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Is Bitcoin a Better Inflation Hedge Than Gold?

Gold and silver markets continue to gather upside momentum as inflation pressures spread throughout the economy.      

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Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Gold and silver markets continue to gather upside momentum as inflation pressures spread throughout the economy.

Gold prices are up 2.4% since last Friday’s close to come in at $1,817 an ounce. Silver, meanwhile, is up an impressive 6.2% this week to trade at $24.85 per ounce.

If silver clears the $25 level in the days ahead, it will make a new 3-month high. That could trigger a new round of technical buying among chart followers.

Turning to the platinum group metals, they are underperforming. The platinum market is up a slight 0.7% for the week to trade at $1,079. And finally, palladium checks in at $2,065 per ounce after suffering a 2.0% a weekly decline.

Metals markets may be starting to reflect broader inflation trends that are manifesting in higher prices for almost everything. These price increases faced by businesses and consumers are showing no signs of letting up, despite the Federal Reserve line that they are “transitory.”

Billionaire hedge fund manager Paul Tudor Jones weighed in on the inflation threat during an appearance on CNBC this week.

Paul Tudor Jones: We have a Federal Reserve Board that are inflation creators, not inflation fighters. It’s pretty clear to me that inflation’s not transitory. It’s here to stay. And it’s probably the single biggest threat to certainly financial markets, and again, probably I think to society just in general. So, this 5.4% CPI is a real eye opener. It’s the highest CPI we’ve had in 30 years. And of course, it’s going to go higher here in the next few months as energy feeds through it. So, for an investor in particular, most to this audience, it’s absolute death for a 60/40 portfolio for a long stock, long bond portfolio. So, the real question is how do you defend yourself against it?

According to Paul Tudor Jones, the best defense against inflation will be not gold but Bitcoin. There’s certainly no arguing that Bitcoin has outperformed gold along with virtually every other asset in the investment universe over the past few years.

The cryptocurrency attained a market capitalization of over $1.2 trillion on its rally Thursday. After having risen tens of thousands of percent to attain that lofty height, Jones risks being late to the party.

It’s difficult to see how anything like Bitcoin’s past performance could be replicated from a current cost basis of over a trillion dollars. But it’s not difficult to see how it could suffer a massive selloff after the latest round of hype fades.

Bitcoin was bolstered this week by the launch of a Bitcoin futures exchange-traded fund. The ETF will hold futures contracts rather than actual bitcoins. That makes it a derivative instrument of derivative instruments that track a highly speculative underlying digital asset. In other words, it’s multiple layers of risk.

The history of commodity futures ETFs is instructive here. They have tended to diverge negatively, sometimes dramatically so, from the underlying indexes they are supposed to track. They have been plagued by price drags from contango and contract rollover – not to mention management fees and other costs.

Bitcoin itself can be owned directly on the blockchain, outside of the banking and brokerage systems and free of their fees and counterparty risks. Those advantages are completely lost by owning futures contracts or Wall Street vehicles that hold them.

Similarly, many of the key advantages of owning precious metals in physical form are lost by holding financial instruments that purport to be backed by metal. Even if they do a good job of tracking spot prices, which is no sure thing, gold and silver ownership is about more than that. People own gold and silver coins for the privacy, the security, and the convenience of possessing money in tangible form.

The debate over whether precious metals or cryptocurrencies are more valuable forms of money will ultimately be settled by the market. Which asset class serves as a better inflation hedge will also be proven out in the years ahead.

Gold and silver have a centuries long track record of retaining purchasing power over time and performing especially well during periods of rapidly rising inflation.

Cryptocurrencies have no such track record. They have been driven more by speculation on their widespread adoption and potential use cases than by inflation fears per se.

It’s true that the number of Bitcoins that will ever be mined is strictly limited. That gives Bitcoin an inherent scarcity in contrast to unbacked fiat currencies such as the U.S. dollar, which can be created in unlimited quantities.

But the number of cryptocurrencies that can be created out of nothing is also unlimited. Who’s to say whether Bitcoin will always be the top crypto? Or whether any of them will be worth anything in a new “beyond digital” internet and computing paradigm that may arrive in the future.

Gold and silver markets will inevitably go through booms and busts in the future. But the metals themselves will never cease to be valuable to various industries, to jewelers and artisans, and to investors who want to hold hard money outside of the financial system.

Meanwhile, gold appears undervalued as compared to the general stock market on a historical basis, and silver is undervalued versus gold.

During the deflationary Great Depression and the inflationary 1970s, the gold price reached a 1:1 ratio versus the Dow Jones Industrial Average.

The Dow trades at over 35,000 today, and that’s about 20 times the gold price.

Were the Dow:gold ratio to revert toward 1:1, either stocks would have to crash, gold would have to launch into a super-spike, or some combination of both.

Given the tremendous inflation pressures currently exerting themselves in the economy, the late 1970s may be the best model for what to expect going forward.

It would mean rising price levels combined with a weak economy (stagflation).

And given that our debt load today is more than four times greater as a share of the economy than it was in the 1970s, investors should brace for the potential of a far greater financial crisis.

In the event that plays out in the form a crash in the value of the U.S. dollar, gold should serve as a premier safe-haven asset.

But silver could perform even better as an inflation hedge. It did during the late 1970s leading up to its January 1980 super-spike high of nearly $50/oz.

Some dismiss that move as artificially induced by the Hunt brothers, who tried to corner the silver market. They shouldn’t dismiss the potential for another mad scramble for scarce supplies of silver, however, fueled by broad and deep global demand rather than a handful of futures market speculators.

This time around it could be Tesla or a solar panel manufacturer, for example, that try to “corner” the silver market by accumulating strategic stockpiles.

Or it could be a large number of individual investors mobilized in internet forums to collectively “corner” the market for physical silver. Crowdsourced campaigns spearheaded by silver enthusiasts are already afoot to try to force the hand of paper futures traders who engage in naked short selling that artificially suppresses spot prices.

For now, silver remains relatively cheap versus not only most financial assets, but also versus other hard assets. In March 2020, silver became historically cheap versus gold – at one point sending the gold:silver price ratio to a record 130:1.

The gold:silver ratio currently checks in at about 76:1. It still has a lot more room to narrow in favor of silver during a precious metals bull market.

At the 1980 peak, the ratio came close to hitting 16:1, which is often referred to as the “classic ratio” observed going back to ancient times.

