Month: February 2022

Once gold price hits 2000 expect a ‘sharp pullback’ – Florian Grummes on crack-up boom civil unrest and Bitcoin target

February 18, 2022 David

Once gold price hits $2,000, expect a 'sharp pullback' – Florian Grummes on crack-up boom, civil unrest, and Bitcoin target

It's only a matter of time before double-digit inflation hits the U.S. said Florian Grummes, managing director of Midas Touch Consulting.

"We are on track for that. It's just a question of time. It could happen this year, maybe next year. If the Fed indeed starts to hike and starts to taper…you see the markets already giving a clear signal, so I don't think they can do it aggressively at all, if they do it at all. They probably will roll back rather quickly during the year because end of the year we have midterm elections," Grummes told David Lin, anchor for Kitco News.

Gold's multi-year bull cycle is still continuing, Grummes said.

"Gold has done everything to disguise its true intentions. In hindsight, the flash crash of last August was actually the start of a multi-month uptrend. Today, we are trading $200 higher already. Gold has been correcting since August 2020. Over the last 16 months it went into a triangle and I think the last important low was mid-December, $1,750 and since then gold has been climbing higher," he said.

$2,000 an ounce remains an important key psychological level, Grummes noted.

Could rising mortgage rates trigger the next housing crisis? These are the best real estate investment strategies – Briton Hill

"I think we're going to $1,975 over the next few weeks, maybe one to three months, maybe even with a short overshoot towards the round psychological number of $2,000. The monthly Bollinger band is around $1,975 so that's for me the logical target of this rally," he said. "Very likely [gold] would be overextended if we reach this $2,000 level over the next few weeks or months, and then you probably will get a pullback and then it will take another few months until gold climbs higher again and tests this number again."

 

By David Lin

For Kitco News

Time to buy Gold and Silver on the dips

 

David – http://markethive.com/david-ogden

60 market crash governments seizing your money shortage of food: Todd Horwitz’s scary view

February 17, 2022 David

60% market crash, governments seizing your money, shortage of food: Todd Horwitz's scary view

The Federal government of Canada recently invoked the Emergencies Act for the first time in Canadian history in response to the trucker protest in Ottawa.

Todd Horwitz, chief market strategist of BubbaTrading.com told David Lin that the stripping away of personal freedoms is not exclusive to Canada, and is only going to get worse around the world.

“That’s where governments are going anyways,” Horwitz said. “When people continue to vote in the directions that they vote and they give up their freedoms, you are proving to the government to do this because you keep voting in the same people that don’t belong there.”

The Emergencies Act, which became law in 1988, defines a “national emergency” as one of the following: a public welfare emergency, a public order emergency, an international emergency, or a war emergency.

The emergency in question must be “an urgent, temporary and critical situation that seriously endangers the health and safety of Canadians or that seriously threatens the ability of the Government of Canada to preserve the sovereignty, security and territorial integrity of Canada.”

Invoking the Emergencies Act grants the Federal government several powers, including the ability to seize private bank accounts and suspend large transactions.

Deputy Prime Minister Chrystia Freeland said in a press conference earlier this week that the government is broadening “Terrorist Financing” rules to cover crowdfunding platforms and digital assets, like cryptocurrencies.

Horwitz said that cryptos will be difficult to seize.

“That’s not so easy at this moment. If you’re carrying, in your cold wallet, your cryptocurrencies, they don’t have any actions to that,” he said. “This is one of the things that makes cryptos so valuable right now and why you’re starting to see more dominance and more play there is because…if you’re in Ukraine and you want to get out, you can’t walk out with a million dollars of gold but you can walk out with a million dollars on a flashdrive of Bitcoin. So this is a threat that they couldn’t really follow through on.”

For more information on why stocks are still headed for a 50% to 60% correction and why a shortage of food may be on the way, watch the video above.
 

By David Lin

For Kitco News

Time to buy Gold and Silver on the dips

 

David – http://markethive.com/david-ogden

Potential de-escalation with Russia Ukraine takes gold to lower pricing

February 16, 2022 David

Potential de-escalation with Russia – Ukraine takes gold to lower pricing

Precious metals across the board sustained moderate to strong price declines in light of recent news suggesting that the geopolitical tension between Russia and Ukraine has begun to de-escalate. Recent news indicated that some Russian troops that were positioned near the border of Ukraine began to leave and return to their base.

