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27
2023
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Gold Poised for a Breakthrough as Silver Aims for $30
2023: A good year for gold in-between some historic ones? James Stanley presents us with a technical outlook on gold over the past two years along with rather bullish expectations for 2024. He calls 2022 a “doji” year for gold: a trading term that here means a lot of rangebound or stale trading. While we don’t doubt that the 12-month chart corroborates this analysis, Stanley makes it seem as if it was a dull year for gold. It’s hard to imagine anyone forgetting that in 2022, Russia launched its attack on Ukraine, upsetting the world’s political, social and economic stage. But in remembering this, some might easily forget that this attack brought gold to a new ATH after some movement that might have been a little stale. So surprising is this, perhaps, because the two years of lockdowns brought the kind of panic and uncertainty not even Russia’s military can match. Seeing gold respond so strongly to an attack that was mostly isolated from the West was almost strange. This brings us to Stanley’s second point, that gold gained nearly 12% so far this year, posting another ATH. But if the Russian invasion seemed like “weak news” compared to global lockdowns, how about this year’s gains? Besides the conflict in Gaza, which didn’t actually push gold to its latest ATH, there wasn’t really anything bombastic as we took note of gold flying up without seeming to need anything in terms of sudden or unexpected drivers. Stanley presents many other interesting points, very much addressing the psychological side of levels. As he notes, in the minds of investors, $1,000.1 gold is a lot higher than $999.99. We’ve all been to grocery stores, right? Calling back to 2008 and gold’s road to establish itself above $1,000, Stanley says that the same thing is happening with $2,000 right now. He outlines how the longer gold is above $2,000, the easier it will be to hold footing there and search for new significant levels. We’d also like to mention the levels themselves here: a doubling in price in the span of 15 years for an asset that supposedly bears no yield isn’t all that bad. Of the various tumult that is already expected in 2024, Stanley finds the relationship gold has with the Federal Reserve to be the most important factor. He believes it’s an intrinsic one, and that for gold to truly hold above $2,000, the Fed must turn dovish. If that’s the case, gold investors should be ready to wait past March given that even official inflation figures remain high. When it does happen, the cuts are probably going to help gold break through the $2,050-$2,075 level, which Stanley notes has been a difficult one. But hasn’t that been said about $2,000 just some weeks ago? From there, there is a lot to look forward to in regards to gold prices during what one can only imagine will be a heated election. Commerzbank: $30 silver looks likely by end of 2024 We did just say that sentiment can’t be overstated when it comes to gold and its levels, but it is just as true for silver, if not more so. Seeing silver, the historical outperformer during gold’s bull runs, linger around $24 has undoubtedly been disappointing for many investors. Of course, there are those that are glad to be able to buy silver this cheaply, but those already know what we’re about to cover. Commerzbank’s economists place silver in 2024 at $30, which is really merely in line with how much gold has gained so far. It wouldn’t be unreasonable to expect more, but we’re sure this level will satisfy for the time being. The Silver Institute revised its figures for industrial demand for the metal in 2023 and previous years, raising them across the board. Metals Focus also noted that the market continues to operate in a conspicuous deficit, which will have to be addressed. So there’s a lot more behind silver than just needing to catch up to gold. A piece on Financial Times similarly lauds silver as an excellent supplement to gold right now, starting with the comparatively low price which makes it attractive as a haven investment. Ned Naylor-Leyland, manager of the Jupiter Gold and Silver fund, slightly rebrands a familiar quote that usually pertains to gold: “You can see silver leaving London and going abroad. Indians are very keen on silver for jewelry.” Indeed, premiums have been rising in India on top of spot prices hitting highs that can be pretty unattractive for consumers. $1,980 to $2,100 gold is great for headlines, but maybe not for jewelry consumers who were hoping to get their hands on some immediate glitter. A big believer in solar panel demand, Naylor-Leyland also takes note of not just the supply deficit, but also a supply structure with deep issues. These make for very powerful drivers, but as he notes, not in the short-term. There is a plus side to that, of course: once silver does catch up to gold in a ratio sense, there’ll be plenty of reasons to expect more gains onwards. New Hampshire could be the fifth state to reintroduce gold into its legislature We’ve been willing so far to mention the bad points of what should be great news surrounding gold in legislation, and we see no reason to change that. The bad points are minor, and the reason we mention them is that we’d like to see gold’s re-introduction into the American monetary system done right. New Hampshire has proposed bill HB1674, which aims to introduce gold as legal tender to the state. One of the two negatives, if we’re to call them that, is that they are only the fifth state to make a concentrated effort in this direction. Perhaps because Utah has enjoyed gold as constitutional money since 2011, it seems kind of unfair that we’ve barely cleared the fifth state in all this time. And how it has enjoyed it. In the time since the bill was passed, Utah opened its state gold bank, allowed for the creation of Goldbacks and much more. But what are we to make of the timeframe? If it takes a decade to do five states, and we have 50… Here’s to hoping that the math doesn’t add up like that in the coming years. The other downside to the bill is a mention of gold partly acting as “electronic currency”, somewhat similar to what we’ve seen in Texas. From what we can gather in the definition, this does seem to open up a bit of leeway in the wrong direction, and we hope that those spearheading the bill end up focusing on bullion instead of IOUs. Onto the positive, the bill would exempt both gold and silver from taxation, both in regards to gains and sales. Things get even better as we get deeper into the bill, as it would allow businesses in the state to use gold and silver instead of the U.S. dollar for transactions. As the announcement notes, it would place gold and silver on the same footing as Federal Reserve banknotes in the state. We’re willing to pay the price of others dealing in electronic gold if we can have the alternative of dealing in physical gold instead of U.S. dollars. That is, when all of this becomes nationwide, or at least makes its way to California…
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This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: $2,050 to $2,075 as the new resistance for gold, silver seems to be getting attention, and what’s in the small print of New Hampshire’s proposed gold as legal tender bill.