"Gold Set To Soar As Inflation Fears Mount" by Alex Kimani

[Tom Nolan + 2,443]

• Gold prices have climbed to their highest level in months, and the precious metal could still have plenty of upside. 
• Inflation fears, on top of a weaker dollar, have reinforced the bullish case for gold.
• A gold-buying spree in India has added even further upward pressure for gold prices.

Gold Set To Soar As Inflation Fears Mount

By Alex Kimani - Nov 11, 2021, 6:00 PM CST

• Gold prices have climbed to their highest level in months, and the precious metal could still have plenty of upside. 
• Inflation fears, on top of a weaker dollar, have reinforced the bullish case for gold.
• A gold-buying spree in India has added even further upward pressure for gold prices.

Join Our Community

Last year proved to be a gold speculator and investor's dream after gold prices rallied hard to hit historical highs thanks to a perfect storm of a global pandemic, massive government stimulus packages, weakening dollar, and a stock market bull run that had finally run out of gas. The torrid rally represented the sharpest gain the metal has mustered in more than a decade, with gold prices nearly doubling between August 2018 and August 2020.

Unfortunately, the rally has lately run out of steam, with gold prices pulling back sharply from an all-time high of $2,069.40 an ounce, set on Aug. 6, 2020.

Gold prices have been in the dog house for much of the current year ever since the Federal Reserve signaled higher interest rates amid expectations of rising inflation, while a brawny dollar has not been helping matters.

Luckily for the bulls, the yellow metal has lately been receiving support from unexpected quarters.

Gold prices have climbed to their highest level in nearly three months in tandem with a weaker dollar as U.S. inflation hit new highs. Gold is traditionally regarded as an inflation hedge though it has a mixed track record in that regard. Indeed, gold is a proven long-term hedge against inflation, but its performance in the short term is less convincing.

Meanwhile, a gold-buying spree in India linked to Diwali festivities has helped boost demand and prices.

Spot gold has surged nearly 4% over the past five trading sessions to trade at $$1,857.90 per ounce on Thursday, a level it last touched in June with a cross-section of Wall Street punters saying the commodity is now poised for a breakout.

The bulls currently have the upper hand, with gold having broken the previous resistance at $1,830-$1,835.

Source: Trading View

Cusp of a breakout

Inflation numbers for the month of October came in worse than expected, with the Consumer Price Index (CPI) jumping 6.2%, a 31-year high.

CPI increased 0.9% on a monthly basis against the 0.6% estimate.

 Annual core inflation clocked in at 4.6%, compared with the 4% expectation and the highest since August 1991.

Fuel oil prices soared 12.3% for the month, and 59.1% over the past year. Energy prices overall climbed 4.8% in October and 30% for the 12-month period.

In a separate report by the Labor Department, real wages after inflation fell 0.5% from September to October, with a 0.4% increase in average hourly earnings more than offset by the CPI surge.

"Inflation is clearly getting worse before it gets better, while the significant rise in shelter prices is adding to concerning evidence of a broadening in inflation pressures," Seema Shah, chief strategist at Principal Global Investors, has told CNBC.

The Fed has conceded that inflation has been more persistent than expected, but says it expects the situation to return to normal in a year or so. Surging inflation could force the Fed to tighten policy more quickly than it has signaled though it has been insisting that interest rate hikes are still off in the future.

According to the CME's FedWatch tool, traders are currently pricing in two rate increases in 2022 and about a 44% probability of a third hike.

Inflation matters aside, a gold-buying spree in India has been giving the precious metal a boost.

The India Gem and Jewellery Domestic Council Chairman estimates that gold sales this year will be 15-20 percent above pre-pandemic levels (2019), while the India Bullion and Jewellers Association (IBJA) has reported that sale of gold on Dhanteras across the country this year was about 50 tonnes, valued at over Rs 20,000 crore. That's a 67% jump compared to Dhanteras in 2019 that saw gold worth Rs 12,000 crore change hands. Dhanteras festival marks the first day of Diwali celebrations.

Wall Street is growing increasingly bullish on the gold trajectory: "Gold prices are on the cusp of a breakout. Considering the extremely poor sentiment in precious metals across the last few months, the bar is low for prices to slice through trendline resistance, "TD Securities analysts have told CNBC.

