GC going to flip to December soon, and contango has it at a high of $2000.00 exactly. Welcome to the new era...2K gold! Who woulda' thunk it! Fascinating.
Despite being overbought, there's signficant upside for gold & silver. People are going to be buying on dips, and like tech stocks from 1996-2000, metal prices can rally irrationally higher for years.
Gold Wins Over New Buyers From Pension Funds to Private Wealth Ranjeetha Pakiam, Jack Farchy and Anchalee Worrachate, Bloomberg News (Bloomberg) -- Gold’s surge to an all-time high is winning over a wider fan base of pension funds, insurance companies and private wealth specialists. Managers who run long-term portfolios worth trillions of dollars are taking interest in gold as they search for returns in a yield-starved investing landscape. The broader array of buyers is one of the key dynamics behind the rally to $2,000 an ounce, even as gold’s traditional customers in India and China remain on the sidelines. In the past, when bonds offered heftier yields, many professional investors had little use for gold. A broad portfolio of stocks and bonds could generate a reliable yield, and the two assets would balance each other out during market downdrafts. Gold, which offers no income, is hard to value and costs money to keep in storage. But now, the math has shifted. With $15 trillion in debt offering negative yields and the Federal Reserve likely holding rates near zero for the foreseeable future, some on Wall Street are questioning the wisdom of owning bonds and looking elsewhere for assets to hedge against equity volatility. “Safe government bonds have always played a very important role as a portfolio diversifier and will continue to be, but we have to recognize that their potency is diminishing due to the low absolute level of yields,” said Geraldine Sundstrom, who focuses on asset allocation strategies for Pacific Investment Management Co. in London. “We need to diversify our diversifier and look for safe haven beyond government bonds. Given Pimco’s view that rates will be kept very low for years to come causing depressed levels of real yield, gold feels like an appropriate diversifier,” she said. Pimco, which manages $1.9 trillion in assets, is far from alone. In a May note, Citigroup Inc. cited “new non-traditional investors in bullion, including insurance companies and pension funds” as part of the fuel behind the rally. Last week, Swiss private bank Lombard Odier & Cie SA said it added gold to its “strategic asset allocation.” Arbuthnot Latham & Co., a private bank managing money for clients including trusts and personal pensions, says it’s bought more shares of gold mining companies as a proxy to the precious metal, according to Chief Investment Officer Gregory Perdon. “There has definitely been more widespread institutional ownership of gold than in previous rallies,” says John Reade, chief market strategist at the World Gold Council. “Gold’s in the conversation now with much more investors than it was 10 or 20 years ago.” Even so, gold ownership among the professional class is viewed to be low. The total value of investor positions in gold futures and exchange-traded funds is equivalent to just 0.6% of the $40 trillion in global funds, according to UBS Group AG strategist Joni Teves. That position could easily double without the allocation looking extreme, she wrote in a note. Reade, who previously worked at hedge fund Paulson & Co., reckons no more than one in five institutional investors has an allocation to gold. “It’s odd why pension funds would want to buy gold,” said Mark Dowding, chief investment officer at BlueBay Asset Management. “It delivers no income or dividends and it costs money to store. It also does nothing to match assets to liabilities.” The allure may be that gold simply tends to do well during times of inflation or when equities stumble -- two scenarios that seem within the realm of possibility in the current environment. A broader base interested in gold could also mean that if gold does suffer a correction, it’s likely to find plenty of investors waiting in the wings to buy. “The lower real yields go and the weaker the dollar, the more attractive gold is,” said Charles Diebel, a portfolio manager at Mediolanum International Funds. “Normal buyers of gold wouldn’t be driving this,” he said, referring to retail investors and jewelry buyers. “It would be long-term investors looking for diversification.” ©2020 Bloomberg L.P. https://www.bloomberg.com/news/arti...-is-winning-over-new-buyers?srnd=premium-asia
