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Gold and Silver Prices
Gold closed higher on Friday and ended the week with a gain midst geopolitical turmoil and continued equity market weakness.
"Gold rose as much as 1 percent on Friday as the dollar fell after U.S. Federal Reserve officials made cautions comments that fed doubt about the outlook for interest rate hikes, while palladium hit a record high driven by worries about short supplies.
"Spot gold rose 0.7 percent to $1,221.38 an ounce by 2:47 p.m. ET. The session high was the highest since Nov. 8 at $1,225.29. Gold was on track to gain about 1 percent this week.
"Two Fed officials cautioned that global economic growth was slowing and the dollar fell to one-week lows against a basket of major currencies, making bullion cheaper for buyers using other currencies.
"'When you get people talking about the economy slowing down, they may not raise rates so quickly or as aggressively and that is bearish for the dollar,' said INTL FCStone analyst Edward Meir.
"Further support for gold came from weaker global stock markets and lower U.S. Treasury yields.
"'A weaker dollar and lower yields are pretty much tailor made to benefit gold,' said James Steel, chief metals analyst at HSBC Securities in New York, who sees prices rising to $1,245-$1,250." ("Gold jumps as dollar slides; palladium hits record," Reuters, CNBC, 11/16/18.)
Gold ended the week up $11.70, closing at $1,221.10. Silver ended the week up $0.24, closing at $14.39.
U.S. Dollar Strength Is Unsustainable- Broadway Gold - Kitco News
The strength in the U.S. dollar is not sustainable and that's a positive for gold and silver.
"While all commodities are suffering under the boot heel of a surging U.S. dollar, one junior explorer CEO sees the potential for gold and silver to shine as the current environment is unsustainable.
"Monday, the U.S. dollar rose to its highest level in 16 months, while gold fell to a one-month low and is in striking distance of testing psychological support at $1,200 an ounce... the U.S. Dollar Index last traded at 97.51 points up 0.63% on the day.
"In an interview with Kitco News, Thomas Smeenk, CEO of Broadway Gold Mining (TSX.V: BRD), said that the government can continue its game of printing fiat money for a while still but at some point there is going to be a shock to the system and investors will turn to commodities as a safe-haven asset.
"'Deficit spending at some point is going to drive inflation higher and that will be reflected in commodity prices,' he said.
The strength we have seen in the U.S. dollar isn't sustainable.'
"Smeenk noted that mining companies continue to struggle in the face of a stronger U.S. dollar and general equities take focus from the mining sector. However, he added valuations in the mining sector are so low that at some point investors are going to take notice.
"'At some point, we have to get back to fundamentals,' he said.
"... Smeenk said that he sees copper prices struggling in the near-term as global economic worries weigh down demand. However, he added that this is the perfect environment for gold and silver.
"He added that he also sees silver eventually outperforming gold. The gold-silver ratio is above 85 points, hitting a new multi-decade high is also unstainable.
"'There is a lot of uncertainty in the world and silver and gold should be part of everyone's portfolio,' he said." (U.S. Dollar Strength Is Unsustainable- Broadway," by Kitco News for Kitco News, 11/12/18.)
Billionaire Ray Dalio: Why saving in cash is 'the worst thing you could do' - Montag
Billionaire does not recommend holding cash as it is the surest tax on your money.
"Amid headlines of turmoil in the stock market, heightened global trade tensions and political tumult, it may seem like the safest place to store your money is in a savings account.
"But actually, just holding your money in cash is a bad idea, according to billionaire hedge fund magnate Ray Dalio.
"'That's the worst thing you could do because it is the surest tax on your money," Dalio tells CNBC Make It. 'You will bleed slowly to death, because the after-tax returns are lower than inflation by a little per year.'
"Here's what he means: Over time, inflation causes the goods and services you buy every day to become more expensive relative to the value of the dollars in your wallet... And over the long term, inflation becomes increasingly powerful.
"Although you do earn interest on money deposited in a savings account at a bank, the amount is far too low to keep up with the negative impact of inflation, Dalio points out.
