82 replies to this topic

[Carlos77]

Northstar & Badcharts: Charting with Gold

 

House prices have not gone up 1,000 % since 1975. It’s the value of your paper currency that you’re purchasing that property in that is devalued, essentially. So let’s put it another way.

House prices are the same as they were in 1975.

 

What, Kevin? What are you talking about?

House prices are the same as they were in 1975. House prices are currently 242 ounces of gold. House prices in 1975 were 242 ounces of gold.

 

So what are you trying to tell me here? What’s the currency? Are you telling me this paper stuff that is handed out by the US government, the British government, the Eurozone? Is that our currency? Because if that’s our currency, then everything around us that we need to survive, whether it’s houses, food, clothing, all the utility bills, they’re seemingly going up and up and up and up.

 

But they’re not. It’s an illusion. It’s a complete illusion. 

 

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[Carlos77]

Gold Investment Dead?

 

Adam Hamilton     January 19, 2024

 

 

 

Since gold ETFs have proven such a dominant force driving gold prices over the last decade-plus, those quarterly GDT reports also track the world’s biggest physically-backed ETFs.  Two American behemoths have always topped that list, the GLD SPDR Gold Shares and IAU iShares Gold Trust ETFs.  At the end of Q3, together they commanded over 39% of all the gold held by all the world’s physically-backed ETFs!

 

This chart superimposes GLD+IAU holdings in metric tons over gold prices and key technicals.  While gold has powered dramatically higher since mid-2022’s anomalous selloff driven by an extreme USDX surge on monster Fed rate hikes, its identifiable investment demand has collapsed!  Investors have mostly abandoned gold, not returning after that brutal rout.

 

 

 

 

 

With gold just off nominal record highs yet GLD+IAU holdings threatening new secular lows, it’s sure valid to wonder whether gold investment is dead.  Have investors deserted gold forever?  Is it now at the mercy of gold-futures speculators alone?  It was their massive mean-reversion buying that fueled most of gold’s gains since late September 2022 with investors missing in action.  Their selling retarded gold’s advance.

 

Two big market factors argue investors will soon return to gold, reestablishing normal relationships.  The still-high USDX that ravaged gold in mid-2022 is rolling over into what will probably prove a major bear market.  The FOMC has all but officially ended its scorching hiking cycle, with markets increasingly looking for rate cuts this year.  Just as higher rates were bullish for the dollar, lower ones are bearish for it.

 

The lower the USDX grinds as Fed rate cuts are anticipated then executed later this year, the more gold-futures buying that will trigger pushing gold higher.  And today’s young gold upleg growing will yield many new nominal record highs.  The last one was late December’s $2,077, which is merely 3.6% higher than gold’s depressed midweek levels!  Streaks of new record highs excite and attract investors like nothing else.

 

 

 

The bottom line is although gold investment looks dead, it almost certainly isn’t.  Investors have mostly abandoned gold in recent years, as evident in the holdings of the world’s dominant gold ETFs.  Gold’s precipitous mid-2022 plunge as the US dollar skyrocketed on monster Fed rate hikes really damaged gold psychology.  So investors mostly sat out gold’s huge mean-reversion bull now achieving new records.

 

They started returning in mid-2023, but were distracted by stock markets’ euphoric AI bubble.  But all that is changing which will increasingly attract back investors to gold.  The dollar is rolling over into a likely bear with Fed rate cuts coming, and bubble-valued stock markets are overdue for a major selloff.  Gold’s streak of new records will also drive bullish financial-media coverage, generating mounting investor excitement.

 

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[Carlos77]

Tides of change in gold paper markets

 

 

Open interest in the Comex gold contract has collapsed dramatically in recent days.

 

 

 

 

This has been reflected in hedge funds reducing their positions.

On the last Commitment of Traders figures, net longs were 61,033. That was on 23 January. With the collapse in Open Interest, I suspect that today the figure is closer to 40,000 (see dotted arrow).

 

 

 

 

 

Meanwhile, Other Reporteds net longs have increased to 108,441 on 23 January.

 

 

 

It is this category which I believe stands for delivery, taking out 515,400 ounces in January so far. Clearly, the character of this market hs changed.

 

 

 

 

Conclusion

The level of speculative interest in the gold contract is dying. The ability of the Swaps to trigger stop-losses is being compromised. In other words, liquidity in this contract is dropping, likely to make it more volatile. When the uptrend resumes, the price move should be spectacular. But in the very short-term, don’t be surprised if in thin markets gold dips towards $1950. But bear in mind that the real money will be accumulating every ounce it can get its hands on!

