(Kitco News) – Incrementum AG is still sticking with its $2,300-an-ounce longer-term forecast for gold, calling for this to be hit in the next two years.
In the 10th annual “In Gold We Trust” report Tuesday, authors Ronald-Peter Stoeferle and Mark J. Valek described the first quarter as the strongest period for gold in 30 years, with the metal emerging from a bear market that had been in force since 2013.
In particular, analysts cited ultra-low global interest rates, including negative rates adopted by some central banks in their effort to jump-start economic growth.
“Gold is increasingly attractive in this environment,” the report said. “It used to be said that gold doesn’t pay interest; now it can be said that it doesn’t cost interest.”
Furthermore, any moves to unleash so-called “helicopter money” into the economy likely will jump-start inflation, the report said.
Gold had been dinged the last few years by the perception the U.S. economy was recovering, thereby helping the U.S. dollar and leading to expectations of normalization of U.S. interest rates. However, the Federal Reserve hiked only once by 25 basis points back in December. And, said Incrementum AG, now it appears that the U.S. economic expansion may have run its course.
“We believe the time for investing in inflation-sensitive assets has come,” said the report, also describing mining stocks as “interesting opportunities.”
The annual report listed a long-term target of $2,300 an ounce back in 2008, when gold was trading around $800 an ounce. The metal got up to around $1,920 in 2011 after a decade-long bull run, before falling back below $1,100 late last year, then rallying again. Incrementum AG said it stands by its thesis that gold will rally, arguing that central bankers cannot create a “self-sustaining” economic expansion by printing money.
“According to our perception, the events of the past year are validating our views and we are maintaining our gold price target of $2,300 by June 2018,” Incrementum AG said.
Governments have undertaken “structural over-indebtedness” in many parts of the world, spending cuts are “illusory” and massive tax increases are seen as counter-productive, the report said. As a result, central banks have undertaken a monetary “all-or-nothing gamble.”
Meanwhile, actions by central banks have led to a “bubble” in interest-rate markets, decimating free-market price discovery, the report said. The authors describe interest rates as being at the lowest level in 5,000 years.
“When this bubble inevitably bursts, it will be abundantly clear how valuable an insurance policy in the form of gold truly is.”
Incrementum AG suggested a new recession is “inevitable” and there is even potential for “stagflation,” which is the combination of stagnation and inflation.
The authors said they would not be surprised if there is a short-term correction in the market.
“However, we don’t expect a very deep correction, since it appears as though many potential buyers are waiting on the sidelines, eager to buy dips,” the authors said. “Relative strength in silver and mining stocks gives us confidence as well. Positive seasonality in the second half of the year should also provide a tailwind. All in all, conditions for the new bull market to become firmly established appear to be quite favorable from a technical perspective.”
(Kitco News) – There was much less risk aversion in the world marketplace Tuesday, following two sessions of very rough trading waters. Safe haven gold prices saw some selling pressure on profit taking from the shorter-term futures traders, following the recent strong gains that pushed prices to a 27-month last Friday. Still, the gold market bulls are in firm near-term technical command. August Comex gold was last down $7.00 an ounce at $1,317.80. July Comex silver was last up $0.091 at $17.835 an ounce.
The VIX (volatility index) that is one measure of anxiety in the marketplace for stocks calmed to pre-Brexit readings Tuesday.
Most world stock markets rebounded Tuesday and U.S. stock indexes were solidly higher in afternoon New York trading. Other safe-haven assets–U.S. Treasuries and the U.S. dollar index also saw some selling pressure following their recent solid gains. The British pound and Euro currency have stabilized following their pounding taken after last week’s Brexit vote.
Many market watchers are still wondering if there is more Brexit-related selling pressure soon to come. Today’s market action could be just a pause before more Brexit-related market turmoil resumes. Ratings agencies, including Standard & Poors and Fitch, on Monday lowered their credit ratings for the United Kingdom.
(Note: Follow me on Twitter–@jimwyckoff–for breaking market news.)
Live 24 hours gold chart [Kitco Inc.]
