“You will not hear about this in the mainstream financial press: there’s a gold rush happening at the moment, and it’s getting bigger. It makes a strong case for much higher gold prices. Understand that gold prices move based on demand and supply. If demand is increasing, price tends to move higher.”
USAGOLD note: We referenced this newsletter in yesterday’s DMR and repost it now for those who may have missed it.
Repost from 11-4-2020
“We want you on board the gold train as it pulls out of the station. It’s also important to understand why you’re on board. Gold is — and always has been — the world’s favorite safe haven. That is, during times of uncertainty, insecurity, economic or political upset, war, devaluations and more, gold has always come out as #1. And this impressive track record goes back more than 5,000 years.”
USAGOLD note: This overview from the Aden Sisters – the widely followed chart analysts – is an excellent primer for those new to the gold market, i.e., why it has always made portfolio sense and why it makes sense now and for the future – “the best investment in the world today.”
Repost from 8-16-2020
“Specifically we see ongoing US dollar weakness, deeper negative real rates in the treasury markets and a significant rise in unproductive debt as the Democrats open the spigots with fiscal stimulus as supporting factors. With the economy still contracting in Q1, we expect a bounce in H2 as the vaccine frees up the economy. With the recovery comes demand-pull as well as cost-push inflation further fuelled by the higher velocity of money, leading to expectations of much higher inflation, notwithstanding the weak labour markets.”
USAGOLD note: Ross Norman has finished high or won the annual LBMA price forecasting contest (including last year’s) that one is forced to pay attention. He sees $2025 as the average price, $1810 as the low, and $2285 as the high. Norman says physical demand for silver coins and bars will show “impressive gains,” reflecting ‘strong demand for safe havens in these troubled times.” He sees $36 as the high for gold’s traveling companion.
“Low rates and yields are typically positive for gold, as they minimise the opportunity cost of holding the zero-yielding metal. Moreover, given exceptionally low yields (or, in other words, high bond prices), the effectiveness of bonds as a hedge against market turmoil, and in particular equity market corrections, is hampered as it becomes harder to see yields fall much more. This forces investors towards other portfolio diversifiers, something that should continue to benefit gold.”
USAGOLD note: London-based Metals Focus forecasts that gold will push toward the $2000 mark once again over the next few months then “reaching all time highs later in the year. It also give a thumbs up to silver saying it will peak “in the high $30s before year end.”
Repost from 1-14-2021
“A snippet from Citi’s outlook for the coming year: Citi analysts look for gold prices to move toward US$2,100/oz over the next 6-9 months, before moderating in 2022. Overall, gold prices could average US$1,900/oz in 2021.”
USAGOLD note: Please keep in mind that the big institutions adjust their forecasts during the course of the year as circumstances change. Over the past few years, Citibank has been consistently bullish on gold.
Repost from 1-8-2021
“Silver is down 50 percent from its all-time high. Gold is down 10 percent from its all-time high, less than 10 percent. I will buy both, but I will buy more silver than gold.” – Jim Rogers, Rogers Holdings
USAGOLD note: Rogers climbed aboard the silver bandwagon some time ago. In this article, he also warns about high-flying tech stocks being in a bubble. He says he is not good at timing markets but imagines “the bubble will pop later in 2021.”
Repost from 1-12-2021
“Silver prices could go much higher. It looks like a silver price of $50.00 per ounce could arrive much sooner than many have expected. You have to look at the demand for the gray shiny metal. Saying the very least, it’s through the roof. But don’t expect to hear much about it in the mainstream financial press.”
USAGOLD note: We posted Lombardi Letter’s take on gold last week. Here is its prediction on silver. Please see the post immediately above.
Chart courtesy of TradingView.com • • • Click to enlarge
“It was a long-term national and economic policy strategy decision to increase the size of our gold holdings. The decision was driven by stability objectives; there were no investment considerations behind holding gold reserves. In normal circumstances, gold has a confidence-building feature, so it may play a stabilizing role and act as a major line of defense under extreme market conditions, in times of structural changes in the international financial system, or during deep geopolitical crises. The central bank also decided to repatriate overseas gold holdings. Holding precious metals within the country is consistent with international trends, enhances financial stability, and may strengthen market confidence in the Hungarian economy.”
USAGOLD note: We referenced this report in this morning’s DMR and repost it here for those who may have missed it. Central banks, in short, hold gold for the very same reasons that private individuals do. Rekasi says central banks do not buy gold through ETFs but via over-the-counter transactions or through purchases from domestic producers. In other words, they buy the metal itself (not paper representations) for strategic safe-haven purposes and are not making a price bet. In this interview, Rekasi skillfully outlines the rationale for gold ownership in the context of the contemporary financial environment for individuals, funds and institutions alike.
