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Goldline Week in Review

Release Date:  Saturday, November 23, 2019
METALS MARKET UPDATE – WHAT YOU NEED TO KNOW
  • Gold prices were up in early trading and are poised to have their second weekly gain.
  • Investors and analysts are concerned about the fate of U.S.-China trade negotiations.
  • China may retaliate against the U.S. for its support of freedom protesters in Hong Kong.
  • Economic data throughout the world remains weak.

https://www.kitco.com/news/2019-11-15/Gold-prices-down-on-busy-U-S-data-day.html

METALS NEWS –

As the Federal Reserve embarks on a new form of Quantitative Easing, analysts see gold shining as a critical safe haven asset.

  • Gold is headed to $1550 by Christmas according to Dave Kranzler, publisher of The Mining Stock Journal. "The recent sell-off in gold has triggered massive gold demand from India… With both technical and fundamental factors aligned, I believe there's a good chance that gold will head toward at least $1550 by Christmas. The open interest in Comex gold hit another all-time high on Monday (November 18) as the shorts tried to fight gold's big bounce Monday morning. If the gold price continues moving toward $1500, short-covering will provide added power to the move." https://www.gold-eagle.com/article/gold-price-forecast-gold-poised-pleasant-holiday-rally
  • Morgan Stanley has forecast higher gold prices in 2020 as investors move from stocks and bonds into the yellow metal. "Morgan Stanley predicted that the price of gold will rise next year as American equities and corporate bonds will underperform peers. Meanwhile, the bank said the dollar will weaken as growth outside the U.S. picks up. Morgan Stanley said gold is projected to average $1,511 an ounce next year, trading in a range around $1,500, against about $1,458 now." https://www.newsmax.com/finance/markets/morgan-stanley-gold-price/2019/11/19/id/942350/
  • Daniel Oliver Jr., President of the Committee for Monetary Research & Education, explained why gold is critical for preserving an investor's purchasing power. "First, what people seem to often forget is that we shouldn't look at the value of gold in terms of dollars; it should be the other way around. We should understand that gold is stable, and the dollar is the asset that is moving around. Second, physical gold has a yield in terms of purchasing power… Gold's value is therefore effectively constant, and everything else falls in purchasing power compared to gold…  So, it's not just that gold buys you more commodities, but those commodities buy more consumer products in turn. Gold is therefore a great way to save in that it increases its purchasing power over time." https://gallery.mailchimp.com/b268a38a165b03979d95268dd/files/9b36d812-dd37-4d77-a148-c4e63f6c15b9/Incrementum_Inflation_Diversifier_Advisory_Board_Call_October_2019.01.pdf
  •  Doug Casey, Founder of Casey Research, penned an essay explaining why gold is the only true form of money. "It's an unfortunate historical anomaly that people think about the paper in their wallets as money. The dollar is, technically, a currency. A currency is a government substitute for money. But gold is money… It's simply common sense. Gold is particularly good for use as money, just as aluminum is particularly good for making aircraft, steel is good for the structures of buildings, uranium is good for fueling nuclear power plants, and paper is good for making books. Not money. If you try to make airplanes out of lead, or money out of paper, you're in for a crash. That gold is money is simply the result of the market process, seeking optimum means of storing value and making exchanges." https://bonnerandpartners.com/why-you-should-secure-your-money-in-gold/
  • Gold's recent price consolidation offers buying opportunities for investors wrote Kitco commentator Lobo Tiggre. "Precious metals are still in 'correct and consolidate' mode, which has many resource investors worried. With Tax Loss Season heating up, I can't blame them. But I do see this situation as a terrific opportunity, and I'll tell you why. To me, the critical factor is that—whatever Powell says—the Fed's easy money policy is in high gear…" https://www.kitco.com/commentaries/2019-11-21/Tax-loss-season-opportunity-for-gold-and-silver-investors.html 
ECONOMIC NEWS –

The U.S.-China trade war continues to threaten the world economy while the Federal Reserve's new Quantitative Easing may signal the fall of the stock market. 

