- Stansberry Research: Gold’s Bull Run Can Reach $3,000
- Reuters: Gold Leaps to 5-month Peak
- Monetary Metals: What Moves Gold and Silver?
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Stansberry Research: Gold’s Bull Run Can Reach $3,000
Daniela Cambone of Stansberry Research interviews the founder and editor of Gold Stock Analyst John Doody, who shares his forecast for gold and silver.
The current economic scenario of loose monetary policy, two years of three million deficit and high inflation should be perfect for gold, yet the price isn’t rising. Doody says it feels like that, because we’re just about to feel the impact and everything is just starting. Prices rise, workers strike, and shelves are empty. Last March gold was bought under $1.700 and now it’s worth $1.800.
When compared to Bitcoin, gold retains its position as the ultimate hedge to inflation: In the 1971’s gold was worth $31/oz, and now it has risen 5.000% to $1.800. Compared to gold, all its competitors are “new kids on the block.” Doody thinks it’s very likely that the gold price can rise to $3.000 at the end of this bull market, that still has a few more years into it.
Next Daniela and John talk of mining stocks: John says that the first thing he looks at in a company is if it has a feasibility study by an independent crew of engineers. He recommends Gold Stock’s review, as they evaluate mines economically and give them target prices to aim for.
Doody ends the discussion by stating that “when gold gets going, silver gets roaring”. Investors should keep their eyes on precious metals, as both gold and silver are just getting started.
Stansberry research 2.11.2021, Daniela Cambone
Reuters: Gold Leaps to 5-month Peak
Last Wednesday Gold surged to a five-month high: spot gold was up 0.7% at $1,843.31/oz and U.S. gold futures went up 1% at $1,848.3. Coming after gold, spot silver rose 1.3% to $24.59.
The leap was caused by surging U.S. consumer prices as gasoline and food manufacturers achieved the biggest annual gains in 31 years. “Once again we have hot inflationary data”, the director of trading at High Ridge Futures, David Meger commented. He adds that gold is an important hedge against inflation, and inflation is the right kind of environment to foster a gold market rally in the coming weeks and months.
The situation has its risks: if inflation data remains hotter than expected, the Federal Reserve might respond by reducing more liquidity. But it’s also possible that breaking above the $1,835/oz resistance level could cause an upward momentum towards $1.900.
Reuters, Bharat Gautam 10.11.2021
Monetary Metals: What Moves Gold and Silver?
There are dozens of theories that try to predict the forces that move gold and silver prices. Most of them share the same problem: they focus on superficial things such as trying to correlate the change of the quantity of dollars to each commodity, or comparing mine production with industrial and jewelry demand.
This article by Keith Weiner, the founder of DiamondWare, proposes that they all ignore the fundamentals of gold and silver markets: the gold and silver basis. To put it simply, this means the comparison between futures price and spot price.
Using oil as a recent example, buyers prefer to buy it now rather than later, thus the price of instant delivery is higher than a later one. This condition is called “backwardation” and signs that warehouses should sell the commodity in the spot market and buy it back via a futures contract. This promises a small, but risk free profit, and as long as it lasts, there are more buyers of spot oil than warehouses that store it.
When the futures price rises above the spot price, we enter “contango” and you can profit by buying spot and selling a future. In other words, the market values oil in storage more than what’s consumed at the moment. Backwardation is considered a bullish indicator, and contango a bearish one.
At the moment gold has a contango of $1.09 and silver $0.03, while oil has a backwardation of $1.20. Virtually all mined monetary metals are in human hands, so all scarcity and abundance exist in metals to the market – and it is measured with the basis.
Monetary Metals Fundamentals Price Model calculates the effects of futures traders, and it shows a clear upward trend in the fundamental price of both gold and silver. If this indicator keeps rising while the actual price does not, it might be a good time to trade.
MonetaryMetals, Keith Weiner 8.11.2021