Meanwhile, the current mining ratio is only about 7:1, according to First Majestic Silver CEO Keith Neumeyer. That is to say, mines worldwide are producing 7 ounces of silver for every one ounce of gold they bring to market.

With so many ratios seemingly out of whack, investors would be wise to reconsider the ratio of hard assets to paper assets in their portfolios. And those who already have a prudent allocation to gold bullion should be sure they also have an adequate ratio of silver holdings.

Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. Until then this has been Mike Gleason with Money Metals Exchange, thanks for listening and have a weekend everybody.

      

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Futures Rebound From Friday Rout As Omicron Fears Ease

Futures Rebound From Friday Rout As Omicron Fears Ease

S&P futures and European stocks rebounded from Friday’s selloff while Asian shares…

Futures Rebound From Friday Rout As Omicron Fears Ease

S&P futures and European stocks rebounded from Friday’s selloff while Asian shares fell, as investors took comfort in reports from South Africa which said initial data doesn’t show a surge of hospitalizations as a result of the omicron variant, a view repeated by Anthony Fauci on Sunday. Meanwhile, fears about a tighter Fed were put on the backburner.

Also overnight, China’s central bank announced it will cut the RRR by 50bps releasing 1.2tn CNY in liquidity, a move that had been widely expected. The cut comes as insolvent Chinese property developer Evergrande was said to be planning to include all its offshore public bonds and private debt obligations in a restructuring plan. US equity futures rose 0.3%, fading earlier gains, and were last trading at 4,550. Nasdaq futures pared losses early in the U.S. morning, trading down 0.4%. Oil rose after Saudi Arabia boosted the prices of its crude, signaling confidence in the demand outlook, which helped lift European energy shares. The 10-year Treasury yield advanced to 1.40%, while the dollar was little changed and the yen weakened.

“A wind of relief may blow the current risk-off trading stance away this week,” said Pierre Veyret, a technical analyst at U.K. brokerage ActivTrades. “Concerns related to the omicron variant may ease after South African experts didn’t register any surge in deaths or hospitalization.”

As Bloromberg notes, the mood across markets was calmer on Monday after last week’s big swings in technology companies and a crash in Bitcoin over the weekend. Investors pointed to good news from South Africa that showed hospitals haven’t been overwhelmed by the latest wave of Covid cases. Initial data from South Africa are “a bit encouraging regarding the severity,” Anthony Fauci, U.S. President Joe Biden’s chief medical adviser, said on Sunday. At the same time, he cautioned that it’s too early to be definitive.

Here are some of the biggest U.S. movers today:

  • Alibaba’s (BABA US) U.S.-listed shares rise 1.9% in premarket after a 8.2% drop Friday prompted by the delisting plans of Didi Global. Alibaba said earlier it is replacing its CFO and reshuffling the heads of its commerce businesses
  • Rivian (RIVN US) has the capabilities to compete with Tesla and take a considerable share of the electric vehicle market, Wall Street analysts said as they started coverage with overwhelmingly positive ratings. Shares rose 2.2% initially in U.S. premarket trading, but later wiped out gains to drop 0.9%
  • Stocks tied to former President Donald Trump jump in U.S. premarket trading after his media company agreed to a $1 billion investment from a SPAC
  • Cryptocurrency-exposed stocks tumble amid volatile trading in Bitcoin, another indication of the risk aversion sweeping across financial markets
  • Laureate Education (LAUR US) approved the payment of a special cash distribution of $0.58 per share. Shares rose 2.8% in postmarket Friday
  • AbCellera Biologics (ABCL US) gained 6.2% postmarket Friday after the company confirmed that its Lilly-partnered monoclonal antibody bamlanivimab, together with etesevimab, received an expanded emergency use authorization from the FDA as the first antibody therapy in Covid-19 patients under 12

European equities drifted lower after a firm open. Euro Stoxx 50 faded initial gains of as much as 0.9% to trade up 0.3%. Other cash indexes follow suit, but nonetheless remain in the green. FTSE MIB sees the largest drop from session highs. Oil & gas is the strongest sector, underpinned after Saudi Arabia raised the prices of its crude. Tech, autos and financial services lag. Companies that benefited from increased demand during pandemic-related lockdowns are underperforming in Europe on Monday as investors assess whether the omicron Covid variant will force governments into further social restrictions. Firms in focus include meal-kit firm HelloFresh (-2.3%) and online food delivery platforms Delivery Hero (-5.4%), Just Eat Takeaway (-5.6%) and Deliveroo (-8.5%). Remote access software firm TeamViewer (-3.7%) and Swedish mobile messaging company Sinch (-3.0%), gaming firm Evolution (-4.2%). Online pharmacies Zur Rose (-5.1%), Shop Apotheke (-3.5%). Online grocer Ocado (-2.2%), online apparel retailer Zalando (-1.5%).

In Asia, the losses were more severe as investors remained wary over the outlook for U.S. monetary policy and the spread of the omicron variant.  The Hang Seng Tech Index closed at the lowest level since its inception. SoftBank Group Corp. fell as much as 9% in Tokyo trading as the value of its portfolio came under more pressure. The MSCI Asia Pacific Index slid as much as 0.9%, hovering above its lowest finish in about a year. Consumer discretionary firms and software technology names contributed the most to the decline, while the financial sector outperformed.  Hong Kong’s equity benchmark was among the region’s worst performers amid the selloff in tech shares. The market also slumped after the omicron variant spread among two fully vaccinated travelers across the hallway of a quarantine hotel in the city, unnerving health authorities.

“People are waiting for new information on the omicron variant,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management in Tokyo. “We’re at a point where it’s difficult to buy stocks.” Separately, China’s central bank announced after the country’s stock markets closed that it will cut the amount of cash most banks must keep in reserve from Dec. 15, providing a liquidity boost to economic growth.  Futures on the Nasdaq 100 gained further in Asia late trading. The underlying gauge slumped 1.7% on Friday, after data showed U.S. job growth had its smallest gain this year and the unemployment rate fell more than forecast. Investors seem to be focusing more on the improved jobless rate, as it could back the case for an acceleration in tapering, Ichikawa said. 

Asian equities have been trending lower since mid-November amid a selloff in Chinese technology giants, concern over U.S. monetary policy and the spread of omicron. The risk-off sentiment pushed shares to a one-year low last week. 

