Gold in six easy lessons
1. Don’t buy it because you need to make money; buy it to protect the money you already have.
2. Don’t look at price as a barrier; look at it as an incentive.
3. Don’t buy the paper pretenders; buy the real thing in the form of coins and bullion.
4. Don’t fall prey to glitzy TV ads; do your due diligence instead.
5. Don’t allow naysayers to divert your interest; allow yourself the right to protect your interests as you see fit.
6. Don’t forget the golden rule: Those who own the gold make the rules!
“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.”
“New highs are times to take profits on a scale-up basis, and significant corrections offer the opportunity to step up to the plate and repurchase the precious metals. Unfortunately, the human emotions of fear and greed often drive traders and investors to buy when markets are peaking and sell on days like September 5 and 6. Trailing stops can be useful tools and capital savers during wild bull markets.”
USAGOLD note: For Investors in the physical metals, i.e., those who have their positions fully paid for and stored safely away, short-term price movements are not usually a matter of concern. For leveraged investors in the futures and options markets, it is a different story. The short-term is always in such cases a direct and abiding concern. If one fundamentally believes in the metal’s safe haven attributes, a drop in the price can be seen as an opportunity to acquire portfolio insurance at a more favorable price.
Repost from 9-11-2019
“While demand from key Asian markets will likely to remain weak this year, ongoing central bank purchases and renewed investor interest will lend support for higher gold prices. We therefore expect gold to average $1,558/oz in 2020, with a possibility to test and move beyond $1,700/oz later in the year.”
USAGOLD note: GFMS reports 4% growth internationally in bullion coin sales with a dollar value rise of 20% – a minor surprise. The research firm is usually fairly conservative on its price projections making the $1700 price prediction a surprise as well. The full report is a comprehensive look at gold market fundamentals – on both the supply and demand sides of the ledger – and an important read.
Repost from 1-30-2020
“Gold remains the best-performing mainstream asset of the 21st century, yet investors own a mere 82 million ounces (worth $128bn) between them via the exchange traded funds. That might sound like a substantial holding, but it is not. With global exchange traded funds worth over $5trn, the implication is that the average portfolio has a mere 2% allocation to gold. Academic studies range in their conclusions, but they all suggest the optimised allocation should be greater than zero. I have often felt that 8% makes sense for a balanced portfolio and 15% to 25% for an all-weather total return fund.”
USAGOLD note: Charlie Morris’ study linked above is highly recommended. In it he makes the same point we did in Gold’s Century: While stocks dominated headlines, gold quietly performed.
From that study:
“The question becomes whether or not an investment that has performed so well in the past is likely to perform equally well in the future. Though nothing in the world of finance and economics is certain, we rest the bullish case for gold on the understanding that none of the economic and financial system problems that created a positive price environment for gold over the last nearly nineteen years have been removed from consideration. In fact, a case could be made that they have only intensified – and dangerously so”
Repost from 1-30-2020
“[S]entiment is strongly bullish with speculative futures positions on NYMEX reaching a record high net long and the gold price reaching its most overbought level since 2010. A great deal of political uncertainty is already priced in, so if the situation settles down then the gold price will most likely pull back. The gold price is expected to trade in a range between $1,700/oz and $1,400/oz.”
USAGOLD note: This report also covers Heraeus’ expectations for silver, platinum, palladium and the more exotic precious metals – rhodium, ruthenium and iridium. Heraeus is a global precious refiner located in Germany.
Repost from 1-29-2020
Barron’s/Randall W. Forsyth
“Gold is insurance. Insurance isn’t supposed to make you rich; it’s supposed to keep you from being poor. The best thing to happen is your insurance never pays off because nothing bad happens. Hope for the best, but better to prepare for the worst. A nice rock can help.”
USAGOLD note: Here at USAGOLD, we have advocated gold as portfolio insurance for nearly 50 years. What is different now from times past is that funds, institutions and central banks – as Forsyth points out in this article – also see the value of this nice rock in the battle to preserve assets during uncertain times.
