METALS MARKET UPDATE – WHAT YOU NEED TO KNOW
METALS MARKET UPDATE – WHAT YOU NEED TO KNOWRelease Date: Saturday, August 24, 2019
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METALS MARKET UPDATE – WHAT YOU NEED TO KNOW
- Investor demand keeps gold prices above $1500 per ounce after China announces new tariffs against U.S. goods.
- Civil unrest in Hong Kong may further fuel the metals markets as investors seek safe haven assets such as gold and silver.
- Technical trends favor both gold and silver markets.
- Gold ended the week at $1,527.60. Silver closed at $17.50.
("Gold prices move up as China retaliates on trade; Powell speech awaited," Kitco, Gold prices move up as China retaliates on trade; Powell speech awaited," 8/23/19.)
METALS NEWS – A STRONG GOLD BULL MARKET AND NEW RECORD HIGH FORECASTS
A number of analysts and financial institutions continue to see a bright future for the gold market.
- Dan Oliver, founder of Myrmikan Capital, forecasts gold prices to climb as high as $3,000 per ounce, citing the renewed interest of institutional investors and Fed policy of lower interests and a weaker dollar. You can read more here. https://www.thestreet.com/video/gold-3000-stage-is-set-15064839
- Veteran fund manager Mark Mobius believes investors should buy gold "at any level" because prices will continue to rise. "Gold's long-term prospect is up, up and up," he told Bloomberg viewers. https://www.bloomberg.com/news/videos/2019-08-20/mobius-should-be-buying-gold-on-any-level-video
- Egon von Greyerz, Founder and Managing Partner of Matterhorn Asset Management, wrote that bonds with negative interest rates will soon total more than $50 trillion and the dollar will continue to fall. As such, "[g]old will soon blow through the $1,525 Dent resistance and also later the high at $1,920 … Based on technical indicators, gold should continue to $1,650 to $1,750 without a major correction. https://news.gold-eagle.com/article/it%E2%80%99s-mad-world%E2%80%A6currencies-zero-and-bonds-minus-zero/1150
- The Lombari Letter reviewed the growing number of banks that are forecasting significantly higher gold prices including TD Securities ($2,000 gold), Bank of America ($2,000 gold) and Goldman Sachs ($1600+ gold). "Mind you, these are not the only big banks saying the price of gold could go much higher. The list of big banks that are bullish on gold is getting bigger on an almost-daily basis." https://www.lombardiletter.com/even-big-banks-drum-2000-gold-prices-now/32237/
- MarketWatch reported that "strong undercurrents" have analysts targeting $2,000 gold. "Gold has benefited from a spate of supportive factors over the past few months, and some bulls now see the precious metal making a climb to a record high of $2,000 an ounce." https://www.marketwatch.com/story/why-golds-strong-undercurrent-has-some-analysts-eyeing-2000-an-ounce-2019-08-15?siteid=rss&rss=1
- Technical analysis from AG Thorson leads him to conclude a new gold market is starting with the potential of going as high as $8,000 per ounce. "Will gold reach $8000 during the next decade? Frankly, I have no idea. However, I do see the potential for the above ingredients. Whatever the case, I think a new gold bull market is just getting started, and investors should consider some allocation." https://finance.yahoo.com/news/gold-price-forecast-next-decade-193706145.html
- Russia eliminated its value added tax (VAT) on banking investments into gold. The Russian government has been on a buying spree increasing its reserves from 2% to 19%. Investor demand for gold is expected to increase 15 times above its current levels over the next five years. https://www.kitco.com/news/2019-08-22/Russia-s-President-Putin-Cancels-VAT-on-Gold-and-Other-Precious-Metals-Investments.html
ECONOMIC NEWS – FEARS OF RECESSION GROW; EQUITY MARKETS SUFFER; TRADE WAR ESCALATES
There is a growing chorus of economists who are warning that a recession is imminent, causing the equity markets to fall.
- A number of business economists believe the U.S. economy will fall into a recession within the next two years. "Thirty-four percent of economists surveyed, in a report published on Monday, said they believe a slowing economy will tip into recession in 2021. That's up from 25 percent in a survey taken in February." https://www.foxbusiness.com/economy/recession-coming-what-economists-think
- China announced that it was imposing new tariffs on U.S. goods causing the Dow to fall more than 100 points in early trading. The editor in chief at the Chinese state-run Global Times tweeted: "China has ammunition to fight back. The US side will feel the pain." https://www.foxbusiness.com/economy/us-china-trade-war-beijing-getting-ready-fight-back
- CBS News reported that corporate profits for S&P 500 companies are expected to fall by 3%, increasing the risk of recession. "Concerns are growing that corporate America's bottom lines have topped out. If so, that could be among the biggest signs that the U.S. economy is faltering and potentially headed for recession." https://www.cbsnews.com/news/heres-the-most-recent-sign-the-economy-is-headed-for-recession/
- Dankse Bank analysts believe the Federal Reserve will cut interest rates five more times by April. "The Danish bank suggested that if the Fed really hopes to reflate the economy and markets it may need to commit to more easing, or embark on deeper and faster cuts." https://www.cnbc.com/2019/08/20/the-fed-will-cut-rates-five-more-times-before-april.html
- David Koch, the younger brother of the famous billionaire conservative Koch Brothers, died on Friday at the age of 79. "The brothers, whose last name is pronounced coke, financed one of the most influential political networks in the modern era." https://www.cnbc.com/2019/08/23/billionaire-industrialist-and-libertarian-activist-david-koch-dies.html