“Gold bullion is staying firm, close to a multiyear absolute high. This dynamic has caused bullion to register a relative all-time high compared with the CRB Index. What happened to gold bullion after it registered its previous all-time high relative to the CRB in 2008? It doubled in absolute terms to peak above $1,900 in 2011.”
USAGOLD note: Also …… Is this not a disinflation-deflation signal? If so, the demand for gold will come from investors seeking refuge from a possible systemic meltdown – ala 2008-2009.
“Over 40 years the authors have watched the bright optimism of a new, rigorous approach to economics — which they shared — dissolve into the failures of prediction, [former Bank of England governor Mervyn King and former Financial Times columnist John Kay] write, arguing that the modern community of economists and policymakers needs to accept radical uncertainty and rethink its models.”
USAGOLD note: And radical uncertainty ought to be a psychological underpinning for any rational, modern day investment portfolio. As Nicholas Taleb of black swan fame once said: It is just as important to prepare for what we cannot foresee as for what we can. One short cut to achieving that goal, in our view, is to own gold – and enough of it to make a difference.
“Having been mugged too often by reality, forecasters now express less confidence about our abilities to look beyond the immediate horizon. We will forever need to reach beyond our equations to apply economic judgment. Forecasters may never approach the fantasy success of the Oracle of Delphi or Nostradamus, but we can surely improve on the discouraging performance of the past. – Alan Greenspan, The Map and the Territory, 2013
Repost from 3-24-2020
“Scientists have just discovered something new about gold. When extreme crushing pressure is applied quickly, over mere nanoseconds, the element’s atomic structure changes, becoming more similar to metals harder than gold.”
Dr. Moneywise says: History teaches that under the crushing pressure of a financial meltdown gold hardens the portfolio, makes it more resilient!
Repost from 8-6-2019
“Yet while the yellow metal has done far better than other assets, it has slipped 2% over the last month. The Goldman analysts, with a 12-month price target of $1800 an ounce, said that is about to change, thanks to the Federal Reserve’s aggressive bond purchase plan unveiled on Monday, in which the U.S. central bank said it would buy as many Treasurys and mortgage-backed securities as needed to keep financial markets running smoothly.”
USAGOLD note: Yesterday’s developments in the gold market certainly buttress Goldman’s outlook. The Wall Street firm sees the announcement of unlimited quantitative easing as a turning point.
Repost from 3-24-2020
“But the real answer explaining the huge price difference goes back to what you and I were discussing just a few weeks ago when I said that the London Gold Pool II is close to collapse. We are no longer ‘close to collapse.’ It is collapsing. There is no announcement from central banks like there was back in March 1968 when the first London Gold Pool collapsed. But we don’t need an announcement. The markets are telling us what is happening.”
USAGOLD note: Turk brings a great deal of historical perspective and insight to the table and this interview is a prime example. “All the markets are in turmoil,” he says, “so our number one focus should be on safety for both our health and wealth.”
“Perhaps scarred by their experience, or perhaps due to the distressing human tragedy that is currently unfolding, they (i.e., analysts concerned about inflation) have been notably quiet this time around. That is unfortunate because, as the saying goes, policymakers always solve for the last crisis. We are worried that the real pain trade for markets – and the economy – is the long awaited return of inflation. A good hedge would be to buy gold, as well as inflation linked bonds in the US and Euro Area, which are currently trading at all time lows.” – Oliver Harvey, DeutscheBank
USAGOLD note: Gold would have to trade at more than $2200 per ounce to match the early 1980s high when adjusted for inflation. That figure does not take into account any future inflation. We should keep in mind too that fewer analysts worry about inflation these days than disinflation or deflation. The beauty of gold as a portfolio item is that history has shown it to protect against either or both no matter in which order they arrive.