Ooohhh wow! ....“It is clear the resistance level of $2,000 is a strong threshold for the price and significant volumes are placed there,” he wrote. “Any news regarding new monetary stimulus from the US Federal Reserve could trigger gold to break up the resistance level of $2,000.”.... https://www.marketwatch.com/story/g...by-rising-dollar-2020-08-04?mod=mw_latestnews
‘Ample room’ for more gold gains as hedge funds late to the party, adviser says Published: Aug. 5, 2020 at 7:27 a.m. ET By Steve Goldstein Hedge funds have missed one rally, or so it seems from positioning data. Getty Images If you adjust for inflation, gold still has to climb to $2,800 per ounce to surpass 1980 levels. But gold bulls aren’t complaining as futures for the yellow metal topped $2,000 in nominal terms for the first time. At $2,052 in the early hours of Wednesday, gold US:GC00 has climbed 35% this year. So the question is whether the gold rally can last. What has fueled it so far is the aggressive fiscal and monetary policy action, in the U.S. and across the world, which has helped cushion the economic blow from COVID-19 and sent interest rates lower but also led to a rise in inflation expectations. Gold has been outperforming the dollar alternatives, according to Goldman Sachs commodities analysts. Still, gold of late has caught its own momentum apart from its fundamentals. Analysts at Goldman Sachs point out gold has broken away from real, or inflation-adjusted, interest rates, and it is outperforming dollar alternatives. Mike Shedlock, the Mish Talk blogger and investment adviser at SitkaPacific Capital Management, points out that hedge funds have largely sat out the gold rally. He bases that on Commodity Futures Trading Commission data on futures positions. “There is ample room for Fear of Missing Out to kick in as the managed money and big spec hedge funds sat out much of the recent rally,” he writes. “And with 105,025 short contracts there is plenty of fuel for a short squeeze too.” JPMorgan strategists led by Nikolaos Panigirtzoglou say while older people are flocking to gold, younger investors led by millennials are turning to bitcoin US:BTCUSD. Both gold and bitcoin exchange-traded funds have seen strong inflows over the last five months. It should be noted Panigirtzoglou says bitcoin is now trading at a premium, rather than a discount, to the cost of production. https://www.marketwatch.com/story/h...reaks-key-2000-level-2020-08-05?mod=home-page
https://smallcaps.com.au/copper-gold-plus-silver-may-tell-us-all-we-need-to-know/ Copper and gold (plus silver) may tell us all we need to know By Robin Bromby August 7, 2020 Analysts forecast the copper market will this year reach its highest surplus since 2012, while gold and silver continue to rally. “Strictly speaking, gold and copper prices do not have any fundamental relationship with each other.” That dictum this week comes from the commodities team at ANZ Bank — which then immediately went on to qualify. “That being said, they produce a good indicator of how the markets and interest rates, in particular, are doing.” While most of us have been fixated on the gold to silver ratio (of which there is more below), Daniel Hynes and Soni Kumari at ANZ have been watching the copper to gold ratio which fell to 1:3 in April, a level not seen for more than 30 years – even lower than that witnessed during the global financial crisis. The ratio recovered to 1:3.6 in mid-July as the copper price rallied, but with the recent surge in gold, by the middle of this week it had eased back to 1:3.2. ANZ is now forecasting that, by late this year, the copper market will be in surplus to the tune of 565,000 tonnes — the largest surplus in the copper market since 2012, and compares markedly with the 2019 deficit of 100,000t. As the analysts say, gold tends to perform well during times of economic and geopolitical stress, but copper is the exact opposite. Copper is used almost entirely for industrial production, with more than 65% going directly into construction and electronics. That contrasts with gold, with most of that metal going into investment hoarding and only a small slice used industrially. ANZ is now predicting copper demand will drop by 4% this year, with China able to only partially offset the collapse in the West’s industrial activity due to the COVID-19 crisis. Gold and silver are signalling loss of faith in currencies and economies Other analysts are a little more graphic in their pandemic outlook for the global economy. This from Michael Every, head of Asia-Pacific financial markets research at Rabobank: “We are deluding ourselves that we are recovering back to the status quo ante. We aren’t.” “We are deluding ourselves [that] stimulus to shield us can be sustained forever everywhere. It can’t.” Mr Every says that gold will win if fiat currencies lose their value (as the lira is doing in Turkey right now, combined