Inflationsförväntningarna i USA stiger snabbt efter förra veckans stimulanspaket och FEDs pengatryckning
Chart shows large four traders on Comex still short 150k contracts last Tuesday v average 98k. Squeeze still on.
Goldman Sachs tells clients it is time to buy gold
Gold continued to push higher on Tuesday as a recent wave of selling dried up and Goldman Sachs told its clients the time had come to buy the “currency of last resort”. Like other asset classes, gold was hit hard in the recent scramble for US dollars, falling more than 12 per cent from its early March peak of around $1,700 a troy ounce to $1,460 last week. The yellow metal started to see a resurgence on Monday, rising by more than 4 per cent after the Federal Reserve said it would buy unlimited amounts of government bonds and the US dollar fell. It gained another 4 per cent to $1,618 on Tuesday helped by the recommendation from Goldman Sachs, which said gold was at an inflection point and could hit $1,800 over the next 12 months. The record high for gold is $1,900, reached in 2011. “We have long argued that gold is the currency of last resort, acting as a hedge against currency debasement when policymakers act to accommodate shocks such as the one being experienced now,” said Jeffrey Currie, head of commodities at the Wall Street bank. As well as being seen as a hedge against all kinds of market volatility, gold is viewed by many investors as a way to protect themselves from the debasement of currencies and also inflation.
Efter FEDs besked om oändlig pengatryckning börjar nu papperspengarnas existens sättas på ordentligt prov
Retail investors in Europe and the US have bought up gold and silver bars and coins over the past two weeks in an effort to protect their money from the collapse in global stock prices and many currencies." And with the Fed now set to unleash unprecedented dollar destruction by injecting over $625 billion in freshly printed fiat into the system this week alone...
According to Kitco, silver sales are skyrocketing: “Data from the U.S. Mint shows that it has sold 2.32 million one-ounce silver coins so far this month, up significantly from February sales of 650,000 coins.”
And based on wholesale cost over spot price for 1 oz bullion American Eagles, premiums for physical products are soaring higher. Gold is selling at about a 6% premium and silver is selling at an 86% premium. Both of these figures are well over their averages from earlier in the year.
Coronavirus: China local governments try to boost spending with voucher programme worth billions of yuan
China’s central government has endorsed efforts by local governments to distribute prepaid vouchers worth billions of yuan to lift consumer spending amid the coronavirus outbreak, although the packages pale in comparison with direct handouts announced by the Hong Kong government and planned in the US.
The National Development and Reform Commission (NDRC), the country’s top economic planning agency, said it was closely watching voucher programmes in a number of cities and urged other local governments to consider similar measures based on their budgetary leeway.
Som vid tidigare kriser flyr investerarna EM och behöver USD vilket leder till en starkare USD och en ändå mer trumpen Trump
This is the biggest 7-day gain for the USDollar since Black Wednesday in 1992 when George Soros "broke The Bank of England," crashing the pound and forcing Britain to withdraw from the European Exchange Rate Mechanism.
It is also on par with October 1978's surge in the dollar when the Fed clamped down hard on monetary policy - after the signing of the Full Employment and Balanced Growth Act, better known as the Humphrey-Hawkins Act, mandating The Fed to crack down on inflation (which Volcker then did by drastically raising rates) - sending the stock market into the infamous "October massacre."
BullionStar Update – The Window to Purchase Precious Metals with Fiat Currency is Closing
More and more refineries, mints and fellow bullion dealers are suspending their operations indefinitely. At BullionStar, we are facing significant operational and stock inventory challenges. There’s an acute shortage for particularly Gold Coins, Silver Bars and Silver Coins. For Gold Bars, some of the private refineries are still open and take orders but have long backlogs.
COMEX and London OTC Spot Price Discovery Failing
What does this mean for price premiums?
Due to the paper spot and futures precious metals markets not reflecting the demand and supply for physical precious metals, premiums are high and are fluctuating a lot.
The precious metals price premium mechanism is there to balance physical demand and physical supply of precious metals.
Despite higher than normal premiums, demand for physical precious metals continues to be overwhelming. We receive several hundred orders each day. We’ve had two hour waiting times in the shop even though we just expanded the shop to 5 counters and even though we have an extremely efficient system for serving customers. At BullionStar, we currently have about 8 customer buy orders for every customer sell order which is the highest we have seen in years.
Extreme Demand – Scarce Supply
Precious metals have been hit by a double whammy. Demand is truly extreme and unprecedented, and at the same time due to the COVID-19 situation, the bullion supply chain is facing the same issues as other scarce good supply chains.
The underlying problem here is that price discovery for precious metals is a farce and is broken as we have warned about and pointed out so many times over the years such as here, here, here, here and here.
Disconnect between the Paper Price and Physical Price
There is a disconnect between on the one hand, the COMEX futures and London spot OTC market and on the other hand, the physical precious metals market.
Unless there is a very strong rally in the paper market that balances physical demand and supply, the disconnect between the paper market and physical market may widen until the paper pricing system (COMEX futures and LBMA unallocated system) implodes.
In a scenario where the paper spot market doesn’t rally to balance physical demand and supply, physical precious metals will no longer be priced based on the spot market. Bullion dealers will stop pricing metals. Many have already done so by suspending the accepting of orders.
When preferences in the derivatives paper spot and futures markets, which are unbacked or only partially backed by precious metals, differ from supply and demand in the physical market, prices disconnect.
The Window to Purchase Precious Metals with Fiat Currency is Closing
The window for purchasing physical precious metals with fiat currency is quickly closing. At this time, it is still possible to settle physical precious metals purchases in fiat currency with some bullion dealers. At BullionStar, we are still accepting orders for precious metals settled in fiat currencies, and priced based on spot with a premium, but that is subject to change.
I would strongly recommend everyone to value and count their physical precious metals in weight i.e. in grams or troy ounces, not in fiat currency.
If you don’t hold physical precious metals yet, the window for acquiring metal is closing in. At BullionStar, we still have inventory stock of some items but are running out quickly. By traditional means, our premiums are very high but still not high enough for physical demand and supply to balance.
If you as a saver or investor find actual bullion in stock with another bullion dealer that has better conditions than us, go for it. At this time, any fiat currency price quoted for physical metals is a good price.