Gold prices to average above $2,000, Silver to average above $30 through 2024

Gold and Siver’s imp[resive rally this summer is just the start of the precious metal bull market, according to one Canadian Bank.

In areport published Tuesday, commodity analysts at CIBC upgraded their gold and silver forecasts for the rest of the year into 2021. The analysts said that they see gold prices averaging the third quarter around $1,925 an ounce. The average goes up to $2,000 for the fourth quarter, the analysts said.

Looking ahead, CIBC sees gold prices averaging $2,300 an ounce in 2021, $2,200 an ounce in 2022, $2,100 in 2023 and $2,000 an ounce in 2024.

“The outlook for continued low real interest rates, increasing government debt burdens coupled with geopolitical uncertainty arising from the upcoming U.S. election are all supportive of further significant price appreciation,” the analysts said.

Looking at silver, the Canadian bank sees the precious metal averaging $25 in the third quarter; in the fourth quarter the average price is expected to rise to $28 an ounce.

Looking ahead, CIBC sees silver prices averaging $32 an ounce in 2021, $31 an ounce in 2022, $30 in 2023 and $28 in 2024.

“Even though the commodity has already performed well year-to-date, this metal has potential to provide investors with even more torque given the relatively smaller market for silver vs. gold,” the analysts said.

The analysts said that gold investor should continue to watch real interest rates as a critical factor to drive prices in the long-term. They added that they also expect to see central banks inject more liquidity to support financial markets.

“While we appear to be in the midst of another round of QE with significant uncertainty surrounding the magnitude and length of a global recession, real rates below 2% are here to stay in the near term,” the analysts said. “The gold and silver price has already reacted favorably to fundamentals, but could still have room to move higher if history repeats itself.”

The bank also sees further weakness in the U.S. dollar as another important factor to support gold and silver prices.

“The USD remains under pressure with COVID-19 far from being under control and some pandemic stimulus measures set to roll off over the coming months. The USD’s period of dominance is likely over for some time as the country struggles under a heavy debt load, high unemployment, and continuing trade war uncertainty,” the analysts said.

 

By Neils Christensen

For Kitco News

David

Gold to outperform silver into year-end, $4K gold price not ruled out by 2023 – Bloomberg Intelligence

Gold is looking to outperform silver into year-end, according to Bloomberg Intelligence, which is not ruling out $4,000 gold by 2023, noting that the gold bull rally is just beginning.

After breaking $2,000 an ounce level, gold has been stuck in a trading range between $1,930 and $1,980 an ounce. But despite the several-week hiatus from major price action, gold will still do better than silver in the second half of the year, said Bloomberg Intelligence senior commodity strategist Mike McGlone.

“The done-deal nature of continued central bank easing is a solid foundation for gold, but less so for silver and copper prices. Industrial metals are dependent on more fiscal stimulus and a global economic rebound, yet increasingly vulnerable to normal stock-market mean reversion,” wrote McGlone in the latest monthly commodity update.

For silver to outperform gold on a continuous basis for the rest of the year, the market will have to see a combination of rising bond yields, a peak dollar, declining stock-market volatility and continued global economic expansion. In Bloomberg Intelligence’s view, this scenario is unlikely.

“Gold should continue appreciating into year-end, notably vs. silver, copper and base metals, which are more at risk to a wobbly stock market and slack global economic growth, in our view,” McGlone said. “If stock prices decline, gold's upper hand should accelerate as base metals come under pressure.”

Moreover, the gold’s bull rally is just beginning, noted the report. “Gold bottomed at about $700 in 2008 and peaked near $1,900 in 2011. A similar-velocity 2.7x advance from this year's low-close near $1,470 points toward $4,000 by 2023,” McGlone explained.

The stock market will play a big role in gold’s performance going forward, with fortunes turning towards the yellow metal.

“If history is a guide, equities will eventually experience a bear market. Stocks' rapid ascent the past few years has left gold by the wayside. Prospects appear to be increasing for an extended period of trading places for the asset classes,” McGlone noted.

Despite this optimistic view on gold, the report warned that $2,000 an ounce will prove to be a strong resistance level because the yellow metal looked overheated above that level. However, even though it might take gold some time to breach $2,000 an ounce on a sustained basis, in the long-term gold is heading much higher.