Adjusted for Inflation (1970- present)
John Rubino/Dollar Collapse
“Two points about Mobius’ suggestion that most portfolios should be 10% allocated to gold: First, the idea of replacing dollar cash with a historically better-performing store of wealth seems like a no-brainer in a world of soaring fiat currency debt and plunging interest rates. Second and vastly more interesting, the current allocation to gold in the financial world is about 1% of total investable capital, so moving from here to 10% would produce spectacular price gains for gold.”
Image courtesy of Visual Capitalist/Jeff Desjardins
Repost from 7-11-2019
“The United States monetary system is mutating and gyrating very fast, and the reported $4 trillion Federal Reserve credit bonanza has not even been implemented yet, let alone felt yet in the economy. The Federal Reserve’s balance sheet has exploded by $356.462 billion in one week to $4.716 trillion, a new all-time record high and the largest absolute single-week increase ever, by far. For some reason, the graph at FRED is not being updated. The runner-up was the week of October 1, 2008, which logged an absolute increase of $292.164 billion. (All data comes from here.) This week blows that record out of the water by over 22%. And there is almost certainly more to come.”
USAGOLD note: The bar to the far right on the chart below shows the nominal growth in the Fed’s balance sheet for the month of March (through the 18th). The bullion banks, he says, face the real danger of a short squeeze. “If you have no physical gold or silver in your possession,” he says, “now is the time to get some.”
“I think these are unlikely to be good real returning investments and that those that will most likely do best will be those that do well when the value of money is being depreciated and domestic and international conflicts are significant, such as gold,” the Bridgewater Associates leader [Ray Dalio] said.”
USAGOLD note: We featured a post on Ray Dalio’s current thinking just this morning. He is back now with an an even more detailed commentary via Linked In. . . .and a summary at the link above.
Repost from 7-20-2019
“‘When I think about what would I buy in the right here and now, I would be buying gold,’ Wayne Gordon, executive director for commodities and foreign exchange at UBS Group AG’s wealth-management unit, told Bloomberg TV. Prices would appreciate over three to six months, according to Gordon.”
USAGOLD note: Gordon also notes that gold went through a period similar to the present in 2008-2009 when it at first declined only to rise subsequently to all-time highs. We’ve posted the chart below a couple of times over the past several days but thought it worth posting again here in the context of Gordon’s observations and recommendations. The full article is worth the visit.
“In today’s market the majority of investors are simply chasing performance. However, why would you NOT expect this to be the case when financial advisers, the mainstream media, and WallStreet continually press the idea that investors ‘must beat’ some random benchmark index from one year to the next. But, is this ‘speculation’ or ‘investing?'”
USAGOLD note: Roberts draws on the expertise of ten legendary financial wise men in this informative article.
Repost from 11-27-2019
“For the long haul, there could be a lot of good buys out there. [i.e., in the stock market]. But by the same token, you need to be hedged and the only way you can hedge yourself in a market like this is by buying a hard asset and that hard asset happens to be gold. That is why if you get a dip in gold prices, add to it. I am not suggesting that individuals should have portfolios made up 100% of gold. But I am suggesting that anywhere from 10% to 15% investment on gold so that it becomes a hedge in your portfolio.”
USAGOLD note: Cardillo is the chief market economist at Spartan Capital Securities. It used to be that most mainstream portfolio managers recommended a 1% to 5% gold allocation. That allocation number has increased markedly over the past several months with many money managers, i.e., more in line with Cardillo’s number. Capital preservation, at times, supersedes capital gains as the primary portfolio objective.
“Given that the market has reacted straight back to the 2019-2020 uptrend at 1544, we expect it to recover … Target is 1782.”
USAGOLD note: Gold bull Germany’s Commerzbank remains undeterred by the recent sharp downside correciton.
Repost from 3-17-2020
USAGOLD note: Stoferle, along with Mark J. Valek, publish the widely circulated and referenced In Gold We Trust annual report. In this interview, Stoferle says “It is crystal clear. We are in a gold bull market again.” The most important opinion expressed is that the start of something different, perhaps very special, occurred in the gold market over the past 30-days or so. Stoferle and his hosts at MacroVoices delve into just what that “something” might be. If you are looking for fundamental insights on gold’s price potential, this interview will get you where you want to be.
