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Goldline Week in Review

Release Date:  Saturday, November 9, 2019
WEEKLY SPECIAL

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METALS MARKET UPDATE – WHAT YOU NEED TO KNOW
  • Gold prices fell this week on news there may be easing of the U.S.-China trade war.
  • China stated he would rollback certain tariffs to help implement the first stage of an agreement with the U.S.
  • Gold ended the week at $1,459.80/oz. Silver closed at $16.87/oz.

https://www.investing.com/news/commodities-news/gold-prices-rebound-but-set-for-worst-week-in-two-years-amid-positive-trade-news-2015903

METALS NEWS –

Gold remains the top choice for portfolio diversification as interest rates continue to fall and concerns about a faltering economy increase.

  • Gold remains the best investment choice with the potential to reach $10,000 according to the chairman of Franco-Nevada, Pierre Lassonde. "The next 30 years is going to see supply and demand fundamentals shift in favor of gold, and prices will push much higher to over $25,000 an ounce by 2049 when using historical average growth rates, this according to Pierre Lassonde, chairman of Franco-Nevada, in a recent webcast, joining Frank Holmes, CEO of U.S. Global Investors. On a shorter time frame, gold prices in the next five years can hit anywhere between $2,500 and $10,000 an ounce, if historical equities to gold ratios are applied to current levels, as historically, the Dow Jones to gold ratio hit one to one during times of peak gold prices." https://www.kitco.com/news/2019-11-04/Pierre-Lassonde-gold-is-still-the-best-investment-gold-price-could-hit-10-000-in-five-years.html
  • Dave Kranzler, publisher of The Mining Stock Journal, believes gold could rally to $1600 by the end of the year. "[S]ince the bull market resumed in late 2015, the chart pattern has been punctuated with a series of "bull flags," each on more shallow and shorter in duration than the previous.  Technically you can see that the RSI/MACD are positioned in potentially bullish formations. With the Fed likely to further increase that amount of money it is currently printing, I would not be surprised to see gold test and/or exceed $1600 by Christmas." https://www.gold-eagle.com/article/gold-forecast-next-move-higher-may-have-commenced
  • Egon von Greyerz, Founder and Managing Partner of Matterhorn Asset Management, advised investors to buy gold as governments move towards Marxism. "[I]n the next few years, as the 2006-9 financial crisis returns with a vengeance, the world will rapidly change. Massive money printing will lead to depressionary hyperinflation which will turn into a deflationary implosion of the financial system 2-3 years later. As the depression takes hold, many people will have no jobs, no money and no social security. This will lead to empty stomachs and social unrest. Marxist left-wing governments will come to power and in some countries there will be right-wing fascism…. Stocks are in the final stages of a secular bull market. This could end in the next few weeks or in early 2020. Once the market turns, we will see a crash at an early point and this will be the start of a secular bear market of immense proportions. Before the market has bottomed, we are likely to see falls exceeding the 1929 crash which was 90% for the Dow Jones…. There has probably never been a more favorable climate for holding precious metals, primarily gold but also some silver. The primary reason for holding gold is clearly for wealth preservation or insurance purposes against a bankrupt financial system. But physical gold and silver today also represents the most unique investment opportunity ever." http://news.gold-eagle.com//article/buy-gold-marxism-destroys-your-money/1176
  • Nearly $2 Billion flowed into the gold market during the third quarter of 2019 with the trend continuing into the fourth quarter according to the World Gold Council. "The gold market saw record inflows into exchange traded products during the third quarter and it appears that trend has continued into the early start of the fourth quarter. In a report Thursday, the World Gold Council said that global gold-backed ETFs saw $1.9 billion of net inflows last month." https://www.kitco.com/news/2019-11-07/Gold-market-sees-1-9-billion-in-ETF-inflows-in-October.html
  • Writing for the financial website The Deviant Investor, Gary Christenson explained that massive debt may send gold prices to new record highs. "Debt increases and gold prices rise along with the debt… [The debt/gold ratio] should rise during the next five years. The ratio could double and stay within the range. If debt doubles in 7 – 9 years and the ratio also doubles, gold prices would be in the $5,000 to $8,000 range in 2026—2028. If you doubt that quadrupling is possible, remember that gold rose by a factor of 21 from 1971 to 1980, and by a factor of 7.4 from 2001 to 2011." https://deviantinvestor.com/
  • Economist and professor of finance economics Massimo Guidolin engaged in an applied monetary policy analysis to find that the gold bull market will soon resume its upward movement. "To obtain reliable forecasts of the price of gold, we propose to move the focus from a traditional 'real rate view' to an overall monetary-policy-stance perspective… When we purge the data of the effects of the strong U.S. dollar, 2014-2017 turns out to have been an exceptional period in which gold appreciated while real interest rates climbed and monetary policy went through a tightening cycle. Gold prices can be expected to resume on an even stronger appreciation path because since early 2019, shadow short-term rate indicators have signaled a significant monetary policy easing in the U.S. and worldwide." https://seekingalpha.com/article/4303741-gold-glitters-shadow
  • Gold's recent correction provides a buying opportunity for investors according to several analysts. "Gold prices continue to trade under pressure as positive trade headlines are feeding investors' risk-on appetite, but any dips towards $1,450 will still be viewed as buying opportunities in gold, according to analysts. 'Price dips towards $1450/oz are likely to continue to be viewed as buying opportunities," said Standard Chartered precious metals analyst Suki Cooper. "In our view, prices have held up well given the good news, increased risk appetite and soft physical market.'" https://www.kitco.com/news/2019-11-07/Gold-prices-sell-off-but-anything-above-1-450-is-still-a-buying-opportunity-analysts.html
ECONOMIC NEWS –