Overnight, the PBoC cut the RRR by 50bps (as expected) effective 15th Dec; will release CNY 1.2tln in liquidity; RRR cut to guide banks for SMEs and will use part of funds from RRR cut to repay MLF. Will not resort to flood-like stimulus; will reduce capital costs for financial institutions by around CNY 15bln per annum. The news follows earlier reports via China Securities Daily which noted that China could reduce RRR as soon as this month, citing a brokerage firm. However, a separate Chinese press report noted that recent remarks by Chinese Premier Li on the reverse repo rate doesn’t mean that there will be a policy change and an Economics Daily commentary piece suggested that views of monetary policy moves are too simplistic and could lead to misunderstandings after speculation was stoked for a RRR cut from last week’s comments by Premier Li.

Elsewhere, Indian stocks plunged in line with peers across Asia as investors remained uncertain about the emerging risks from the omicron variant in a busy week of monetary policy meetings.   The S&P BSE Sensex slipped 1.7% to 56,747.14, in Mumbai, dropping to its lowest level in over three months, with all 30 shares ending lower. The NSE Nifty 50 Index also declined by a similar magnitude. Infosys Ltd. was the biggest drag on both indexes and declined 2.3%.  All 19 sub-indexes compiled by BSE Ltd. declined, led by a measure of software exporters.  “If not for the new omicron variant, economic recovery was on a very strong footing,” Mohit Nigam, head of portfolio management services at Hem Securities Ltd. said in a note. “But if this virus quickly spreads in India, then we might experience some volatility for the coming few weeks unless development is seen on the vaccine side.” Major countries worldwide have detected omicron cases, even as the severity of the variant still remains unclear. Reserve Bank of Australia is scheduled to announce its rate decision on Tuesday, while the Indian central bank will release it on Dec. 8. the hawkish comments by U.S. Fed chair Jerome Powell on tackling rising inflation also weighed on the market

Japanese equities declined, following U.S. peers lower, as investors considered prospects for inflation, the Federal Reserve’s hawkish tilt and the omicron virus strain. Telecommunications and services providers were the biggest drags on the Topix, which fell 0.5%. SoftBank Group and Daiichi Sankyo were the largest contributors to a 0.4% loss in the Nikkei 225. The Mothers index slid 3.8% amid the broader decline in growth stocks. A sharp selloff in large technology names dragged U.S. stocks lower Friday. U.S. job growth registered its smallest gain this year in November while the unemployment rate fell by more than forecast to 4.2%. There were some good aspects in the U.S. jobs data, said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute. “We’re in this contradictory situation where there’s concern over an early rate hike given the economic recovery, while at the same time there’s worry over how the omicron variant may slow the current recovery.”

Australian stocks ended flat as staples jumped. The S&P/ASX 200 index closed little changed at 7,245.10, swinging between gains and losses during the session as consumer staples rose and tech stocks fell. Metcash was the top performer after saying its 1H underlying profit grew 13% y/y. Nearmap was among the worst performers after S&P Dow Jones Indices said the stock will be removed from the benchmark as a result of its quarterly review. In New Zealand, the S&P/NZX 50 index fell 0.6% to 12,597.81.

In FX, the Bloomberg Dollar Spot Index gave up a modest advance as the European session got underway; the greenback traded mixed versus its Group-of-10 peers with commodity currencies among the leaders and havens among the laggards. JPY and CHF are the weakest in G-10, SEK outperforms after hawkish comments in the Riksbank’s minutes. USD/CNH drifts back to flat after a fairly well telegraphed RRR cut materialized early in the London session.  The euro fell to a day low of $1.1275 before paring. The pound strengthened against the euro and dollar, following stocks higher. Bank of England deputy governor Ben Broadbent due to speak. Market participants will be watching for his take on the impact of the omicron variant following the cautious tone of Michael Saunders’ speech on Friday.

Treasury yields gapped higher at the start of the day and futures remain near lows into early U.S. session, leaving yields cheaper by 4bp to 5bp across the curve. Treasury 10-year yields around 1.395%, cheaper by 5bp vs. Friday’s close while the 2s10s curve steepens almost 2bps with front-end slightly outperforming; bunds trade 4bp richer vs. Treasuries in 10-year sector. November’s mixed U.S. jobs report did little to shake market expectations of more aggressive tightening by the Federal Reserve. Italian bonds outperformed euro-area peers after Fitch upgraded the sovereign by one notch to BBB, maintaining a stable outlook.

In commodities, crude futures drift around best levels during London hours. WTI rises over 1.5%, trading either side of $68; Brent stalls near $72. Spot gold trends lower in quiet trade, near $1,780/oz. Base metals are mixed: LME copper outperforms, holding in the green with lead; nickel and aluminum drop more than 1%.

There is nothing on today’s economic calendar. Focus this week includes U.S. auctions and CPI data, while Fed speakers enter blackout ahead of next week’s FOMC.

Market Snapshot

  • S&P 500 futures up 0.7% to 4,567.50
  • STOXX Europe 600 up 0.8% to 466.39
  • MXAP down 0.9% to 189.95
  • MXAPJ down 1.0% to 617.01
  • Nikkei down 0.4% to 27,927.37
  • Topix down 0.5% to 1,947.54
  • Hang Seng Index down 1.8% to 23,349.38
  • Shanghai Composite down 0.5% to 3,589.31
  • Sensex down 1.5% to 56,835.37
  • Australia S&P/ASX 200 little changed at 7,245.07
  • Kospi up 0.2% to 2,973.25
  • Brent Futures up 2.9% to $71.89/bbl
  • Gold spot down 0.2% to $1,780.09
  • U.S. Dollar Index up 0.15% to 96.26
  • German 10Y yield little changed at -0.37%
  • Euro down 0.2% to $1.1290