Repost from 11-20-2020
“After a spectacular year, precious metals are set for further gains in 2021, with silver tipped to outperform, but analysts are growing more cautious about the prospects for gold as the global economy recovers from the impact of the coronavirus.”
USAGOLD note: Reuters weighs in on the precious metals for 2021 with a mostly bullish appraisal of the future. 2020, as Hobson points out, was a very good year ……
Repost from 1-2-2020
“Gold has not only stabilized as expected above its short, medium and long-term moving averages but has also broken its downtrend from last August and we remain of the view weakness from August is a correction within the longer-term bull market.”
USAGOLD note: It’s the markets that fail to correct in a natural fashion of which we should be suspicious. We agree with Credit Suisse’s baseline assessment that the weak market since August is a correction within a bull market. Not sure why the $1966 November high is the magical number ……
USAGOLD note: Hathaway runs through a list of factors likely to affect the price of gold – dollar depreciation, deficit spending and government debt, economic underperformance, low interest rates, etc. He reference’s a 30% decline in the dollar as very bullish for gold. He touches on a subject we have visited often: the net effect of institutional money moving into gold. (He says even a 1% move of $100 trillion in assets under management into gold could translate to a gold price five times its current level.
Repost from 11-16-2020
“Gold can enhance any investment portfolio in four key ways. It generates long-term returns, acts as a diversifier and mitigates losses in times of market stress, provides liquidity with no credit risk and, finally, improves overall portfolio performance.”
USAGOLD note: This article, written with the first-time investor in mind, lays out the basic rationale for gold ownership in clear-cut terms.
Repost from 12-30-2020
“The United States Mint (Mint) today unveiled new reverse (tails) designs for bullion and collectible versions of American Eagle Gold and Silver Coins. 2021 marks the 35th Anniversary of the American Eagle Coin Program, and the new designs will begin appearing on these coins in midyear 2021. “These beautiful designs build on the United States Mint’s heritage of artistic excellence and fortify the American Eagle Coin Program’s status as an icon in the numismatic and art worlds,” said Mint Director David J. Ryder.
USAGOLD note: Gold eagle bullion coins will be struck with the portrait design (top) and silver eagle bullion coins with the flying eagle design (bottom). USAGOLD will carry these items to be introduced, as indicated above, midyear 2021.
Repost from 10-4-2020
“It’s bumping up against the top line of that trend channel right at $1,900. So, if it can break above that, that’s going to be bullish.” – Matt Maley, Miller Tabak
USAGOLD note: Been there. Done that. In the space of a couple days from when this CNBC article was published. Analysis for those who lean to the technical ……
Chart courtesy of TradingEconomics.com • • • Click to enlarge
“The most dangerous attacks of all are those in which the enemy penetrates a bank or stock exchange, not to disable it or steal information, but to turn it into an enemy drone. Such a market drone can be used by attackers for maximum market disruption and the mass destruction of Americans’ wealth, including stocks and savings.”
USAGOLD note: The above is a Pentagon war games scenario in which Ricards was a participant. Though he doesn’t mention the cyberattack last month on several federal government agencies (deemed “the worst ever”), it serves as a warning of financial markets vulnerabilities in the modern era. He says that “[t]he answer to both threats – collateral damage and digital warfare – is to have some hard assets in physical form that cannot be attacked digitally. These include physical gold and silver, land and fine art. These are the things that cannot be erased in a digital attack or frozen when payment systems are disrupted.” It just so happens that those are the same shelters the wealthy have used for centuries as a hedge against the unexpected.
“As long as Wall Street has been in existence, it has been a tradition around this time of year for market participants to make predictions about what might happen to stock prices, interest rates, commodities and exchange rates in the following 12 months. These predictions garner a lot of attention, as they are made by very smart people with access to the best data and vast resources at their disposal. And yet, far more often than not these predictions end up being hilariously wrong.”
USAGOLD note: In line with our commentary further down the page, we post Dillian’s views on the subject of annual market forecasts. It is because markets and events are so unpredictable that gold (old reliable) makes so much sense as a portfolio inclusion. Dillian, the editor of The Daily Dirtnap, is among our favorite market commentators these days and we link his writings often here. Highly readable, baseline insight at the link above ……
“Gold has been around for thousands of years. Bitcoin has been around for 20 years.”
USAGOLD note: Gartman has been back and forth on gold over the years. At the moment, he appears to be solidly in the gold camp and vehemently negative on bitcoin saying it is “utterly illogical.”
