over the next six to 12 months. We believe it is not possible to forecast the price of gold or, for that matter, the price of other investment assets. This, in fact, is why we have a potential hedge …”

Thomas Kertsos
First Eagle Investment Management
Gold Hub interview

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Posted in Gold-silver price predictions, Notable Quotable, Today's top gold news and opinion | Tagged , |

Paper vs physical gold and silver and why the precious metals sector should rally

Investment Research Dynamics/9-26-2022

“Something stopped the selling of paper gold and silver back then – some trigger event – and the paper shorts scrambled to start covering, driving the market higher and setting off a 2 1/2 year bull move in the precious metals sector.  Whatever that catalyst was – and it was connected to the de facto credit market/banking system collapse – will be triggered again. It’s a matter of timing.”

USAGOLD note: Kranzler makes reference to the “bifurcated” structure of the gold market – paper gold vs. physical gold. As a result of the low pricing generated in the paper market, he says, there has been a large flow of cheap gold and silver to buyers in the Eastern hemisphere. Now, he cautions, “the set-up in the markets is startlingly similar to that of late September and early October 2008.” He predicts a similar trigger event to occur possibly before Christmas.

Gold price and major market events of 2008
annotated line chart showing gold in 2008 before and after quantitative easing announced
Sources: St. Louis Federal Reserve [FRED], ICE Benchmark Administration, London Bullion Marketing Association
Annotations by USAGOLD

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John Paulson’s views on gold

Bloomberg/Michael P. Reagan/9-25-2022

cartoon on sticking with gold over stocks
“One thing about gold is that it’s down this year, more or less 8%. It’s down a lot less than stocks or bonds. So it has proven to be a source of protecting wealth.”

USAGOLD note: Paulson’s latest views on gold are included in a more expansive interview at the link. We cited this interview in yesterday’s DMR and repost it here for those who may have missed it. He explains how the positive real rate of return has kept a lid on gold and outlines a technical scenario under which all that could change.

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Gold miners look beyond Fed hikes to predict return to $1800

Yahoo!Finance-Bloomberg/Yvonne Yue Li/9-20-2022

photo of two gold miners' bars“Not even the most hawkish Federal Reserve in decades can beat down the exuberance of gold enthusiasts at the industry’s biggest annual gathering. Bullion prices will reach $1,806.10 an ounce by year-end, according to the average estimate in a survey of 10 participants at the Denver Gold Forum, the yearly meetup of mining executives, investors, bankers and analysts.”

USAGOLD note: That’s a pretty good move if it does in fact materialize before year-end …… The consensus has gold rising on “heightened geopolitical and economic risks.”

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Posted in Gold-silver price predictions, Today's top gold news and opinion |

Silver inventories plummet at LBMA and COMEX

Numismatic News/Patrick A. Heller/9-15-2022

photo of three silver bars“Where is the physical silver going that is leaving the LBMA and COMEX? Metals Focus India reports that silver demand in that country, perhaps the world’s top silver consuming nation, is now so strong that the silver price in India is trading at a premium to the world silver spot price. In July 2022, almost 58 million ounces of physical silver was imported into India. This was at least 50 percent higher than in any month in the previous four years and may be an all-time high record amount of imports into India in any month.”

USAGOLD note: Silver, like gold, is traveling west to east. We cited this article in Tuesday’s DMR and repost it here for those who may have missed it.

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Charlie Munger predicts a horrible economic crisis where everything will collapse

NewTraderU/Steve Burns/9-3-2022

photgraph of a cumpled greenback“I would not predict that our modern politicians will be as willing to permit a new Volcker to get that tough with the economy and bring on that kind of a recession. So I think the new troubles are likely to be different from the old troubles. You may wish you had you had a Volcker style recession instead of what you’re going to get.”

USAGOLD note: It is worth noting not just what Munger has to say, but the conviction with which he says it. These are deeply held views, Though not a full transcript, the link above includes some of the key quotes from his YouTube interview in text form. “I think the safe assumption for an investor,” he says, “is that over the next hundred years, the currency is going to zero. That is my working hypothesis.” (For more, please see Wednesday’s Daily Market Report.)