Top Overnight News from Bloomberg

  • Speculators were caught offside in both bonds and stocks last week, increasing their bets against U.S. Treasuries and buying more equity exposure right before a bout of volatility caused the exact opposite moves
  • Inflation pressure in Europe is still likely to be temporary, Eurogroup President Paschal Donohoe said Monday, even if it is taking longer than expected for it to slow
  • China Evergrande Group’s stock tumbled close to a record low amid signs a long-awaited debt restructuring may be at hand, while Kaisa Group Holdings Ltd. faces a potential default this week in major tests of China’s ability to limit fallout from the embattled property sector
  • China Evergrande Group is planning to include all its offshore public bonds and private debt obligations in a restructuring that may rank among the nation’s biggest ever, people familiar with the matter said
  • China tech shares tumbled on Monday, with a key gauge closing at its lowest level since launch last year as concerns mount over how much more pain Beijing is willing to inflict on the sector
  • The U.S. is poised to announce a diplomatic boycott of the Beijing Winter Olympics, CNN reported, a move that would create a new point of contention between the world’s two largest economies
  • SNB Vice President Fritz Zurbruegg to retire at the end of July 2022, according to statement
  • Bitcoin has markedly underperformed rivals like Ether with its weekend drop, which may underscore its increased connection with macro developments
  • Austrians who reject mandatory coronavirus vaccinations face 600-euro ($677) fines, according to a draft law seen by the Kurier newspaper
  • Some Riksbank board members expressed different nuances regarding the asset holdings and considered that it might become appropriate for the purchases to be tapered further next year,  the Swedish central bank says in minutes from its Nov. 24 meeting

A more detailed look at global markets courtesy of Newsquawk

Asian equities began the week cautiously following last Friday’s negative performance stateside whereby the Russell 2000 and Nasdaq closed lower by around 2% apiece, whilst the S&P 500 and Dow Jones saw shallower losses. The Asia-Pac region was also kept tentative amid China developer default concerns and conflicting views regarding speculation of a looming RRR cut by China’s PBoC. The ASX 200 (+0.1%) was initially dragged lower by a resumption of the underperformance in the tech sector, and with several stocks pressured by the announcement of their removal from the local benchmark, although losses for the index were later reversed amid optimism after Queensland brought forward the easing of state border restrictions, alongside the resilience in the defensive sectors. The Nikkei 225 (-0.4%) suffered from the currency inflows late last week but finished off worse levels. The Hang Seng (-1.8%) and Shanghai Comp. (-0.5%) were mixed with Hong Kong weighed by heavy tech selling and as default concerns added to the headwinds after Sunshine 100 Holdings defaulted on a USD 170mln bond payment, whilst Evergrande shares slumped in early trade after it received a demand for payments but noted there was no guarantee it will have the sufficient funds and with the grace period for two offshore bond payments set to expire today. Conversely, mainland China was kept afloat by hopes of a looming RRR cut after comments from Chinese Premier Li that China will cut RRR in a timely manner and a brokerage suggested this could occur before year-end. However, other reports noted the recent remarks by Chinese Premier Li on the reverse repo rate doesn’t mean a policy change and that views of monetary policy moves are too simplistic which could lead to misunderstandings. Finally, 10yr JGBs were steady after having marginally extended above 152.00 and with prices helped by the lacklustre mood in Japanese stocks, while price action was tame amid the absence of BoJ purchases in the market today and attention was also on the Chinese 10yr yield which declined by more than 5bps amid speculation of a potentially looming RRR cut.

Top Asian News

  • SoftBank Slumps 9% Monday After Week of Bad Portfolio News
  • Alibaba Shares Rise Premarket After Rout, Leadership Changes
  • China PBOC Repeats Prudent Policy Stance With RRR Cut
  • China Cuts Reserve Requirement Ratio as Economy Slows

Bourses in Europe kicked off the new trading week higher across the board but have since drifted lower (Euro Stoxx 50 +0.1%; Stoxx 600 +0.3%) following a somewhat mixed lead from APAC. Sentiment across markets saw a fleeting boost after the Asia close as China’s central bank opted to cut the RRR by 50bps, as touted overnight and in turn releasing some CNY 1.2tln in liquidity. This saw US equity futures ticking to marginal fresh session highs, whilst the breakdown sees the RTY (+0.6%) outpacing vs the ES (Unch), YM (+0.3%) and NQ (-0.6%), with the US benchmarks eyeing this week’s US CPI as Fed speakers observe the blackout period ahead of next week’s FOMC policy decision – where policymakers are expected to discuss a quickening of the pace of QE taper. From a technical standpoint, the ESz1 and NQz1 see their 50 DMAs around 4,540 and 16,626 respectively. Back to trade, Euro-indices are off best levels with a broad-based performance. UK’s FTSE 100 (+0.8%) received a boost from base metals gaining impetus on the PBoC RRR cut, with the UK index now the outperformer, whilst gains in Oil & Gas and Banks provide further tailwinds. Sectors initially started with a clear cyclical bias but have since seen a reconfiguration whereby the defensives have made their way up the ranks. The aforementioned Oil & Gas, Banks and Basic Resources are currently the winners amid upward action in crude, yields and base metals respectively. Food & Beverages and Telecoms kicked off the session at the bottom of the bunch but now reside closer to the middle of the table. The downside meanwhile sees Travel & Tech – two sectors which were at the top of the leaderboard at the cash open – with the latter seeing more noise surrounding valuations and the former initially unreactive to UK tightening measures for those travelling into the UK. In terms of individual movers, AstraZeneca (+0.7%) is reportedly studying the listing of its new vaccine division. BT (+1.2%) holds onto gains as Discovery is reportedly in discussions regarding a partnership with BT Sport and is offering to create a JV, according to sources. Taylor Wimpey (Unch) gave up opening gains seen in wake of speculation regarding Elliott Management purchasing a small stake.

Top European News

  • Johnson Says U.K. Awaiting Advice on Omicron Risks Before Review
  • Scholz Names Harvard Medical Expert to Oversee Pandemic Policy
  • EU Inflation Still Seen as Temporary, Eurogroup’s Donohoe Says
  • Saudi Crown Prince Starts Gulf Tour as Rivalries Melt Away

In FX, the Buck has settled down somewhat after Friday’s relatively frenetic session when price action and market moves were hectic on the back of a rather mixed BLS report and stream of Omicron headlines, with the index holding a tight line above 96.000 ahead of a blank US agenda. The Greenback is gleaning some traction from the firmer tone in yields, especially at the front end of the curve, while also outperforming safer havens and funding currencies amidst a broad upturn in risk sentiment due to perceivably less worrying pandemic assessments of late and underpinned by the PBoC cutting 50 bp off its RRR, as widely touted and flagged by Chinese Premier Li, with effect from December 15 – see 9.00GMT post on the Headline Feed for details, analysis and the initial reaction. Back to the Dollar and index, high betas and cyclicals within the basket are doing better as the latter meanders between 96.137-379 and well inside its wide 95.944-96.451 pre-weekend extremes.