with concerns about the US dollar). “[If] it is gold and not any fiat currency at all … real businesses should be panicking and markets collapsing because a wrenching deflationary accounting and international-trade adjustment that will make the COVID crisis look like a normal day in the office is what looms for years during the transition away from fiat.” Speaking of gold versus fiat currencies, Voima Gold, based in Helsinki, has done a revealing calculation on the US dollar versus gold. In 1932 gold was worth US$20.67 per ounce. In Thursday trading in New York, the gold price went through US$2,067/oz. In 88 years, therefore, the US dollar has declined by 99% against gold. That is a startling figure and illustrates the fact that gold can preserve your wealth, while paper money does not. Meanwhile, Christopher Ecclestone at London-based Hallgarten & Co, as usual, pulls no punches, writing this week that “while the markets dance in a Gatsby-like frenzy, they seem to fail to notice that the economy is looking more like 1931 by the day”. “The rise in base metals prices is welcome but we cannot help feeling that the industrial metals are ‘whistling past the graveyard’ of the real economy which, no matter where you look (and we include China) is looking mighty sickly,” he said. Big gold accumulations in private hands Voima also made a point about gold stocks that is usually overlooked. While most discussions revolve around official holdings, Voima has calculated the following gold stocks in private hands by region: India with 24,500t, China (20,398t), Germany (8,918t), (Italy 5,707t), France (4,605t) and Switzerland (920t). While Switzerland lags in total, it comes in on the top of gold held per capita. In figures out this week from the World Gold Council (WGC), we learn that gold-backed exchange-traded funds (ETF) in July recorded an eighth consecutive month of inflows, with July alone adding 166t of bullion worth about US$9.7 billion. Global ETF holdings have once again reached a new all-time record high — now hitting 3,785t. Moreover, the rising price is proving no discouragement from ETF investing, with the WGC reporting that the trend of rising inflows continued in the first trading days of August when gold went through US$2,000/oz. North American funds in July accounted for 75% of all inflows. The WGC noted, however, that — as ANZ did with copper — that Mr Market in July was sending out conflicting messages. They cite: The S&P 500 reaching a monthly closing high; The US 10-year yield finished at an all-time low of 0.53%; The “highly concentrated” NASDAQ reached record levels and was up 20% so far this year; Silver had its strongest month ever, rallying by 34%; Gold rallied by 11% and, at the end of July, was up nearly 30% on the year. Silver continues “remarkable” price performance There are equally impressive statistics out of the Washington-based Silver Institute this week. Dubbing it a “remarkable price performance”, the institute notes that from an intra-day low on March 18 of US$11.64/oz, the silver price (as of Thursday’s US$28/oz) has rallied more than 140% and is at a level not seen since 2013. “The silver price hike has been fuelled by its inherent safe-haven status, fears of inflation, remarkably low interest rates and continual liquidity boosts by central banks,” the institute said. They see both retail and institutional demand for the metal. July was silver’s highest monthly gain since 1979. Global silver-backed ETFs posted all-time high inflows in 2020, up from 296Moz on 1 January to 1.25 billion ounces as of Thursday. Silver bullion coin demand is up 60% so far this year. And the gold-to-silver ratio which peaked at 1:127 on 18 March now stands at 1:72 — a decrease of 43%.
Huge bearish move, haven't seen a single day's move like this one for a while. My call: That's about it. Any further down move from here will be minor, no significance. I'm expecting this to be the bottom. The cash may hit 1900 but I'm doubting it. The next move may not be up but flat for a day, then on upward. Good buying opportunity imo about now.
I'm not a chart guy, but it looks like it could retrace all the way back down to 1800, where the parabolic rise began. There will be plenty of buyers at 1800, as well as 1700 - the real "line in the sand" level
As a reminder that everyone has to make up their own mind, here's what Tom McClellan, no slouch analyst, says tonight: GDM & GOLD: Bearish short and intermediate term. Big down days almost never mark the end of a down move. More should be coming. I'm not dissing themickey, or assessing who's likely right, I'm just trying to stay detached. [ McClellan: of same-named breadth oscillator, & distinctive correlation analysis ]