Gold riding the momentum wave to an eight-month high

Geopolitical uncertainty continues to dominate market sentiment, and gold has been able to ride this new wave of fear and momentum to an eight-month high of $1,900 an ounce.

Despite gold's 3% rally this week, the question remains: can the precious metal hold on to this momentum if and when tensions between the U.S. and Russia start to ease. As I have mentioned before, this is one of the reasons why I have never been a fan of buying gold as a safe-haven asset.

However, I have also noted that this time feels slightly different as inflation remains a dark cloud hovering over markets and exacting its toll on the global economy. As central banks worldwide react to rising consumer prices, many analysts are starting to ring the warning bell that monetary policy tightening could push the global economy into a recession.

Friday, Bank of America's chief investment strategist, Michael Hartnett, said in his latest note that "recession risks [are] rising." He said that he sees a scenario where over the next six months, "rates shock morphs into recession shock."

We are approaching the time when gold will shine. At some point, markets will realize that their monetary policy expectations have been too aggressive.

We are already starting to see expectations of an aggressive move in March being pared back. At the start of the week, markets saw a more than 50% chance of a 50-basis point hike. Markets now see a 30% chance of that happening.

What's next for gold price? Geopolitics shock markets, growth outlook at riskFrom the minutes of the Federal Reserve's January monetary policy meeting, we can see that the central bank wants to raise interest rates "soon." Ultimately, they will not sacrifice economic growth to rein in inflation.

When markets understand this fundamental truth, they will realize that real rates will remain extremely low, and that is where gold's true value starts to shine.

According to many commodity analysts, a perfect storm is on the horizon as rising interest rates will add volatility to equity markets, forcing investors to reduce their risk profiles.

However, in a world of still low interest rates, bond yields don't provide the protection they once did.

This week I had a chance to talk with John Reade, chief market strategist at the World Gold Council, and I asked him why investors should be paying more attention to gold. He noted that gold could be an important diversification tool for any portfolio or investor.

"We've issued various editions of the strategic case for gold in the U.K. and Europe and Australia, Russia, Singapore. Looking at the benchmark of assets that might be in a typical portfolio for each of those countries, you find very similar result," he said. "Somewhere between 4% and maybe the higher 10%, of gold in your portfolio seems to be optimal for increasing the risk-adjusted returns," he said.

It's also more than just gold that is benefiting. In an interview with Kitco News, Morgan Lekstrom, president and CEO of Silver Hammer Mining Corp, said that as gold starts to move higher, silver should start to shine.

We have also seen sharp moves higher in platinum and palladium as gold prices have rallied.

Have a great weekend

By Neils Christensen

For Kitco News

Time to buy Gold and Silver on the dips

David

60% market crash, governments seizing your money, shortage of food: Todd Horwitz’s scary view

60% market crash, governments seizing your money, shortage of food: Todd Horwitz's scary view

The Federal government of Canada recently invoked the Emergencies Act for the first time in Canadian history in response to the trucker protest in Ottawa.

Todd Horwitz, chief market strategist of BubbaTrading.com told David Lin that the stripping away of personal freedoms is not exclusive to Canada, and is only going to get worse around the world.

“That’s where governments are going anyways,” Horwitz said. “When people continue to vote in the directions that they vote and they give up their freedoms, you are proving to the government to do this because you keep voting in the same people that don’t belong there.”

The Emergencies Act, which became law in 1988, defines a “national emergency” as one of the following: a public welfare emergency, a public order emergency, an international emergency, or a war emergency.

The emergency in question must be “an urgent, temporary and critical situation that seriously endangers the health and safety of Canadians or that seriously threatens the ability of the Government of Canada to preserve the sovereignty, security and territorial integrity of Canada.”

Invoking the Emergencies Act grants the Federal government several powers, including the ability to seize private bank accounts and suspend large transactions.

Deputy Prime Minister Chrystia Freeland said in a press conference earlier this week that the government is broadening “Terrorist Financing” rules to cover crowdfunding platforms and digital assets, like cryptocurrencies.

Horwitz said that cryptos will be difficult to seize.

“That’s not so easy at this moment. If you’re carrying, in your cold wallet, your cryptocurrencies, they don’t have any actions to that,” he said. “This is one of the things that makes cryptos so valuable right now and why you’re starting to see more dominance and more play there is because…if you’re in Ukraine and you want to get out, you can’t walk out with a million dollars of gold but you can walk out with a million dollars on a flashdrive of Bitcoin. So this is a threat that they couldn’t really follow through on.”

