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Goldline Week in Review

Release Date:  Saturday, October 5, 2019
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METALS MARKET UPDATE – WHAT YOU NEED TO KNOW
  • Gold prices hovered around $1500 in early Friday trading on mixed economic news. 
  • The Bureau of Labor Statistics said job creation fell below the consensus forecast of many economists.
  • Unemployment fell to 3.5%.
  • Economists state that muted wage growth remains a concern for the economy.
  • Gold ended the week at $1,505/oz. Silver closed at $17.61/oz.

https://www.kitco.com/news/2019-10-04/Gold-prices-relatively-unchanged-following-mixed-U-S-employment-data.html

METALS NEWS –

Investors acquired gold at record levels last month as strategists and banks continue to see higher gold prices.  

  • We should see gold rise to $2,000 by next year according to the president and global strategist at Independent Strategy.  "'What my gut says is that cause of the vilification of fiat currencies by central bankers, which is set to get worse — not better, people will look for an alternative currency … Gold is a good alternative currency because it's safe, and because it costs nothing to own it compared to paying negative rates on deposits…' As a result, gold prices will likely touch $1,600 before the end of this year, before moving higher to $2,000 next year, he said. https://www.cnbc.com/2019/10/03/investing-in-gold-bullion-could-soar-to-2000-next-year.html 
  • Gold to $11,500? Yes, says Nick Barisheff, CEO of Toronto's Bullion Management Group. "When I wrote $10,000 Gold: Why Gold's Inevitable Rise Is the Investor's Safe Haven in 2013, I felt like a lone wolf in the wilderness with my prediction. Today, Pierre Lassonde has predicted $25,000 gold, and Jim Rickards $40,000 gold. While the predictions seem far-fetched to many investors, if we analyze the available supply of gold and the amount of financial assets in the marketplace, then we can attain a reasonable prediction for the gold price. [E]ven if you assume that the entire $1.64 trillions' worth of bullion were available, if 5% of investors in financial assets decided to allocate to bullion, that would equate to $15 trillion of demand. Since mine supply has been in decline, and it takes about 20 years to bring a mine from discovery to production, the only way you can divide $15 trillion into $1.64 trillion is for the price to go up to $11,500/oz." http://www.marketoracle.co.uk/Article65864.html
  • September proved to be a record month for gold and silver futures contracts highlighting the strength of the precious metals markets. "September was a record-breaking month for the gold market. Wednesday, the CME Group, the world's leading and most diverse derivatives marketplace, said that volume in the metals market averaged 818,000 contracts per day last month, up 37% from last year and the second highs average daily volume in the exchange's history… The CME said that the exchange saw record average daily volume of 17,000 contracts in silver options, an increase of more than 100% from last years." https://www.kitco.com/news/2019-10-02/Yep-September-Was-A-Record-Month-For-Gold-Market-CME.html
  • Gold's long-term prospects remain positive wrote analysts Fawad Razaqzada. "There is no doubt that gold's long-term technical outlook is positive, even after what was a relatively small retracement that began at the start of September. And we are now expecting the precious metal to potentially resume its long-term rally. Remember, gold had risen sharply for four consecutive months prior to the hiccup in September. So the recent weakness should be put into perspective." https://www.cityindex.co.uk/market-analysis/gold-set-to-resume-rally-amid-renewed-falls-for-yields-and-stocks/
  • MarketWatch columnist Michael Brush identified five reasons why investors should own gold: "Gold also offers investors a safe haven against political headline risk and uncertainties … Central banks are purchasing gold in volumes not seen in 50 years … Typically governments resort to inflation to reduce debt burdens like these, says [Tom Winmill], and he thinks the U.S. is now on that course. Gold usually performs well when inflation heats up and the dollar weakens. 'I would not be surprised to see gold at $2,000 an ounce in two years… 'It seems like a bigger pool of money is chasing the space right now …People are reloading when gold falls. There is good net accumulation.' … At the Denver Gold Forum in September, Barrick Gold cautioned that mining production could fall by 45% over the next 10 years barring an increase in investment in new mines…." https://www.marketwatch.com/story/five-reasons-why-gold-is-still-worth-owning-2019-10-03?mod=commodities
ECONOMIC NEWS –

Although Democratic efforts to impeach President Trump, have dominated the news, this week also saw continued warning signs that the U.S. and global economies are in jeopardy.

  • The U.S. manufacturing gauge fell to its lowest levels for the past ten years fueling fears of a recession. "The new export orders index was only 41%, the lowest level since March 2009, down from the August reading of 43.3%, ISM data showed. 'We have now tariffed our way into a manufacturing recession in the U.S. and globally,' said Peter Boockvar, chief investment officer at Bleakley Advisory Group."   https://www.cnbc.com/2019/10/01/us-manufacturing-economy-contracts-to-worst-level-in-a-decade.html
  • Oil prices, which can be one of the most important inflation drivers, may rise to "astronomical" levels according to a member of the Saudi Royal family. "Saudi Arabia's Crown Prince Mohammed bin Salman has warned of astronomical oil prices in the event that tensions escalate in the Persian Gulf, two weeks after his country was hit by a drone and cruise missile attack that Riyadh and Washington have blamed on Iran... 'Oil supplies will be disrupted and oil prices will jump to unimaginably high numbers that we haven't seen in our lifetimes.'" https://www.cnbc.com/2019/09/30/oil-will-hit-unimaginably-high-prices-in-event-of-war-with-iran-mbs.html
  • The EU has threatened retaliatory tariffs against the U.S. "The European Union warned Thursday it will retaliate against the U.S. decision to slap tariffs on a range of the bloc's exports - from cheese to wine - that could cause job losses in Europe and price increases for Americans. The Trump administration's decision to put new import taxes on EU goods worth $7.5 billion opened a new chapter in the global trade wars that are heightening fears of a global recession." https://www.usatoday.com/story/money/2019/10/03/european-union-warns-retaliate-over-us-tariffs/3850301002/