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June 13 2018

moneymetals

WHY HARRY DENT’S $400 FORECAST FOR GOLD IS WRONG…. Price Is Heading Up Much Higher

Harry Dent has been making the rounds suggesting that for gold to get back to its pre-bubble price, it would need to fall to $400 or $450. If we were to believe Mr. Dent, then it would be bad news for gold investors. However, Harry Dent’s gold price forecast is quite faulty because he fails to consider the most critical factor.

Harry Dent has become well-known on the internet for his $750 gold price forecast. He bases a low gold price upon what he calls “The end of the Commodity Super-Cycle.” Dent sees nothing but massive deflation ahead. Thus this will cause the gold price to fall along with all commodities.

Unfortunately for Dent, his gold price forecast is incorrect because he fails to incorporate the Falling EROI (Energy Returned On Investment) and energy into his analysis. Dent, like many in the financial industry, believes in the “Energy Tooth Fairy” (a term coined by Louis Arnoux). What I mean by the Energy Tooth Fairy is the notion that economy will continue to grow forever because plenty of cheap energy will always be available. Thus, economic and business cycles, forecasted by Dent, will also continue forever.

Before I explain in detail why Dent is totally wrong on his $400 gold price forecast, here he is in a recent interview on Kitco:

(https://www.youtube.com/watch?v=62jrl_irLzs)


Dent makes several forecasts in the interview, but his price target for gold is the most startling for precious metals investors. He says gold is heading for $650-$750, but that is just the first target. Dent then says, “Ultimately for gold to erase its bubble and get back to its bubble origin, it would be $400-$450. Once gold hits $400 or $450, then Dent would be a buyer.

I gather Dent is suggesting that gold became a bubble in 2004 when it went above $400 an ounce:

Gold price 20 year chart june 11 2018

As we can see in the chart above, the gold price never fell below $1,050 since the 2008 Financial Meltdown. Is Harry Dent suggesting that the gold price will drop another $600 from its low of $1,050 in 2015??




June 11 2018

moneymetals

Why are Gold/Silver Premiums SO Darn Low Right Now?

The bullion markets have undergone a shift in recent months. Prices may be range-bound, but there has been a transition from a seller’s market to a buyer’s market. Our goal, as always, is to keep our readers and clients apprised of developments and answer your questions.

Question: Why don’t spot prices for gold and silver respond to bullish news events or fundamentals in the physical market?

Answer: Physical supply and demand don’t necessarily impact the “spot” prices for gold and silver set in the futures markets on a day-to-day basis.

Take a hypothetical situation where some geopolitical event has investors running for safety. Lots of people decide to buy gold. Unfortunately, many of these investors will foolishly turn to gold futures.

As demand spikes in the futures markets, the bullion banks stand ready to meet the new demand with freshly printed digital contracts. This new supply of gold derivatives is scooped up by eager buyers even though not a single physical bar is added to any inventory. Their digital receipt which purports to represent gold is, in fact, almost completely unbacked.

The geopolitical event may drive plenty of demand, but the impact on price will be muted, and perhaps eliminated entirely.

Question: I noticed that premiums have fallen significantly compared to two years ago. Why has this occurred?

Extremely low prices

Answer: When demand for coins, rounds, and bars outstrips the physical inventory held by dealers, premiums will start rising as dealers bid aggressively for inventory.

This dynamic drove premiums sharply higher a number of times between 2008 and 2016. This part is telling; the futures markets can, and often do, signal the exact opposite of what is happening in the bullion markets where supply and demand are actually balanced through price. Between 2011 and 2015, spot prices were in decline, but that was a period of unprecedented demand for physical coins, rounds, and bars.

Today, this dynamic is working in reverse. Retail bullion investors in the U.S. (but not worldwide) have been more inclined to sell.

They seem optimistic that President Donald Trump and his policies will solve many problems. Some are frustrated by the returns in the metals markets and seek better performance elsewhere. Dealers are buying lots more inventory from the retail public than they did a couple years back, and this glut in supply has caused premiums to fall as a result.

We view this period of relatively low spot prices AND extraordinarily low premiums on physical gold and silver items as the best sort of environment to buy, not sell. But for those wishing to sell, Money Metals also offers the best prices.

Article Source: 
(https://www.moneymetals.com/news/2018/06/11/why-are-gold-silver-premiums-so-low-001549)

January 31 2018

moneymetals

For Anyone Still Wondering If Gold Prices Are Rigged...

That said, it is way too soon for investors in gold futures to start counting on fair dealing. There are, as usual, a few telltale signs that the action is unlikely to have much effect.

There are no U.S. based banks listed as part of this enforcement action, but that is merely suspicious. What really looks bad is the fact that, once again, no senior bank executives have been charged with a crime.