“The stair-step rally in gold is set for some leveling off, in our view. This is expected in a bull market, especially in early resumption days, but our graphic shows the propensity for gold to pull back and consolidate gains when reaching similar relatively extended levels in the past,” McGlone said. “It looks to us like gold's bullish run is just beginning.”

 

Some of the main drivers supporting gold into the year-end include central bank easing, uncertainty surrounding a V-shaped economic recovery, fiscal stimulus and stock-market volatility.

“Gold has the catalysts to maintain performance leadership into year-end, in our view,” McGlone wrote. “Central-bank rate easing and U.S. bond yields gravitating toward zero are solid underpinnings for gold, as is the potential for increased U.S. stock-market volatility approaching the presidential election. Less certain is global fiscal stimulus and an economic recovery, typically needed to buoy industrial metals.”

 

By Anna Golubova

For Kitco News

 

 

David

Gold/silver – all eyes on the Fed this week

It was a rangebound week for gold futures by remaining well inside the bullish "falling wedge pattern" while at the same time, major equity indices fell 10% off their contract highs led by an overheated tech sector. Remember, when markets go parabolic, volatility rises; therefore, you need to reduce your long positions from a tactical portfolio management strategy while increasing your short positions because we know a correction is just around the corner. Long story short, "do not overstay your welcome."

Reviewing the underlying themes for gold and silver in my notebook, this week, the ECB left its policy on hold while growth projections had increased, and they will monitor the impact of the euro on inflation. I suspect that ECB prefers to wait and see what the Fed will do this coming week. The Fed will most likely state that "the committee expects to maintain a target range until it is confident that inflation will run 2% for some time," while increasing QE buying.

 

Technical view of the gold market

Gold stalled at major three-star resistance last Thursday at 1973-1976.6 with a high of 1975.2. Despite Thursday's early strength, given the failure and overall consolidation, our momentum indicator continues to hold within previous resistance at 1955.5-1958, our Pivot, and a level in which gold spent quality time overnight. A close outside of 1973-1976.6 and 1928-1932 will encourage direction buying or selling.

I went back through 20 years of my trading strategies to create a Free New "5-Step Technical Analysis Guide to Gold," which you should print out. The guide will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Gold.

Our strategy on gold

If you did not get our recommendation before 1910 hit, you might want to adjust your initial entry to 1930. Otherwise, if you have been working with us and you were and are looking to position in gold for the long run; we suggested that our clients consider using FOUR Micro 10 oz December Gold contracts per $25,000 and buying TWO at 1910 and TWO at 1855, with a stop at 1790. Doing such would ideally risk $3,700. We would look to a gold target of 2275/oz, which would allow for a profit of $15,700. If you would like to be up to date on the developments of our strategies in the futures and commodities markets, please register for a Free two-week trial by clicking on the link here: The Blue Line Express Two-Week Free Trial Sign up.

 

By Phillip Streible

Contributing to kitco.com

 

David

Mining's biggest face-to-face goes virtual

With PDAC 2021 announcing an all virtual show due to COVID-19 concerns, juniors and miners will have to learn to adapt.

The Kitco podcast discussed the impact of PDAC's annual convention, the industry's biggest yearly get-together, on going virtual. Oreninc CEO Stephen Stewart joined special correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae, to record a podcast on Friday.

"Well first and foremost, it's a shame. I'm sad that the PDAC is not going to be in person, and while I see the value in Zoom calls…it's just not the same. I think that's such an important aspect of the PDAC is these face-to-face interactions with your colleagues and friends," said Stewart.

"You know, the collision…that tends to occur at an event where you get 25 or 30 or 5,000 people in the same space from all over the world. There's just no way you can recreate the magic that occurs at the PDAC."

Restrictions on social interactions forced PDAC organizers to make the change.

"As the COVID-19 pandemic continues to affect travel and major gatherings, we recognize that staying connected is more important than ever for members, exhibitors, sponsors, attendees and numerous partners. The decision to move forward with a virtual event offers a safe and innovative solution for the industry to access our outstanding programming, investment and networking opportunities," wrote the PDAC in a news release.

The convention will be held March 7-10. Exact dates and scheduling are pending. Kitco News will be a media partner.

"PDAC is one of the top industry shows. For the past 12 years, Kitco News has enjoyed covering the event, connecting with newsmakers, exhibitors, attendees and sponsors. In support of the decision to go virtual, Kitco is a committed PDAC media partner will provide extensive virtual coverage of the event," said Kitco's media director, John Dourekas. "During these challenging times, we will take the opportunity to use technology and innovation to find new ways that allow people to connect online."