By Alex Kimani for Oilprice.com

[Tom Nolan + 2,443]

https://oilprice.com/Energy/Energy-General/Surge-In-Energy-Prices-Poses-Major-Inflation-Risk.html

Surge In Energy Prices Poses Major Inflation Risk

By Irina Slav - Nov 11, 2021, 5:00 PM CST

• Soaring energy costs are one of the main drivers of inflation
• The U.S. Labor Department reported the fastest consumer price increase since 1990 for October
• Inflation is set to remain a problem well into 2022

Join Our Community

When the first signs of inflation began to make themselves visible earlier this year, it was welcomed as a signal of strong economic recovery. Then, however, came the energy crunch, and now the two are comingling into a worrying trend. In the United States, the Labor Department reported the fastest consumer price increase since 1990 October. The figure came in at 6.2 percent, driven higher by, among other things, higher gasoline prices.

In China, prices of goods at the factory gate rose to a record high last month because of soaring energy costs. The world's biggest exporter suffered an arguably worse energy shortage than Europe this autumn, with supply so tight it led to factory closures and blackouts.

In Europe, media are reporting that Germany is facing the highest inflation rates in three decades because of higher energy prices. The situation is not much different in the rest of Europe either. Prices are climbing in tune with the price of energy, regardless of where this energy comes from.

"The surge in energy prices poses significant near-term risks to global inflation and, if sustained, could also weigh on growth in energy-importing countries," said the chief economist and director of the World Bank's Prospects Group, Ayhan Kose, as quoted by Reuters. The Group produces the World Bank's Commodity Markets Outlook.

Indeed, energy prices have invariably been a major driver of consumer prices. As such, they have also been a driver of inflation. Yet this time, it's all different. This time, the global economy is trying to get back on its feet after the devastation wrought on it by lockdowns in response to the coronavirus pandemic. And if inflation gets out of hand, this will become this much harder.

"Inflation hurts Americans pocketbooks, and reversing this trend is a top priority for me," President Biden said after the release of the consumer price index report yesterday, as quoted by Bloomberg.

Related: Can U.S Shale Drillers Help Prevent An Energy Crunch?

"The largest share of the increase in prices in this report is due to rising energy costs," the president continued, adding, "I have directed my National Economic Council to pursue means to try to further reduce these costs, and have asked the Federal Trade Commission to strike back at any market manipulation or price gouging in this sector."

Inflation, which the Fed initially dismissed as "transitory", is becoming a real headache not only for the United States but also for much of the world, it seems, and it could threaten the recovery of the global economy. The question is, of course, how to bring energy costs down.

Normally, if prices reach a worrying level, OPEC would step in and ramp up production. This time, however, OPEC and its OPEC+ partners are sticking to their limited-supply guns in evidence of its belief that the recovery drive is stronger than inflation fears, at least for now.

The real question, therefore, is how long OPEC+ will continue with its policy of limited production ramp-up, especially as large consumers voice their displeasure with this policy and some, such as China last month, are buying less oil as a result of the price rise.

According to analysts from investment banks and the World Bank, oil supply will grow more markedly next year, and the price rally in energy will weaken, at least in fossil fuels. In renewable energy, prices are also higher because of the supply chain problems caused by the pandemic, which appear to be particularly stubborn and are seen lasting well into 2022. Inflation, in other words, will remain a serious concern, especially as central banks go ahead with stimulus tapering. Just how serious it will become yet remains unclear, but it would, once again, depend on oil supply.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

• Chinese Crude Oil Imports Drop To Three-Year Low In October
• Natural Gas Prices Soar As Putin Punks Europe
• Why Uranium Stocks Are Soaring

[Tom Nolan + 2,443]

NOTE THE CHARTS - "Vaccine-Resistant Variants"  because Federal Reserve actions hinge on this...

In the 85-page report published moments after the market close, the Fed warned that as Bloomberg put it, "prices of risky assets keep rising, making them more susceptible to perilous crashes if the economy takes a turn for the worse" adding that “asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall."

https://www.zerohedge.com/markets/fed-issues-market-red-alert-warns-stocks-vulnerable-significant-declines

Fed Issues Market Red Alert: Warns Stocks Vulnerable To "Significant Declines"

by Tyler Durden

Monday, Nov 08, 2021 - 04:20 PM

It's not just increasingly more banks warning that the market is in a bubble and extremely elevated asset prices are risking a broader market crash (see "This Is How One Bank Will Trade The Bursting Of The Biggest Ever Asset Bubble In 2022"): moments ago, in its semi-annual Financial Stability Report, the Fed itself has issued the same warning.

In the 85-page report published moments after the market close, the Fed warned that as Bloomberg put it, "prices of risky assets keep rising, making them more susceptible to perilous crashes if the economy takes a turn for the worse" adding that “asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall."