Technically, August gold futures prices closed near mid-range. The gold bulls still have the solid overall near-term technical advantage. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,362.60. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at last week’s low of $1,252.80. First resistance is seen at today’s high of $1,329.50 and then at this week’s high of $1,340.00. First support is seen at today’s low of $1,308.20 and then at $1,300.00. Wyckoff’s Market Rating: 7.5
Live 24 hours silver chart [ Kitco Inc. ]
July silver futures prices closed nearer the session high. The silver market bulls have the solid overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $19.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is seen at this week’s high of $17.94 and then at the May high of $18.08. Next support is seen at today’s low of $17.55 and then at $17.25. Wyckoff’s Market Rating: 7.5.
July N.Y. copper closed up 490 points at 217.10 cents today. Prices closed nearer the session high and hit a seven-week high again today. The copper bulls have gained the slight overall near-term technical advantage. A bullish “rounding-bottom” reversal pattern has formed on the daily bar chart. Copper bulls’ next upside breakout objective is pushing and closing prices above solid technical resistance at 225.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the June low of 201.30 cents. First resistance is seen at today’s high of 218.35 cents and then at 220.00 cents. First support is seen at 215.00 cents and then at today’s low of 211.85 cents. Wyckoff’s Market Rating: 5.5.
Our Comment: While the Financial Illuminati were papering over things with expanding credit, the earth was moving beneath their feet. The demographics were changing, the efficiencies of technological advances were already baked in, and due to central planning, wages didn’t remotely keep pace with the ballooning of assets owned by the well-off.
Brexit is nature beginning to rebalance the distortions of the very visible and very distorting hand of central planners ignoring the concept of free will. THE FINANCIAL MANIPULATION COULD ONLY MASK THE UNDERLYING SYSTEMIC WEAKNESS FOR SO LONG. Real change starts bottom up. You still can’t fool all the people all the time.
THE EXIT- England voted to Leave while Scotland and Ireland voted to Stay. The City of London also voted to remain.
(Kitco News) – The surprising vote last Thursday by U.K. citizens to leave the European Union sent shock waves throughout the world marketplace. Very few times are markets “wrong-footed” on fundamental news events, but the Brexit vote was a huge miscalculation by the general marketplace. Many markets on Friday experienced huge and even record daily price trading ranges. Gold futures saw a whopping daily trading range Friday of $110.00.
Now is an extra important timeframe for many markets. High volatility may continue this week. And by the end of this week, new price trends in many markets could be well established that will dictate price action into autumn, and even beyond.
Let’s take a look at some of the key markets most likely to see volatile price action this week, and their implications on other markets.
Gold: Once again the gold market has proven the “perma bears” wrong. Gold prices surged to a 27-month high Friday on the uncertainty surrounding the Brexit news and on the high volatility in other markets. A price uptrend on the weekly continuation chart for nearby gold futures has been established, to suggest more upside price action in the coming weeks.
History once gain repeats itself in the marketplace
Importantly, gold is one example of the powerful cyclical nature of raw commodity market prices. Earlier this year gold prices began to rally, along with crude oil and some other major raw commodity markets, for no clear-cut reason. What happened was that the major “bust cycle” in the raw commodity sector petered out and the beginnings of a new “boom cycle” were under way. A look at longer-term charts for most raw commodity markets shows the keen boom and bust cycles that those markets experience every few years.
U.S. Treasury Bonds: I wish I had a dollar for every time over the past 20 years that I’ve said the bond market bulls are resilient and that the trading landscape is littered with would-be top-pickers. I could probably buy a good meal for my wife and I. On Friday nearby U.S. T-Bond futures scored a new all-time modern historical high in prices. The weekly bond chart shows a big and bullish “outside week” up was scored, whereby the week’s high was higher and low was lower than the previous week’s trading range. If bond market bulls continue to march higher, there would be serious economic and financial implications. Such would suggest continued tepid world economic growth, or stagnation, a very low inflationary environment continuing, or even price deflation, and likely further stimulatory monetary policy moves by the world’s major central banks. None of the above is at all good. If indeed U.S. Treasury bond prices continue to climb in the coming months, look for the other safe-haven markets to also benefit: gold and the U.S. dollar.