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As global powers fight it out, commodity prices are set to rocket

Money Week/Dominic Frisby/9-1-2022

graphic of World War III with question mark“Well, gold. Russia and China both have lots – we have long argued that China’s gold reserves are ten times what they say they are.  But governments everywhere, whether controlled by tyrants or technocrats, are always going to want to maintain the option to print, debase and manipulate, so gold alone is unlikely. But you never know. Yet against this highly-bullish-for-commodities backdrop, we have a situation here in the west that looks like the dead cat bounce in stocks is now over, and the bear is again gnashing his teeth.”

USAGOLD note: Frisby takes some time to consider commodities, including the metallic variety, Russia’s answer to Davos, and the latest musings from Credit Suisse’s Zoltan Poszar.

 

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‘Why shouldn’t it be as bad as the 1970s?’: Historian Niall Ferguson has a warning for investors

CNBC/Karen Gilchrist/9-3-2022

graphic showing the 1970s do not equal the 2020s“Speaking to CNBC at the Ambrosetti Forum in Italy, Ferguson said the catalyst events had already occurred to spark a repeat of the 70s, a period characterized by financial shocks, political clashes and civil unrest. Yet this time, the severity of those shocks was likely to be greater and more sustained.”

USAGOLD note:  Much of Wall Street is in denial of the future Ferguson sees knocking on the door……

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War and industrial policy

AdvisorAnalyst/Zoltan Pozsar, Credit Suisse/8-24-2022

world map divided between Eurasia left and NorthSouth America right

“Finally, the U.S. got very rich by doing QE. But the license for QE came from the ‘lowflation’ regime enabled by cheap exports coming from Russia and China. Naturally, the top of the global economic food chain – the U.S. – doesn’t want the lowflation regime to end, but if Chimerica and Eurussia are over as unions, the lowflation regime will have to end, period. As we noted in our prior dispatch, the special relationship between China and Russia (‘Chussia’) is a powerful one: a marriage of commodities and industry, uniting the largest commodity producer (Russia) and the factory of the world (China), potentially in control of Eurasia.”

USAGOLD note: Pozsar’s latest and a must-read for forward thinkers…… We are in an economic war, he says. Forget the BRICS and focus instead on TRICKS (Turkey, Russia, Iran, China, and North Korea) – the alliance of the sanctioned. “Forecasts of a rapid deceleration of inflation are naively optimistic,” he warns.

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Sweden, Austria start bailing out energy companies triggering Europe’s “Minsky Moment”
ZeroHedge/Tyler Durden/9-3-2022

“Prime minister Magdalena Andersson said the government would offer hundreds of billions of kroner in support to electricity producers, the FT reported. The PM warned that, left unchecked, rising collateral demands for electricity producers could ripple through the main Nasdaq Clearing market in Stockholm and, in the worst case, spark a financial crisis….”

USAGOLD note: Russia cut off natural gas flow through the Nordstream pipeline “indefinitely” late last week due to what it called a “technical fault,” according to a report over the weekend from Financial Times.

______________________________________________________________

Image attribution: Maulucioni, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons

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‘Dr Doom’ warns of an epic market crash is likely, suggests hedging with gold and other alternative assets

MarketsInsider/Theron Mohamed/9-2-2022

cartoon showing gold as something to be used in times of uncertainty“The upshot is the rate hikes needed to rein in inflation could tank the economy, and cause crashes across stocks, bonds, housing, credit, private equity, and other assets in bubble territory, [Nouriel] Roubini said. If that fallout spurs the central bank to give up on fighting inflation, price increases could spiral out of control as well, he continued.”

USAGOLD note: Columbia University’s Roubini worries about a “stagflationary crisis” and suggests investors hedge their portfolios with “alternative assets such as short-term and inflation-indexed bonds, gold and other commodities, real estate, infrastructure, and even bitcoin.”

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Investors should buy commodities as the risk of a recession remains low over the next year, Goldman Sachs says

MarketsInsider/Matthew Fox/8-29-2022

“Investors should buy commodities as a recession outside of Europe appears unlikely over the next year, Goldman Sachs said in a note on Monday. The bank said that heightened fears of an imminent recession have pummeled commodity prices in recent months, making them especially ripe to be purchased by investors looking for a good deal.”

