- Stansberry Research: The upcoming bull market in gold could last for years
- Reuters: Gold reached a five-month high
- MonetaryMetals: The fundamentals of the gold and silver markets
Stansberry Research: The upcoming bull market in gold could last for years
Stansberry Research's Daniela Cambone interviews John Doody, the founder and editor of Gold Stock Analyst, who sheds light on his gold and silver forecasts. The current economic situation, characterized by expansive fiscal policy, a deficit year of two to three million, and high inflation, should be perfect for a rise in gold prices, yet its value has not yet increased. According to Doody, the situation may seem dire because the effects of actions have not yet been felt: the momentum is just starting to build. Prices are rising, workers are striking, and store shelves are bare. In March, gold was sold for under €1,500, and now its value is €1,573. However, gold remains the best hedge against inflation, even compared to Bitcoin: The value of gold was €27/oz in 1971, and it has risen by 5,000% to €1,573 today. All of gold's competitors are "newcomers." Doody believes it is very likely that the price of gold will rise to €2,620 by the end of the current bull market, which may still be a few years away. Doody notes that..."...when gold starts moving, silver runs."According to Dood, investors should keep an eye on precious metals, as the rise of both silver and gold is just beginning. Stansberry Research 11/2/2021
Reuters: Gold reached a five-month high
Gold rose at the beginning of November to its highest price in five months: the spot price increased by 0.7% to €1,610.09/oz, and U.S. gold futures rose by 1% to €1,614.45. The spot price of silver followed gold, rising by 1.3% to €21.48.The growth was attributed to rising consumer prices in the United States, according to David Meger, the commercial director of High Ridge Futures, based on recent inflation data. Both fuel and food producers have reached their highest annual revenues in 31 years. Meger adds that gold is an important hedge against inflation, and inflation creates the right conditions for growth in the gold market in the coming weeks and months.
The situation is not entirely risk-free: if inflation continues to be hotter than expected, the U.S. Federal Reserve may respond by reducing liquidity. However, it is also possible that breaking the price ceiling of €1,603/oz could drive the price up towards €1,660.
Reuters, Bharat Gautam, 11/10/2021
Monetary Metals: The Fundamentals of Gold and Silver Markets
Many different theories attempt to predict the factors affecting the prices of gold and silver. However, most of them share the same problem: they cling to superficial variables, such as trying to relate the amount of dollars to commodities or comparing mining production to the demand in the industrial and gemstone markets.Keith Weiner, the founder of DiamondWare, argues in an article that many theories overlook the fundamental factors of the gold and silver markets: the gold and silver basis. He simplifies the comparison of futures and spot prices to each other.
Oil can be used as a fresh example: buyers want to purchase it now rather than later, so its immediate delivery price is higher than the price for later delivery. This state is referred to as "backwardation," and it is a signal for inventories to sell the commodity on the spot market and replenish stocks with futures. This generates a small, risk-free profit, and as long as the condition persists, more spot oil is purchased than is stored.
When the futures price rises above the spot price, the condition changes to "contango," and then profit can be made by buying on the spot market and selling futures. In other words, the markets then value the storage of oil more than its consumption. Backwardation is seen as a sign of a bull market, while contango indicates a bear market.
The contango for gold is currently €0.95 and for silver €0.026, while the backwardation for oil is €1.05. In practice, all mined precious metals are in the hands of people, so scarcity and abundance are measured in relation to the markets - and the basis measures this condition.
The fundamental pricing model described in the Monetary Metals article models the effects of futures trading on the markets, and it shows a clear upward curve in the fundamental price of both gold and silver. If this indicator continues to grow while the price remains stable, the time is ripe for trading.
Monetary Metals, Keith Werner, 11/8/2021
