All posts by Alan B. Zibluk

Gold silver prices soar inflation on horizon?

Gold, silver prices soar; inflation on horizon?

Gold and silver prices are trading sharply up in midday U.S. futures trading Monday. Prices shot from modestly higher levels overnight to sharp gains following an early-morning announcement from the Federal Reserve that the U.S. central bank is very aggressively buying more securities, including mortgage-backed, and also will open up a “main street” lending facility. The Fed used the term “unlimited” on amounts it will spend. U.S. stock indexes initially shot higher on the news but quickly sold off again. April gold futures were last up $65.30 an ounce at $1,550.30. May Comex silver prices were last up $0.505 at $12.895 an ounce.

Today as I watched the TV business news channels continue to report dire news on the economy, and stock and financial markets–in particular a national movie theater official who said there is not one single member of his association that is making one single dime at present—I pondered the following as my wife and I have been holed up for two weeks in my rural Midwest home on a dead-end road: When this coronavirus panic has run its course and the severely impacted people worldwide return to a normal way of life, it seems that all of the world that has been pent up for what will likely have been so many weeks will want to get out in the public and do some things, and be some places and enjoy life again! That means a surge in retail demand, especially at entertainment-related businesses. That potential massive surge in consumer demand is likely to be temporary but there are a few stock market forecasters saying the stock indexes will be back at record highs by next year. Importantly, after the U.S. and other major central banks of the world have flooded their economies with massive sums of cash, it seems that pent-up consumer demand could be even stronger. My college economics classes taught me that when you combine higher consumer demand with money that has flooded the banking system it is a sure signal for price inflation—and maybe problematic price inflation at that. Ironically, after so many years of low inflation, it may have taken a crash in the world economies into near depression levels to restart price inflation trends that up until a dozen years ago had been rising at significantly higher annual rates. When I got into the commodity markets industry full-time over 35 years ago, I also learned that price inflation is bullish for raw commodities, and especially for gold. And after over three decades in the business I do know that price history in markets repeats itself. I could be off the mark on this rising inflation theory, but one cannot argue that the elements for such occurring are or will be in place. Let me know your thoughts. I enjoy hearing from my valued Kitco readers all over the world. jwyckoff@kitco.com

Global stock markets were lower in overnight trading. U.S. stock indexes were locked limit down in overnight trading as the U.S. Congress over the weekend failed to agree on a financial aid package for U.S. businesses and citizens, which was being blamed for the even more dour marketplace mood to start the trading week. There are midday reports that the U.S. Congress is close to agreement on a bailout package.

The Covid-19 outbreak continues to spread worldwide, with the U.S. economy shutting down even further as many states, including New York and California, have been locked down by their governors. Focus in the U.S. is on a shortage of medical supplies. Local health officials are now asking for the public to donate any supplies such as masks and gloves that they have at home. U.S. Senator Rand Paul has been diagnosed with Covid-19. Over the weekend much of the American public came to the stark realization the U.S. is not going to remain on lockdown for just a couple weeks, but instead for a period likely at least twice that long and probably even longer. China-U.S. relations are becoming more strained as President Trump now refers to Covid-19 as the “China virus,” which has angered the Chinese people.

The important outside markets today see Nymex crude oil prices weaker and trading around $22.00 a barrel. The U.S. dollar index is weaker after hitting a three-year high overnight. The 10-year U.S. Treasury note yield has dropped to around 0.78% Monday after trading above 1.0% last week.

Technically, April gold futures bulls and bears are back on a level overall near-term technical playing field as a steep price downtrend on the daily bar chart has been negated. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,600.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at today’s low of $1,484.60. First resistance is seen at $1,575.00 and then at $1,600.00. First support is seen at $1,525.00 and then at $1,500.00. Wyckoff's Market Rating: 5.0

May silver futures bears have the solid overall near-term technical advantage as a steep price downtrend is in place on the daily bar chart. A bearish pennant pattern may also be forming. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $14.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $11.00. First resistance is seen at $13.23 and then at $13.50. Next support is seen at today’s low of $12.29 and then at $12.00. Wyckoff's Market Rating: 2.5.

May N.Y. copper closed down 870 points at 208.40 cents today. Prices closed near mid-range today and closed at a three-year low close. The copper bears have the solid overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 234.15 cents. The next downside price objective for the bears is closing prices below solid technical support at last week’s low of 197.25 cents. First resistance is seen at today’s high of 214.65 cents and then at 217.50 cents. First support is seen at 205.00 cents and then at today’s low of 202.05 cents. Wyckoff's Market Rating: 1.0.