The stock market's surge this week is being tempered by a number of analysts who are warning that new highs may be followed by a devastating collapse. 

  • Ray Dalio who co-founded one of the world's largest hedge funds and is ranked among the richest billionaires, wrote that reckless economic policies and global debt will lead to a "paradigm shift" in our economy which can be ruinous. "The World Has Gone Mad and the System Is Broken …[L]arge government deficits exist and will almost certainly increase substantially, which will require huge amounts of more debt to be sold by governments—amounts that cannot naturally be absorbed without driving up interest rates at a time when an interest rate rise would be devastating for markets and economies because the world is so leveraged long. Where will the money come from to buy these bonds and fund these deficits? It will almost certainly come from central banks, which will buy the debt that is produced with freshly printed money. This whole dynamic in which sound finance is being thrown out the window will continue and probably accelerateThis set of circumstances is unsustainable and certainly can no longer be pushed as it has been pushed since 2008. That is why I believe that the world is approaching a big paradigm shift." https://www.linkedin.com/pulse/world-has-gone-mad-system-broken-ray-dalio/
  • Michael Pento of Pento Portfolio Strategies says that central bankers have created a massive bubble that will soon burst sending us into economic collapse that exceeds the Great Recession. "'When this thing implodes, we are all scr--ed. On a global scale, we have never before created such a magnificent bubble. These central bankers are clueless, and they have proven that beyond a doubt. All they can do is to try to keep the bubble going…The plunge in the stock market would be huge and from a much higher level. Back in the Great Recession, unemployment claims spiked. We had millions of people laid off, and the same thing would happen today only... much worse." https://www.marketwatch.com/story/qe-on-steroids-could-lead-to-a-depression-warns-money-manager-who-compares-the-us-to-a-banana-republic-2019-10-28
  • Morgan Stanley believes the coming years will be dismal for stocks and bonds. "The next decade could be a dismal one for both stocks and bonds, according to Morgan Stanley, which ran analysis on what current valuations for asset classes mean for future returns historically... Why so low? Such a weak portfolio return is likely after a decade of massive multiple expansion for stocks and a flood of money into bonds as central banks ease monetary policy to re-spark economic growth." https://www.cnbc.com/2019/11/04/morgan-stanley-markets-will-have-some-low-in-the-next-decade.html
  • Citi Bank forecast the U.S. dollar to fall significantly as the Federal Reserve continues to buy more bond assets. "The U.S. dollar index could fall to as low as 85 as the Federal Reserve grows its balance sheet again by purchasing more bond assets, a Citi strategist said Thursday. 'Our latest projections are that it would weaken even further — maybe to the high 80s, perhaps even as low as 85….'" https://www.cnbc.com/2019/11/01/us-dollar-could-weaken-to-85-on-the-dollar-index-citi.html
  • Global debt has reached record highs, threatening the world economy. "The global debt load has surged to a new all-time record equivalent to more than double the world's economic output, IMF chief Kristalina Georgieva warned Thursday. While private sector borrowing accounts for the vast majority of the total, the rise puts governments and individuals at risk if the economy slows, she said. 'Global debt -- both public and private -- has reached an all-time high of $188 trillion. This amounts to about 230 percent of world output….'"  https://news.yahoo.com/global-debt-surges-record-high-188-tn-imf-142925892.html

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