YESTERDAY, Gold and silver zoomed after the European central bank chief press conference s. “Punctured” is the word I will use after gold and silver prices crashed like a pack of cards after news on nearing of US-China trade deal. Today focus will be on impact of UK election results on Brexit and signing of US-China trade deal and official statement from both nations. Remind you that the actual trade deal is yet to be signed. Full Story
Gold’s post breakout reaction back from its early September peak has evolved into a steady downtrend as we can see on its 6-month chart below. The approach of the rising 200-day moving average below suggests that this reactive downtrend will have run its course before much longer leading to a second upleg. However, gold’s COTs have shown no improvement as this downtrend has unfolded, which is a sign that the downtrend has further to run. The now orderly downtrend has one distinct advantage which is that bulls simply have to wait either for a breakout from it or the development of a basing pattern. One indication that the downtrend is a correction and not the start of something more sinister is the positive divergence of the Accumulation line compared to the price. Full Story
Fed Chairman Jerome Powell said the economic outlook for the U.S. was favorable as the central bank announced its decision to hold rates steady, as expected, though forecast only moderate and slowing growth through 2020 and 2021. Our View: Do not believe the Federal Reserve in an election year. Central banks do make a U turn on their long term policies. Trade deal with China will not have an immediate impact on US economy. It will take at least three months to know the real impact (if at all the trade deal is signed.) Full Story
I was a bit disappointed yesterday as gold did not rise despite Trump and his more impeachment news. Gold is firm but did not rise sharply. The biggest four continuous trading sessions of this year starts from today. Anything can happen till Monday. Sit on cash BUT use sharp (if any) to invest for next year in gold and silver. If you are already invested in gold and silver and have some surplus cash to invest, then buy small amounts of physical gold and physical silver in 50:50 ratio for 2021. Full Story
The yellow metal remains on sound footing, though, and over the next 12 to 24 months, I see its price advancing further on strong fundamentals. Mean reversion, in particular, is the theme I believe investors should be focused on in 2020 and beyond.
This was the message shared by Bloomberg Intelligence commodity strategist Mike McGlone in a note to investors last week.
The chart below illustrates the 10-year rate of change for gold, the S&P 500 and U.S. trade-weighted dollar. In other words, it shows you how much each asset class has changed from a decade earlier. Full Story
So, what happens? Trump this week alone re-imposed tariffs against Argentina and Brazil over steel and aluminum and threatened France with tariffs on wine, cheese, and hand bags because France was imposing a tax on digital services that could affect U.S. tech companies such as Facebook (FB) and Google (GOOG). He also once again trash-talked the U.S. dollar and his perception that U.S. interest rates are too high. The stock markets “tanked” from record highs, the U.S. dollar swooned, and gold rose. Cynically, we wonder if he was short the stock market and the dollar and long gold.
The stock markets bounced right back when it appeared that, lo and behold, the U.S. and China might work out the first phase of a trade deal by December 15. The U.S. is poised to raise tariffs once again if there is no deal. While a deal is unlikely tariffs that are supposed to kick in may be dropped. But what if there is no deal and the tariffs are imposed? But one wonders how anything positive could happen when the Trump signed a bill supporting the Hong Kong protestors and Congress passed a bill supporting the Uighurs. Full Story
FOMC tomorrow and ECB on Thursday can have surprises. Let’s make the Christmas Merry by doing a few trades but highly profitable trades. I will be looking for clues on short term interest rate outlook and ignore growth projections for next year. Other than crude oil and energies related risk, I am bullish on global economic growth for next year. Global growth move like an old diesel vehicle wherein initial pick up is very weak but the when the growth vehicle gets warmed, it matches the petrol engine. The pace of rise of gold and silver will change every two months next year. One should not be bothered if gold and silver gives negative return for a quarter as medium term to long term, gold is bullish. Full Story
2019 is on track to be a 50-year high in central banks’ net gold purchases. Bloomberg Intelligence reports that central banks have been absorbing about 20 percent of global gold mine supply. Based on the gold-to-silver ratio, it looks like silver might have more upside if demand for safe haven assets rises. Bloomberg’s Eddie van der Walt writes that the gold-silver ratio has dropped to 86 from 93 in July and that means silver has outperformed on the back of gold’s gains. UBS analyst Giovanni Staunovo is bullish on palladium and platinum. Staunovo wrote in a December 5 report that palladium will likely enter its ninth straight year of market deficit in 2020 and could climb above $2,000 an ounce. Even as platinum is set to enter a surplus, its price could be driven by gold. “As platinum is highly correlated to gold, our bullish view for gold should mean higher platinum prices, which we expect to trade at around $1,000 an ounce next year.” Full Story
By: Michael J. Kosares, USA Gold - 9 December, 2019
Though we would not characterize 2019 as a breakout year, gold has certainly thrown off the restraints. As a result, it has been a very good year thus far. Per Friday’s close (12/6/2019), gold is up almost 13.8% on the year even after accounting for last week’s selloff. Silver is up 13.7% on the year. If the current gains hold through the end of December 2019, it will be gold’s best year since 2010! Full Story
Chinese New Year is towards the end of January. I am hopeful that Chinese gold physical demand will be near record highs. If spot gold price remains below $1430 around end January then Chinese gold demand will zoom. Potential Chinese gold demand around the Chinese New year will prevent gold prices from attack bearish factors like trade deal, US jobs creation and sustained rise in US bond yields among other factors. Slowdown in central bank gold demand will be only temporary. Full Story
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