  • AUD/GBP/CAD/NZD – A technical correction and better news on the home front regarding COVID-19 after Queensland announced an earlier date to ease border restrictions, combined to give the Aussie a lift, but Aud/Usd is tightening its grip on the 0.7000 handle with the aid of the PBoC’s timely and targeted easing in the run up to the RBA policy meeting tomorrow. Similarly, the Pound appears to have gleaned encouragement from retaining 1.3200+ status and fending off offers into 0.8550 vs the Euro rather than deriving impetus via a rise in the UK construction PMI, while the Loonie is retesting resistance around 1.2800 against the backdrop of recovering crude prices and eyeing the BoC on Wednesday to see if guidance turns more hawkish following a stellar Canadian LFS. Back down under, the Kiwi is straddling 0.6750 and 1.0400 against its Antipodean peer in wake of a pick up in ANZ’s commodity price index.
  • CHF/JPY/EUR – Still no sign of SNB action, but the Franc has fallen anyway back below 0.9200 vs the Buck and under 1.0400 against the Euro, while the Yen is under 113.00 again and approaching 128.00 respectively, as the single currency continues to show resilience either side of 1.1300 vs its US counterpart and a Fib retracement level at 1.1290 irrespective of more poor data from Germany and a deterioration in the Eurozone Sentix index, but increases in the construction PMIs.
  • SCANDI/EM – The aforementioned revival in risk appetite, albeit fading, rather than Riksbank minutes highlighting diverse opinion, is boosting the Sek, and the Nok is also drawing some comfort from Brent arresting its decline ahead of Usd 70/brl, but the Cnh and Cny have been capped just over 6.3700 by the PBoC’s RRR reduction and ongoing default risk in China’s property sector. Elsewhere, the Try remains under pressure irrespective of Turkey’s Foreign Minister noting that domestic exports are rising and the economy is growing significantly, via Al Jazeera or claiming that the Lira is exposed to high inflation to a degree, but this is a temporary problem, while the Rub is treading cautiously before Russian President Putin and US President Biden make a video call on Tuesday at 15.00GMT.

In commodities, WTI and Brent front month futures are firmer on the day with the complex underpinned by Saudi Aramco upping its official selling prices (OSPs) to Asian and US customers, coupled with the lack of progress on the Iranian nuclear front. To elaborate on the former; Saudi Arabia set January Arab light crude oil OSP to Asia at Oman/Dubai average +USD 3.30/bbl which is an increase from this month’s premium of USD 2.70/bbl, while it set light crude OSP to North-West Europe at ICE Brent USD -1.30/bbl vs. this month’s discount of USD 0.30/bbl and set light crude OSP to the US at ASCI +USD 2.15/bbl vs this month’s premium of USD 1.75/bbl. Iranian nuclear talks meanwhile are reportedly set to resume over the coming weekend following deliberations, although the likelihood of a swift deal at this point in time seems minuscule. A modest and fleeting boost was offered to the complex by the PBoC cutting RRR in a bid to spur the economy. WTI Jan resides on either side of USD 68/bbl (vs low USD 66.72/bbl) whilst Brent Feb trades around USD 71.50/bbl (vs low 70.24/bbl). Over to metals, spot gold trades sideways with the cluster of DMAs capping gains – the 50, 200 and 100 DMAs for spot reside at USD 1,792/oz, USD 1,791.50/oz and USD 1,790/oz respectively. Base metals also saw a mild boost from the PBoC announcement – LME copper tested USD 9,500/t to the upside before waning off best levels.

US Event Calendar

  • Nothing major scheduled

DB’s Jim Reid concludes the overnight wrap

We’re really at a fascinating crossroads in markets at the moment. The market sentiment on the virus and the policymakers at the Fed are moving in opposite directions. The greatest impact of this last week was a dramatic 21.1bps flattening of the US 2s10s curve, split almost evenly between 2yr yields rising and 10yrs yields falling. As it stands, the Fed are increasingly likely to accelerate their taper next week with a market that is worried that it’s a policy error. I don’t think it is as I think the Fed is way behind the curve. However I appreciate that until we have more certainly on Omicron then it’s going to be tough to disprove the policy error thesis.

The data so far on Omicron can be fitted to either a pessimistic or optimistic view. On the former, it seems to be capable of spreading fast and reinfecting numerous people who have already had covid. Younger people are also seeing a higher proportion of admissions which could be worrying around the world given lower vaccinations levels in this cohort. On the other hand, there is some evidence in South Africa that ICU usage is lower relative to previous waves at the same stage and that those in hospital are largely unvaccinated and again with some evidence that they are requiring less oxygen than in previous waves. It really does feel like Omicron could still go both ways. It seems that it could be both more transmittable but also less severe. How that impacts the world depends on the degree of both. It could be bad news but it could also actually accelerate the end of the pandemic which would be very good news. Lots of people more qualified than me to opine on this aren’t sure yet so we will have to wait for more news and data. I lean on the optimistic side here but that’s an armchair epidemiologist’s view. Anthony Fauci (chief medical advisor to Mr Biden) said to CNN last night that, “We really gotta be careful before we make any determinations that it is less severe or really doesn’t clause any severe illness comparable to Delta, but this far the signals are a bit encouraging….. It does not look like there’s a great degree of severity to it.”

Anyway, the new variant has taken a hold of the back end of the curve these past 10 days. Meanwhile the front end is taking its guidance from inflation and the Fed. On cue, could this Friday see the first 7% US CPI print since 1982? With DB’s forecasts at 6.9% for the headline (+5.1% for core) we could get close to breaking such a landmark level. With the Fed on their media blackout period now, this is and Omicron are the last hurdles to cross before the FOMC conclusion on the 15th December where DB expect them to accelerate the taper and head for a March end. While higher energy prices are going to be a big issue this month, the recent falls in the price of oil may provide some hope on the inflation side for later in 2022. However primary rents and owners’ equivalent rents (OER), which is 40% of core CPI, is starting to turn and our models have long suggested a move above 4.5% in H1 2022. In fact if we shift-F9 the model for the most recent points we’re looking like heading towards a contribution of 5.5% now given the signals from the lead indicators. So even as YoY energy prices ease and maybe covid supply issues slowly fade, we still think inflation will stay elevated for some time. As such it was a long overdue move to retire the word transitory last week from the Fed’s lexicon.

Another of our favourite measures to show that the Fed is way behind the curve at the moment is the quits rate that will be contained within Wednesday’s October JOLTS report. We think the labour market is very strong in the US at the moment with the monthly employment report lagging that strength. Having said that the latest report on Friday was reasonably strong behind the headline payroll disappointment. We’ll review that later.