 

https://alasdairmacl...d-paper-markets

 

 

 

[Carlos77]

Sarajevo redux or how world wars come about

And the relevance to Israel, Gaza, and the wider Middle East

 

MACLEODFINANCE

01.02.2024

 

On 28 June 1914, Archduke Franz Ferdinand and his wife Sophie were assassinated in Sarajevo. Who would know that in only a few weeks the whole of Europe would be at war, leading to the deaths of millions. Are we facing a similar escalation of events today?

 

Nowadays, we would ascribe runaway events like these to chaos theory, but it wasn’t so in 1914. They were sequenced with the principal actors seemingly unable to stop them. Austria-Hungary called in Germany and together they declared war on Serbia. That brought in Russia, Serbia’s ally, so Germany declared war on Russia. Russia’s ally, France, mobilised her forces so Germany declared war on France, bringing in Britain which declared war on Germany on 4 August. In a little over five weeks from the Sarajevo assassination, all the European combatants had embarked on the most destructive war in all history. It came out of nowhere and was to last over four years.

Central to the escalation was one nation — Germany. Central to the current Middle East crisis is one nation — The United States.

 

Today, we could be in the early stages of a similar escalation of events triggered by Israeli attempts to eliminate Hamas in Gaza. So far, the progression of events has been subdued, notably to some activity by the Houthis at the Bab El-Mandeb Strait disrupting shipping. Predictably, this is proving difficult and expensive to deal with and shows signs of leading to more intensive attacks by NATO participants on Yemen’s Houthis. But the Houthis are allied with Iran, and Iran supports both Hamas and Hezbollah. Iran is now allied to Russia which is winning the war against NATO in Ukraine. And Russia is allied with China which is claiming Taiwan. It is beginning to rhyme with Sarajevo all over again, but on a global, as opposed to a European scale.

 

Additionally, there is a currency angle today. The First World War was not about currencies, but today the Americans find themselves having to protect their dollar’s hegemony and credibility, something that was not an issue when gold was the money to which all currencies individually referred.

 

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[Carlos77]

A Lot of Reasons to Want Gold in Unknown Situations Like now

 

Join Craig Hemke and Andrew Maguire in our Monthly Wrap-Up video as they dive into the economic outlook for February! They will discuss: 

• Geopolitical Events: Political instability, conflicts, and trade tensions that affect investor sentiment and drive demand for safe-haven assets like precious metals.
• Interest Rates: Interest rates that influence the opportunity cost of holding precious metals.
• Industrial Demand: Some precious metals, such as silver, platinum, and palladium, have industrial uses in sectors like electronics, automotive, and jewelry. Changes in industrial demand can affect their prices.

30 min.

 

[Carlos77]

Gold Resists Fed Chair

 

Adam Hamilton

February 02, 2024

 

Since Powell’s pressers can really move markets, I watch all of them live in my line of work.  Hearing him all but rule out a March rate cut was stunning! All that was pretty-darned hawkish, hammering March rate-cut odds to 38% and leaving 2024 expected cuts near 141bp. Emphasizing how serious a hawkish surprise that was, the flagship S&P 500 stock index plunged 1.6% into close on the Fed chair’s comments!

That easily could’ve lit a fire under the US dollar and crushed gold. While the latter did fall from $2,045 just before Wednesday’s FOMC decision to $2,037 on close, that still made for a slight 0.1% gain across a quite-hawkish FOMC! And the US Dollar Index only climbed 0.2% to 103.6, merely revisiting its bounce high hit over a week earlier.  Gold had resisted the Fed chair despite being mired in bearish psychology!

Post-FOMC market reactions often aren’t fully apparent until the end of the subsequent trading day. That gives overseas traders time to react overnight, and American traders more time to digest the implications of whatever the Fed did. At noon Thursday as I pen this essay, gold had surged 1.1% near $2,060. And the USDX had dropped 0.5% around 103.1.  Neither were responding as usual to a hawkish Fed surprise!

Gold’s impressive counter-Fed rallying this week could prove an important psychological inflection point.  Gold’s latest surge despite a big hawkish surprise ought to help convince gold-futures specs this young upleg still has lots of room to run. That will motivate them to pile back into longs, amplifying gold’s gains. As its upleg resumes powering higher on balance, the resulting new records should attract lots of new traders.