As of 5:10 PM EST, the deepest percentage price decline today occurred in the precious metal palladium, which sustained a loss of 4.18%, or $98 taking the most active March contract to $2248. Today’s strong decline in palladium is directly related to the potential de-escalation of the geopolitical conflict in Russia and Ukraine. Since 40% of the annual global production of palladium occurs in Russia, any de-escalation of the geopolitical tensions would have a direct bearish impact on palladium.

All of the precious metals traded lower even with moderate tailwinds from dollar weakness today. The dollar lost almost 4/10% (-0.39%), taking the dollar index to 95.985. March silver gave up almost 2% (-1.8%) and is currently fixed at $23.375. Gold futures had a significant price drop of $14.30 (-0.76%), taking the most active April futures contract to $1855.10.

It is my current belief that the largest factor resulting in bullish sentiment for gold pricing is the current level of inflationary pressures. The recent CPI (Consumer Price Index) came in at its highest level since February 1982 at 7.5%. However, the most alarming news indicating that inflationary pressures in the United States are far away from peeking and most likely spiraling higher was today’s PPI (Producer Price Index). The producer price index is an excellent barometer on wholesale costs to companies and corporations that produce goods and services. More so, they give advanced information on the CPI and PCE index. Wholesale costs rising will be passed onto consumers at a later date.

Today the U.S. Bureau of Labor Statistics released the PPI index indicating that wholesale prices have increased by 1% in January. That takes the year-over-year wholesale price inflation index to 9.7%, which is almost a record high since the PPI was first calculated in November 2010. Before today’s report, the highest level on record indicated a year-over-year rise to 9.6% in November 2021.

Inflation will continue to climb and not taper off as the Federal Reserve has predicted for quite some time. The rise in inflation was a multiyear event that was the net result of exceedingly aggressive rises in the money supply due to administrative programs and the aggressive monetary policy by the Federal Reserve in regards to their asset sheet balance which now exceeds $8.7 trillion.

To effectively reduce inflation, two things need to happen. First, there needs to be a tapering of the asset balance sheet and a reduction of the money supply in the United States coupled with raises in interest rates. Secondly, and most importantly, effectively reduce the bottlenecks caused by supply chain shortages. As long as inflationary pressures continue to grow, there is a high probability that gold will continue to gain value.

 

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

 

David – http://markethive.com/david-ogden

Gold is more than just a safe-haven asset and can fit in all portfolios – WGC’s John Reade

February 15, 2022 David

Gold is more than just a safe-haven asset and can fit in all portfolios – WGC's John Reade

Safe-haven demand is pushing gold prices to a three-month high but will rising geopolitical tensions create a sustainable bid in the precious metal.

On Monday editor Neils Christensen recorded a podcast with Phillip Streible, chief market strategist at Blue Line Futures. The guest was John Reade, chief market strategist of the World Gold Council. The three talked about the health of the global marketplace.

Reade said safe-haven demand is positive for gold, but prices could see a sharp correction if the conflict is quickly resolved.

Instead of looking at short-term price volatility, Reade said that the World Gold Council's research shows that gold plays a vital diversification role for any type of portfolio.

"We've issued various editions of the strategic case for gold in the U.K. and Europe and Australia, Russia, Singapore. Looking at the benchmark of assets that might be in a typical portfolio for each of those countries, you find very similar result," he said. "Somewhere between 4% and maybe the higher 10%, of gold in your portfolio seems to be optimal for increasing the risk-adjusted returns," he said.

CRU's top five commodities for 2022 – spoiler gold, silver didn't make the list

The comments come as the gold market saw an interesting trend last year as investment demand in exchange-traded products lagged physical demand. In its annual analysis of the gold market, the WGC reported that physical demand for the precious metal rose 10% to 4,021 tonnes in 2021 as 173 tonnes of gold were liquidated from ETFs.

Looking through the rest of 2022, Reade said that he thinks the gold market is in a good place, even as the precious metal faces the prospect that the Federal Reserve could raise interest rates seven times this year.

"If there were one or two mikes priced into the curve, I'd be a lot more nervous," he said. "I think we're in for some very interesting times in markets over the next, well, two months to two years."

As for gold versus Bitcoin, Reade said that the two assets are entirely different. He explained that while digital currencies have improved a portfolio's return, it has also added risk and volatility.