The rest of the week ahead is published in the day by day calendar at the end but the other key events are the RBA (Tuesday) and BoC (Wednesday) after the big market disruptions post their previous meetings, Chinese CPI and PPI (Thursday), final German CPI (Friday) and the US UoM consumer confidence (Friday). Also look out for Congressional newsflow on how the year-end debt ceiling issue will get resolved and also on any progress in the Senate on the “build back better” bill which they want to get through before year-end. Mr Manchin remains the main powerbroker.

In terms of Asia as we start the week, stocks are trading mixed with the CSI (+0.62%), Shanghai Composite (+0.37%) and KOSPI (+0.11%) trading higher while the Nikkei (-0.50%) and Hang Seng (-0.91%) are lower. Chinese stock indices are climbing after optimism over a RRR rate cut after Premier Li Kequiang’s comments last week that it could be cut in a timely manner to support the economy. In Japan SoftBank shares fell -9% and for a sixth straight day amid the Didi delisting and after the US FTC moved to block a key sale of a company in its portfolio. Elsewhere futures are pointing a positive opening in US and Europe with S&P 500 (+0.46%) and DAX (+1.00%) futures both trading well in the green. 10yr US Treasury yields are back up c.+4.2bps with 2yrs +2.6bps. Oil is also up c.2.2% Over the weekend Bitcoin fell around 20% from Friday night into Saturday. It’s rallied back a reasonable amount since (from $42,296 at the lows) and now stands at $48,981, all after being nearly $68,000 a month ago.

Turning back to last week now, and the virus and hawkish Fed communications were the major themes. Despite so many unknowns (or perhaps because of it) markets were very responsive to each incremental Omicron headline last week, which drove equity volatility to around the highest levels of the year. The VIX closed the week at 30.7, shy of the year-to-date high of 37.21 reached in January and closed above 25 for 5 of the last 6 days. The S&P 500 declined -1.22% over the week (-0.84% Friday). The Stoxx 600 fell a more modest -0.28% last week, -0.57% on Friday. To be honest both felt like they fell more but we had some powerful rallies in between. The Nasdaq had a poorer week though, falling -c.2.6%, after a -1.9% decline on Friday.

The other main theme was the pivot in Fed communications toward tighter policy. Testifying to Congress, Fed Chair Powell made a forceful case for accelerating the central bank’s asset purchase taper program, citing persistent elevated inflation and an improving labour market, amid otherwise strong demand in the economy, clearing the way for rate hikes thereafter. Investors priced in higher probability of earlier rate hikes, but still have the first full Fed hike in July 2022.

2yr treasury yields were sharply higher (+9.1bps on week, -2.3bps Friday) while 10yr yields declined (-12.0bps on week, -9.1bps Friday) on the prospect of a hard landing incurred from quick Fed tightening as well as the gloomy Covid outlook. The yield curve flattened -21.1bps (-6.8bps Friday) to 75.6bps, the flattest it has been since December 2020, or three stimulus bills ago if you like (four if you think build back better is priced in). German and UK debt replicated the flattening, with 2yr yields increasing +1.3bps (-0.7bps Friday) in Germany, and +0.3bps (-6.7bps) in UK this week, with respective 10yr yields declining -5.3bps (-1.9bps Friday) and -7.8bps (-6.4bps Friday).

On the bright side, Congress passed a stopgap measure to keep the government funded through February, buying lawmakers time to agree to appropriations for the full fiscal year, avoiding a disruptive shutdown. Positive momentum out of DC prompted investors to increase the odds the debt ceiling will be resolved without issue, as well, with yields on Treasury bills maturing in December declining a few basis points following the news.

US data Friday was strong. Despite the headline payroll increase missing the mark (+210k v expectations of +550k), the underlying data painted a healthy labour market picture, with the unemployment rate decreasing to 4.2%, and participation increasing to 61.8%. Meanwhile, the ISM services index set another record high.

Oil prices initially fell after OPEC unexpectedly announced they would proceed with planned production increases at their January meeting. They rose agin though before succumbing to the Omicron risk off. Futures prices ended the week down again, with Brent futures -3.67% lower (+0.55% Friday) and WTI futures -2.57% on the week (-0.15% Friday).

Tyler Durden
Mon, 12/06/2021 – 07:51





Author: Tyler Durden

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Economics

Davos Is Making The Central Bank Case For Gold

Davos Is Making The Central Bank Case For Gold

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

A few months ago I talked about the…

Davos Is Making The Central Bank Case For Gold

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

A few months ago I talked about the upcoming changes to the way adoption of Basel III’s new bank reserve rules would alter the gold market.

In short my conclusion was similar to that of Alistair MacLeod’s and others, that Basel III should collapse the egregious manipulation of the gold market through the use of using futures and unallocated gold as bank reserves.

In May I wrote:

In effect, Basel III, if implemented in its current form, would change the gold market from a speculative one based on perceptions of the efficacy of monetary policy to control real interest rates to one that should force price discovery in an almost purely physical market. As I told my Patrons in May 16th’s Market Report video, physical gold will go from being the price taker to the price maker.   

I didn’t then nor do I think now that will happen immediately after Basel III goes into effect in the U.K. on January 1st. But I do think the recent weakness in gold has been an early sign of stress within the gold market brought on by the upcoming rules implementations.

And that has sent gold lower in recent weeks despite rising inflation and falling real interest rates. Of course this is because the markets have been overpricing the ‘transitory inflation’ argument put forth by the major central banks.

So, when Jerome Powell came out, in his first important statement post-reappointment announcement, and put a fork in ‘transitory’ inflation the markets were properly shocked. This happened on the heels of OmicronVID-9/11 dominating the headlines and also creating some overblown market reactions thanks to poorly-programmed headline trading algorithms.

For those who have been confused or disagreed with my assessment of Powell for the past six months, thinking Powell was lying about inflation as proof he’s just another idiot Fed Chair, I give you the counter argument. He had to survive the obvious coup attempt put on by Obama and Lael Brainard to oust those not controlled by Davos from the FOMC.

Once that happened, Powell could speak openly because the political storm clouds over his head dissipated. Cue his forcing Treasury Secretary Janet Yellen to finally agree with him on inflation after he put his cards on the table.

Now, we have policy clarity from the Fed.

