Commerzbank, HSBC: Silver Starting To Outperform Gold
Monday March 21, 2016 07:09
Silver has been outperforming gold lately, causing a decline in the gold-silver ratio, say HSBC and Commerzbank. This ratio measures how many ounces of silver it takes to buy an ounce of gold. Early Friday, Comex May silver hit a high of $16.17 an ounce that was its most muscular level since October. Silver has been helped lately by dollar weakness and improvement in industrial base metals, Commerzbank says. “Because silver has noticeably outperformed gold of late, the gold-silver ratio has decreased from almost 84 at the end of last month to a good 78, its lowest level since early February,” Commerzbank says in an early-Friday research note. As of a late-Thursday HSBC report, the ratio was at 79. “We think it may narrow further, implying that silver will gain on gold,” HSBC says. “Up to now, silver failed to keep up with the gold rally. Part of this may be due to producers streaming or selling silver forward to raise cash. This increase may have weighed on prices. Longer term, this may be positive because future production has already been sold. Also silver coin and bars are becoming increasingly competitive with gold coins and bars and may see greater demand.” As of 8:59 a.m. EDT, Comex May silver was roughly flat for the day, down 1.3 cent to $16.02 an ounce, while April gold was down $11.80 to $1,253.20.
By Allen Sykora of Kitco News; asykora@kitco.com
HSBC: ‘Why Tightening Isn’t Frightening’
Friday March 18, 2016 09:06
Gold’s rally after the Federal Reserve tightening that occurred in December may last longer than normal, HSBC says. In a special report titled “Why Tightening Isn’t Frightening,” chief metals analyst James Steel points out that the metal historically has rallied for at least 100 trading days after the first Fed rate hike of a cycle. He lists three reasons the rally may be more prolonged this time: a more dovish Federal Open Market Committee, his bank’s bearish U.S. dollar outlook, and negative global interest rates. “This backs our view that gold can continue to rise, and we see it reaching $1,300/oz by year-end,” Steel says.
By Allen Sykora of Kitco News; asykora@kitco.com
Epstein On Fed Outcome: ‘Time To Move To The Bullish Side Of Gold’
Friday March 18, 2016 09:06
Veteran futures trader Ira Epstein says the outcome of this week’s meeting of the Federal Open Market Committee is bullish for gold. “I’m in the camp that’s learned to ‘never fight the Fed,’” says the director of the Ira Epstein division of Linn & Associates. The FOMC left interest rates unchanged, which was expected, but the so-called “dot plot” of views of individual Fed members showed they do not envision as much tightening as back in December. “The Fed no longer sees the strong economy they saw in December,” Epstein says. “They’ve come around to the marketplace’s point of view and see a more fragile economy that needs time without tighter money restrictions. The Fed … is going to do all it can to not restrict inflation from moving higher. Keep in mind all the stimulus that was enacted to create inflation that has failed to do so. As I see it, when breaks (in gold) occur off this current run, purchases are warranted.” Epstein later adds, “With this change in the Fed’s policy, its time to move to the bullish side of gold until something important changes.”
By Allen Sykora of Kitco News; asykora@kitco.com