For more information on why stocks are still headed for a 50% to 60% correction and why a shortage of food may be on the way, watch the video above.

By David Lin

For Kitco News

Time to buy Gold and Silver on the dips

David

Potential de-escalation with Russia â Ukraine takes gold to lower pricing

Potential de-escalation with Russia – Ukraine takes gold to lower pricing

Precious metals across the board sustained moderate to strong price declines in light of recent news suggesting that the geopolitical tension between Russia and Ukraine has begun to de-escalate. Recent news indicated that some Russian troops that were positioned near the border of Ukraine began to leave and return to their base.

As of 5:10 PM EST, the deepest percentage price decline today occurred in the precious metal palladium, which sustained a loss of 4.18%, or $98 taking the most active March contract to $2248. Today’s strong decline in palladium is directly related to the potential de-escalation of the geopolitical conflict in Russia and Ukraine. Since 40% of the annual global production of palladium occurs in Russia, any de-escalation of the geopolitical tensions would have a direct bearish impact on palladium.

All of the precious metals traded lower even with moderate tailwinds from dollar weakness today. The dollar lost almost 4/10% (-0.39%), taking the dollar index to 95.985. March silver gave up almost 2% (-1.8%) and is currently fixed at $23.375. Gold futures had a significant price drop of $14.30 (-0.76%), taking the most active April futures contract to $1855.10.

It is my current belief that the largest factor resulting in bullish sentiment for gold pricing is the current level of inflationary pressures. The recent CPI (Consumer Price Index) came in at its highest level since February 1982 at 7.5%. However, the most alarming news indicating that inflationary pressures in the United States are far away from peeking and most likely spiraling higher was today’s PPI (Producer Price Index). The producer price index is an excellent barometer on wholesale costs to companies and corporations that produce goods and services. More so, they give advanced information on the CPI and PCE index. Wholesale costs rising will be passed onto consumers at a later date.

Today the U.S. Bureau of Labor Statistics released the PPI index indicating that wholesale prices have increased by 1% in January. That takes the year-over-year wholesale price inflation index to 9.7%, which is almost a record high since the PPI was first calculated in November 2010. Before today’s report, the highest level on record indicated a year-over-year rise to 9.6% in November 2021.

Inflation will continue to climb and not taper off as the Federal Reserve has predicted for quite some time. The rise in inflation was a multiyear event that was the net result of exceedingly aggressive rises in the money supply due to administrative programs and the aggressive monetary policy by the Federal Reserve in regards to their asset sheet balance which now exceeds $8.7 trillion.

To effectively reduce inflation, two things need to happen. First, there needs to be a tapering of the asset balance sheet and a reduction of the money supply in the United States coupled with raises in interest rates. Secondly, and most importantly, effectively reduce the bottlenecks caused by supply chain shortages. As long as inflationary pressures continue to grow, there is a high probability that gold will continue to gain value.

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

David

Is gold price about to sprint?

Inflation in the U.S. is now at 7.5% — the highest level in forty years. For the U.S. stocks, this means more losses as markets price in a more aggressive Federal Reserve. But for gold, this means more demand as investors turn to the precious metal for protection.

Also, a warning from the U.S. that Russia could launch military action in Ukraine "any day" is pushing gold prices well above the $1,850 an ounce level. Here's a look at Kitco's top three stories of the week:

3. U.S. Mint sells 5 million ounces of silver in January, best start since 2017

2. From one of the worst to best-performing assets? Gold price to tackle $2,100 by year-end, says Wells Fargo

1. The U.S. makes 'largest financial seizure ever,' taking control of $3.6 billion in Bitcoin stolen in 2016

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

David

Gold price looks to take $1,850 as markets fear emergency Fed move

Gold is catching a bid as markets worry the Federal Reserve could opt for an emergency rate hike before the March meeting to try and tame inflation.

Gold is up nearly 2% on the week as more investors turn to the precious metal amid a widespread risk-off sentiment in the marketplace. At the time of writing, April Comex gold futures were trading at $1,841.30, up 0.21% on the day.

This week's shockingly high U.S. inflation report has added more uncertainty regarding the Fed's tightening plan.

With consumer prices rising 7.5% in January, the highest in 40 years, Goldman Sachs is now projecting seven 25 basis points hikes this year. There is also growing consensus for a 50 basis point hike in March. And some are even not ruling out an emergency move by the Federal Reserve prior to the March meeting.

