Gold and silver continue to move higher, faster, than forecasted by analysts
It was another day in which the precious metals ran strongly to higher pricing. Initially both gold and silver spiked strongly in mid-March when the coronavirus epidemic grew into a global pandemic. Gold gained almost $300 as it traded from $1450 to $1788.
Gold futures basis the most active August contract closed up $23.70 (+1.28%) and is currently fixed at $1867.50. Silver gained 7.92%, which is a gain of a $1.70. Currently September silver futures are fixed at $23.265.
The accelerated moves to higher pricing are based upon new fundamental events unfolding during the pandemic causing market participants to not only react to central banks flooding liquidity to reignite their contracting economies. The monetary policy of quantitative easing always results in a devaluation of the currency specific to that central-bank.
The recent acceleration of higher gold and silver prices are tied to heightened tensions which have escalated to a new level between the United States and China. China reported today that the U.S. had ordered it to close its Houston consulate, magnifying the existing tension between our two superpowers. China labeled the action by the United States as an “unprecedented escalation by the U.S.” this led China to threaten and retaliate if the decision isn’t reversed.
The recent breakdown and stalemate between China in the United States adds fuel to the fire created from the massive U.S. fiscal stimulus, as well the Federal Reserve maintaining a monetary policy that is very accommodative. The actions by the Federal Reserve have the potential to devalue the U.S. dollar, which is exactly what we have seen.
The totality of geopolitical and economic expenditures creates a perfect storm scenario in which we could see gold challenge and trade to a new all-time record high. Currently, gold is at a new all-time record high when paired against the Euro dollar, the Indian Rupee, the Canadian Dollar and many others.
According to MarketWatch, Boris Schlossberg, managing director of FX Strategy for BK Asset Management said, “Gold attracts flows when real interest rates compress and when political tensions rise, so the current market regime is a perfect recipe for a move higher over the intermediate term horizon.”
It is clear to many analysts including myself that gold and silver have rallied based on two primary reasons; U.S. dollar weakness and extremely bullish sentiment by traders and market participants.
Jeroen Blokland, senior portfolio manager at Robeco Asset Management believes that, “It seems the precious metal has been caught up in the perfect storm. Much of what’s driving silver also is driving gold — aggressive monetary policy financing of fiscal spending, which limits the ability of bond yields to rise. That is sending inflation-adjusted, or real, yields lower, which tends to boost precious metals.”
Unquestionably as long as central banks continue along the path of extremely accommodative monetary policies, they will devalue the currency of their country. However not since the end of World War II have so many central banks devalued their currencies through a process of quantitative easing. These actions can only have one outcome in regards to gold and silver pricing, and that is that they will continue to gain value, and traders will continue to fuel the demand for the safe haven asset grow substantially.
Wishing you as always good trading and good health,
This report is now free and publicly available to everyone
Gold Forecast: Proper Action
On July 7th, we issued the following Trade Alert; BREAKOUT and Close ABOVE $1800. Buy August gold @ the market – Current $1807 to $1808.10. Place Protective Stop @ $1762 just below the low of the last three days.
Yesterday, July 21st we sent out a trade alert to raise stops.
We are recommending that you raise your stop from $1762 to $1826, placing at just below the former resistance level that is now a support level. Also, we are recommending that if gold pricing continues to run higher that you put a limit order in to sell your August gold position at $1860 or better.
long August gold @ $1807 and sold @ $1860 for a profit of $5300.00 per contract
long spot gold @ $1790 and sold @ $1850 for a profit of $6000 per 100 ounces
ETF's: Maintain long ETF positions:
NUGT in @ $73.00
GLD in @ $167.00
SLV in @ $18.00
We are extremely bullish on gold and silver as the global pandemic continues to affect the reopening of economies worldwide, the effective close of gold futures above $1800 on Tuesday, July 7th, was the signal that we have waited for. All subscribers should be long futures positions and have re-balanced their portfolios to weight gold heavily.
Gold Market Forecast
Today’s dynamic upside move in both gold and silver were welcomed but unexpected. The fact that Silver gained 9% in trading today, and 6% yesterday is a historical first in terms of a two day climb in silver. Gold is now within striking distance of the all-time record high. This is especially true when you look at the next most active contract month which is October and currently trading at $1889 per ounce.
Today’s video report will detail what our strategy is to reenter from the long side in both gold and silver. We placed our upside target where we believe we could see resistance form and a correction begin. The first part has come into fruition, now we must determine whether or not we will see prices back off or if we will break through this price point. If we do break above this price point the next target is $1920 per ounce in gold. The next target for silver if we get follow-through is $25-$26 per ounce