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Goldline Week in Review

Release Date:  Saturday, October 26, 2019


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  • Gold prices jumped to a two-week high on weak economic news.
  • New orders and shipments for critical U.S.-made capital goods fell more than expected.
  • The Federal Reserve is more likely to cut interest rates to help bolster the economy.
  • Gold ended the week at $1,505.00/oz. Silver closed at $18.10/oz.


Gold prices are expected to move higher in 2020 according to a number of analysts as central banks lower interest rates and engage in Quantitative Easing to forestall a global recession.

  • Investment professional Tony Hayes wrote the Federal Reserve's new Quantitative Easing policies will send gold prices to near record levels. "If it looks like a duck, walks like a duck and quacks like a duck it is probably a duck. Thus despite the protestations to the contrary by Chairman Powell, last week's announcement that the Fed that it intends to buy $60 billion of bills per month until mid-2020 certainly is QE on a massive scaleThis should push the price of gold back to its equilibrium level with the AWMB which stands at US $1,900 per ounce but should be higher at possibly US $2,000 per ounce by mid-2020 as excess reserves continue to move out into the real economy."
  • Gold prices are projected to rise to $1700 in as little as six months according to analysts at the ANZ banking group. "'Our model also suggests prices could breach USD $1,700/oz over the next six months. This offers opportunities for consumers, producers, and investors. A pullback to fair value, in the short term, could present an opportunity for increased exposure to the metal… With solid fundamentals, gold remains a good prospect for portfolio diversification."
  • TD Securities strategists believe that gold will reach above $1600 in 2020 even if the U.S. reaches a trade deal with China. "'We see a risk that prices could break lower as the belief grows that a potential U.S.-Sino trade deal, along with monetary easing, will help the economy avoid a steeper downturn — which could sway the Fed's communication strategy,' TD Securities strategists write. But, long-term gold is heading higher, add the strategists. 'We still see gold moving above $1,600/oz next year as global central banks cut further amid a global economic slowdown.'"
  • Global central bank policies will cause gold and silver prices to rise significantly in the months ahead according to Craig Hemke. editor and publisher of the TF Metals Report. "Expect negative interest rates and unlimited debt monetization in the months ahead as the central banks literally empty their 'tool box' in a desperate attempt to maintain order… Though gold and silver prices are already up about 20% year-to-date, this worsening global monetary/liquidity crisis sets the stage for considerable gains in the months ahead. Are you positioned to participate? If not, now is the time to prepare through the acquisition of physical precious metal. Only precious metal can provide protection against the madness of the central bankers."
  •  The Financial Times Advisor recommends that investors bolster their portfolios with gold. "What a difference a year has made for gold. In October 2018 the metal was in the doldrums… Today (October 10 2019) however, gold is trading above $1,500/oz. Futures market positioning in the metal has recently reached an all-time high. So what has changed? Market perception of risks, both geopolitical and financial, have been revised upward. Key points: Gold is back in fashion, as other defensive assets are offering negative yields.  In times of stress, gold has a positive correlation with the US dollar.  Gold can be bought in bars, coins or ETPs."
  • Barron's writes that current silver prices offer a buying opportunity for investors. "'If you are bullish on gold's future prospects, silver is going to provide you with upside leverage with relatively low risks at these price levels,' says Peter Spina, president of silver news and analysis provider 'The risk-to-reward appeal in silver is one of the best opportunities in a decade.'"

Several key indicators, including the Federal Reserve's new Quantitative Easing policy, are warning of a global economic slowdown and U.S. recession.

  • U.S. durable goods orders fell 1.1% in September, another sign of a slowing economy. "Orders to U.S. factories for big-ticket manufactured goods tumbled in September by the largest amount in four months while a closely watched category that tracks business investment fell for a second month. The declines underscored the troubles manufacturing is having in the face of a global slowdown and trade war uncertainty."
  • Caterpillar reported significant drops in sales and profits for the quarter. "Caterpillar just flashed the latest warning sign for the global economy. The construction and manufacturing equipment titan, viewed as a bellwether for global industry, revealed a 6% drop in sales and an 8% drop in profit per share in the third quarter. Caterpillar produces so much of the world's equipment that a decline in its business often indicates a broader slowdown in construction and factory activity. Weaker demand for its products typically means people are building and manufacturing less, which doesn't bode well for global economic growth."
  • U.S. electronic firms are reducing their investments and laying off workers due to the continuing trade war. "U.S. electronics factories are investing less and slowing hiring or laying off workers in some cases due to the rising costs of trade tariffs, according to an industry survey set for release on Wednesday. The IPC, a global electronic industries trade association, found that nearly a third of all the dollar value of what its members with U.S. operations import has been hit by increased costs from the protracted U.S.-China trade war."
  • The continuing trade war with China is eroding corporate profits and increasing costs to consumers says a Moody economist. "What began as targeted tariffs on steel and aluminum imports in early 2018 accelerated over the past year and a half as tariff rates were jacked up with each disappointment in the negotiations. And now, months and months of those tariffs — and disrupted supply chains because of them — are raising costs and squeezing margins for a wide variety of companies. 'President Trump's trade war is doing significant damage to the US and global economies,' said Mark Zandi, chief economist at Moody's. 'The higher tariffs act like a tax increase on businesses and their customers.'"
  • JPMorgan Chase warned that the money market stress which is causing an increase in short term borrowing rates is expected to worsen. "JPMorgan Chase & Co. says the money-market stress that sent short-term borrowing rates surging last month is likely to get much worse despite the Federal Reserve's attempts to inject billions of dollars into the financial system…JPMorgan's note follows similar warnings from Bank of America Merrill Lynch and Goldman Sachs Group Inc., who have also attributed September's funding stresses to factors including post-financial crisis bank regulation."
  • Economist Stephen Moore told Fox Business that so-called "transfer payments" such as food stamps and Medicare/Medicaid may kill the U.S. economy. "A transfer payment is money that has been paid to an individual who has not performed any service or rendered any goods for it. These payments are projected to make up 67.9 percent of government outlays and take up 14.4 percent of GDP this year, according to OMB. 'We've been a nation defined by people being entitled to government money, and that is the kind of cancer cell that could kill our economy….'"