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Jun 29, 2020 11:47 NY Time
| Bid/Ask | 1768.90 / 1769.90 | |
| Low/High | 1762.90 / 1777.10 | |
| Change | -2.60 | -0.15% |
| 30daychg | +40.20 | +2.33% |
| 1yearchg | +360.00 | +25.55% |
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Silver Price & PGMs
Jun 29, 2020 11:47 NY Time Kitco 10AM Silver Fix
| Silver | 17.77 | -0.03 |
| Platinum | 805.00 | +10.00 |
| Palladium | 1833.00 | +21.00 |
| Rhodium | 5800.00 | 0.00 |
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(Kitco, Mon. June 29th, 2020) – Gold prices have seen a positive correlation to the expansion of the Federal Reserve’s assets, and as the Fed embarks on the largest stimulus program in its history, the yellow metal is set rally in the same fashion as in the aftermath of the last recession, said Frank Holmes, CEO of U.S. Global Investors.
“In the next three years, if we look back, if [history] repeats itself, from 2008, 2009 to 2011, that three year run saw gold go from a $750 – $800 range up to $1,900. If we forecast that because we have the same expansion of the balance sheet of the Fed then it would project, if cycles are exactly the same, gold could go to $4,000,” Holmes said.
Holmes noted that although trillions of dollars have already been injected into the monetary system this year through the Fed’s quantitative easing program, more stimulus is still on its way.
“This is going to cost the U.S. government approximately $10 trillion in fiscal and monetary policy to get the economy back, so I think that number you’re seeing after 2008, 2009 after Lehman Bros. went bankrupt, you saw the balance sheet expand from $1 trillion to $3 trillion. I think it’s got to hit the overall $10 trillion,” he said.
What’s different this time is the policies toward trade from global leaders.
“Prior to 2008, 2009, we went on an incredible run from 2001 up to that date, and that date was when the G20 finance ministers and government agencies around the world were all pro-trade, pro-growth. Ever since the crisis of 2009, it’s all about synchronized taxation and regulation, and now it’s synchronized money printing, monetary, fiscal stimulus that we’ve never seen,” he said.
When Alan Greenspan was Chair of the Federal Reserve, the balance sheet of the central bank was about 6% of gross domestic product (GDP). Today, that number stands near 33% of GDP, Holmes noted.
“And this is how much money that [Fed Chair Jerome] Powell has to to throw at this because of the coronavirus and the synchronized shutdown of the world. This is unprecedented. So, I think hard assets trade higher,” he said.
Gold is the only commodity that looks good through 2020 – UOB Group
These UOB bank group comments come as gold prices remain near their highest level in nearly eight years and continue to test critical resistance at $1,800 an ounce. However, the bank said that the break might not come until the end of the third quarter.
“Overbought shorter-term conditions could lead to a period of consolidation first but spot gold is expected to stage another push higher towards (and possibly above) the 8-year peak of $1,795, likely closer to the end of third quarter,” the analysts said.
The bank remains bullish on gold as the world faces low to negative interest rates as central banks support the global economy, impacted by the coronavirus.
“Global central banks continue their massive monetary policy easing, providing a strong and steady tailwind for gold,” the bank said. Further, “Adding to the tailwind, safe haven allocation demand remains strong amidst the on-going economic uncertainty.”
However, the analysts warned that investors should expect to see all-time record prices this year.
“As a result of widespread need for safe haven diversification amidst such uncertain recessionary times, gold ’s long positioning has ballooned to yet another record high,” the analysts said. “This significant allocation will weigh on gold, cause the occasional profit taking and possibly slow down gold ’s ascent.”
Looking at gold ’s technical picture, the analysts said that even if gold faces further consolidation, the precious metal ’s uptrend is far from being at risk.
“Support is at $1,600 but only an unlikely break of $1,500 would indicate that spot gold has found a top,” the analysts said.
Posted by :
Jack Dempsey, President
401 Gold Consultants LLC
jdemp2003@gmail.com