Federal Reserve Bank of St. Louis President James Bullard further encouraged these hawkish views, stating he supports the fed funds rate hitting 1% after just three meetings.

In the meantime, the 10-year Treasury yield surged further above 2%, a level not seen since August 2019.

"The gold price chart is looking constructive. The immediate cause was hot inflation data. The Fed is now losing some investor confidence. It looks like they are scrambling to fix what's already a policy mistake. And gold is benefiting from that panic," Gainesville Coins precious metals expert Everett Millman told Kitco News.

A 50 basis points hike is possible in March, but what's even more likely is the Fed choosing to do a rate hike in between the FOMC meetings.

"There is some precedent for that. The immediate reaction to either of those moves would be a selloff for gold. But overall, the beginning of a rate cycle will be bullish for gold," Millman said. "Based on historical observations, any time the Fed begins rate hikes after telegraphing them in advance, gold has performed well at the beginning."

While odds are increasing for the 50 basis points hike, RJO Futures senior market strategist Frank Cholly told Kitco News that an emergency pre-meeting rate increase is unlikely.

"The 50 basis points hike in March is more probable. But gold has not fully priced that in yet. Treasuries have done that, but gold still moved higher. Gold is still looking for the Fed to remain dovish," Cholly noted.

Gold price remains down as annual U.S. CPI rises 7.5% in January; another 40-year high

The level gold will be looking to breach next week will be $1,850 an ounce. The precious metal already attempted to approach this resistance numerous times in the past several weeks but was unsuccessful.

"Gold will be challenging $1,850, and we could see that breached on the next attempt," Cholly pointed out. "We had an impressive rally in light of all the inflationary data. Gold is starting to embrace the fact that rates are moving higher as inflation is lasting longer. This is real inflation, and gold is finally starting to come to terms with this. We are going to get that pop above $1,850. I'm getting more bullish now."

In the meantime, gold's safety range is between $1,800 and $1,850. Longer-term, Cholly is looking for the precious metal to move above $1,900 by the middle of the year.

FOMC meeting minutes and other data to watch

The big item on the agenda next week is the January FOMC meeting minutes. Markets will be looking for clues in terms of how aggressive the U.S. central bank could allow itself to be.

"The minutes of the January FOMC meeting, due out next Wednesday, will help to clarify whether officials would consider a 50bp hike. Assuming his nomination wins the approval of the Senate Banking Committee in the vote scheduled for 15th February, we also expect Fed Chair Jerome Powell to schedule his semi-annual 'Humphrey-Hawkins' testimony for some time later this month," said Capital Economics chief North America economist Paul Ashworth.

Powell's semi-annual testimony would be the more appropriate venue to deliver some major policy shifts, added Ashworth.

"We still think that the unusually flat yield curve will prevent the Fed from being able to hike too aggressively this year and will force it to lean more on using quantitative tightening to drive long yields up. Even though the 10-year yield finally climbed to 2% this week, the 10s-2s spread is down to less than 50bp now," he said.

Below are other data to keep a close eye on next week.

Tuesday: PPI, NY Empire State Manufacturing Index

Wednesday: retail sales, industrial production, FOMC meeting minutes

Thursday: building permits, housing starts, jobless claims, Philadelphia Fed Manufacturing Index

Friday: existing home sales

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

David

Gold, silver sales are still being taxed, is that about to change soon? Jp Cortez

Unlike traditional investments like stocks and bonds, retail investors who buy and sell precious metals must pay sales taxes, but that could soon change. So far, 42 states have removed some or all of the taxes from gold and silver transactions. “The last several years have been really promising in eliminating sales taxes in many states,” Jp Cortez, Policy Director, Sound Money Defense League explained. “Last year Arkansas and Ohio both decided to move forward with removing sales tax on precious metal transactions.”

Cortez continued, “This year Kentucky, Mississippi, Hawaii, New Jersey and Tennessee are all considering removing sales taxes on gold and silver purchases as well.”

The Sound Money Defense League is a public policy project in collaboration with money metals exchange to remonetize gold and silver.

Cortez spoke to David Lin, anchor at Kitco News on eliminating taxes on gold and silver transactions.

