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Gold and silver: first objective hit

Commentaries & Views

What an explosive week in the metal’s markets capped off with volatility! All the chatter in the markets has been the rising expectations of continued fiscal stimulus and declining real interest rates. If you look at bonds across all durations (2-year, 10-year, 30-year), the markets are expecting Central Banks to remain dovish while rising inflation worries grip the markets, and I am not just talking about gold and silver. You might be asking yourself, "With unemployment in the double digits, flights from Chicago to Miami for $42 and jobs just are being permanently eliminated left and right, how can there possibly be inflation?" Well, the answer is the Federal Reserve practically doubled the money supply as measured by M2 in 6 months!

If you get our Blue Line Morning Express report, we put out a note this morning. "Gold stretched to a new high early Thursday night hitting 2089.4, again led by silver's continued surge, which nearly hit $30 at 29.915. We have been unequivocally bullish bias on gold since Q3 of 2018, and this has played out even better than we could have ever anticipated. We do not believe the precious metals rally to be in the late innings; it may only be midway through. However, straight-shot exuberance is becoming a bit overdone. We will be patient for lower prices to reposition and see an opportunity to expect platinum to lead the way within a healthy pullback. Nonfarm Payroll is due at 7:30 am CT. The U.S. Dollar has had a difficult time capitalizing on better U.S. economic data. Still, a stronger job report today should boost the dollar and weigh on the metals, whereas poor job gains should continue to buoy the sector. Washington's fifth fiscal stimulus bill or the lack thereof is also in the spotlight upon today's self-imposed deadline, and this will undoubtedly sway market sentiment." So be sure to stay up to date on the developments by registering for a Free two-week trial by clicking on the link here:

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Daily Silver Chart

Looking forward, we are revising our forecasts for gold and silver higher, while real yields should continue to fall further. Long-term, it seems that the Fed will accept an overshoot on inflation targets and leave monetary support in the system longer to ensure a recovery happens. While short-term behind the scenes, you should use the rising geopolitical tensions between the U.S. and China to add to your core positions and surprise "better than expected data" from the labor markets. While the phase one trade deal falls apart, industrial metals should see weakness i.e., copper, silver, platinum, and palladium, and that is where you should capitalize. 

Daily Gold Chart

Looking for the next critical level of support, I expect some retest of $2,000/oz. and this correction may happen in the middle of the night. Therefore, we choose to trade in the world's most liquid precious metals futures market with nearly 24-hour trading and standard-sized 100 oz. and smaller-sized 50oz. and 10oz. contracts for portfolio management.

If you did not receive the new edition of our free "Gold Trends Macro Book," it has been updated with silver slides. This monthly updated booklet will provide you with all the quantitative analysis of the precious metal’s markets. You can request yours here:

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.