By Neils Christensen

For Kitco News

Time to buy Gold and Silver on the dips

 

David – http://markethive.com/david-ogden

Is gold price about to sprint?

February 14, 2022 David

Is gold price about to sprint?

Inflation in the U.S. is now at 7.5% — the highest level in forty years. For the U.S. stocks, this means more losses as markets price in a more aggressive Federal Reserve. But for gold, this means more demand as investors turn to the precious metal for protection.

Also, a warning from the U.S. that Russia could launch military action in Ukraine "any day" is pushing gold prices well above the $1,850 an ounce level. Here's a look at Kitco's top three stories of the week:

3. U.S. Mint sells 5 million ounces of silver in January, best start since 2017

2. From one of the worst to best-performing assets? Gold price to tackle $2,100 by year-end, says Wells Fargo

1. The U.S. makes 'largest financial seizure ever,' taking control of $3.6 billion in Bitcoin stolen in 2016
 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

David – http://markethive.com/david-ogden

Gold price looks to take 1850 as markets fear emergency Fed move

February 13, 2022 David

Gold price looks to take $1,850 as markets fear emergency Fed move

Gold is catching a bid as markets worry the Federal Reserve could opt for an emergency rate hike before the March meeting to try and tame inflation.

Gold is up nearly 2% on the week as more investors turn to the precious metal amid a widespread risk-off sentiment in the marketplace. At the time of writing, April Comex gold futures were trading at $1,841.30, up 0.21% on the day.

This week's shockingly high U.S. inflation report has added more uncertainty regarding the Fed's tightening plan.

With consumer prices rising 7.5% in January, the highest in 40 years, Goldman Sachs is now projecting seven 25 basis points hikes this year. There is also growing consensus for a 50 basis point hike in March. And some are even not ruling out an emergency move by the Federal Reserve prior to the March meeting.

Federal Reserve Bank of St. Louis President James Bullard further encouraged these hawkish views, stating he supports the fed funds rate hitting 1% after just three meetings.

In the meantime, the 10-year Treasury yield surged further above 2%, a level not seen since August 2019.

"The gold price chart is looking constructive. The immediate cause was hot inflation data. The Fed is now losing some investor confidence. It looks like they are scrambling to fix what's already a policy mistake. And gold is benefiting from that panic," Gainesville Coins precious metals expert Everett Millman told Kitco News.

A 50 basis points hike is possible in March, but what's even more likely is the Fed choosing to do a rate hike in between the FOMC meetings.

"There is some precedent for that. The immediate reaction to either of those moves would be a selloff for gold. But overall, the beginning of a rate cycle will be bullish for gold," Millman said. "Based on historical observations, any time the Fed begins rate hikes after telegraphing them in advance, gold has performed well at the beginning."

While odds are increasing for the 50 basis points hike, RJO Futures senior market strategist Frank Cholly told Kitco News that an emergency pre-meeting rate increase is unlikely.

"The 50 basis points hike in March is more probable. But gold has not fully priced that in yet. Treasuries have done that, but gold still moved higher. Gold is still looking for the Fed to remain dovish," Cholly noted.

Gold price remains down as annual U.S. CPI rises 7.5% in January; another 40-year high

The level gold will be looking to breach next week will be $1,850 an ounce. The precious metal already attempted to approach this resistance numerous times in the past several weeks but was unsuccessful.

"Gold will be challenging $1,850, and we could see that breached on the next attempt," Cholly pointed out. "We had an impressive rally in light of all the inflationary data. Gold is starting to embrace the fact that rates are moving higher as inflation is lasting longer. This is real inflation, and gold is finally starting to come to terms with this. We are going to get that pop above $1,850. I'm getting more bullish now."

In the meantime, gold's safety range is between $1,800 and $1,850. Longer-term, Cholly is looking for the precious metal to move above $1,900 by the middle of the year.

FOMC meeting minutes and other data to watch

The big item on the agenda next week is the January FOMC meeting minutes. Markets will be looking for clues in terms of how aggressive the U.S. central bank could allow itself to be.

"The minutes of the January FOMC meeting, due out next Wednesday, will help to clarify whether officials would consider a 50bp hike. Assuming his nomination wins the approval of the Senate Banking Committee in the vote scheduled for 15th February, we also expect Fed Chair Jerome Powell to schedule his semi-annual 'Humphrey-Hawkins' testimony for some time later this month," said Capital Economics chief North America economist Paul Ashworth.