Re-post from 8-11-2019
(USAGOLD Afternoon Update – 3-13-2020) – It doesn’t help matters that it’s Friday the 13th. In fact, this whole week feels like Friday the 13th with gold down about $145 (or 8.5%) since last Friday’s close. It’s been even worse for silver – down $2.66 or 15.4%.
A single thought comes to mind which I thought I would pass along:
The vast majority of those who own the physical metal do so for long-term, asset preservation purposes. It is easy to lose sight of that bit of perspective on days like today and weeks like the one we are now winding up. Rather than waste a lot of my time and yours with a lengthy dissertation on the merits of gold ownership, let me post a couple of charts to make my point and perhaps put the past week into perspective.
The first shows gold’s performance when compared to the Dow Jones since January 1, 2020 – the time period in which the coronavirus evolved from a local problem in China to a world pandemic. As you can see, through today’s closing numbers, gold is level on the year and the Dow Jones Industrial Average has lost 19.69%. Gold has not established a base on the moon, but it has held its own in particularly difficult times.
Zooming out, the second chart shows gold’s performance when compared to the Dow over the past 12-months – a period in which the ill-effects of the coronavirus are diluted by a longer timeline. As you can see, gold is up 16.88% over the period and the stock market is down 9.79%. An annualized return of 16.88% is something to consider at a time when positive returns have been difficult to come by.
Charts courtesy of TradingView.com
Gold Newsletter’s Brien Lundin had an interesting comment along these lines as quoted in Myra Saefong’s MarketWatch column yesterday. “Gold,” he says, “is often seen as a safer bet for investors and Thursday’s plunge in prices, as global stock markets drop, shows that investors have taken refuge in what the precious metal has to offer: cash. If gold’s being sold to raise cash in an emergency, which is what appears to be happening now, then it is doing its job as a safe haven.”
It’s all a matter of perspective……
Reprinted with permission michaelpramirez.com
USAGOLD note: Suki Cooper says “gold is likely to be an asset investors can turn to” under current and economic and financial circumstances. A brief but comprehensive look at the factors affecting the price of gold at this point in time.
“’When rates go this low, you reignite … [the] rally in gold, which soared today,’ Cramer said. ‘I would buy gold aggressively on this rate cut — aggressively — especially as protection against whatever horrific predictions made the Fed want to take such a drastic move today.'”
USAGOLD note: Cramer has always had a positive view of gold. Now though his advice to own it takes on a sense of urgency he has not indicated previously.
Repost from 3-5-2020
“For the last few months, gold has had the benefit of a strong “fear factor” as investors retreat to the safety of the yellow metal in the face of mounting global health and economic concerns. Missing from the equation, though, has been a strong currency component for the metal due to the dollar’s persistent strength for much of the past year. Finally, however, gold now has both a strong fear factor and a supportive currency component for the first time since 2018.”
“Gold investors are bracing for increased market anxiety as the worst selloff in oil since 1991 spurred a massive slump in equities. Bullion jumped above $1,700 an ounce when markets opened in Asia, before pulling back, as money managers cashed in gains to cover losses in other assets. A 30-day measure of expectations for price swings for the metal climbed to the highest since December 2015.”
USAGOLD note: Gold is being tugged higher by safe-haven investors and lower by speculators unloading to cover losses in other markets. Of the two, which has staying power and which the flash in the pan? We will leave that for you to decide. Those watching the gold market closely these days are well aware of the price volatility, as shown in the chart below. At this juncture, volatility has translated to a rising price trend for gold, while for stocks it has been the opposite.