They will be tapering QE and they will be raising rates in 2022. Now the markets can begin the task of readjusting themselves into year-end. With that in mind, it makes perfect sense to see gold, which has been a losing trade all year under pressure just from tax-loss selling alone, no less expectations of a stronger U.S. dollar.

It also makes sense for high-flying equities to take a hit along with junk bonds which were yielding less than inflation. There are trillions in misallocated capital out there that go far beyond the simple idea that the Fed’s only mandate is to prop up the equity markets.

Powell and those that stand behind him, I have strenuously argued, can see the fight for the future of the monetary system clearly, and it doesn’t include a place for the commercial banks in a world of CBDCs. While one could argue the Fed would like that power CBDCs confer, one could also clearly make the counter argument that it also loses a tremendous amount of power now being just one central bank among many and the dollar just another digital token without value.

Does anyone really believe Wall St. is happy to sign up for this nonsense? City of London?

To get a really good sense of where I think we are in this now, check out my recent appearance on Bitcoin Magazine’s Fed Watch Podcast and Livestream.

Okay so, all that said, let’s really talk about what’s happening in gold.

Because this week we saw two major announcements by two very different central banks vis a vis gold.

All Roads to Singapore

Singapore has now joined the ranks of Russia, Turkey, Hungary, Serbia, Poland and others in adding to their central bank gold reserves.  This is a very significant move because this is the first country outside of those in Russia’s nominal orbit.  

Singapore, outside of Hong Kong, is a major clearinghouse for offshore Chinese yuan settlements.  ICBC opened up a branch there in 2012 to handle such transactions and things have only progressed from there.

I don’t necessarily see this as a China-related move by the MAS — Monetary Authority of Singapore — as their monetary policy is very independent and pretty much algorithmic.

They manage the exchange rate of the Singapore dollar (SGD) within a 1% band of expected rates against a basket of currencies, rather than publishing a benchmark rate.  Moreover, the MAS is moving away from the old SIBOR / SOR system. SIBOR is Singaporean LIBOR — the interbank overnight lending rate.  And SOR is the SGD overnight swap rate.

They, like the U.S., are move to an analogue of SOFR — the Secured Overnight Funding Rate — to replace LIBOR.  SORA is Singaporean SOFR for all intents and purposes.

So, why is this important? 

If Singapore is worried, like everyone else is about a collapse of the current financial system which is expressly on the table via Davos and the Great Reset, then those with the gold will be in a much better position to defend their currencies during a crisis and maintain a relatively stable global exchange rate.

Since Singapore aims to be the independent broker between East and West, especially now that Hong Kong has all but been taken over by China, this move is very interesting to say the least.

From the Zerohedge article on this there’s is this great point:

For a central bank which actively publishes reams of publications and reports on all sorts of topics related to Singapore’s financial sector and markets and it’s international financial position, this omission about Singapore’s sizeable gold purchases could be considered quite strange, but then again, given that we are dealing with the secretive world of gold and central banks, maybe it’s not so strange.

In addition, MAS is famous for it’s obsession with maintaining and controlling the exchange rate of the Singaporean dollar (versus a basket of currencies), so perhaps MAS prefers not to draw attention to the amount of gold in it’s international reserves as this might encourage FX markets to view the gold purchase as a move that strengthens Singapore’s reserve position and hence could put upward pressure on it’s exchange rate.

Singapore is a key player for the future of pan-Asian finance.  If the very savvy MAS is buying gold then they are scared. They are making plans for a very different future where debt becomes the dirtiest word in English.

Moreover, they bought this gold back in May and June and it has only now been discovered on their balance sheet. Why would they not announce these purchases?

For the same reason the Bank of Ireland didn’t tell anyone they nibbled on some physical gold over the summer, so as to not move the price. What’s really significant here is that Ireland is the first euro-zone country to announce gold purchases. Previous to this it was only non-euro EU members like Hungary, Poland and Czechia.

That we’re seeing euro-zone countries begin shoring up their currency reserves with gold feeds the argument I made back in May.

Moreover, just so everyone is also clear what both of these central banks are facing, it isn’t just Europe that is now dealing with insane natural gas prices. Singapore is looking at a catastrophic rise in energy costs. So, if you think the MAS isn’t still toe-dipping without telling anyone into gold to stabilize the SingDollar well, you have a reading comprehension problem.

The Golden Circle

Now let’s go back to Basel III and talk about how it was supposed to be the thing that finally got gold out of its slump.

Back in May, Powell hadn’t begun defending the U.S. dollar. He hadn’t even had his public spat with ECB President Christine Lagarde yet. Nor had he raised the Reverse Repo Rate he was paying to 0.05%.

So, with Basel III on the horizon and the U.K. exempt until January 1st, 2022, there is still the basic infrastructure in place that if the Fed tightens, which it did through the RRP rate, then gold would be under constant pressure by those needing dollars at cheap rates regardless of the fundamentals.

Short term funding needs always trump long-term fundamentals.

So, the Fed still needs gold kept under wraps to maintain its primacy. But at the same time, the ECB and other Central Banks accumulating gold need it to rise, or at least keep pace with their currency vs. the dollar.

I still believe that dynamic is in play for 2022 and it will finally be the full expression of Basel III that will continue putting a higher floor underneath gold.  

Remember, as I wrote back in that May article:

The ECB, on the other hand [vs. the Fed], can go bankrupt, since it has no capacity to [create infinite amounts of elastic money].  All it can do is buy the sovereign debt of the member countries’ central banks and hand them back euros, while swapping around deckchairs on this monetary Titanic. There is a definable limit to this process, especially if rates rise as people lose confidence in the underlying economic activity of those countries and their fiscal positions.

Europe is locking down its economy over OmicronVID-9/11 and removing the unvaccinated from society. They are between steps 7 and 8of 10 on the path to genocide.

Does any rational person believe there will be a renaissance of European economic dynamism in 2022 under these conditions? If you do, you might be a shitlib who believes in unicorn farts, 69 genders and that Elizabeth Warren is an economic genius.

For the rest of us who live in reality-land, of course Europe is the most vulnerable here.

Once Basel III goes fully into effect and paper and unallocated physical gold will no longer be considered as bank collateral for balance sheet purposes, the demand for physical gold because of this need for it as a central bank asset to back national currencies, becomes even more acute. 

Those countries lining up on the opposite side of the Great Reset are buying gold while it is still cheap.  Powell’s dollar drain since June’s RRP rate hike has gifted everyone with cheaper gold prices for another 6 months.  