The panel also discussed Rio Tinto resignations over the destruction of a culturally significant Indigenous site. In May a 46,000 year-old rock shelter was detonated by Rio Tinto to expand its iron ore mine in Western Pilbara. Paul Harris weighed in on the impact of the C$78 million bought deal investment by billionaire Eric Sprott in First Majestic Silver.

 

By Michael McCrae

For Kitco News

David

Upcoming influencers for gold pricing

Market participants and investors will focus on two primary factors which could have a profound impact on market sentiment. The two factors are the upcoming FOMC meeting scheduled to begin next week, and the Treasury Department’s report that this year’s budget deficit is nearly triple when compared to last year.

The United States Treasury Department reported today that the federal budget deficit in the United States is now above $3 trillion with one month remaining for fiscal 2020. This is more than double the federal budget deficit for 2019. In August alone expenditures created an additional $200 billion in debt.

According to the Associated Press, “The U.S. budget deficit hit an all-time high of $3 trillion for the first 11 months of this budget year, the Treasury Department said Friday. The ocean of red ink is a product of the government’s massive spending to try to cushion the impact of a coronavirus-fueled recession that has cost millions of jobs.”

The Associated Press report also said that with one month to go in the 2020 fiscal year, the deficit could go even higher. The Congressional Budget Office is forecasting the deficit for this year will reach a record $3.3 trillion.

Considering that the budget deficit last year came in at $984 billion, the capital expenditure allocated by the U.S. Treasury Department to fund the ‘cares act’ has in essence tripled the budget deficit from 2019. In fact, this year’s budget deficit is more than double the record deficit of $1.4 trillion which occurred in 2009.

One huge factor which will temper this tremendous debt is that the government’s interest cost to finance is actually down 10% this year, currently at $484 billion when compared to the cost of interest payments the government incurred last year. This is do to interest rates currently being near zero.

Beginning next week, the Federal Reserve will convene for the September FOMC meeting. Current consensus expects that the Federal Reserve will continue its current monetary policy. This policy which has set the Fed funds rate near zero, with quantitative easing allocating purchases of approximately $120 billion per month, as the Fed adds mortgage backed securities, treasuries and corporate bonds to their asset balance sheet is weighing heavy on traders’ minds.

According to Magnify Money, “The Fed also extended the life span of its loan and liquidity facilities, recognizing the recovery may take longer than originally planned. Still, the Fed continues to call for further fiscal support from Congress and the Department of the Treasury to avoid long-lasting economic and societal damage.”

It is expected that during next week’s meeting Federal Reserve members will focus on its main framework to achieve its dual mandate of maximum employment and controlled inflation, although more emphasis is currently being put upon the employment side. It is highly unlikely that the Federal Reserve will raise interest rates.

Both factors, the expanding budget deficit and next week’s FOMC meeting should be supportive of the bullish sentiment that has existed in the safe-haven asset class, i.e. gold.

Gold futures basis the most active December 2020 Comex contract sustained moderate losses today giving up approximately 8/10 of a percent, and is currently fixed at $1948.10.

 

By Gary Wagner

 

 

David

AM-PM Roundup

Gold, silver firmer amid weaker greenback

Gold and silver prices are modestly up in midday U.S. trading Thursday, supported in part by a weaker U.S. dollar index on this day and by the overall bullish chart postures for both metals. Prices are well their daily highs, however. October gold futures were last up $8.50 at $1,955.30 and December Comex silver was last up $0.157 at $27.245 an ounce.

Global stock markets were mostly weaker overnight. U.S. stock indexes are weaker at midday. Traders and investors are wondering if the rebound in the U.S. stock market will continue, following solid gains posted in the stock indexes Wednesday. The months of September and October can produce serious turbulence in the stock and financial markets. New turmoil in the stock markets should benefit the safe-haven gold and silver markets.

The regular monetary policy meeting of the European Central Bank was Thursday. The ECB did not make any significant changes in policy, as expected, and said rates will remain low until inflation hits its target rate of around 2% annually.

The important outside markets today see the U.S. dollar index slightly weaker but well up from its daily low, following decent gains posted earlier this week. Nymex crude oil prices lower and trading around $37.75. The yield on the U.S. Treasury 10-year note is trading around 0.7% today.