The Fed's full view of the current level of vulnerabilities is as follows:...

 

We WILL see an increase in variants, because every vaccinated person will help to spread them.  Vaccines are only designed for the "Alpha" rendition of SARS-CoV-2 virus.  This "Alpha" is the Legacy virus, but virtually no longer exists.  Other Variants primarily spread via those who not have natural immunity which are the Vaccinated population.  Natural Immunity is designed to attack variants of the spike protein along with the entire virus itself.  Vaccinated people's systems are only designed to target an "Alpha" spike protein.

Top Scientists discuss it here

https://community.oilprice.com/topic/24754-moments-after-the-market-close-on-monday-nov-8th-the-fed-issued-a-warning-zero-hedge-will-we-see-variants-emanating-from-the-vaccinated/#comment-167389

[Tom Nolan + 2,443]

https://community.oilprice.com/topic/24765-metals-will-be-the-oil-of-the-future-by-alex-kimani/

 

[notsonice + 1,243]

4 hours ago, Tom Nolan said:

• Gold prices have climbed to their highest level in months, and the precious metal could still have plenty of upside. 
• Inflation fears, on top of a weaker dollar, have reinforced the bullish case for gold.
• A gold-buying spree in India has added even further upward pressure for gold prices.

Gold Set To Soar As Inflation Fears Mount

By Alex Kimani - Nov 11, 2021, 6:00 PM CST

• Gold prices have climbed to their highest level in months, and the precious metal could still have plenty of upside. 
• Inflation fears, on top of a weaker dollar, have reinforced the bullish case for gold.
• A gold-buying spree in India has added even further upward pressure for gold prices.

Join Our Community

Last year proved to be a gold speculator and investor's dream after gold prices rallied hard to hit historical highs thanks to a perfect storm of a global pandemic, massive government stimulus packages, weakening dollar, and a stock market bull run that had finally run out of gas. The torrid rally represented the sharpest gain the metal has mustered in more than a decade, with gold prices nearly doubling between August 2018 and August 2020.

Unfortunately, the rally has lately run out of steam, with gold prices pulling back sharply from an all-time high of $2,069.40 an ounce, set on Aug. 6, 2020.

Gold prices have been in the dog house for much of the current year ever since the Federal Reserve signaled higher interest rates amid expectations of rising inflation, while a brawny dollar has not been helping matters.

Luckily for the bulls, the yellow metal has lately been receiving support from unexpected quarters.

Gold prices have climbed to their highest level in nearly three months in tandem with a weaker dollar as U.S. inflation hit new highs. Gold is traditionally regarded as an inflation hedge though it has a mixed track record in that regard. Indeed, gold is a proven long-term hedge against inflation, but its performance in the short term is less convincing.

Meanwhile, a gold-buying spree in India linked to Diwali festivities has helped boost demand and prices.

Spot gold has surged nearly 4% over the past five trading sessions to trade at $$1,857.90 per ounce on Thursday, a level it last touched in June with a cross-section of Wall Street punters saying the commodity is now poised for a breakout.

The bulls currently have the upper hand, with gold having broken the previous resistance at $1,830-$1,835.

Source: Trading View

Cusp of a breakout

Inflation numbers for the month of October came in worse than expected, with the Consumer Price Index (CPI) jumping 6.2%, a 31-year high.

CPI increased 0.9% on a monthly basis against the 0.6% estimate.

 Annual core inflation clocked in at 4.6%, compared with the 4% expectation and the highest since August 1991.

Fuel oil prices soared 12.3% for the month, and 59.1% over the past year. Energy prices overall climbed 4.8% in October and 30% for the 12-month period.

In a separate report by the Labor Department, real wages after inflation fell 0.5% from September to October, with a 0.4% increase in average hourly earnings more than offset by the CPI surge.

"Inflation is clearly getting worse before it gets better, while the significant rise in shelter prices is adding to concerning evidence of a broadening in inflation pressures," Seema Shah, chief strategist at Principal Global Investors, has told CNBC.

The Fed has conceded that inflation has been more persistent than expected, but says it expects the situation to return to normal in a year or so. Surging inflation could force the Fed to tighten policy more quickly than it has signaled though it has been insisting that interest rate hikes are still off in the future.

According to the CME's FedWatch tool, traders are currently pricing in two rate increases in 2022 and about a 44% probability of a third hike.

Inflation matters aside, a gold-buying spree in India has been giving the precious metal a boost.