Image of Croesus Lydia stater courtesy of the British Museum, 7th century BCE, the first gold coin
Repost from 12-28-2020
“Goldman Sachs is on board, with their head of commodity research, Jeffrey Currie, stating on Dec. 8, 2020, that the world is entering a long-lasting bull market for commodities. Most investors are not positioned for this forthcoming reality, even though the transition is already underway … The good news, if you are reading this, is that we are early in this transition process, and there’s still plenty of time for those who have enjoyed an amazing decade plus long bull market in traditional stocks, bonds, and real estate securities, to reposition their portfolios to benefit from the winners of the next decade.”
USAGOLD note: Commodities, in general, will benefit from the rotation KCI Research envisions – but the king and queen of the commodities are gold and silver and they are likely to be the most direct and easily understood beneficiaries. Goldman’s Jeffery Currie, by the way, has been a staunch advocate of gold and silver ownership over the past few years.
Repost from 12-23-2020
“Goldman Sachs argues that gold has much more upside to come next year. The firm says that while gold may trade more rangebound in the next few months, there will be further upside in bullion as it is bought as a hedge against dollar debasement.”
USAGOLD note: An update on Goldman’s bullish stance for 2021 …… If the firm is right on rangebound trading for the next few months, it could prove beneficial for long-term accumulators with an eye to Goldman’s ultimate target – $2300 per ounce.
Repost from 11-16-2020
“We’re in very uncharted waters. Nobody has gotten by with the kind of money printing now for a very extended period without some kind of trouble. We’re very near the edge of playing with fire.” – Charlie Munger
USAGOLD note: Munger, for those who don’t recognize the name, is Warren Buffet’s business partner at Berkshire Hathaway. This link takes to a nearly hour-long video interview. He says that much has happened in the investment business in the last several years, not all of it good. Basic philosophy and practical advice offered by a legend ……
Repost from 12-21-2020
“Given the widespread perception that the dollar is a haven asset, a decline in the dollar highlights a move into riskier assets over safer bets. Thus it should not necessarily surprise us that silver outperforms as the traders look for risk. With that in mind, the dollar decline forecast by many for 2021 could bring significant outperformance for the price of silver.”
USAGOLD note: We caution that silver’s volatility works both ways. In short, the downsides relative to gold can be just as pronounced as the upsides as a good many silver investors have discovered over the years. Silver should not be viewed, in our estimation, as a substitute for gold, but a complement – something that gives the investor who understands it, and is willing to shoulder the risks, greater upside potential.
Repost from 12-21-2020
“Physical investment is expected to surge by 27 percent to 236.8 Moz in 2020, which would be a 5-year high. The largest retail market for bars and coins, the US, will lead the way with a projected 62 percent gain.”
USAGOLD note: It has been a very good year for silver investment as we have reported consistently on this page. Demand is up and so is the price. For those who like to peruse the numbers, the Silver Institute offers its supply and demand projections for 2020 at the link above.
Repost from 12-21-2020
“At the time of this writing, there seems little chance of the bear case scenario coming to pass. Right now, the global situation seems poised somewhere between the base and bull case scenarios.…Gold’s diversification properties may help investors seeking to preserve value in their portfolios during that difficult navigation ahead.”
USAGOLD note: Milling-Stanley’s bear case has gold at $1600 to $1800; the base case at $1800 to $2000 and the bull case at $2000 to $2300. He is the Head of Gold Strategy at State Street Global Advisors.
Repost from 12-18-2020
“For the record, I am not a Gold-bug; but buy me a well-mixed Sidecar and I may nod in that direction. In 5000 years of human history, there is no record of a kingdom printing the currency of the realm at a faster pace than the growth of the economy without generating inflation.“
USAGOLD note: Bassman, who formerly plied the investment trade at Merrill Lynch and most recently at PIMCO, now heads a “hedge fund of one” and still comments occasionally on the financial markets and investments. Gold is among the investments he thinks “will do well over the intermediate horizon – two to five years.”
Repost from 12-18-2020
“The ‘seemingly crazed idea’ that the US dollar will collapse against other major currencies in the post-pandemic global economy is not so crazy anymore, the economist Stephen Roach told CNBC’s “Trading Nation” on Wednesday.”
USAGOLD note: Roach also says that there is 50% probability that we will see a double-dip recession in the United States. Some believe that the numbers that came at the end of last week – the jobs and durable goods – indicate a slowdown might have already begun.