 

By Jim Wyckoff
For Kitco News

Gold price dips below 1490 ounce Asian markets trounced

Gold price dips below $1,490 ounce, Asian markets trounced

Worry is still gripping world markets in the face of the COVID-19 scare.

Markets are looking for cash and precious metals are getting dumped. On Sunday evening gold dipped below $1,490 ounce, a four-month low. Silver dropped below $12.30 ounce before recovering.

Platinum bucked the trend and traded up, reaching a high of $625 ounce. Palladium was up, too, breaking through $1,580 ounce.

Pacific-Asian stocks are down. Hang Seng opened 5% lower at 21.659. The S&P/ASX 200 is off nearly 6% as of midnight ET.

Dow futures tumbled 900 points on Sunday, tripping the 5% allowable limit and halting further trading, reported CNN.

Reuters reported that oil prices are off more than $1 a barrel at the start of the trading session on Sunday.

Markets are waiting for some monetary action. The U.S. Congress is wrangling over a $1-trillion economic stimulus bill. The bill was held up on Sunday, but negotiation is resuming. A week ago the Federal Reserve acted, slashing the federal fund rate between 0 and 1/4 percent.

 

By Kitco News
Sunday March 22, 2020 22:12

Gold Price in India 22nd March 2020

Gold Price in India (22nd March 2020)

Gold Mar 22, 2020 India ₹3,962 /Gram(22ct)

Gold has over the years been a perfect hedge against inflation. Investors are increasingly looking at gold as an important investment. Goodreturns (OneIndia Money) is providing gold price in India herewith for our readers informational purposes only. These gold rates are updated today and are sourced from reputed jewellers in the country.

 

 

Gold settles higher but logs a second weekly decline

Gold settles higher, but logs a second weekly decline

Gold futures rose Friday, finding support after indiscriminate selling across financial markets weighed even on some traditional havens, sending prices for the precious metal lower for the week.

For now, gold has gotten a boost from Senate Majority Leader Mitch McConnell’s proposal to get “needed relief cash in hands of middle and low income households, and other stimulus measures moving forward,” said Jeff Wright, executive vice president of GoldMining Inc.

“This has at least temporarily stemmed the tide of liquidation selling of all assets, gold no exception,” he told MarketWatch. “All signs point to gold moving higher in near term, unless panic selling wave returns.”

The ICE U.S. Dollar index DXY, -0.78% pull back is also supportive for gold, Wright said. “All signs point to gold moving higher in near term, unless [the] panic selling wave returns.”

Gold for April delivery GCJ20, +1.47% on Comex rose $5.30, or 0.4%, to settle at $1,484.60 an ounce. For this week, prices for the most-active contract lost 2.1%, according to FactSet data. The previous week’s loss of more than 9% was the largest since September 2011.

May silver SIK20, +4.12% rose 25.1 cents, or 2.1%, to $12.385 an ounce, for a weekly decline of 14.6%. Prices on Wednesday settled at the lowest since January 2009.

Gold has “rebounded alongside the improvement in risk appetite, while falling for much of the week as central banks around the world threw the kitchen sink at the coronavirus,” said Craig Erlam, senior market analyst at Oanda, in a note.

“Their efforts are not in vain but we’re not seeing the surge in demand for gold that we’ve seen in the past when the market is flooded with liquidity. I feel there may be a lag effect, with investors still liquidating gold positions to fill holes elsewhere but only time will tell,” he said.

Meanwhile, benchmark U.S. stock indexes moved lower in Friday dealings as gold futures settled. Still, the global equity rout slowed this week as central banks rolled out additional stimulus measures and governments weighed fiscal responses.

Against that backdrop, May copper HGK20, -1.48% ended at $2.1715 a pound, down 0.6% Friday and nearly 12% lower for the week. April platinum PLJ20, +2.44% tacked on 4.3% to $622.50 an ounce, with prices down over 16% for the week, but June palladium PAM20, -0.74% added 0.7% to $1,540.20 an ounce, for a weekly rise of around 2%.

“Fundamentally, gold should be in $1,500-1,600 range, and moving higher based on FOMC balance sheet expansion, stimulus measures and traditional retention of safe haven status,” said Wright. A “weekend of calm and quiet will be welcome for everyone in the market—long and shorts and public in general.”

Published: March 20, 2020 at 1:54 p.m. ET<br>
by Myra P. Saefong and William Watts

Dollar strength continues to plague precious metals

Dollar strength continues to plague precious metals

Gold continues to fall in the presence of extreme dollar strength which is dictating most of the net change within the precious metals complex. As of 6:15 PM EST the dollar is currently up almost 2%, with the index currently fixed at 103.56.