USAGOLD  note: The Wall Street investment bank is sticking with its bullish commodities forecast. Even with the correction over the past few months taken into account, commodities, as measured by the S&P Goldman Sachs Commodities Index, are up over 22%.

S&P Goldman Sachs Commodities Index
(%, year to date)
line chart showing the S&P Goldman Sachs Commodity Index year to date
Chart courtesy of TradingView.com

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Catalyst for $3000 gold: Central bank buying

Lombardi Letter/Moe Zulfiqar/8-24-2022

Photo of pallettes of gold bars purchased by Hungary's central bank“You’ll rarely hear from the mainstream media about central banks loading up on gold. It’s astonishing what central banks have been doing lately. In fact, three of the most certain things about central banks are: they like gold, they are buying gold, and they will continue to buy gold.”

USAGOLD note: Central banks have been adding gold to their holdings at an impressive rate in recent years. The World Gold Council reports a continuation of that trend with 270 tonnes in central bank acquisitions for the first half of the year. Qatar yesterday reported adding almost 15 tonnes to its holdings last month. Zulfiqar sees ongoing central bank gold interest as the key catalyst for sending the price to $3000 per ounce.

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The bear and the gold bull (and the dragon)

Forbes/Clem Chambers/8-24-2022

“The Russian war chest may likely be holding gold back and for me the strategy is to accumulate, because either the conflict ends or the war chest empties or both, and with a lot of inflation in the meantime, when that occurs gold will go up a lot. Unless better long term opportunities come by, a fair chunk of my portfolio will be golden.”

USAGOLD note: Chambers’ hunch, which we featured in Friday’s DMR, may have been prescient. The Moscow Times reports that Russia has been selling gold to China – at a 30% discount to spot! It’s more about the bear and the dragon than the bear and the bull.

 

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For the first time in a generation, investment managers need to seriously consider persistent inflation

MarshMcClellan/Mercer Insights/8-24-2022

graphic illustration of gold coin stacks against a chart background

“Gold is a special case commodity. Historically, it has done well when fear of inflation is high, specifically inflation driven by monetary expansion, having a high sensitivity to inflation when inflation is on a runaway trajectory.… That gold often comes into its own in higher inflation scenarios is related to its close relationship to currency debasement.”

graphic image of a book and reading glasses A Good Weekend ReadUSAGOLD note: MarshMcClennan is a professional firm that advises wealth managers, private banks and family offices. It says that money managers in the past were geared to a disinflationary climate suited to stock and bond ownership. Now, a sea change has occurred in which investors will be forced to deal with rising inflation “when inflation is already high.” As such, “for the first time in a generation,” a different approach is required – one that includes commodities and gold.

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Posted in Gold-silver price predictions, Today's top gold news and opinion |

A major low for silver

MoneyShow/Clif Droke/8-18-2022

Photo stacks of silver bullion coins

“Recent CFTC Commitments of Traders (COT) reports reveal that commercial hedgers (the so-called ‘smart money’ in the silver market) are at one of their lowest levels of holding short positions in years. (See chart below.)… Moreover, [the Silver Institute’s World Silver Survey 2022] predicts total silver supply this year will exceed 32,000 tons, not enough to match the more than 34,000 tons of silver demand projected, leaving a market deficit of around 2,220 tons.”

USAGOLD note: Though the price of silver has declined steadily throughout the summer, demand has remained extraordinarily strong. The sky-high premiums on modern silver bullion coins – notably the American Eagle now trading at a more than 70% premium – testify to that demand. Analyst Clif Droke now thinks the silver futures market might play a little catch-up. Droke also points out a notable decline in the LBMA silver stockpile now at its lowest level since 2016. The last time LBMA holdings got this low, the price rallied 17%. “Putting all the pieces together,” he says, “silver’s outlook is as positive as it has been in recent memory.”

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Posted in Gold-silver price predictions, Today's top gold news and opinion |

How to protect your wealth as inflation hits new record highs

MoneyWeek/Dominic Frisby/8-17-2022

“Inflation in the UK has just hit 10.1%, says the Office for National Statistics. That is five times the Bank of England’s stated target of 2%. FIVE TIMES! Sorry to shout. The joy of the public sector is that you can be this bad at your job and still keep it.”