“A simple glance at gold’s recent performance is sufficient evidence that the metal’s price has drastically benefited from the worries swirling around global financial markets. The gold price even threatened to go parabolic until the Feb. 25 trading session, at which time profit-taking became evident. Yet gold’s price is still at a multi-year high and shows no signs of reversing its well-established long-term upward trend anytime soon. And as recent history suggests, the gold bull market which began in October 2018 will almost certainly continue beyond the coronavirus threat.”
USAGOLD note: Droke considers gold’s post-virus prospects . . . It had entered into a bull market, he says, long before COVID-19 made its appearance on the global stage.
Repost from 3-3-2020
New note: The Financial Times reports this morning that, according to an expert with China’s disease control panel, coronavirus cases in Wuhan “could drop to zero by the end of the month.” He adds, “I estimate that by the end of April except for Hubei, the rest of the country can basically take off their face masks and resume normal life.” The markets will wait for further evidence that this particular expert got it right, but this is certainly a turn for the better if true.
Gold could go to $1800 to $2200 in the long run
A number of technical analysts have reverted to a more bearish forecast over the past few weeks with the $1250 area once again being touted as the downside support area. Many of those same technical analysts, though, have a significantly more positive outlook for the longer term. Among that group is Gary Wagner of the Wagner Financial Group who sees $1267 or even $1247 as possibilities in the short run, but also forecasts the possibility of $1800 to $2200 in the longer run. “Our research,” he explains in an article published recently at the Singapore Bullion Market Association website, “suggests that gold is in the final phase of a major long-term impulse cycle. This model also provides a look back at the final major bullish wave that could be traced back to end of 2015, following a correction to $1,040. This corrective fourth wave developed from the all-time high at $1,900 in 2011. The model suggests that gold could re-test the record highs that, if taken out, could see an extensive surge to between $1800 and $2200 per troy ounce.”
Caveat: At USAGOLD, it bears repeating, we have always advocated the ownership of both gold and silver coins and bullion for long-term asset preservation purposes rather than speculative gain. Though we pass along various projections, we do so with the caveat that anything can happen. The analyst who forecasts downside today can quickly change his or her outlook to the upside tomorrow – or vice versa. The long term charts for gold and silver, though, reveal a consistent upward trend that has served investors well in the period since 1971 when the global monetary system departed the gold standard and entered the fiat money era.
Repost from April 2019
(Update 3/4/2020) – So far so good on Gary Wagner’s forecast.
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“The optimal portfolio, since 1929, included risk weighted combinations of Domestic Equity (24%), Fixed Income (18%), Active Long Volatility (21%), Trend Following Commodities (18%), and Physical Gold (19%). This allocation is highly unorthodox compared to a Traditional Pension Portfolio dominated by equity Linked Assets (73%) and Fixed Income (21%).”
USAGOLD note: “On a long enough timeline every strategy sucks,” quips RCM Alternatives on Artemis’ approach to the 100-year portfolio. That explains the 19% portfolio commitment to physical gold, the portfolio inclusion for all seasons.
Repost from 2-24-2020
“For the benefit of new readers and to jog the memories of long-time followers, let us work through the admittedly circuitous but conceptually simple reasoning behind the reason why the dollar price of gold is heading well above $10,000 per ounce.”
USAGOLD note: This study ties into the one posted below: “Unpleasant arithmetic for gold bugs”. What happens when someday, not if, according to Myrmikan Research, the world wakes to discover that the “much of society’s wealth has become entrapped in non-cashflowing malinvestments?” “That,” says the firm, “is when gold will shoot into the multi-thousands per ounce.” The two articles together are good reading for the deep-thinkers who frequent this website.
Repost from 2-24-2020
“With the smallest balance sheet we can imagine, our best guess is that the Fed initially would have to triple its gold holdings, driving the price of gold up by two thirds (to about $2,600 per ounce). Then, to maintain the gold standard, the Fed would still need to purchase one-third of world gold production each year. Without gold holdings over and above this minimum, the Fed would not be able to lend at all, much less without limit as it can under a pure fiat money standard.”