At this time, more states are considering eliminating sales taxes, Cortez revealed. “There are defensive battles right now. Alabama and Virginia are fighting sunset battles, hoping to extend their current existing exemption,” he said. “Oklahoma and West Virginia also want to eliminate capital gains taxes, so when you sell your assets in those states, you wouldn’t be charged a state income tax.”

Cortez discussed how sales taxes impact the sales and purchases of precious metals. “There are rules, restrictions and tax disincentives that surround the sale and purchase of gold and silver,” Cotez said. “Many people would like to invest in precious metals, because these are assets that have held their value since time in memorial. But very often investors are unable to, because of state tax disincentives, along with rules and regulations. It’s a very onerous process.”

Cortez emphasized the importance of eliminating sales taxes, because in some states you end up paying taxes three times. “Capital gains taxes are federally mandated. If you buy gold and silver, you are going to get hit with a state sales tax between 7% to 10%. This illustrates how criminal this is in nine states,” he pointed out. “Then a couple of years later whenever you sell the asset, you are going to be charged capital gains a second time now at the federal level. And all states except in two or three, you are charged again a third time.”

“As an investment it becomes completely untenable. It’s impossible to store your wealth in this way, because of all the taxes that burden investors,” Cortez added.

Explaining why transactions of precious metals are taxed while stocks and bonds are not, Cortez said the government and the IRS “classifies gold and silver as collectibles. In many cases, they are not deemed as investments. They are categorically put in the same group as beanie babies and baseball cards,” he noted. “There is special discriminatory treatment towards investors who want to store their money in precious metals.”

Cortez stressed why it is necessary to exempt gold and silver transactions from sales taxes. “There are lots of reasons why gold and silver should not be taxed, but an easy one is simply resale. When you buy a car, you are using the car,” he said. “It’s not being held for resale, but in the case of stocks, bonds, ETFs, gold, silver and Bitcoin, these are goods that are being held for resale. They are not consumable final goods. It’s inappropriate to charge a sales tax on them.”

For more on removing taxes on gold and silver transactions , please watch the full video above.

Time to buy Gold and Silver on the dips

David

Gold price surges as new Covid strain surfaces

Gold prices are solidly higher in early U.S. trading Friday, on safe-haven demand and short covering by the futures traders, amid a potentially ominous development on the pandemic front. December gold was last up $20.50 at $1,804.30 and December Comex silver was last down $0.02 at $23.47 an ounce.

There is keen risk aversion in the marketplace Friday, on what typically is a very quiet post-U.S.-Thanksgiving-holiday trading day that sees many U.S. markets closing early. A new strain of Covid-19 that is rapidly spreading in southern Africa has produced high anxiety among traders and investors. The European Union and the U.K. are moving to halt air travel from South Africa. Other governments are also moving quickly to try to control the spread of the new strain of coronavirus. Scientists have not determined how quickly the new strain can spread or whether it is resistant to existing Covid vaccines. The World Health Organization is holding an emergency meeting on the matter Friday.

Global stock markets were sharply lower in overnight trading. The U.S. stock indexes are pointed to solidly lower openings when the New York day session begins.

Nymex crude oil prices have plunged to a nearly two-month low of $72.60 a barrel, U.S. Treasury bond and note prices are soaring (yields dropping) on the news. The yield on the U.S. Treasury 10-year note is presently fetching 1.521%, well down from 1.64% seen on Wednesday. Gold prices are sharply higher on safe-haven demand. The other key outside market today sees the U.S. dollar index solidly lower. Bitcoin prices are sharply down and have lost over 7% Friday.

There is no major U.S. economic data due for release Friday.

Technically, December gold futures bulls have the slight overall near-term technical advantage. A seven-week-old uptrend on the daily bar chart is still alive. Bulls’ next upside price objective is to produce a close above solid resistance at this week’s high of $1,850.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,758.50. First resistance is seen at the overnight high of $1,816.30 and then at $1,825.00. First support is seen at the overnight low of $1,786.40 and then at this week’s low of $1.777.40. Wyckoff's Market Rating: 5.5

The silver bears have the overall near-term technical advantage. A seven-week-old uptrend on the daily bar chart has stalled out. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at the November high of $25.49 an ounce. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at the overnight high of $23.735 and then at $24.00. Next support is seen at this week’s low of $23.28 and then at the November low of $23.045. Wyckoff's Market Rating: 4.0.