Repost from 1-29-2020
“In modern times, since the 1970s, the average level of the relationship between the two precious metals has been around fifty-five ounces of silver value in each ounce of gold value. When the ratio between the metals is below the 55:1 level, silver is historically expensive compared to gold. At levels above 55:1, silver becomes historically cheap. . .Silver could be a sleeping bull at the $18 per ounce level.
USAGOLD note: At present, the gold-silver ratio is near 87:1. Quite a few among our regular clientele who normally concentrate capital in gold have taken the step to fill their ‘silver gap’ at the current price ratio. Within that group, a good many opt to store the metal at a depository facility by which you can buy or sell with a phone call and it is fully insured. Cost-wise, it is competitive with an ETF and offers the additional advantage of a delivery option in case you would rather have your silver nearby at some point in the future. We invite you to contact us for details.
Repost from 1-28-2020
“Speaking at a Schroders breakfast briefing yesterday (January 22), Janet Mui, global economist at Cazenove Capital, said she thought investing in gold was the best way for advisers and fund managers to hedge the risks in their portfolios. She said: ‘Gold has the feature of portfolio hedging and diversification. Gold should be in your portfolio.’”
USAGOLD note: More and more, it is becoming a mainstay in the financial business that the wise investor and/or financial advisor embrace gold as a means to capital preservation in a rapidly changing and increasingly dangerous investment climate. In Cazenove’s case, it is emphasizing gold as a hedge against geopolitical turbulence.
Related, please see:
Precious metals for financial planners and advisors
We will work with you to offer your clients a strong, service-based
presence in the gold coin and bullion market
Repost from 1-24-2020
“’You have to have balance … and I think you have to have a certain amount of gold in your portfolio,’ Dalio said, reiterating his call last year that the precious metal will be a top investment in the years to come.”
USAGOLD note: Dalio says ‘cash is trash’ in this era of negative real rates of return and says gold is the way to go instead. He also rejects bitcoin as an alternative to gold: “There’s two purposes of money, a medium of exchange and a store hold of wealth, and bitcoin is not effective in either of those cases now.”
Repost from 1-21-2020
“I ran into Jim Mellon at a party at the weekend, and we soon got talking about markets. One of his comments – stated with surety and simplicity – has stuck in my mind. ‘Investing in 2020 is going to be easy,’ he said. ‘All you need to do is own gold and silver.’ He said it like it was a no-brainer.”
USAGOLD note: Dominic Frisby makes an interesting revelation in this piece having to do with gold’s 144-day moving average. He also passes along Ross Norman’s gold and silver predictions for 2020. That carries some relevance because Norman is “the LBMA’s number one forecaster over the last 22 years.”
Repost from 1-28-2020
“‘Gold is a place you want to be. I think that it’s partly because it’s inversely correlated with interest rates. But it’s also an insurance policy when things go wrong,’ he said. ‘There’s no such thing as a no-brainer, but this is close.’”
USAGOLD note: David Rosenberg was chief economist at Gluskin Sheff & Associates when he became a well-known market analyst. Now he heads his own advisory firm. In this article, in which he cites the need for gold as a portfolio asset, he also warns about the Fed’s end game, i.e., the “magical money tree.”
Repost from 1-23-2020
“Although tensions between the US and Iran appear to have receded for now, global geopolitical uncertainty remains high. One asset class above all looks set to benefit from this turbulence: gold.”
USAGOLD note: This article concentrates on geopolitical concerns and low yields as the two primary factors likely to drive global gold demand in 2020 and beyond.