No matter how often people at these same firms get caught lying, rigging, and defrauding their own clients and investors at large, regulators never manage to pin blame on the top brass.

They have yet to suspend the trading privileges of any major bank.

James McDonald, who became the CFTC’s head of Enforcement last year, gave market participants a pretty good idea of what to expect from the agency – a passive attitude toward enforcement. Reuters summarized his approach this way:

He plans to encourage companies and staff to report their own wrongdoing and cooperate with investigators, a strategy he hopes will make it easier to prosecute more individuals.

With a policy like this, Wall Street banks don’t have much to worry about. Investors looking for a fair shake in precious metals futures markets, on the other hand, don’t have a whole lot to look forward to.

 (Original Source)

December 05 2017

moneymetals

October 31 2017

moneymetals

BREAKING: China – World’s Largest Gold Producer Mine Supply Plummets 10%

Inline image 1

The world’s top gold producer saw its mine supply plummet by 10% in the first half of 2017. According to the GFMS World Gold Survey newest update, China’s gold production in 1H 2017 fell the most in over a decade. The fall in Chinese gold production is quite significant as the country will have to increase its imports to make up the shortfall in its mine supply.

The data in the GFMS 2017 Q3 Gold Survey Update & Outlook reported that Chinese gold mine supply declined 23 metric tons to 207 metric tons in the 1H 2017 versus the 230 metric tons during the same period last year:

China gold mine production (1h 2016 vs 1h 2017)

The report stated the reason for the decline in Chinese gold production was due to the government’s increased efforts to curb pollution as well as heightened awareness of environmental protection. Furthermore, GFMS analysts forecast that Chinese gold production will continue to deteriorate for the remainder of the year as production is scaled down.

Read full article: (source)

October 23 2017

moneymetals

September 18 2017

moneymetals

Most Investors Won’t Be Buying Gold & Silver until AFTER Big Gains Occur

Physical demand for bullion rounds, coins, and bars remains somewhat soft in the U.S. This year’s run higher in prices as well as rising geopolitical tensions has whet the appetites of some investors, but it has not yet triggered broad participation.

Silver / gold demand increase

Only the contrarians have capitalized
on gold & silver's advance since 2015.

With strong gains both this year and last, metals prices have been responding to a host of issues – from unrestrained federal borrowing to the prospect of nuclear exchange. But they haven’t moved up as much as many expect.

After advancing dramatically in the prior decade, gold and silver have not responded as strongly to the explosive money creation and debt of the last few years as stocks have. And while predictions of crisis have been plentiful, the “Big One” hasn’t yet materialized.

Some honest money investors have even been drawn to Bitcoin and other cryptocurrencies. This is, in part, because of the tremendous run-up in prices in recent months (notwithstanding last week’s crash), and because cryptocurrencies might prove beyond the reach of Wall Street and central bankers to control.

Unfortunately, many investors will be sitting on the sidelines until precious metals are proven outperformers again, and in doing so, they will miss a big move up in prices. While we expect to see much higher gold and silver prices, the catalysts for that aren’t anything to root for. Serious geopolitical strife, a major correction in stock prices, or the U.S. dollar in free fall all mean hardship and pain.

Change is inevitable, and the U.S. economic expansion is getting long in the tooth. Even artificial markets must ultimately yield to actual physics.

The good news for investors with a contrarian bent is that buy premiums on bullion products are the lowest they have been in a decade – and inventory is plentiful. Down the road the opposite may be true, i.e. high premiums and shortages of the physical gold and silver in minted form.

Article Source: (https://www.moneymetals.com/news/2017/09/18/invest-after-big-gains-001160)

August 29 2017

moneymetals

"Alert: Gold Breaks Out to New 2017 High"

Gold’s naysayers and doubters came out in full force earlier this summer as sentiment reached its nadir. The mid-year pullback in prices did, too.

There can be no doubt about it now – gold has broken out of its summer doldrums. On Monday, the yellow metal finally broke through the longstanding $1,300/oz resistance zone to make a new high for the year at $1,316.

Gold - continuous contract (august 28, 2017)

Assuming the breakout holds, the next upside target is $1,375/oz, the high point for 2016.

There are plenty of bullish factors behind gold’s recent upside momentum to continue pushing prices higher in the days and weeks ahead. The gold mining stocks are starting to show relative strength again. And the U.S. Dollar Index appears to have begun another new down leg this week, falling Monday to a two-and-a-half-year low.

Another bullish factor is geopolitics. Gold gained a few more dollars in early trading Tuesday morning in Asia after North Korea launched a missile over Japan. Japanese Prime Minister Shinzo Abe said, "Their outrageous act of firing a missile over our country is an unprecedented, serious and grave threat and greatly damages regional peace and security."