Repost from 9-25-2020
“For gold, is the top in? If you look at the fundamentals, it does not appear to be so. This correction appears to have been an opportunity for those who missed the previous move to get into the gold market. We recommend 15% or more of your net worth being in gold. Some trade 80% or 90% of their net worth in gold. We have not yet seen the true demand for gold or what the demand can do to the price of gold. Gold at $3,000, $5,000 or $10,000 may be reached. If we don’t get the economy back to some sort of normal, gold is just going to keep rising.”
USAGOLD note: We hadn’t looked at a chart on gold volatility in a while and were surprised at the sharp rise since mid-July.
Repost from 8-17-2020
“Silver tends to do well when there is a favorable environment for gold. As such, it should respond positively to the same favorable macroeconomic, monetary conditions and fiscal drivers as does the yellow metal. Since silver has a historical volatility roughly double that of gold, based on historic norms it should outperform gold, when the yellow metal once again follows an upward price trajectory.”
USAGOLD note: If silver did reach $30 in 2021, the return would be 25% based on the current price of $24 per ounce – a pretty nice gain in a 0% world.
Repost from 12-16-2020
“Measured from the generational low in gold prices under $300 an ounce between 1999-2001, the best time of the year to own this hard money, store of value has been during the winter months of December through February. (Using longer-term data analysis over many decades, early December to late February has equally proven a terrific time to own gold.) In this article I will explore the bullish seasonal period now beginning, from December 13th to February 13th specifically. This 2-month span may be ‘the’ smartest time of the year to own gold. And, after months of price decline and renewed skepticism about gold, the odds look to favor a sharp upmove yet again this annual cycle.”
USAGOLD note: We’ve called attention to gold’s seasonal inclinations in the past. In this article, Franke takes the historical record up to date with some observations on current market psychology. “Gold is increasing in value,” he says, “as a money printing hedge. As far as I can tell, Biden and the Democrats will side with the Federal Reserve’s weak outlook diagnosis and continue to stimulate economic demand through deficit spending, while printing new cash in 2021 to keep our economic future on track.”
Chart courtesy of GoldChartsRUs.com • • • Click to enlarge
Repost from 12-15-2020
“In November, gold-backed ETFs and similar products (gold ETFs) recorded their first net outflows in twelve months and second largest monthly outflows ever. Gold ETF holdings decreased by 107 tonnes (t) during the month – US$6.8bn or 2.9% of assets under management (AUM) – as the gold price had its worst monthly move (-6.3%, US$1,763/oz) since November 2016, when it dipped 7.4%.”
USAGOLD note: We were due for a turnaround at some point. That said, the 916 metric tonne net gain thus far this year is still the largest on record and 50% higher than the previous highpoint in 2009 (646 metric tonnes).
ETF Stockpile Flows by Region
Chart courtesy of World Gold Council • • • Click to enlarge
Repost from 12-11-2020
“In their 2021 precious metals outlook report, published last week, the analysts at the German bank expect that silver will continue to outperform gold as an improving global economy boosts the precious metals industrial demand.”
USAGOLD note: Commerzbank – noting that the arguments in silver’s favor are “overwhelming” – forecasts the metal will hit $32 per ounce in the fourth quarter of 2021 – a 28% gain from current pricing. If the spirit moves, you can act anytime day or night at USAGOLD’s Online Order Desk where we have a full selection of silver products (like the bullion coins pictured above) available at competitive rates.
“As for bitcoin relative to gold, I have a strong preference for holding those things which central banks are going to want to hold and exchange value in when they are trying to transact.”
USAGOLD note: How many ultimately see bitcoin as a store of value? How many, despite all the hoopla, as just another speculative investment? Dalio worries about America facing an “internal and/or external existential conflict” between now and the 2024 election – one of several interesting points made in this must-read interview. Under such circumstances, Dalio makes no bones about which of the two is likely to be the preferred asset of last resort.
Repost from 12-10-2020
“Watching Gold fall to recent lows over the past few weeks has been heartbreaking for Goldbugs. We know the real value of Precious Metals has continued to be under-appreciated over the past 24+ months – even though Gold has rallied from $1165 to over $2085 (an incredible 79%). The recent 15% decline in Gold has shaken some investors away from the longer-term opportunities, so we wanted to share our research and highlight some simple Elliot Wave structures with you.”
USAGOLD note: Vermeulen applies the basic Elliot wave five-stage cycle to gold and predicts very bullish results. A good, basic introduction to EWT with gold as the centerpiece …… Vermeulen believes we are in the beginning stages of a “three wave” – an impulse move to the upside that is usually the most powerful in a trend and the longest in duration. It is characterized, according to Wikipedia, by quick price increases and short-lived, shallow corrections.