Powell's semi-annual testimony would be the more appropriate venue to deliver some major policy shifts, added Ashworth.

"We still think that the unusually flat yield curve will prevent the Fed from being able to hike too aggressively this year and will force it to lean more on using quantitative tightening to drive long yields up. Even though the 10-year yield finally climbed to 2% this week, the 10s-2s spread is down to less than 50bp now," he said.

Below are other data to keep a close eye on next week.

Tuesday: PPI, NY Empire State Manufacturing Index

Wednesday: retail sales, industrial production, FOMC meeting minutes

Thursday: building permits, housing starts, jobless claims, Philadelphia Fed Manufacturing Index

Friday: existing home sales

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

David – http://markethive.com/david-ogden

Gold silver sales are still being taxed is that about to change soon? Jp Cortez

February 12, 2022 David

Gold, silver sales are still being taxed, is that about to change soon? Jp Cortez

Unlike traditional investments like stocks and bonds, retail investors who buy and sell precious metals must pay sales taxes, but that could soon change. So far, 42 states have removed some or all of the taxes from gold and silver transactions. “The last several years have been really promising in eliminating sales taxes in many states,” Jp Cortez, Policy Director, Sound Money Defense League explained. “Last year Arkansas and Ohio both decided to move forward with removing sales tax on precious metal transactions.”

Cortez continued, “This year Kentucky, Mississippi, Hawaii, New Jersey and Tennessee are all considering removing sales taxes on gold and silver purchases as well.”

The Sound Money Defense League is a public policy project in collaboration with money metals exchange to remonetize gold and silver.

Cortez spoke to David Lin, anchor at Kitco News on eliminating taxes on gold and silver transactions.

At this time, more states are considering eliminating sales taxes, Cortez revealed. “There are defensive battles right now. Alabama and Virginia are fighting sunset battles, hoping to extend their current existing exemption,” he said. “Oklahoma and West Virginia also want to eliminate capital gains taxes, so when you sell your assets in those states, you wouldn’t be charged a state income tax.”

Cortez discussed how sales taxes impact the sales and purchases of precious metals. “There are rules, restrictions and tax disincentives that surround the sale and purchase of gold and silver,” Cotez said. “Many people would like to invest in precious metals, because these are assets that have held their value since time in memorial. But very often investors are unable to, because of state tax disincentives, along with rules and regulations. It’s a very onerous process.”

Cortez emphasized the importance of eliminating sales taxes, because in some states you end up paying taxes three times. “Capital gains taxes are federally mandated. If you buy gold and silver, you are going to get hit with a state sales tax between 7% to 10%. This illustrates how criminal this is in nine states,” he pointed out. “Then a couple of years later whenever you sell the asset, you are going to be charged capital gains a second time now at the federal level. And all states except in two or three, you are charged again a third time.”

“As an investment it becomes completely untenable. It’s impossible to store your wealth in this way, because of all the taxes that burden investors,” Cortez added.

Explaining why transactions of precious metals are taxed while stocks and bonds are not, Cortez said the government and the IRS “classifies gold and silver as collectibles. In many cases, they are not deemed as investments. They are categorically put in the same group as beanie babies and baseball cards,” he noted. “There is special discriminatory treatment towards investors who want to store their money in precious metals.”

Cortez stressed why it is necessary to exempt gold and silver transactions from sales taxes. “There are lots of reasons why gold and silver should not be taxed, but an easy one is simply resale. When you buy a car, you are using the car,” he said. “It’s not being held for resale, but in the case of stocks, bonds, ETFs, gold, silver and Bitcoin, these are goods that are being held for resale. They are not consumable final goods. It’s inappropriate to charge a sales tax on them.”

For more on removing taxes on gold and silver transactions , please watch the full video above.
 

Time to buy Gold and Silver on the dips

 

David – http://markethive.com/david-ogden

Gold silver bulls gaining a head of steam this week

February 10, 2022 David

Gold, silver bulls gaining a head of steam this week

Gold and silver futures prices are firmer and hit two-week highs in midday U.S. trading Wednesday, as the technical charts for both metals have seen improvement this week, which is inviting speculators to the long side of the markets. April gold futures were last up $7.90 at $1,835.70 and March Comex silver was last up $0.14 at $23.34 an ounce.