The MAS buying gold is telling you that what I said back in May is reality:

So, Basel III is coming to destroy the paper gold markets and destroy the money center banks in New York and London while setting the stage to bail out the euro-zone. Higher gold prices are the answer to all of these things. Think of it this way, in a world where debt assets are failing and new private forms of custodial assets are rising in mindshare [bitcoin and crypto], what’s the only real weapon the central banks have to maintain credibility?

Their gold reserves.

This is the essence of why Davos, I think inadvertently, is creating the new role for gold during these times of change.

For the ECB to survive the bankruptcy of Europe gold has to rise.

For emerging market central banks to survive the turmoil unleashed by an epic U.S. dollar rally because of Europe’s bankruptcy gold has to rise.

When China decides to assert itself as the dominant economic player, which I think it would do in the event of a kinetic conflict between it and the U.S., it’s first move will be upwardly revising its official gold reserves… by a lot.

Gold will really rise on that.

The Great Quagmire

Remember the entire Great Reset rests on Davos destroying the current banking system and rolling it up to the central banks, cutting out the classic two-track monetary system with the commercial bankers being the transmission mechanism.

It means them getting control over the Fed, which looks like a lost cause now. Powell is fully in control of FOMC policy, which I expect him to make very clear at the next meeting. This is why Pelosi so easily cut a deal over the debt ceiling.

There will be no further stupid and dangerous brinksmanship calling into question U.S. policy. The markets are demanding clarity from the U.S. Davos’ manufactured chaos through the Democrats’ shenanigans on Capitol Hill should be a thing of the past. That alone will help push capital back towards the U.S.

Davos’ agenda has failed on Capitol Hill, despite winning battles all across Europe and in the English Commonwealth. Those countries are now dead letters until their current governments are overthrown or the people throw off their shackles… not likely.

Despite the market jitters because of the necessary reallocation to global capital, Powell and the Fed now have to pursue tight monetary policy to force the ECB into openly inflationary policy. This will further trash the euro and finally overwhelm the ECB’s bond buying to the point where rates there start rising.

Davos has responded with gutting Europe to the bone with OmicronVID-9/11 lockdowns and forced vaccinations to take down the global demand side of the monetary equation while forcing diplomatic conflicts on China and Russia neither want to stop the flow of goods around the world.

This is why NATO and the Neocons are going wild in Eastern Europe.

It’s why the Israelis are threatening a war with Iran.

And it’s why the O’Biden administration is looking increasingly desperate to bring us to the brink of war without there actually being one.

Just enough conflict, sanctions, sabre rattling and embarrassments to upset China and Russia’s domestic politics while draining them of their economic dynamism through provocations in places like Afghanistan, Syria, Ukraine, Belarus and yes, even Taiwan while trying to force energy prices higher.

Europe is Davos’ power base. That power looks tenuous at best in a geopolitical sense. The best way for it to reassert what power it has left over the U.S. is forcing a massive revaluation in the price of gold while preparing Europe for further federalization, debt default and population reduction, as I discussed in my last article.

The main path for the central banks to maintain any semblance of credibility in the minds of investors rightly freaked out over the events of the past two years is to add to their gold reserves to offset any currency risk to their fiat reserves.

And while the Fed has fought the good fight against this, with the end of QE and rising rates, a flattening yield curve and more turmoil in overseas funding markets as a result of a much stronger dollar, gold will assert itself (alongside bitcoin) as the safe haven asset of choice in 2022.

So, watch the news flow for more signs of Central Bank gold purchases.  

So far in 2021, through September, according to the World Gold Council, central banks have purchased 385.4 tonnes of gold, after adding Singapore’s numbers but not Ireland’s.  This is roughly on track with expectations for this year of around 15% of total gold demand.  

If not for Turkey’s net outflows thanks to the collapse of its banking system (-27.8 tonnes) and the Philippines who sell local mine production to finance the government, the demand would be well over 400 tonnes this year.

But, as I said throughout this piece, it is the players who are doing this now that matters.  Earlier Japan made headlines, adding 80.8 tonnes in March. Then Poland began a very Russian monthly buying program in May.  Now Singapore is on board trying to offset US dollar strength with gold in an inflationary environment.

And the Irish are now trying to stave off a monetary famine in Europe.

The times they are a’changing rapidly.

*  *  *

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Tyler Durden
Mon, 12/06/2021 – 06:30












Author: Tyler Durden

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Precious Metals

How Low Can Gold & Silver Go?

  Last week we wrote that the precious metals sector remained in a larger correction.   We discussed the performance before the first rate hike in a…


 

Last week we wrote that the precious metals sector remained in a larger correction.

 

We discussed the performance before the first rate hike in a new Fed rate hike cycle. Gold typically declines several months before the hike, but then rebounds significantly. Same for the gold stocks.

 

Although the recent decline could be part of the pre-rate hike decline, its speed surprised us.

 

We noted that a decline in line with history would take Gold below $1700.

 

Let’s look at important support levels that would come into play should the decline continue.

 

The 40-month moving average has been an excellent trend indicator for decades. It currently sits at $1618.

 

Here we plot Gold’s weekly line chart with an equivalent moving average (to the 40-month).

 

Gold has initial support at $1750, followed by the corrective low at $1670 to $1690. The two major support lines are the rising 40-month moving average and the 50% retracement near $1570. 

 

The 40-month moving average could reach $1670 by April 2022. 

 

The monthly line chart for Silver shows key support at $21 and strong support at $18.70. The 62% retracement from the 1993 low and 2011 high is $21. The 80-month moving average for Silver should reach $18.70 in 2022.

 

Here is a zoomed-in look at Silver using the monthly candle chart. Support at $18.70 stands out. Initial support is at $21.

 

The trend remains down, and the relative weakness in Silver and the gold stocks is a warning signal of potential for more selling.

 

Although I am confident that bullish catalysts lie ahead for precious metals in 2022, one must respect the technicals and potential for more downside into 2022. It is advisable to cut your losers and other positions in which you have low confidence.  

 

That would also allow you to build some cash to buy bargains over the coming months. I have covered potential buy targets for my top 10 stocks in my premium service. 

 

I continue to be laser-focused on finding quality juniors with at least 5 to 7 bagger potential over the next few years. To learn the stocks we own and intend to buy, with at least 5x upside potential after this correction, consider learning more about our premium service.

 



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