By Jim Wyckoff

For Kitco News

Buy, Sell Gold and Silver, with Free Storage and Monthly Yields

David

Gold price is consolidating, when is a breakout happening? – Gary Wagner gives price targets

This upcoming Thanksgiving will be the most expensive ever, and inflation will continue to be a serious concern for investors, said Gary Wagner, editor of TheGoldForecast.com who advocates that gold is still the ultimate store of wealth.

On a technical basis, gold is still in its consolidating phase, Wagner told David Lin, anchor for Kitco News.

"A break above $1,880 [gold price] would really signal another breakout and we would push towards $1,990",” he said.

For more information on the main drivers behind gold and the metal’s current relationship with the U.S. dollar, watch the video above.

By David Lin

For Kitco News

Buy, Sell Gold and Silver, with Free Storage and Monthly Yields

David

Gold prices to remain below $1,900 through 2022 – Haywood Securities

The gold market remains in a long-term uptrend. Still, it needs to get through its current consolidation period, according to one investment firm.

In a report published Tuesday, analysts at Haywood Securities said they are lowering their price targets for this year through 2022 but expect to see higher prices past 2023.

Looking at the updated forecast, Haywood analysts see gold prices averaging the year around $1,800 an ounce, down slightly from the previous estimate of $1,815. For next year, the firm sees an average gold price of around $1,850 an ounce, down from $1,900. However, by 2023, the analysts said that they see prices averaging around $1,900 an ounce, up from the prior estimate of $1,800 an ounce.

The analysts said that gold faces some challenging headwinds from a stronger U.S. dollar and rising bond yields in the near term. Bond yields have pushed higher as interest rate expectations have picked up. Markets currently expect the Federal Reserve to tighten monetary policy, which includes reducing their monthly bond purchases before the end of the year and potentially raising interest rates as early as June.

However, looking at the bullish elements, the analysts said that slowing growth and rising inflation create a positive environment for the precious metal.

"With growth slowing and inflation moving higher, we are concerned that China and the broader global economy could be set for stagflation," the analysts said in the report.

"Historically, gold has fared well in stagflation environments as higher inflation and market volatility support capital preservation and lower real interest rates support opportunity cost and growth risk motives. We believe the precious metals complex is in a long-term uptrend, and longer

term macro-economic factors remain constructive. Nevertheless, gold remains a tangible, fungible, and durable store of value," the analysts added.

The comments come as the gold market continues to struggle to attract sustainable bullish momentum and remains trapped below $1,800 an ounce. December gold futures last traded at $1,792.70 an ounce, down 0.78% on the day.

Although gold prices could struggle through 2022, Haywood analysts continue to see solid value in the undervalued mining sector.

"The mining sector is trading at historic lows relative to gold and the broader market in general despite strong fundamentals offered by the sector, including market sector leading free-cash-flow yield of around 6.85%," the analysts said.

The firm said that they continue to focus on organic growth value within the mining sector. Their top picks in the intermediate junior producer space are Endeavour Mining (TSX: EDV), Equinox Gold (TSX: EQX) and K92 Mining (TSX: KNT).

Meanwhile, the firm's top picks in the exploration development space include Filo Mining (TSX.V: FIL) and Osisko Mining (TSX: OSK).

By Neils Christensen

For Kitco News

Buy, Sell Gold and Silver, with Free Storage and Monthly Yields

David

Expect $30 silver price, then $50 soon after, by 2022 – Steve Penny

Once silver breaches $30, there would be minimal resistance keeping it back from hitting $50, said Steve Penny, publisher of The Silver Chartist report.

Penney told David Lin, anchor for Kitco News, that $50 or even $30 an ounce for silver is unlikely to happen by the end of the year.

"I think we're very close to a bottom here. There still is some downside risk to potentially $18 or $19 silver, but it's a high enough probability that we should be mentally prepared for. The big number to watch for is $30, I think everyone knows that," he said. "Once we get above $30, I think we do get to $50 fairly quick, probably within a quarter or two, because there's not much resistance between $30 and $50 silver. I'll say once we get through $30, I think $50 comes pretty quick, probably not in 2021, but perhaps in the first half of 2022."

For more information on Penny's predictions and the industrial use cases of silver, watch the video above. Follow David Lin on Twitter: @davidlin_TV.

By David Lin

For Kitco Newsfinancial crisis, undermine U.S. dollar

1. Gold price jumps $40 as Fed's Powell says the U.S. still 'far from full employment'

By Anna Golubova

For Kitco News

Buy and Sell Gold and Silver with Free Storage

David