On any ordinary news day, this dangerous provocation from North Korea would be the top story on all the cable news channels. Hawks would be calling on the U.S. to retaliate, and doves would be warning of the potential for millions of deaths in the event war breaks out in the densely populated region.

For now, though, the unprecedented flooding caused by Hurricane Harvey is the Trump administration’s top priority. Early estimates are that the storm has caused $40 billion in damage. Water levels are still rising in Houston, and surrounding areas extending to Louisiana, so the scale of the catastrophic losses stemming from 11 trillion gallons of water will continue to grow in the days ahead.


Continue reading... Article Source

July 13 2017

moneymetals

Commodity Cycle Upturn to Lift Precious Metals Prices

Safe-haven demand for physical precious metals came in soft through the first half of the year as a rising stock market reinforced investor optimism toward the economy.

U.S. stocks are expensive by just about every valuation measure you can think of – price/earnings, price/sales, dividend yield, total market capitalization as a percentage of GDP, etc. Even Fed chair Janet Yellen remarked recently that equity valuations appeared “rich.”

The inverse of the extreme overvaluation in equities is the extreme relative cheapness of hard assets. Commodity indexes entered the summer at generational lows in real terms.

Equities expensive, commodities cheap? chart

The perception has been that the world is awash in plentiful, cheap oil. Just a few years ago, with oil over $100 per barrel, the headlines blared warnings about peak oil and supply shortages. At major cyclical turning points in commodity markets, the news tends to reinforce whatever trends brought about major highs or lows in prices.

What investors need to keep in mind is that commodity markets are always cyclical in nature. No matter how bullish or bearish the outlook happens to appear at any given time, prices will eventually turn and trend in the opposite direction.

Oil and agricultural commodities perked up as summer officially began. Whether it’s the start of a major cyclical bull market remains to be seen. But the supply and demand fundamentals are setting up bullishly for commodities markets.

July 05 2017

moneymetals

6 Things Precious Metals Naysayers Get Dead Wrong

Answering the Most Common and Current Objections

Gold attracts its fair share of detractors. But the most common objections to gold as money, and as a safe-haven asset within an investment portfolio, are misplaced. Anti-gold myths are ubiquitous.

Mega billionaire Warren Buffett remarked derisively of gold that it “gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility.”

That brings us to the first thing precious metals naysayers get wrong…

Myth #1: “Gold has no utility.”

Warren Buffett is without question one of the world’s greatest investors. But he is not without biases.

Buffett’s primary business interests are in banking and insurance.

Facts vs myths

He has literally made fortunes off the fiat monetary regime. He took part in (and benefited from) the government bailouts of the financial system. He (along with most other Wall Street and banking titans) supported Hillary Clinton for president.

So maybe, just maybe, Buffett’s hostility to gold has something to do with his deep, symbiotic connections to the political, banking, and monetary establishments!

In any event, the claim that gold has no utility is false. It's been chosen by the market as money because of its many useful features, including fungibility, divisibility, durability, and rarity. Gold also functions as a store of value precisely because it, unlike Federal Reserve notes, has uses beyond that of a currency.

Even if gold weren’t hoarded in vaults, people would still dig it out of the ground at great cost for its uses in electronics, jewelry, art, and architecture. In an economic sense, $50,000 in physical gold is just as useful as a $50,000 sports car – as determined by the market.

July 03 2017

moneymetals

U.S. Gold Exports Surge As Its Gold Trade Deficit Continues

It’s no secret that the East (Asians and Indians) continue to acquire a lot of gold as Western demand has weakened this year. According to the most recent data released by the USGS – United States Geological Survey, U.S. gold exports surged during the first four months of the 2017 versus the same period last year.

How much? A great deal. In the first four months of 2017, the U.S. exported a stunning 173 metric tons of gold (5.5 million oz) compared to 119 metric tons (3.8 million oz) during the same period last year.Thus, U.S. gold exports Jan-Apr 2017 surged 45% versus last year:

U.S. gold exports jan-apr 2016 vs. 2017

June 28 2017

moneymetals

WHEN THIS MASSIVE BUBBLE POPS... What Will Happen To The Precious Metals?

As the Mainstream financial media continues to promote the biggest market bubble in history, only a small fraction of investors are prepared for the disaster when it finally POPS. The markets are so insane today, it seems as if fundamentals don’t matter any more. However, they actually do if we look at the numbers closely.

In order to invest in the correct assets going forward, one must choose between those with a low RISK and high REWARD versus assets with a high RISK and low REWARD. While this may seem like common sense, I can assure you, the market makes no sense whatsoever today. And most investors are doing quite the opposite. Go figure.

If we look at the following charts in this article, we can clearly see which of the following assets, the DOW JONES, GOLD or SILVER, enjoy the lowest risk and highest reward.

Dow jones industrial average indx 6/23/17

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