USAGOLD note: It is difficult to understand how the findings of professors Cecchetti and Stoenholz are ‘unpleasant arithmetic for gold bugs’. More accurately their findings might be called unpleasant arithmetic for the global monetary system. In their anxiety to undermine the argument for a gold standard, the authors unwittingly make a very strong case for gold’s deep undervaluation once the level of federal debt rattling around the global economy (including what’s held at the Federal Reserve) is taken into consideration. As such, many gold bugs, in our view, will take much pleasure from their conclusions, a hint of which is presented in the snippet above.
“If you are looking for the next big trade, then pay very close attention to silver prices. In a few years, we could be looking back at silver at $18.00 per ounce and saying, ‘That was a dirt cheap price.’ Understand this: at the moment, silver could be one of the most overlooked assets out there. Ignoring it could lead to missing out on immense gains.”
USAGOLD note: The Lombardi Letter goes on to show three charts to make the point – the gold-silver ratio, the correlation between silver and the S&P 500, and the growing contract volume on the COMEX.
Repost from 2-24-2020
“This feels like London Gold Pool II (collapsing) in 1968 when the central banks finally threw in the towel and let the gold price run free. I think we are very, very close to a repeat of that moment some time this year and maybe in the not-too-distant future. The shortages of physical metal are showing up both for gold and for silver and that is starting to reflect itself in the price movements. We are at a historic moment, Eric, and I think years from now we are going to look back at 2020 and say, ‘That was the year when the metals really started moving back toward their fair value,’ which is significantly higher than current prices.” – James Turk, GoldMoney
USAGOLD note: Turk at his best. The full interview including price near-term targets for silver is recommended at the link above. “Our patience,” he says, “is being rewarded and it is going to continue to be rewarded as the precious metals move higher in the weeks and months ahead.”
Repost from 2-24-2020
“No rush to build substantial positions, many are looking to opportunistically add to positions. Helping to keep dips shallow and the market well supported. . . [G]iven lingering macro uncertainty, gold’s appeal as a hedge and diversifier is also in focus, allowing prices to stay resilient despite a strong dollar and equities hovering at all-time highs.”
USAGOLD note: A buy the dip mentality among professional money managers is something buyers of physical coins and bullion should keep in mind. It argues against waiting for a major correction to buy – particularly if you are unhedged. Too, the opportunistic adding to positions could become much more aggressive in the event of a stock market correction. Large pools of capital could suddenly be deployed in the gold market.
Repost from 2-19-2020
“Welcome to the gold bull market of the roaring 2020s, it’s just getting started so why don’t you get comfortable and stay a while….”
USAGOLD note: Echoes of what you have read recently on this page with respect to gold’s performance against a range of national currencies, but well-presented and worth a visit.
“Even though gold’s progress in the recent past has been measured and modest it has actually done well – it took its time because it was chewing its way through the considerable resistance arising from the 2011 – 2013 top area. It still is and will be until it gets to the 2011 highs in the $1850 area. However, as mentioned above the now near vertical ascent on the right side of the Bowl on Larry’s chart [not shown please visit link] means that gold is likely to be propelled to new highs with alacrity. It is very important at this time not to get too hung up on gold’s performance against the dollar, which can be misleading and lead to missed opportunity. For the fact is that gold has been romping ahead against most currencies, making new highs in many of them.”
“In this complex environment, Gold shall remain an asset of choice against market risks. We expect Gold to move higher throughout the year and to trade with elevated volatility. We expect Gold to peak at 1780.00 USD/Ounce.”
USAGOLD note: Panizzutti is a highly respected gold market analyst.
Repost from 2-20-2020
“It’s prudent to have a 15% weighting in gold. . . . .”
Repost from 2-20-2020
“In a note on its commodities outlook, Goldman argues that the outlook for lower US yields and weaker equities ‘creates further upside risks to our gold forecasts with gold pushing towards $1,750 should the coronavirus be contained during Q1.'”