Technically, October gold futures bulls have the firm overall near-term technical advantage amid recent choppy trading. Prices are still in a five-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in October futures above solid resistance at the September high of $1,992.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at today’s high of $1,966.60 and then at $1,972.40. First support is seen at today’s low of $1,942.80 and then at $1,925.00. Wyckoff's Market Rating: 7.0

December silver futures bulls have the firm overall near-term technical advantage amid a five-month-old price uptrend still in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the September high of $29.235 an ounce. The next downside price objective for the bears is closing prices below solid support at $25.00. First resistance is seen at today’s high of $27.755 and then at $28.00. Next support is seen at Wednesday’s low of $26.565 and then at this week’s low of $25.985. Wyckoff's Market Rating: 7.0.

December N.Y. copper closed down 535 points at 299.80 cents today. Prices closed nearer the session low today. The copper bulls have the solid overall near-term technical advantage as prices are in a 5.5-month-old uptrend on the daily bar chart. However, the recent higher volatility at higher price levels is a warning signal that a topping process could be occurring. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 309.45 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 279.60 cents. First resistance is seen at today’s high of 305.90 cents and then at 309.45 cents. First support is seen at today’s low of 298.15 cents and then at last week’s low of 295.35 cents. Wyckoff's Market Rating: 7.5.

 

By Jim Wyckoff

For Kitco News

 

David

A scenario to end gold's bull run looks increasingly unlikely – Invesco

The gold market, as it continues to hold critical support, above $1,900 an ounce, is in no danger seeing its current uptrend ending anytime so according to one investment firm.

In a commentary published last week, Talley Léger, Investment Strategist at Invesco, said that the fundamental outlook for gold that has driven prices to nearly double since the lows in late 2015 isn’t going away anytime soon.

December gold futures last traded at $1,957.10 an ounce, up 0.71% on the day.

Léger said that for the gold market to lose its current momentum, the U.S. economy would have to overheat enough to force the Federal Reserve to drastically raise interest rates, which in turn would boost the U.S. dollar. A rise in interest rates would also put the current economic recovery, which is benefitting from low interest rates, in jeopardy.

Léger said that it would be difficult “to identify a catalyst that would bring about such a scenario at this vulnerable stage of the nascent economic recovery.

“In our view, the Fed seems determined to protect this budding upturn by keeping interest rates low for the foreseeable future,” he added.

Although gold’s bull run doesn’t appear to end anytime soon, Léger also said that there are risks to watch. He warned gold investors to keep an eye on consumer sentiment. He explained that rising consumer sentiment could foreshadow impending economic growth.

“According to the latest Surveys of Consumers, challenging economic times are expected to persist not only in the year ahead, but most consumers don’t see a return to uninterrupted growth over the next five years,” he said.

Léger added that Invesco’s base-case scenario is for prolonged, low-altitude recovery alongside lingering fears about the coronavirus, which will be a healthy environment for gold.

As the U.S. looks for meager growth for the foreseeable future, Léger said that the Federal Reserve will continue to maintain low interest rates, which will weigh on the U.S. dollar.

He also said that the threat of rising inflation as the Fed keeps nominal interest rates low could lead to lower real interest rates, “a welcome development for the price of gold.”

 

By Neils Christensen

For Kitco News

David

Dollar strength and U.S. equities under pressure are supportive of gold and silver

Considering today’s extremely strong U.S. dollar, coupled with a major decline in U.S. equities, the fact that both gold and silver are trading higher on the day is extremely impressive. Currently the dollar is up just over 0.75%, which is a net gain of 70 points, taking the dollar index to 93.425.

As of 3:48 PM EST gold futures basis the most active December contract is trading $6.70 higher, a net gain of +0.34%, and fixed at $1940.70. The most noteworthy aspect of today’s trading range was the low which occurred earlier in the trading session when gold futures traded to a low of $1911.70 before recovering. The 50-day moving average for gold futures currently resides at $1912.50. This indicates at least on a technical basis that there is solid support at the 50-day moving average. It also indicates that in terms of short-term market sentiment it remains solidly bullish as long as gold can remain above that key level of support.

Silver futures are also exhibiting moderate gains on the day. Currently the most active December 2020 contract of silver is at $26.825, which is a daily gain of about $0.12, or +0.44%. The only precious metal trading lower on the day is palladium which is currently down by 1.54% and fixed at $2,307.00.