Metals traders are awaiting the U.S. data point of the week, which is Thursday morning’s consumer price index report for January, expected to come in at up 7.2%, year-on-year. That would be a hot reading if the CPI number meets market expectations.

Global stock markets were mostly up overnight. U.S. stock indexes are higher at midday. Attention remains on the release of corporate earnings reports. While the earnings reports have been generally upbeat, traders and investors are still wary about rising inflation and the timing of the Federal Reserve’s tightening of its monetary policy. Rising U.S. Treasury yields this week suggest the marketplace is placing its bets on a more aggressive path of rate hikes from the Fed over the coming months.

'Dramatic' improvement in Bitcoin and Ethereum sentiment as prices rally – analysts

The marketplace is still closely watching the Russia buildup of troops and weapons on the Ukrainian border. However, there are growing notions Russia may not invade Ukraine, amid a flurry of diplomacy from European nations.

The key outside markets today see crude oil prices a bit higher and trading around $89.75 a barrel. The U.S. dollar index is lower today. The U.S. Treasury 10-year note yield is presently fetching 1.925%.

Technically, April gold futures prices hit a two-week high today. Bulls have the firm overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at the January high of $1,856.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the January low of $1,780.60. First resistance is seen at $1,840.00 and then at $1,850.00. First support is seen at today’s low of $1,825.50 and then at $1,816.00. Wyckoff's Market Rating: 7.0

March silver futures prices hit a two-week high today. The silver bulls and bears are now on a level overall near-term technical playing field. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the January low of $21.985. First resistance is seen at $23.48 and then at $23.75. Next support is seen at $23.00 and then at Tuesday’s low of $22.77. Wyckoff's Market Rating: 5.0.

March N.Y. copper closed up 1,435 points at 460.50 cents today. Prices closed near the session high today and hit a 3.5-month high. The copper bulls have the firm overall near-term technical advantage and gained fresh power today. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the October high of 477.70 cents. The next downside price objective for the bears is closing prices below solid technical support at the January low of 428.20 cents. First resistance is seen at today’s high of 461.40 cents and then at 465.00 cents. First support is seen at 455.00 cents and then at 450.00 cents. Wyckoff's Market Rating: 7.0.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

 

David – http://markethive.com/david-ogden

Gold silver rally as traders buy the early dip

February 9, 2022 David

Gold, silver rally as traders buy the early dip

JGold and silver futures prices are modestly up in midday U.S. trading Tuesday. Overnight losses were deemed by the precious metals bulls to be a bargain buying opportunity. Otherwise, some routine backing and filling on the charts has been featured as fresh fundamental inputs are awaited. April gold futures were last up $6.70 at $1,828.50 and March Comex silver was last up $0.154 at $23.23 an ounce.

Global stock markets were mixed overnight. U.S. stock indexes are higher at midday. Corporate earnings reports are in the spotlight at present. While earnings reports have been mostly upbeat, some have not, including a few big companies. That and inflation worries are making the U.S. stock indexes wobbly. More and more, it’s looking like the Federal Reserve will be aggressive and raise the Fed funds rate by 0.5% at its March meeting. Historically, rising interest rates and rising inflation have been bearish for stock markets and bullish for the metals markets.

The U.S. data point of the week will be Thursday morning’s consumer price index report for January, expected to come in at up 7.2%, year-on-year. That would be a hot reading if the CPI number meets market expectations.

From one of the worst to best-performing assets? Gold price to tackle $2,100 by year-end, says Wells Fargo

The key outside markets today see crude oil prices lower and trading around $89.50 a barrel after prices last Friday hit a seven-year high. The U.S. dollar index is firmer early today. The U.S. Treasury 10-year note yield is presently fetching 1.954%, which is near a three-year high.

Technically, the April gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the January high of $1,856.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the December low of $1,755.40. First resistance is seen at this week’s high of $1,824.60 and then at $1,835.00. First support is seen at this week’s low of $1,807.50 and then at $1,800.00. Wyckoff's Market Rating: 6.0

March silver futures bears have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the December low of $21.41. First resistance is seen at this week’s high of $23.11 and then at $23.48. Next support is seen at this week’s low of $22.50 and then at $22.25. Wyckoff's Market Rating: 3.0.