USAGOLD note: A quick look down the roster of nations shows that most, including the United States, are nursing lending rates far below the inflation rate. Only China and, surprisingly, Brazil have their base lending rate above the inflation rate. Frisby’s conclusion? “The most obvious asset to own in all of this is gold.”

table showing inflation and lending rates leading nations states August 2022Table courtesy of TradingEconomics.com

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Posted in Gold-silver price predictions, Today's top gold news and opinion |

Expect the next bear-market downturn soon as traders underestimate inflation

Bloomberg/ Mark Cudmore/8-17-2022

cartoon image of airborne money bags“My underlying thesis since last year has been that we’re in an unprecedented inflation-regime shift. Such levels of inflation have been seen before (more than 40 years ago), but never in such a direct and speedy transition from decades of low inflation. So the market will continuously underestimate and underappreciate the scale of the problem. As part of that, I have regularly argued that front-end yields need to go significantly higher still. And, importantly, there’s no risk of a Fed put and it doesn’t matter when inflation peaks, but how sticky it is.”

USAGOLD note: To paraphrase a famous comment, paradigm shifts can only be recognized in retrospect. If we are in a new and unprecedented inflation regime, as Cudmore theorizes, Wall Street has yet to recognize it choosing to believe instead that somehow the Fed is going to keep a lid on it.

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Posted in Gold-silver price predictions, Today's top gold news and opinion |

The gold standard, the golden jubilee and role of gold in the investment portfolio

The Data Driven Investor/Olegs Jemeljanov/8-12-2022

photo of pile of Swiss 20 franc gold coins – Helvetia

“[T]he demand for gold persists due to the fact that during periods of instability and higher price volatility, the price of gold tends to have a negative correlation with the prices of other assets. This implies that in situations of financial stress gold prices often rise while prices for other assets fall, thereby increasing the role of gold as a universal ‘diversifier’ of the investment portfolio, regardless of the source of financial stress. This differentiates gold from other ways to protect the value of your portfolio by using, for example, derivative financial instruments since these are focused on protecting the portfolio against some specific risks.”

graphic image of a book and reading glasses A Good Weekend ReadUSAGOLD note: In this captivating profile, analyst Dr. Jemeljanov passes along an old Scottish proverb on building financial security: “Get what you can, and keep what you have, that’s the way to get rich.” Gold, he believes, plays a critical role in the second part of that formulation.

 

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Posted in Gold-silver price predictions, Today's top gold news and opinion |

Is gold cheap relative to equities?

Money Week/Dominnic Frisby/8-12-20222

“Effectively, you are measuring stocks in money that hasn’t been debased. There are many who argue that the gold price is suppressed, but let us put such thoughts to one side and accept that, even if it has, gold’s value – its purchasing power – has preserved way better than the US dollar’s, or indeed any national currency.”

USAGOLD note: Frisby takes at look at the DJIA-Gold ratio and runs through the many possibilities – bullish and bearish. …… One striking feature  in the chart below is the stability in the ratio prior to the founding of the Fed and the volatility after, hence Frisby’s comment featured above.

overlay line chaft showing the DJIA-gold ration with annotations and trend channel
Chart courtesy of GoldChartsRUs

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Posted in Gold-silver price predictions, Today's top gold news and opinion |

The emotional scars of inflation will shake the foundations of Western societies

MarketWatch-Project Syndicate/Diane Coyle/8-16-2022

cartoon unage if silver dollar bicycle racing ahead

“Until this year, inflation in advanced economies like the United States and the United Kingdom had been so low for so long that one needed to be well into middle age to remember what living through the price surges of the late 1970s was like. It was bad.… But the headline numbers do not reveal the toll that high inflation takes.”

USAGOLD note: Market analysts tend to crunch the numbers without giving much thought to the net effect of economic maladjustment – like inflation – on daily life and the culture in which it occurs. Coyle makes reference to the 1970s and the German nightmare inflation of the 1920s, which continues, she says, to have “an impact on economic policy-making to this day.” Too, we would attribute a large proportion of the robust demand for gold and silver coins over the past year to older investors who remember the debilitating effects of the 1970s stagflation – and how well investors did who purchased those items in the early part of the decade.

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Posted in Gold-silver price predictions, Today's top gold news and opinion |