On many occasions when U.S. equities have a meltdown like today, gold and silver prices would be dragged along with them lower. As many traders liquidate holdings to cover margin calls.

The NASDAQ composite lost -395 points (-3.49%), and is at 10,917.90, with six minutes left in trading. The S&P-500 sustained a drawdown today of -2.23%, and after factoring in a decline of just over -79 points sits at 3,347.77. The Dow Jones industrial average is down well over -2% and is presently at 27,520.98, after factoring in today’s decline of well over -600 points.

On a technical basis we currently show support for gold futures at $1,912.50 the 50-day moving average, and major support at $1,900 per ounce. Short term resistance occurs at the high achieved today, which was at $1,948.30, with the next level of resistance occurring at $1,975 per ounce, and major resistance occurring at $2,000.

Our technical studies also indicate the first level of support for silver occurs at the 23% Fibonacci retracement level at $25.66, with major support occurring at $25 per ounce. The first level of resistance in silver occurs just below $28 at $27.85.

Considering dollar strength, all the gains seen in gold and silver today are 100% due to market participants bidding the precious metals higher.

Wishing you as always, good trading,

 

 

By Gary Wagner

Contributing to kitco.com

 

David

All eyes on the ECB and potential currency devaluation rate

Although new stimulus measures from the ECB would boost the U.S. dollar and, in turn, drive gold prices down, analysts have said that investors should look past this short-term volatility and focus on the bigger picture: a new lap in the global race of currency devaluation.

Marc Chandler, chief market strategist at Bannockburn Global Forex, said that technical indicators point to continued consolidation in the near-term. However, he does not expect to see any significant correction.

“If the major central banks are engaged in an uncoordinated effort to convince investors that they are serious about pushing inflation higher and that in part, it means lower rates for longer, it is difficult to envision a deep or sustained decline in gold prices,” he said.

Commodity analysts at Commerzbank said they also see the potential for higher gold prices as the ECB could spark a devaluation race.

Jonathan Butler, precious metals analyst at Mitsubishi, said that it’s not surprising to see government and central banks focus on boosting inflation pressures as they try to reflate the global economy. Since March, the global economy has been turned upside down to the COVID-19 pandemic.

“Govesrnments and central banks around the world are, more than ever, looking to raise inflation as they seek a return to growth, avoid a deflationary trap, and perhaps also inflate away the record levels of government debt incurred this year,” he said. “Negative interest rates and a global pandemic/economic crisis was the backdrop for gold’s solid underpinning through the last several months. We expect the macro environment will continue to be favorable to gold as an investment.”

By Neils Christensen

For Kitco New

David

Why juniors could trade higher, and what could hold them back

With all the money raised, juniors should have the means to post lots of drill results this fall, said James Kwantes, editor of Resources Opportunities.

Kwantes was joined by special correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae, to record a podcast on Friday. In recent months the financing tracker Oreninc noted some exceptional weeks for juniors raising funds on the back of higher precious metal prices and easy access to capital.

To create some buzz, exploration companies typically publish their drill results in the fall to coincide with some of the industry's key conferences, such as Beaver Creek Precious Metals Summit and Denver Gold Forum.

Kwantes, a former resource reporter for the Vancouver Sun, said there are a mix of factors that could help and hurt junior stocks. Some juniors won't have a lot to publish due to spiking demand for drillers and the logistical challenge that come from managing COVID-19 restrictions.

There's also the nature of the financings. Kwantes warns about a "flood of paper" potentially hitting the market, which could depress the sector later in the year.

"[Juniors] have raised a lot of cash in the last few months. Everybody's excited about the higher gold price," said Kwantes. "It will be interesting to see what happens when all the holds come off in the four-month paper. There's been a lot of money raised, quite a bit of drilling activity."

"Financings typically have a four-month hold placed on them. So if you buy into a private placement, you can't do anything with the stock for four months. Typically, the company will try to generate news or hopefully make a deposit–make a discovery."

The panel also discussed Barrick Gold, the world's second-largest gold producer, and AngloGold Ashanti Limited, and their decision to sell their combined 80% stake in the Morila gold mine in Mali to Mali Lithium (ASX:MLL) for cash consideration estimated at between $22 million and $27 million.

Paul Harris also noted the surprising uptick in copper production from Chile despite the pandemic.

 

By Michael McCrae

For Kitco News

David