Repost from 12-10-2020
Saxo Bank/Steen Jacobsen
“While these predictions do not constitute Saxo’s official market forecasts for 2021, they represent a warning against the potential misallocation of risk among investors who might typically assign just a one percent chance of these events materializing. It’s an exercise in considering the full extent of what is possible, even if not necessarily probable, and particularly relevant in the context of this year’s unexpected Covid-19 crisis. Inevitably the outcomes that prove the most disruptive (and therefore outrageous) are those that are a surprise to consensus.”
USAGOLD note: Economic surrealism for the new year as seen through the eyes of analysts at the Netherland’s Saxo Bank …… an entertaining read. Many of you will find the forecast for silver particularly agreeable – a sizzling, jolt turbocharges the price higher.
Repost from 12-9-2020
Ray Dalio: Investors should worry about the value of their money as much as the value of their investments
“The basic thesis of the interview is that America has not been a good steward of the benefits of capitalism, which has increasingly gone to fewer and fewer people even as the U.S. has created a mountain of debt. That leads to a loss of productivity and reduced opportunity for the country’s citizens. And, as Dalio puts it, ‘Wealth cannot be created by creating debt and money.’ The result, Dalio believes, is that the world is likely to change in ‘shocking ways’ over the next five years, including a loss of faith in the U.S. dollar: ‘Within the next five years you could see a situation in which foreigners who have been lending money to the United States won’t want to.'”
USAGOLD note: Contrast Dalio’s thinking with that of the economists and theorists quoted at the link in the post directly below …… It is because so many in government agree with the analysts quoted below that gold remains a crucial component of the well-balanced investment portfolio. “Assuming a well-diversified portfolio (which does include cash for emergencies),” writes Fitzsimmons at the link above, “my belief is that middle-class investors (net worth under $1 million), should own at least 5-10% in gold. I also believe that as an American investor’s net worth climbs, the higher that percentage should be because, in my opinion, he or she simply has more to lose by a falling US$. For instance, an investor with a net worth of $2-5 million might have a 15-20% exposure to gold; $10 million, perhaps a 30-40% exposure.
Repost from 9-23-2020
“Demand for gold from jewellers and central banks will remain sharply lower in 2021 than before coronavirus, but investors will keep prices high by stockpiling record amounts of bullion, Refinitiv Metals Research said.”
USAGOLD note: As the saying goes, there is no rush like a gold rush and Refinitive thinks one is brewing for 2021. It sees investor demand for coins and bars swinging from a 6% decline in 2020 to a 13% gain in 2021. And if a blue wave rolls into Washington DC that 13% predicted increase might be seen as modest. Refinitiv is one of the top research firms in the field of precious metals.
Repost from 10-24-2020
“This may be where silver (and to a great extent its big brother gold) fits comfortably into a well-diversified group of holdings or even as an insurance policy for what you have already amassed. There is no longer an excuse not to.”
USAGOLD note: Long goes on to chronicle why silver makes sense based on past performance and because it, along with gold, are “the antithesis of stocks and bonds.” By the end of 2020, if silver stays on track, it will post its biggest annual percentage gain since 2010 (at present it is up 35.7%, according to the table published as part of this study). In early 2011, it rose to almost $50 per ounce.
Repost from 12-7-2020
“Over the last ten years, there have been several instances when the divergence between gold and real rates have resulted in big moves up in the price of gold in a short time span, which we are going to now take a look at.”
USAGOLD note: Miller goes on to present a series of charts to make his point and concludes the “recent weakness in gold is nothing more than a correction before rejoining its uptrend to higher prices.” A number of analysts over the past several months have pointed to negative real rates of return as bullish for gold.
Repost from 12-4-2020
“The yellow metal has also been under pressure from rising bond yields. The yield on the 10-year Treasury has been on the upswing, and as I’ve explained a number of times before, this can have a huge impact on the direction of gold prices.”
USAGOLD note: With that for openers, Holmes goes on to cite the 20-day and 60-day percent change oscillators as indicators of gold being in a buy zone.
Repost from 12-2-2020
“In How to Make Money in Stocks, the book that introduced the [Cup and Handle] pattern, William O’Neil explained that the initial price target for a breakout is 20%. That provides a price target of $228 for GLD or about $2,280 an ounce for gold. But that is for a short-term pattern that sets up over six months. This is a long-term pattern that comes after a consolidation that formed over a decade. Momentum could carry the price of gold much higher.”
USAGOLD note: Some interesting technical analysis based on an old theory finding a new application today. Carr is a Chartered Market Technician for Banyan Hill Publishing and teaches technical analysis at the New York Institute of Finance.
Repost from 12-1-2020