The last time we saw the U.S. dollar have this kind of strength was in January 2017 when it hit a high precisely where the dollar index is trading currently just above 103.

During this last week alone the dollar index traded from a low of 97.70, and is currently at its highest value this week at 103.56. That is a net change of almost 6% (+5.86%) in a single week. Today’s strong rally in gold accounted for roughly one third of the gains realized this week.

U.S. equities had a mild recovery today but it is not convincing enough to say with any conviction that the selling pressure and carnage is over. This could simply be a. Where equities are consolidating and moving up slightly, or a dead cat bounce. In either case the key is caution and patience as we wait to see how the current coronavirus crisis and pandemic play out.

Still many analysts question why we have seen the stock market lose such a vast amount of market capital, along with gold down dramatically at the same time. The common belief is that market participants are simply liquidating all assets including the safe haven group. However, many believe including myself that at some point if equities continue to drop it will not be just the U.S. dollar gaining strength as a safe place to park your investment capital, and gold will once again return to a safe haven asset.

As reported in MarketWatch analysts at Zaner metals wrote, “We do think that gold has seen consistent cushioning from those unwilling to give up on the idea of gold and silver ‘eventually’ getting safe haven buying. However, for the time being, the primary safe haven instrument (at times the only safe haven instrument) has been the dollar and, therefore, we are highly suspicious of further gains in precious metals particularly and silver.”

Although many analysts expect the U.S. equities to remain under pressure over the next months, which should result in more dollar strength and gold prices remaining week.

It is also hard to explain why with all of the proposed extra stimulus from the government and central banks and emergency rate cuts that the dollar continues to be the favored place to put investment capital as a safe haven.

While we acknowledge that the typical reaction to recent Fed decision to infuse capital and liquidity into the markets, and cut rates to near zero in two emergency moves that gold should have reacted in a bullish manner. The facts remain investment dollars are on the move from equities into bonds, the U.S. dollar and the Yen.

On a technical basis we see major support for gold at $1440 to $1446. This is based on a previous support level in gold that occurred between November and December of last year. This was also the price point that we saw gold spring up to higher prices as it challenged $1700 per ounce for the first time in seven years.

The gold – silver ratio hit an all-time record high yesterday just above 124. Today it backed off a little bit moving down to 121.96. Since this ratio is in uncharted territory it is difficult to predict whether this price point will act as ultimate resistance or a level of consolidation before moving to yet a new record high.

Wishing you as always good trading,

 

By Gary Wagner
Contributing to kitco.com

The only silver lining is the gold-silver ratio

The only silver lining is the gold-silver ratio

When we look at the precious metals complex the only thing we see moving higher is not a specific precious metal, rather it is a ratio between two precious metals. This ratio is the only investment that is competing with recent dollar strength which hit a new high today of 101.26, after factoring in today’s gain of approximately 1 ½%.

The only silver lining to this cloud of coronavirus confusion and fear is the gold-silver ratio. The historical I use only goes back to 1998. That being said, the current gold -silver ratio is the highest on record.

Historically speaking from 1687 up until 1885 the gold-silver ratio was fixed at just under 20 to 1, meaning it took 20 ounces of silver to equal the value of 1 ounce of gold. Between 1885 and 1934 the ratio remained range bound between 20 to 1, and 40 to 1.

Figure 1 is a long- term chart of the gold- silver ratio, it goes back to 1687. The arrow just under 1934 shows the dramatic change in the ratio following legislation by President Roosevelt.

President Franklin Roosevelt enacted legislation and passed the Gold Reserve Act of 1934. This act made it illegal for American citizens AND the Federal Reserve to own gold. This act required that all Americans and the Federal Reserve to surrender all of their gold coins as well as gold certificates to the United States Department of the Treasury and exchange them for new American dollars which no longer were redeemable in gold. This in essence converted the gold standard-based dollar to a partially backed currency.

Citizens as well as the Federal Reserve Bank transferred all of their gold reserves to the U.S. treasury at a discount. The net result was that the United States had established an exchange stabilization fund under the control of the treasury which would control the value of the dollar.

After World War II many major countries all met in Bretton Woods and created a monetary management system to maintain the external exchange rate which effectively allowed countries to convert their U.S. dollars to gold.

From 1934 to 1947 the gold-silver ratio rose to 100 for a brief period before settling back to its former level of 20 to 1 in 1971. The red arrow on figure 1 represents the year, 1971 that President Nixon passed legislation that in essence abolished the gold standard as we know it. This became known as the Nixon shock which effectively ended the Bretton Woods agreement and abolished the ability for countries to convert their U.S. dollars into gold.