"'When you put your money in cash or short-term deposit, look at the interest rate you're getting in relationship to the inflation rate,' Dalio, founder of Bridgewater Associates, explains. 'You will see that your after tax return will be below the inflation rate. That means that you're experiencing a tax on that [money] equal to that difference. So you can't keep your money in cash. If you think that's safe, you're looking at it wrong - it's a sure losing strategy.'
"Right now, the national average interest rate for a savings account is only 0.09 percent, according to data from Bankrate. Meanwhile, the Consumer Price Index - which measures inflation - rose 2.7 percent in the past year.
"Since keeping your money in a savings account is a guaranteed way to lose money, you have to turn your savings into investments, Dalio says. Then, your money is growing while you sleep.
"'People with great ideas create productivity and get paid for it,' Dalio says. 'It is better to invest in productivity than to not invest in productivity, because otherwise your money will lose buying power.'" ("Billionaire Ray Dalio: Why savings in cash is 'the worst thing you could do,'" Ali Montag, CNBC, 11/13/18.)
Look To Buy Gold On Dips As Inflation Could Shock Markets- Aberdeen Standard Investments - Christensen
Threat of rising inflation and shock to the financial markets can benefit gold.
"King dollar will rule over gold prices in the near-term, but the yellow metal will continue to be an important diversifier and safe-haven asset for investors in the long-term, according to one fund manager.
"In a telephone interview with Kitco News Maxwell Gold, director of investment strategy at Aberdeen Standard Investments, said that he sees gold as a strong buy on dips as volatility will continue to weigh on financial markets.
"Gold's comments come as the U.S. dollar holds near its highest level since June 2017, which has pushed gold to a one-month lows as prices hold above critical psychological support above $1,200 an ounce...
"Weaker oil prices, which declined for 12 straight trading sessions, dropping nearly 25% since hitting a four-year high in early October. Gold said that the drop in oil prices is lowering inflation expectations, which in turn is driving real interest rates higher, pushing the U.S. dollar and bond yields higher.
"However, he added that inflation is much more than just energy prices. He explained that wage pressures have increased, raising the risks of a surprise inflation shock to financial markets.
"'I think inflation remains one of the biggest underpriced risks in the marketplace,' he said. 'Right now the two crowded trades in markets are long U.S. dollar and short U.S. bonds. Any kind of shock to financial markets could reverse these two trades, which would benefit the gold market.'
"Along with the threat of rising inflation, Gold said that the U.S. economy continues to move through the late-stage of its business cycle. He added that slowing economic growth next year will force the Federal Reserve to moderate its tightening path, which will take further steam away from the U.S. dollar.
"'There are a lot of headwinds facing gold in the near-term but I still think investors are starting to see tangible risks in the marketplace and are slowly buying gold these dips," he said.
"While Gold is optimistic on the yellow metal through the medium to long-term, he also sees potential for silver to eventually regain its luster.
"'Silver has been a tough story even as we see market fundamentals improving,' he said. 'But in the current environment we think that silver can still outperform gold in an inflationary environment.' Silver is current trading at its lowest level to gold in nearly 25 years..." ("Look To Buy Gold On Dips As Inflation Could Shock Markets- Aberdeen Standard Investments." Neils Christensen, 11/13/18.)
In a chaotic 2019, gold will be the 'best house in bad neighborhood' - Kollmeyer
Signs point to 2019 as the year for gold bulls.
"Are greater risks stacking up for investors in 2019?
"In Europe, where Italy is locking horns with the EU and a Brexit deal hangs in the balance, mega-economy Germany has just produced the worst growth in nearly six years. Even if Wall Street can successfully shake off noise from the Old Country, a fresh threat from falling oil prices, along with worries over trade and a Fed misstep may cast long shadows.
"'Equities appear to be in no-man's-land,' says Sean Darby, Jefferies' chief global equity strategist, who writes that Jerome Powell and co.'s intentions is the big thing keeping his clients up at night.
"And they aren't far off with those worries, according to our call of the day, which predicts 2019 will be a doozy for investors and advises they seek shelter in a much-neglected, glittering port.