USAGOLD note: Goldman sees political uncertainty, geopolitical risks, de-dollarization and negative yields as the chief inducements for gold ownership and the coronavirus as a kicker that could intensify the underlying uptrend.
Image courtesy of Visual Capitalist
“I’ll be shocked if we don’t see $2,000 per ounce by the end of the year. I’m not a gold bug. You won’t find me bringing every conversation back to the benefits of gold bullion. But I’m bullish on gold today. That’s because I think it will hit its all-time-high price this year.”
USAGOLD note: Baldiali offers a variation on the last man left standing theme to which we have alluded on occasion here.
Repost from 2-21-2020
“Of course, dumping US Treasuries would impede China’s economic growth if dollar assets were sold and converted back into renminbi (which would appreciate). But China could diversify its reserves by converting them into another liquid asset that is less vulnerable to US primary or secondary sanctions, namely gold. Indeed, both China and Russia have been stockpiling gold reserves (overtly and covertly), which explains the 30% spike in gold prices since early 2019.”
USAGOLD note: We mentioned this Roubini analysis in yesterday’s DMR and repost the link here for those who may have missed it. He goes on to say that Chinese diversification is likely to accelerate and that it “could trigger a shock in the U.S. Treasuries market.” Moving from a policy of steady accumulation to something more aggressive could also trigger a shock in the gold market. This is a must read for those who would like to gain a better understanding of the geopolitical forces at work in the financial markets at this juncture.
Repost from 2-20-2020
“Citi commodity strategists upgraded their six to 12 month level to $1,700 per ounce and said they expected nominal highs of $2,000 in the next 12 to 24 months.”
USAGOLD note: Citbank reiterates its bullish call on gold for 2020.
Brazil real, India rupee, euro, Canada dollar, Australia dollar and British pound
Charts courtesy of BullionStar.com
“Independent analyst Ross Norman is the most bullish of all the analysts who turned in their gold price forecasts for 2020 to the LBMA. He set his low price at $1,520 an ounce, his high price at $2,080, and his average price at $1,755. The most bearish gold price forecast for 2020 comes from Bernard Dahdah of Natixis. He set his low price at $1,300 and his high price at $1,450. His average price stands at $1,398 an ounce.”
USAGOLD note: The London Bullion Market Association’s consensus for 2019 was bullish and that turned out to be a good call. It is calling for a repeat performance in 2020.
Repost from 2-10-2020
“Gold will outperform the S&P 500 Index in 2020. That’s one of several projections made by CLSA in its just-released ‘Global Surprises 2020’ report. The Hong Kong investment firm has an impressive track record when it comes to making market predictions—last year it had a 70 percent hit rate—so it may be prudent to take this one seriously.”
USAGOLD note: We referenced this report in yesterday’s DMR and post the link here for those who might have missed it.
“With developed market government bond yields at already very low levels, gold provides safe haven characteristics as an alternative. Indeed, with stabilization of recent global data points, the market may soon start to worry about inflation where gold would act as a hedge whereas government bond prices would decline.”
USAGOLD note: More and more professional investors, like Bank of New York Mellon’s Suzanne Huchins, have begun to factor inflation into their investment scenarios. Inflation concerns have been absent from the mix for a very long time and whether or not they are justified now remains to be seen. Wherever and whenever inflation enters the discussion, though, there you will find gold.
Repost from 2-7-2020
“The silver market today is obviously quite different from the one in 2011 that saw silver jump to an all-time high of $49 an ounce. Could it run that far again? We believe so. Consider: industrial demand for silver, particularly photovoltaics, is heading up, and should get another lift if and when the trade war with China is put to rest. Investment demand for silver also looks solid, with no end in sight to the low-interest-rate policy direction of central banks. Add higher demand to shrinking supply, lower grades, and less silver by-product credits from falling lead and zinc mine production, we see a floor forming under silver prices.”