This caused the gold silver ratio to rise once again to approximately 80 to 1.

Figure 2 is the gold silver ratio from 1975 to 2015. It shows that between 1990 and 2015 the gold silver ratio traded from 90 to 1, to as low as 35 to 1.


 

However, that all changed at the beginning of 2020, when the ratio had been trading at roughly 85 to 1. Figure 3 is the gold silver ratio including the most current data up until March 18, 2020. During the first 18 days of March the gold silver ratio jumped from approximately 95 to the current value today of 124, the highest level on record.

What is clear is that the precious metals as a group have been under pressure and trading dramatically lower ever since the coronavirus crisis began. However never in history has it taken 124 ounces of silver to equal the value of a single ounce of gold, until today.


 

Wishing you as always good trading,

 

By Gary Wagner

Contributing to kitco.com

Silver price beaten down but investors cant find any so what’s going on? Peter Hug Responds

Silver price beaten down but investors can‘t find any, so what’s going on? Peter Hug Responds

Silver’s future is bleak as a recession could wipe out any industrial demand left for the metal, this according to Peter Hug, global trading director of Kitco Metals.

Monetary policy was not enough to calm investors, Hug noted, as markets reacted negatively to the last Federal Reserve rate cut made last Sunday.

“That episode really scared the market. It indicated that the Fed pushing on a string here is not going to solve the issue. It’s going to require some significant fiscal policy,” he said.

Hug said that a recession may now be underway.

“Ignoring the economics of a significant recession – it may be short lived, if we’re not already in it – if we ignore the economics of it, silver [is] an industrial metal and there would be virtually no demand for it,” he said.

Hug said that the recent price decline in metals is due to traders and investors liquidating their metals to meet margin calls, putting even more pressure on the physical market.

“Because there is no physical metal in the market right now, both the U.S. Mint and the Canadian Mint are on allocation with some products anywhere from four to six weeks out, at a minimu, we’re looking at a situation where there isn’t enough physical offtake to offset the selling of the ETFs and the futures, because there’s no physical product left to buy,” he said.

Spot silver traded 20 cents higher on the day Tuesday.

Silver prices plummet as mints can’t keep up with demand

Silver prices plummet as mints can’t keep up with demand

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Precious metals have plunged in the markets, but there is still demand for physical coins in the midst of the coronavirus outbreak, this according to Phil Streible, chief market strategist of Blue Line Futures.

“I can tell you one thing, I called around the last couple of days trying to buy physical metals, specifically physical silver, and silver was a $1.50 to $2.00 over spot, so there is an underlying demand that is out there right now, just more on the physical side,” Streible told Kitco News.

His comments come as spot silver retreated $1.70 an ounce on Monday.

Streible noted that while bonds have done well, there may not be much upside left given the run-up we have already seen.

“It seems like the only place that anyone found any safe haven in was the bond market, but with yields dipping back down below 0.64%, I think that there’s not much room there on the upside,” he said.

On metals, Streible said that it is better now to be positioned in the physical space, rather than the miners or leveraged products.

Gold should be bouncing back from this selloff later in the year, he said.

“The key level you have to look at in gold is $1,508. That’s the 200-day moving average, if we don’t close below there, I think we’d still be in a pretty healthy market,” he said.

 

By Kitco News
For Kitco News

Gold rate today jump as traders flee from equities

Gold rate today jump as traders flee from equities

Gold futures were up 2 per cent to Rs 41,154 per 10 grams. Silver futures were up 0.90 per cent to Rs 40,850 per kg.

Reuters

NEW DELHI: Gold and silver leaped on Monday as investors moved to safe haven assets in a risk-off environment due to rising coronavirus cases in India and abroad.

As per the government of India, the total number of confirmed Covid-19 cases in the country were at 110 with two deaths till now. Indian Council of Medical Research has warned that community transmission of the disease is inevitable and then the numbers could rise manifold.

Gold futures were up 2 per cent to Rs 41,154 per 10 grams. Silver futures were up 0.90 per cent to Rs 40,850 per kg.

Gold prices on Friday crashed by Rs 1,097 to Rs 42,600 per 10 gram in the national capital as investors moved to other assets, including rupee after an appreciation in the domestic currency, according to HDFC Securities. The yellow metal had closed at Rs 43,697 per 10 gram in the previous session.