"'Being long gold has been a tough investment since 2012, and so often, when we see the yellow metal gaining traction, the [U.S. dollar] regains its mojo, and we see the inevitable reversal,' writes Chris Weston, head of research at Pepperstone Group. 'However, as we look into our crystal ball and gaze into 2019, emerging warning signs can be seen that suggest 2019 could be the year where gold bulls finally get their day in the sun.'
"He predicts a 'capital preservation trade' will grip the world in 2019, reviving currency wars, which will boost gold's safe-haven allure. And the trigger for all this will be a rise in U.S. unemployment and the realization by markets that the Fed has made a policy mistake by going too far with interest-rate hikes, which Weston says could hit in the second quarter of 2019.
"Weston notes how the central bank...won't be able to ignore a cloud over the eternal sunshine of the U.S. labor market.
"From there, 'risk aversion will take hold, with a rampant flattening of the U.S. yield curve and a [dollar] flight will be in play. This is when gold works, especially when the position in gold futures has been significantly reduced,' he says." ("In a chaotic 2019, gold will be the 'best house in bad neighborhood,'" Barbara Kollmeyer, Market Watch, 11/14/18.)
Wells Fargo turns positive on gold. Here's how the firm sees it going - Landsman
Wells Fargo's head of real asset strategy is bullish on gold due to the stock market cycle and the high dollar.
"With gold trading around one-month lows, the Wells Fargo Investment Institute is getting bullish.
"John LaForge, the firm's head of real asset strategy, sees gold regaining its luster and delivering profits for investors.
"'When your stock corrections are in the 10 to 15 percent level, which is kind of what we're in now, what we often find is that investors go out and search for some kind of insurance,' he said Tuesday on CNBC's "Futures Now." 'They typically will buy gold - even on a bounce in stocks.'
"LaForge's bullish case is built on more than just the stock market cycle. The U.S. dollar index, which hit 52-week highs this week, is also a key element of his refreshed forecast.
"'The dollar is a little too high. It has to back off,' he said. Typically, gold and the greenback move in opposite directions. So, as the dollar softens, it should provide a positive catalyst for the yellow metal.
"... LaForge... predicts $1,300 an ounce within the next 12 months, an 8 percent gain from current levels.
"'$1,200 [an ounce currently] is not so bad when you look around at all these different assets prices getting crushed,' he said.
"'We're still working off all the excesses from when gold was at $1,900,' LaForge said. 'When that happens, when you have excess supply like we do in the system, your bounces just don't become as meaningful.'" ("Wells Fargo turns positive on gold, here's how the firm sees it going," Stephanie Landsman, CNBC, 11/14/18.
Gold prices inch higher as dollar eases - Reuters
Dollar weakness continues to be a positive for gold.
"Gold prices edged higher on Thursday as the dollar weakened against the pound and euro after the British cabinet approved the prime minister's draft Brexit plan.
"Spot gold was up 0.31 percent at $1,214.58... 'There's going to be a bid for gold provided the dollar continues to slide,' said Stephen Innes, APAC trading head at OANDA in Singapore.
"The dollar index, which measures the greenback against a basket of six major currencies, traded at 96.84, off a 16-month high hit on Monday. 'We could see further slide in the dollar since we didn't get any follow-through on the bullish consumer price index effect,' Innes added.
"U.S. consumer prices increased by the most in nine months in October amid gains in the cost of gasoline and rents, pointing to steadily rising inflation that likely will keep the Federal Reserve on track to raise interest rates again next month.
"Meanwhile, Asian stocks rose on Thursday, supported by a bounce in Chinese shares on news that Beijing has delivered a written response to U.S. trade demands, raising hopes the two sides could resume negotiations to end their trade war.
"U.S. President Donald Trump and is expected to meet Chinese President Xi Jinping on the sidelines of a G20 summit in Argentina at the end of November and in early December...
"'If a good trade deal comes out of the upcoming talks (between China and the United States) it could be positive for gold,' said Renisha Chainani, head of commodity and currency research at Monarch Networth Capital. 'Gold prices have taken important support level at $1,200 and rebounded and I think this uptrend would continue.'" ("Gold process inch higher as dollar eases," Reuters, CNBC, 11/15/18.)