Technically, April gold futures prices hit a two-week high today. Bulls have the overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at the January high of $1,856.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the January low of $1,780.60. First resistance is seen at $1,835.40 and then at $1,850.00. First support is seen at today’s low of $1,816.00 and then at this week’s low of $1,807.50. Wyckoff's Market Rating: 6.5

March silver futures bears have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the December low of $21.41. First resistance is seen at $23.48 and then at $23.75. Next support is seen at $23.00 and then at today’s low of $22.77. Wyckoff's Market Rating: 4.0.

March N.Y. copper closed down 140 points at 444.85 cents today. Prices closed near mid-range today. The copper bulls have the slight overall near-term technical advantage amid recent choppy trading. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the January high of 460.10 cents. The next downside price objective for the bears is closing prices below solid technical support at the January low of 428.20 cents. First resistance is seen at today’s high of 448.40 cents and then at this week’s high of 451.95 cents. First support is seen at today’s low of 439.50 cents and then at 437.00 cents. Wyckoff's Market Rating: 5.5.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

 

David – http://markethive.com/david-ogden

Gold price advances as inflation fears grow even with hawkish Fed

February 8, 2022 David

Gold price advances as inflation fears grow even with hawkish Fed

Gold futures had respectable gains in New York trading today. The most active April 2022 contract gained $14.20 and as of 4:47 PM, EST is currently fixed at $1822. Considering the Federal Reserve’s updated monetary policy, which is more hawkish and the most recent statement from last month’s FOMC meeting and last week’s strong jobs report, gold has been extremely resilient and continuing to gain in value.

Gold was trading at approximately $1830 before the release of last month’s Federal Reserve monetary policy statement and traded to a low of $1814 during Chairman Powell’s press conference. During the week beginning on January, 24 gold opened at approximately $1835 and closed on Friday, January 28 at $1784. However, over the last two weeks, gold has had significant gains closing at $1808 last week and gaining over $14 today, taking it to $1822. At current pricing gold has almost fully recovered from the declines of the week beginning January 24.

Gold’s resilience is apparent in light of last Friday’s jobs report which came in well above the forecast from economists polled by the Wall Street Journal which was expecting 150,000 new jobs. The actual number of new jobs added according to the U.S. Labor Department was an additional 467,000. Gold continues to rise against strong headwinds resulting from the current demeanor of the Federal Reserve and a strong jobs report.

The strength in gold pricing is based upon two primary factors. First, gold has been buoyed by real concerns and fears about inflation levels. Second is the uncertainty of the current geopolitical risks between Ukraine and Russia.

Inflationary fears grow

Currently, the CPI index is at 7% based on last month’s report which is at a record 40 year high. On January 28, the Bureau of Economic Analysis reported that the PCE index grew to 5.8% in December; this level is now also at a 40 year high. On Thursday of this week, the BEA will release its most current report for January on the CPI index. According to analysts polled by Bloomberg, Thursday’s report is expected to rise to an epic level of 7.3% over last year.

If the forecasts are correct and the inflationary pressures vis-à-vis the CPI come in at 7.3%, it will only strengthen the resolve of the Federal Reserve to be more aggressive on raising interest rates in March. According to Reuters, “U.S. inflation figures for January are due on Thursday, with markets now pricing in a one-in-three chance the Fed might hike by a full 50 basis points in March.”

That forecast is very close to the CME’s Fed watch tool that is predicting that there is a 25% likelihood that the Federal Reserve will raise rates by ½ % in March.

On the Russian front

The current geopolitical tensions between Russia and Ukraine continue to grow, with NBC News reporting that Russia is pessimistic about a resolution resulting from diplomacy. “Entering a critical week in the standoff over Ukraine, neither Russia nor the United States sounded optimistic about intensifying diplomatic efforts to de-escalate tensions.” According to the NBC News article titled Russia has massed 70 percent of forces needed to invade Ukraine, “Russia has already assembled 70 percent of the forces it would need to launch a full-scale invasion of Ukraine, a U.S. official with direct knowledge of the latest government assessment said late Friday amid spiraling tensions in the region.”

These two factors have been ultimately supportive of gold pricing and will continue to not only support gold pricing but move them higher in the upcoming weeks ahead.

 

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

 

David – http://markethive.com/david-ogden