Globally, gold prices jumped in early trade after another emergency rate cut by the US Federal Reserve, before paring gains as some investors sold the metal for cash amid a sell-off in equities.

Spot gold was up 0.9 per cent at $1,543.60 per ounce by 0248 GMT, having risen as much as 2.8 per cent earlier. The metal fell ..

Spot gold was up 0.9 per cent at $1,543.60 per ounce by 0248 GMT, having risen as much as 2.8 per cent earlier. The metal fell 3 per cent on Friday. U.S. gold futures rose 1.8 per cent to $1,544.20 per ounce.

Among other precious metals, palladium fell 3.2 per cent to $1,748.63 per ounce, having fallen more than 5 per cent earlier in the session, while platinum slipped 0.4 per cent to $758.50. Silver gained 0.4 per cent to $14.74 per ounce.

 

ETMarkets.com|Last Updated: Mar 16, 2020, 10.16 AM IST

Gold futures log largest weekly loss in more than 8 years

Gold futures log largest weekly loss in more than 8 years

Gold futures ended sharply lower for a fourth straight session on Friday, with a loss of more than 9% for the week—the largest since September 2011.

Volatility-shocked investors looked for news on fiscal stimulus packages from governments around the world to help ease the economic pain of the COVID-19 epidemic that has ground some of the world’s business activity to a halt and rocked financial markets.

“It seems that investors have been selling gold in order to cover losses elsewhere,” said Caroline Bain, chief commodities economist at Capital Economics, in a Friday research note. “Ample liquidity in the gold market means that the sale of gold holdings is a relatively quick and seamless way to raise cash in times of need.”

Gold for April delivery GCJ20, +0.80% on Comex fell $73.60, or 4.6%, to settle at $1,516.70 an ounce. Prices for the metal, based on the most-active contract, ended at their lowest level year to date, according to FactSet data. Gold futures saw a weekly loss of 9.3%, the biggest percentage decline since the period ended Sept. 23, 2011.

May silver SIK20, +1.27% dropped $1.505, or 9.4%, to end at $14.50 an ounce, after the metal tumbled 4.6% in the previous session. A settlement around this level would be the lowest most-active contract finish since May of last year. For the week, silver lost 16%.

The United States Mint said Thursday that it has temporarily sold out of American Silver Eagle bullion coins. “Our rate of sale in just the first part of March exceeds 300% of what was sold last month,” the Mint said. Sales of the one-ounce American Silver Eagle coins were at 2.32 million so far this month, as of Thursday, compared with sales of 650,000 in the month of February, according to data from the Mint.

“It’s a double whammy of low production…and a sudden spike in demand,” said Dana Samuelson, president of precious-metals dealer American Gold Exchange Inc. “I’m not convinced that buyers are rushing in because the price dropped. This is a fear driven surge in demand.”

House Speaker Nancy Pelosi said she and President Donald Trump were near an agreement on a an aid package to help address the health emergency that is created by the infectious disease that was first identified in Wuhan, China in December and has infected about 128,000 people world-wide. Pelosi said the House will pass a coronavirus bill aimed at helping families.

U.S. benchmark stock indexes climbed Friday, a day after the Dow DJIA, +9.36% and the S&P 500 SPX, +9.28% suffered their biggest one-day plunge since the October 1987 crash. The U.S. dollar also strengthened, with the ICE U.S. Dollar Index DXY, +1.25% up 1.3% as gold futures settled, looking at a gain for the week.

Gold has declined this week even though markets remain volatile as the metal’s “natural opposition to the U.S. dollar has been restored and for the short term,” said Colin Cieszynski, chief market strategist at SIA Wealth Management Inc.

“The plunge in Treasury yields a few weeks ago, depressed the US dollar and boosted gold, but now that the panic rush into bonds has eased a bit, the US dollar has rebounded against gold and other currencies like the Yen USDJPY, -0.03% and the Euro EURUSD, +0.36%, and gold has dropped back,” he told MarketWatch.

Taking a look at the bigger picture for gold, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said “some investors who were reluctant to part with their equities at depressed prices were able to sell gold in order to meet the margin calls,” prompting the recent declines in the price.

“This is exactly the same as what happened a week and a half ago before the emergency rate cut from the Federal Reserve, and when equities dropped dramatically in 2008, 2001, 1987, etc.” he told MarketWatch. “In all those previous cases, investors were able to take advantage of gold’s liquidity to meet margin calls, and the gold price quickly recovered within days [or] weeks. That is what I am expecting to recur this time around.”

 

Published: March 13, 2020 at 2:42 p.m. ET
By Myra P. Saefong and Mark DeCambre