Repost from 1-19-2020
“The next leg higher for Gold will see a price peak near $1450 before another brief sideways/stalling pattern sets up. After that, our research suggests a rally will quickly drive Gold prices above $1550 (or much higher). As we’ve been suggesting, Silver will likely lag behind Gold by about 20+ days. We believe Silver is going to see an incredible upside price move – even bigger than Gold in percentage terms. Our belief is that Silver will be trading above $26 to $28 per ounce – almost DOUBLE the recent low price level, when Gold will be trading just above $2000 per ounce. The reason for this is the relationship between the Gold/Silver/US Dollar pricing levels – called the Gold/Silver Ratio.”
USAGOLD note: A very optimistic forecast from a group that has made “some truly amazing precious metals calls over the past 6+ months.”
Repost from 5-15-2019
(Note update 1/24/2020: This item was posted just before the rally actually began.)
“Just to be on the safe side: We think the overall rise in asset prices –be it stocks, housing, real estate, etc. –will very likely continue in 2020; and we do not recommend jumping ship. What we recommend, however, is to increase one’s risk awareness. This entails, for instance, taking some risky chips off the table and consider preventive measures against markets’ downside moves.”
USAGOLD note: Polleit goes on to recommend gold and silver for these purposes, offers an interesting chart and ends with price forecasts for both gold and silver by the end of 2020.
Chart courtesy of the World Gold Council
Chart note: The chart above shows gold’s ranking among top investment choices in 2019. As for the future, “gold,” says the World Gold Council, “has historically performed well in the 12 to 24 month period following policy shifts from tightening to ‘on-hold’ or ‘easing’ – the environment in which we currently find ourselves. And, historically, when real rates have been negative, gold’s average monthly returns have been twice as high as the long-term average.” The full report (linked above) focuses on key gold demand drivers for 2020 – financial uncertainty and lower interest rates, weakening in global economic growth and gold price volatility.
(Kitco reported yesterday that Germany was largely responsible for strong gold coin demand experienced by the Perth Mint in 2019 based on investor concerns of a weakening economy.)
Repost from 1-17-2020
“In summary, while the lagging performance of silver may be discouraging, a breakout for silver is very likely within the next 12 months as long as gold can continue to hold its breakout level at $1,380/oz. Based on the amount of commitment the metal has shown to this breakout level thus far, I would argue that this is a very high probability.”
USAGOLD note: If Dart is correct that the next silver breakout might not become evident until October, there is plenty of time for physical buyers to stock up. At the same time, we’ve been involved in precious metals long enough to know that when it comes to silver directional changes they almost always arrive unpredictably, quickly and with a vengeance. The best way to own silver is not in the futures market where margin calls or forced liquidations can become a problem, but as a physical holding that allows the virtue of patience. If and when the breakout comes, the investor is then well-positioned to take advantage of it.
“‘I’m no insect,’ the 57-year-old businessman jokes. ‘Gold is a great way to make a lot of money.’”
USAGOLD note: The billionaire gold investor discusses his passion for wildlife preservation, particularly big cats. We featured a riveting Bloomberg interview of Thomas Kaplan some time ago. It is available here. Coincidentally, that interview occurred at the end of May just before gold began its run from just under $1300 to current levels. Kaplan said gold is on the cusp of launching a ten-year bull market that would take it between $3000 and $5000 per ounce. That link and the MarketWatch link above are both highly recommended. . . . .
Repost from 10-22-2019
“Despite a resiliently strong & compressed US$ and a lack of (sustained) US equity volatility, Gold made a statement breakout in summer 2019. It became sensitive to geopolitical and trade risk and the repricing was (smartly) aligned with a shift in Fed policy. There are technical similarities between the repricing higher in 2019 (into a bull market) versus repricing in 2013 (into a bear market), which should be respected.”
USAGOLD note: We made reference to this Scotia Bank report in yesterday’s DMR. We repost it here for those who might have missed it. The very fact that gold has begun to respond so forcefully to periods of market duress is a matter of interest to Scotia Bank, one of the principal traders of the precious metal in international markets.
Repost from 1-15-2020
“Gold rallied nearly 4% in December, mainly in the second half of the month, and recently moved to an intraday high of US$1,613/oz as the US-Iran confrontation unfolded. We believe there are a few likely reasons for the move. . .”