  • Despite early cheers at the prospect of ending the U.S.-China trade war, Chinese officials are pessimistic that an agreement with the U.S. can be reached. "The mood in Beijing about a trade deal is pessimistic due to President Donald Trump's reluctance to roll back tariffs, which China believed the U.S. had agreed to, a government source told CNBC's Eunice Yoon… The Chinese are looking carefully at the political situation in the U.S. including the impeachment hearings and the presidential election, the source said, adding the officials are wondering if it is more rational to wait things out since it is unclear what Trump's standing will be even in a few months." https://www.cnbc.com/2019/11/18/mood-in-beijing-about-trade-deal-is-pessimistic-government-source-tells-cnbc.html
  • Henry Kissinger, the former U.S. Secretary of State who helped normalize relations with communist China, is warning Americans the current conflict with China could be worse than a world war. "Former US secretary of state Henry Kissinger warns that a catastrophic conflict between America and China that will be 'worse than world wars' is inevitable unless the two sides sort out their differences… 'It's no longer possible to think that one side can dominate the other…it will be worse than the world wars that ruined European civilization,'" https://www.zerohedge.com/geopolitical/kissinger-coming-conflict-between-us-and-china-will-be-worse-world-wars
  • China is secretly moving out of U.S. dollars in a sign the country wants to "decouple" from the U.S. economy. "China is heavily exposed to the U.S. dollar, but now, with the risk of "decoupling," Beijing is silently diversifying its reserves to reduce its dependence on the world's largest reserve currency, analysts say. Ongoing trade tensions with the U.S. has 'increased the risk of a financial decoupling' between the two largest economies, ANZ Research said in a recent report." https://www.cnbc.com/2019/11/18/china-diversifying-fx-reserves-assets-to-counter-us-dollar-exposure.html
  • The Federal Reserve's injection of billions of dollars in what is clearly a form of Quantitative Easing is a sign the stock market is facing a so-called "blowoff top" where a rapid rise is prices is followed by a steep and rapid drop. "'The financial media is loudly declaring the current blowoff top in stocks is not a blowoff top… The delicious irony here is these denials are reliable markers of blowoff tops: the louder the denials, the greater the odds that this is in fact the blowoff top that many pundits have been expecting for some time, but always in the future.'" https://www.marketwatch.com/story/why-dow-28000-could-mark-that-blowoff-top-bears-have-been-predicting-2019-11-17?siteid=rss&rss=1
  • Vanguard's chief global economist sees a faltering global economy and the prospect of a major drop in the stock market in 2020. "Joe Davis, the global chief economist and head of investment strategy at fund giant Vanguard, isn't buying it. "In the year ahead, we don't foresee a significant reversal of the [U.S.-China] trade tensions that have occurred so far. And with continued geopolitical uncertainty and unpredictable policy-making becoming the new normal, we expect that these influences will weigh negatively on demand in 2020… No surprise, then, that Davis isn't terribly optimistic about financial markets, citing heightened policy uncertainties, late-cycle risks and stretched valuations. "Our near-term outlook for global equity markets remains guarded, and the chance of a large drawdown for equities and other high-beta [more volatile] assets remains elevated and significantly higher than it would be in a normal market environment….'" https://www.marketwatch.com/story/why-vanguards-chief-economist-says-there-is-an-elevated-risk-of-a-large-drawdown-in-stocks-2019-11-19?mod=home-page
  • A former stock market bull sees worrisome signs that the economy is slipping into recession. "'The actual data itself is just decelerating pretty hard actually,' the Economic Cycle Research Institute co-founder told CNBC's "Trading Nation" on Monday. 'I don't think we can remove recession risk from the table. It's still out there as long as you're slowing.' Achuthan sees the downtrend particularly affecting two key parts of the economy: retail sales and industrial production… Yet, stocks are firing on all cylinders. But don't let that fool you, he says. 'A couple of months before the Great Recession, markets hit an all-time high.'"  https://www.cnbc.com/2019/11/19/this-economic-trend-could-revive-recession-fears.html
  • A Wall Street investment "hall of famer" sees a corporate profit recession in 2020. "Institutional Investor Hall of Famer Richard Bernstein is making a bearish contrarian call on earnings. Despite Wall Street's strong appetite for stocks right now, Bernstein believes there's a high probability corporate earnings will come in negative next year… 'By our work, we would argue that the first half of 2020 you could actually see a full-blown profits recession.'" https://www.cnbc.com/2019/11/21/full-blown-profits-recession-could-hit-us-in-2020-all-star-investor.html