• SSGA: What Will Become of Gold in 2021?
• Kitco: Will Bullion Keep Up With the Demand?
• Bloomberg: Commodities Are Faring Well

Image: Umicore

SSGA: What Will Become of Gold in 2021?

George Milling-Stanley from State Street Global Advisors sums up the year 2020 and gives his predictions for 2021. COVID-19 pandemic was the primary drive of gold price in 2020 and pushed it to an all time high during August. Contributing to the price hike were also the growing economic and geopolitical risks and anticipation of a blue wave in US politics. As we’re entering 2021, vaccine distribution has been slower than anticipated, infection cases are still rising and the new US administration might be forced to order new major lockdowns. The beginning of 2021 is full of uncertainties, and the article offers three forecasts on gold price development:

Milling-Stanley gives a 20% probability for a Bear Case Scenario of $1,600 to 1,800. It assumes that the many current positive trends in China and other emerging markets reverse causing major challenges with reopening the economy. Meanwhile vaccine distribution will accelerate in both Europe and the US, allowing their economy to reopen and rebound. This would cause equity markets to soar to new heights, yield curve to steepen and the US dollar to strengthen. Gold prices will drop because of dwindling safe-haven, investment demand, and jewelry demand.

His Base Case Scenario of $1,800 to 2,000 has a 40% probability, and it assumes little change from current circumstances. Economy of the emerging markets will remain slow, and their central banks will reverse their gold buying trends. Virus spread remains patchy in the US and Europe, causing the economy to recover very slowly. The US Dollar price remains flat, but there are enough signs of recovery that safe-haven demand might suffer.

There’s a 40% probability for a Bull Case Scenario of $2,000 to 2,300, which assumes that the global economy will recover unevenly. Recovery will be more powerful in the emerging markets thanks to the current positive trends, which will also increase the demand for jewelry. The US and Europe will face continued problems due to increasing infection rates and new lockdowns. The Biden administration’s actions will raise the US deficit keeping gold in high demand as a defensive investment.

In conclusion George doesn’t consider the Bear case as probably with the world now teetering in between his Base and Bull scenarios. The year 2021 will be very interesting, but at the moment of writing there are more upsides than downsides for gold.

10.12.2020, George Milling-Stanley

Kitco: Will Bullion Keep Up With the Demand?

David Lin of Kitco News interviews Ruth Crowell, chief executive of London Bullion Market Association about the possible logistics difficulties caused by Covid-19 lockdowns, Brexit, and other other topics. Main topic of their discussion is the storage and transportation of physical gold and silver bullion and whether challenges on these fronts will lead to shortages similar to March and April of 2020.

Ruth remains confident in the logistics providers’ capability to deliver. She assures that the vaults and transportation service providers are better prepared now, as the market has grown more resilient and adaptable. She thinks that despite the shortage, the logistics companies pushed through the challenges rather well, as proven by the high stock prices in London. She also reassures that LBMA is keeping touch with different service providers and mints to ensure they are prepared for coming challenges and to prevent premiums from spiking up again.

Next David asks about Brexit, but Ruth isn’t convinced that it will affect gold trade in a significant way: companies have had plenty of time to prepare for a hard Brexit, and a valuable asset such as gold will likely be prioritized in trade negotiations. If there are any disruptions, LBMA will cooperate with the logistics companies to smooth them out.

Nearing the end of the interview Ruth comments that the recent downward trend of gold only means it’s behaving exactly as it should as a safe-haven asset. It acted as an insurance product during a rainy day, and as hope for the vaccine surfaces, some profit-taking was only to be expected. She concludes the interview by talking about LBMA’s values and their cooperation with other gold organizations.

8.1.2021, David Lin

Bloomberg: Commodities Are Faring Well

Bloomberg reports that commodity investors believe that crops, metals and oils are set for a rally with the weakening dollar and Chinese demand making these materials more appealing as the world is beginning to recover from the pandemic. Speculators have turned back towards commodity markets with the prices rising to the highest in a decade. “Markets are rallying due to the combined effect of US dollar weakness, the cyclical recovery from covid-19, central bank stimuli, and increased fiscal spending on infrastructure,” explains Michael Salden from Vontobel Asset Management.

According to data compiled by Bloomberg, the investors were holding a net-long position of 2.3 million futures and options contracts in the week ended Jan 5, which is the most since January 2011. Corn is at the highest in almost 10 years with China hoarding American crops, while soybeans, sugar and grains have also caught the investors’ attention, especially grains having rallied for over 45% in the last six months.

Oil has rebounded from the pandemic to a 10-month high after Saudi Arabia announced to cut production by 1 million barrels a day for Feb and March. This rally has also extended beyond crude prices into options and oil futures. In precious metals, bets on rising gold prices have also risen to a 16-week high with platinum and silver being on the up as well.

9.1.2021, Isis Almeida, Michael Roschnotti and Andres Guerra Luz

This is Jalonom’s weekly review of interesting precious metal news from different international sources. We wish to offer the reader a compact and quick to read review of weekly news. Especially we focus on news relating to gold investing.