USAGOLD note: In this article, Perlaky runs through six factors driving gold to higher ground over the past few weeks in the paper gold market – four of which are not commonly tracked in financial media including the positive effects of derivatives’ positioning, why light trading volumes have made a difference, and professional investor portfolio positioning prior to the end of the year. He also offers a few brief thoughts on three drivers that have gotten a lot of attention in financial media – technical charting signals (please see chart below), the Fed’s repo policies and geopolitical risks. All in all, an informative look at what drove the recent run-up in gold prices.
Chart courtesy of the World Gold Council
Repost from 1-14-2020
“What is amazing about this run-up in gold that we have seen is that it has taken place with the U.S. dollar actually quite firm.”
USAGOLD note: David Rosenberg is chief economist at Gluskin Sheff and Associates and a highly-respected Wall Street analyst. We were a bit surprised at his $3000 forecast for gold. He explains how it is possible to a skeptical host.
Repost from 9-16-2019
“Well, I worked on Wall Street and in the hedge fund industry for decades. I also lived among the players in New York and Greenwich, Connecticut, at the same time. I’ve met the top hedge fund gurus in private settings. And here’s the thing: I’ve never met one of them who does not have a large hoard of physical gold stored safely in a nonbank vault. Not one.”
USAGOLD note: That’s quite a statement. . . .At the link, Rickards tells where he thinks gold will be in 2026.
Image courtesy of Visual Capitalist
Repost from 1-10-2020
“With the significant decline in the US Monetary Base since 2016, there are some serious threats facing the monetary system. These are setting up really favourable conditions for Silver prices and the position it has in the international monetary system. The expectation for much higher Silver prices are certainly reflected in the charts. I have previously presented this chart (now updated) to show how the current bottoming process (2015 to 2018) is similar to that of 2001 to 2003 . . .”
USAGOLD note: Moolman goes on to say that “this time we will likely see far greater price increases in a shorter period, especially given the serious threats facing the monetary system.” Though Moolman’s thesis is intriguing to say the least, we feel the necessity to caution once again that past performance is no guarantee of future results. His chart is reproduced with permission.
USAGOLD note: Back to back interviews of Standard Chartered’s Suki Cooper, LGT Bank’s Stefan Hofer and Plurimi Wealth’s Patrick Armstrong . . . Worth a visit as all the interviews take the situation with Iran into account.
Repost from 1-10-2020
“Currency debasement – or currency destruction in the case of Venezuela and dozens of other countries – means higher gold prices. The Iranian situation is just the trigger causing this latest jump in the gold price. And when people seek protection of their wealth from geopolitical events, they don’t want paper gold, they want the real thing – physical metal.
USAGOLD note: Turk says gold is in a bull market and sheds light on the ‘whale versus whale’ confrontation developing in the gold futures market.
“While silver’s charts do not yet look as positive as gold’s, that is normal at this early stage in the cycle, when gold is favored over silver, which attracts more speculative interest as the bullmarket progresses. Nevertheless, as we can see on the latest 10-year chart for silver below, it is starting to look a lot better as it hauls itself up out of the 2nd low of the giant Double Bottom pattern shown.”
USAGOLD note: The outlook for silver in 2020 from one of our favorite technical analysts. . . . .
Repost from 1-3-2020
USAGOLD note: U.S. Global Investors’ Frank Holmes says negative interest rates are what’s behind the strong performance for gold in 2019. He also says there is a possibility we will see $1800 to $1900 in 2020.
Image courtesy of Degussa Goldhandel
Repost from 1-2-2020
“If gold’s implicit prediction is right, it has two implications. The first and most important one is a belief that inflation is at last due to return, after many false alarms. The second is that gold is now settled in a bull market.”