 

 

The bottom line is gold resisted the Fed chair this week.  This latest FOMC meeting was quite hawkish, as top Fed officials fought back against traders’ big rate-cut expectations.  The statement and Fed chair both emphasized the FOMC doesn’t yet have enough confidence in disinflation trends to start cutting soon.  Then the Fed chair unusually all but ruled out rate cuts starting in March, slamming traders’ hopes.

 

Yet despite big reactions to this hawkish surprise in rates and stock markets, the US dollar didn’t surge and gold didn’t plunge.  The former had already stalled out after bouncing hard, while speculators’ collective gold-futures bets in the latter were already bearish.  So gold surged out of the FOMC, which should really boost traders’ confidence in chasing its upside momentum.  That likely rekindled gold’s young upleg.

 

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[Carlos77]

Banking crisis in CRE looms

 

Market report for week ending 2 February 2024

 

 

 

And this week saw a dramatic decline in Comex Open Interest. This is our next chart.

 

 

What it tells us is that declining interest in the paper market fails to suppress the gold price. Comex’s influence on the gold price is visibly declining, a point poorly understood. And the investing public is disinterested as well.

 

According to the World Gold Council, ETF holdings declined by 244 tonnes last year, 10 tonnes of which was in December. The gold price holding levels close to all time highs with public interest virtually zero is a powerfully bullish combination. Demand is being led by central banks, adding more than 1,000 tonnes for the second year in a row. And one guesses that off-balance sheet government buying in sovereign wealth funds is also a factor.

 

 

 

 

In silver, the last COT numbers indicated that hedge funds are net short, which while not unheard of is unusual and very bullish. This is my last chart

[Carlos77]

Getting Physical: Why Bullion Has Outperformed Gold Stocks

 

FEBRUARY 1, 2024  BY SCHIFFGOLD

 

Gold stock performance is obviously tied to much more than just the bullion price. For one, shareholder value can always be diluted when you’re holding stocks, regardless of the industry. Gold mining companies also have overhead for exploration, extraction, processing, and storage. There are also price fluctuations in oil, materials, and labor that gold miners have to contend with.

Physical gold also comes with some overhead — mainly with regard to storage, transportation, and security — but the costs are lower in comparison.

 

Still, gold mining stocks have the added benefit of paying dividends. They just come with the need to consider a longer list of variables like executive management, the cost of exploration, and aging equipment that could require repair or replacement. When the broader economy isn’t doing great and overhead costs are lower, winning gold miners can fare extremely well.

 

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[Carlos77]

Historic & Massive Silver Upside Overshoot On The Way With Sentiment At Rock Bottom, Plus A Look At Gold

 

Silver Overshoot On The Way

Very big picture there is a massive divergence between GOLD & SILVER. Last time the two had a larger divergence like this, silver played catch-up big time. And this time, silver will break out of a 43-year+ cup and handle. So the over-shoot this time should be absolutely mega.

Silver About To Begin Mega Outperforming Gold, Expect Red Line (SILVER) To Break Above (ORANGE LINE) Gold (SEE 2 PREVIOUS OVERSHOOTS)

 

 

 

 

 

Gold Breakout

Graddhy out of Sweden:  Gold has broken out on quarterly and is still holding its backtest, plus holding above 2000 level. As said, the longer this breakout holds, the more likely the third huge bull phase has begun. Still, sector sentiment is getting worse, which is just what we want to see now.

With Sentiment At Rock Bottom: Gold Is Performing Beautifully, Ready To Accelerate Higher

 

 

 

 

Gold vs Money Supply

Graddhy out of Sweden:  This chart clearly shows how undervalued GOLD is relative to the US currency supply.

Imagine The Revaluation For The Price Of Gold That Is In Front Of Us (PURPLE LINE)

 

 

 

 

https://kingworldnew...a-look-at-gold/

[K Wave]

Dr Copper...unless it gets a huge reversal pretty much imminently, not looking so hot....multiple longer time frames attempting rollover mode simultaneously.

 

Feels eerily like just before Covid when Gold and Silver were holding up while other metals started to slip badly

 

And watch Apple here closely...unlike last earnings go round it is really struggling after the initial stick save...

 

Under 188 is first hint of trouble, and under 180, turn out the lights.

Bulls need a strong move over 190 to keep things alive...and soon...

 

Edited by K Wave, 08 February 2024 - 09:56 AM.