The India Gem and Jewellery Domestic Council Chairman estimates that gold sales this year will be 15-20 percent above pre-pandemic levels (2019), while the India Bullion and Jewellers Association (IBJA) has reported that sale of gold on Dhanteras across the country this year was about 50 tonnes, valued at over Rs 20,000 crore. That's a 67% jump compared to Dhanteras in 2019 that saw gold worth Rs 12,000 crore change hands. Dhanteras festival marks the first day of Diwali celebrations.

Wall Street is growing increasingly bullish on the gold trajectory: "Gold prices are on the cusp of a breakout. Considering the extremely poor sentiment in precious metals across the last few months, the bar is low for prices to slice through trendline resistance, "TD Securities analysts have told CNBC.

By Alex Kimani for Oilprice.com

• Gold prices have climbed to their highest level in months, and the precious metal could still have plenty of upside. 
• Inflation fears, on top of a weaker dollar, have reinforced the bullish case for gold.
• A gold-buying spree in India has added even further upward pressure for gold prices.

????

 

what a load of BS

 

the Dollar has been strengthening on a steady basis since last December, it has not been weakening

Gold is range bound and is not moving anywhere, Year to year it is down $12. Adjusted for inflation since its breaching of $1800 gold in 2011. ..... Gold is a big loser.

Gold upward pressure???? Gold has breached $2000 and has been  falling backwards..... The $2000 barrier ....good luck....gold since the pandemic started has gone nowhere........Now if everyone got vaccinated you might have something......Sad so many tards out there are un-vaccinated.

 

 

upward pressure on Gold? Gold has lost its shine as an investor safe haven...........

Edited November 12, 2021 by notsonice

[Tomasz + 1,608]

There is no need to convince anyone that the official measure of CPI is said to  have not much to do with the realities in which most US citizens live. As far as possible  the official CPI is undercut.

This can be seen, for example, on the basis of ShadowStats data, where CPI inflation is shown, but still measured with the methodology adopted in 1980.

Today's + 6.2% are actually levels closer to 15%, according to ShadowStats, whose methodology has  however, also been heavily criticized for the lack of detailed empirical research and an arbitrarily adopted correction factor.

Every goverment do this in more or less elegant way so I dont mean to attack USA specifically.

 

Edited November 13, 2021 by Tomasz

[footeab@yahoo.com + 2,187]

On 11/12/2021 at 12:56 PM, notsonice said:

• Gold prices have climbed to their highest level in months, and the precious metal could still have plenty of upside. 
• Inflation fears, on top of a weaker dollar, have reinforced the bullish case for gold.
• A gold-buying spree in India has added even further upward pressure for gold prices.

????

 

what a load of BS

 

the Dollar has been strengthening on a steady basis since last December, it has not been weakening

Gold is range bound and is not moving anywhere, Year to year it is down $12. Adjusted for inflation since its breaching of $1800 gold in 2011. ..... Gold is a big loser.

Gold upward pressure???? Gold has breached $2000 and has been  falling backwards..... The $2000 barrier ....good luck....gold since the pandemic started has gone nowhere........Now if everyone got vaccinated you might have something......Sad so many tards out there are un-vaccinated.

 

 

upward pressure on Gold? Gold has lost its shine as an investor safe haven...........

Sigh... Gold genius is up 550% in last 20 years... Silver ~500% in last 20 years.  It is almost as if you PURPOSEFULLY lied like a little coward by picking the peak in 2011...   Who knew, when you print money, your currency drops in value... SHOCKER!

You might figure out what a vaccine is and what is not eventually.  Let me guess you are also wearing a moron diaper as you have not passed 1 year old math where a 2nm virus can ... pass through a 95nm diameter hole.... Or the giant voids top bottom sides where it floats in the room as no one actually owns a medical grade mask which are only ~5% effective at slowing spread if they are changed out every hour on the hour...

[footeab@yahoo.com + 2,187]

23 hours ago, Tomasz said:

There is no need to convince anyone that the official measure of CPI is said to  have not much to do with the realities in which most US citizens live. As far as possible  the official CPI is undercut.

This can be seen, for example, on the basis of ShadowStats data, where CPI inflation is shown, but still measured with the methodology adopted in 1980.

Today's + 6.2% are actually levels closer to 15%, according to ShadowStats, whose methodology has  however, also been heavily criticized for the lack of detailed empirical research and an arbitrarily adopted correction factor.

Every goverment do this in more or less elegant way so I dont mean to attack USA specifically.

 

The REAL CPI is buy a car, a house, property(anywhere) and it all matches the blue line.  The Red is based on the cost of food prices only for the most part or cost of a toaster which are NOT major expenses in your life in comparison. 