USAGOLD note: Those of you who frequent this page know of my long-standing appreciation for the work of John Authers who used to write for the Financial Times but is now at Bloomberg. In this article, he tells why gold might be in the early stages of a new bull market. We encourage a visit to the link to learn more about the “implicit prediction” he mentions above.
“‘History shows that under most outcomes gold will likely rally to well beyond current levels,’ [Goldman Sachs] analysts including Jeffrey Currie and Damien Courvalin said in a note. That’s ‘consistent with our previous research, which shows that being long gold is a better hedge to such geopolitical risks.’”
USAGOLD note: Goldman has become one of the more consistent and vocal advocates of gold ownership on Wall Street over the past several months. . . . .
Kitco/Interview of Frank Giustra
“I believe we are overdue for some kind of accident in the financial markets. Some, yet unknown catalyst will set off a chain of events that will destroy a lot of wealth. Be ready, because at some point, there will be tremendous opportunities to invest in. In the meantime, stay liquid and make sure you own a lot of gold.”
USAGOLD note: Kitco asks “how would you invest $100,000 in the next decade.” Frank Giustra, chairman of Leagold, answers. . . . .
Repost from 12-27-2019
“He said he didn’t include the bonus gold prediction in his 2020 list because he included something ‘similar’ in 2019 and, ‘I don’t do it two years in a row.'”
USAGOLD note: He was right for 2019 as gold turned in a pretty good year. Will he be right for 2020? A number of analysts agree with him that 2020 could be another good year for the yellow metal.
Repost from 12-24-2019
“Unlike the gold bugs, I’m not a broken record. And unlike the barbarous relic brigade, I recognise gold’s importance in the modern world. Atlas Pulse analyses the gold price and outlines the bull/bear regime with the reasons why. It is an evidence-based approach with an enviable track record. I tell it how I see it and find the air-punching narratives tedious. You won’t find one here.”
USAGOLD note: We referenced this report in yesterday’s DMR and call attention to it again here for those who may have missed it. Morris comes to some interesting conclusions as to where gold is headed in the years to come. . . .all presented with a clear rationale at the link above.
Repost from 12-17-2019
“The big trend shall be a return to the commodity markets as inflationary pressures finally return, given the expansionary policies presently being followed by the leading and the second-tier central banks.”
USAGOLD note: Gartman says he is retiring from the newsletter-writing business, but not before recommending gold play a prominent role in the portfolio for the next decade. He joins a number of analysts warning of inflation’s return as the new decade unfolds.
Repost from 12-24-2019
“Gold is positioned to remain an indispensable component of the portfolio in the future, as it lets the investor navigate stressful passages in the market with relative ease.”
USAGOLD note: Stoferle reviews the factors that accrued as positive for gold in 2019 – the very same factors, he says, that will “remain in 2020”.
Repost from 12-24-2019
“‘I am bullish on gold. I am not saying that gold is not going to go down because it is going to fluctuate, but people should have at least 10 percent of their portfolio in physical gold,’ he said.”
USAGOLD note: Mobius sticks with his 10% recommendation and his bullish call on the yellow metal.
Repost from 11-26-2019
“[W]e think that the US Dollar has begun a major decline phase, which will likely take us into the 2021 time-frame. Moreover, with the metals currently setting up for what can be a multi-year rally as well (as I discussed in my prior metals articles), this is one commonly held correlation belief that seems to be supported by the underlying charts we track.”
USAGOLD note: Avi Gilbert bases his analysis on Elliot Wave Theory and now thinks the cycle is turning in gold’s favor and against the dollar. For the full analysis, we recommend a visit to the link.
Repost from 12-24-2019
“Schatz thinks Goldman’s forecast is too low [for 2020]. ‘I think Goldman is way off here,’ he said. ‘$1,600 is going to be a footnote.’”
USAGOLD note: This article reviews forecasts from a number of analysts including Heritage Capital’s Paul Schatz. Needless to say, our clientele would be greatly pleased with a decade that included a $3000 gold price.