U.S. Dollar Index: The weekly continuation chart for U.S. dollar index futures shows a bullish “outside week” up was scored last week. Also, the price downtrend on the weekly chart was negated. The greenback bulls have gained good upside technical momentum. I suspect the U.S. dollar index will continue to trend sideways to higher in the coming weeks, or longer. That’s a bearish element for the raw commodity sector. Most major commodities are priced in U.S. dollars on the world markets. When the dollar appreciates, it makes those commodities more expensive to purchase with non-U.S. currency.
British Pound: The Brexit vote late last week caused the biggest one-day price fluctuation in the history of British pound and Euro currency trading. Nearby British pound futures prices fell to a new modern historical low on Friday. The serious technical damage produced on the charts suggests there is more downside pressure coming for both the pound and the Euro currency. Such would be a bullish element for safe-haven assets like gold, the U.S. dollar and U.S. Treasuries.
S&P Stock Futures: Friday’s price action in the U.S. stock indexes again proves that history repeats itself in the marketplace. Prices Friday saw a huge and technically bearish “outside week” down, to strongly suggest we’ve probably already seen the highs in the U.S. stock indexes for this year. Again, if that’s the case, you will see continued price appreciation in the safe-haven assets like gold.
Nymex Crude Oil: Friday’s events in the world marketplace also worked to pressure crude oil prices. However, the losses were not severe in oil and an uptrend line remains in place on the weekly continuation chart for nearby Nymex crude oil futures. Still, Friday’s price action in other markets suggests it will very difficult for crude oil prices to make headway on the upside in the coming weeks or few months.
By Jim Wyckoff, contributing to Kitco News; email@example.com
Summary:Risk-off continues. Euro, GBP continue to soften as USD, GOLD, benefit. Equities and Oil continue to slide
Markets as of 7:55pm ET
Gold: 1335.0 +13.00
Silver: 17.90 +.110
Brent Oil: 48.41 -2.50 (reflects catch up post Brexit vote)
WTI: 47.23 -0.41
NMX Nat Gas: 2.64 -0.019
DOW: 17154 (93.0)
ES: 2007 (11.00)
FTSE: not open
DAX: not open
NIKKEI: not open
Currencies ( in $US)
EU: 1.10 -0.60%
GBP: 1.34 -1.85%
CHF: 0.9729 +0.15%
JPY: 102.00 -0.15%
Noteworthy So Far:
BEARish to 12500
mkt under 13500 currently. close under here triggers momentum to 13250. then 12500
Flags under 14100 can be sold. Settle over TRP reverses trend
COMMENT: we are now looking at monthly charts for numbers
Support 1310., TRP
Resist: 1345, 1359
BULLish to 1359
flags over TRP can be Bt.
Comment: Earlier we synopsized the drivers behind Friday’s Brexit vote HERE. We are biased in the macro and believe there is little standing in Gold’s way from taking its place as a bonafide currency in a post Brexit world. Volatility aside, with the EURO and GBP down, it will be a matter of time before the US FED announces its own agenda to weaken the $ via swaps with Europe and/ or interest rate cuts. Brexit is a tipping point, but we expect pull backs as gov’t speakers try to calm mkts. In the long run currency debasement will determine Gold’s price. If all cunnencies are trading ZERO, what is it they are trading ZERO against? GOLD.
Resistance: 2045, 2060, 2100
BEARish: 1970 on radar.
Flags under 2060 can be sold
Settle over TRP reverses trend
Comment: Another round of QE is likely and in the least we wil see rates lowered. But how much can 25 basis points do to help a market levitating on financial engineering instead of organic growth? NIRP is on the horizon and it will work at first, but in the end the FED will be paying banks to borrow money from it. That is unsustainable.
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20-April-2016 Everyday Sydney Gold and Silver Prices
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