[Tom Nolan + 2,443]

https://www.zerohedge.com/commodities/trade-idea-goldman-gold-10x-upside

VIDEO and EMBEDDED Docs in article

Gold 10x Upside: A Trade Idea From Goldman

by Tyler Durden

Sunday, Nov 14, 2021 - 06:30 PM

With gold having been left long ago at the station, abandoned by the "hard money" crowd which together with today's youth has found a new fascination with "digital gold" i.e., cryptos, in a dynamic profiled recently by JPMorgan which said that "Institutions Are Rotating Out Of Gold Into Bitcoin As A Better Inflation Hedge", even as inflation is soaring to levels not seen since the days of Paul Volcker's hyperinflation, is gold about to have a new chance to shine? According to a recent burst of pro-gold articles, golden sentiment may be about to shift.

As Bloomebrg writes today, "gold may outperform the S&P 500 Index about 20% as the threat of stagflation becomes real." It elaborates:

Concerns over peak economic growth are coinciding with rising inflation, which pushed the real yield on Treasuries to record lows. The high correlation between the real yield and gold suggests bullion is undervalued. Trading signals based on 20-week moving averages imply a potential breakout rally over the next year.

One of the factors cited by Bloomberg is that gold has a strong inverse relationship with the U.S. real interest rate, which has resumed its slide into negative territory since March. Gold prices and the real yield have an r*square of 0.91 on the regression model over the last five years and the red asterisk below the red line signals gold prices are undervalued for the current level of yield.

Separatley, Bloomberg takes us on a quick tour of Bollinger Band studies, which plot lines above and below a simple moving average at a specified number of standard deviations to identify periods of high and low volatility. The first chart shows the weekly candle is breaking out of the upper trading band.

The next chart shows the bandwidth is about to widen from its lowest point since 2019 which created a so-called volatility squeeze. It suggests a significant increase in volatility ahead, potentially in favor of gold. And, as Bloomberg further notes, a trading strategy that follows the weekly crossover with a volatility squeeze has helped gold to beat S&P 500.

There have been five cases where gold crossed above its 20-week moving average with bandwidth below 6 over the past two decades. On average, bullion outperformed S&P 500 by 19% over the next 52 weeks with no losing record. The sixth signal is still counting. As Bloomberg concludes, "if this pattern repeats, gold is well primed to outshine S&P 500 next year."

In addition to Bloomberg, in a Friday note, UBS strategist Wayne Gordon looked at the recent surge in the price of gold, which jumped $50/oz after the release of US inflation data, which helped it break above the barrier of $1,835. Looking ahead, UBS sees "risks for further strength in CPI in early 2022, which could stoke even stronger demand for gold" while "recent hawkish comments by some Fed officials caused a flattening of the US yield curve, only adding to gold's shine." As a result, UBS raised its end-March pricate target modestly from $1,700 to $1,800 while acknowledging that risks are "skewed to the upside in the short run, and moves above $1,900 should not be ruled out."

So, gold above $1,900, hardly a shocker since the yellow metal is already trading just $35 away.

A far more convincing pitch for gold also on Friday came from none other than Goldman's head of energy research Damien Courvalin who repeated the bank's recent optimistic talking points on the yellow metal in an interview with Bloomberg in which he said that "gold is set to boom" far higher from its current price.

Which actually brings us to the punchline: a trade idea for gold, also from Goldman, courtesy of the bank's European strategist Bernhard Rzymelka who urges clients to "consider levered gold upside" which while attractive exposure in its own right is also cheap optionality on even  lower real yields.

The trade idea is as follows: Buy Gold 6m expiry  $2130 binary call @ 10% offered

• 10x maximum payout
• Ref. $1830 spot, 26 Apr 22 expiry date
• Risks to the downside limited to premium spent

His four investment highlights:

• The yellow metal looks ready to break higher on chart & follow the rally in US real yields
• Our -1.10% target for 30y real yields equates to $2300 in Gold
• Positioning in gold is light and looks ready to build higher
• Implied volatility remains close to the 2 year lows  & has started to break higher today

Charts below:

Gold with upside to $2300 if real yields hit their -1.10% target. Options markets offer attractive upside over the next 3-6 months.

Implied 6m volatility has started to break higher, suggesting it is an attractive buy if the downside momentum in real yields extends as expected... and gold starts catching up.

Gold positioning by non-commercials has consolidated & looks ready to make new highs. At this point feel free to make fun of applying Elliott waves to CFTC positioning... but it should arguably reflect human psychology as much as the price chart itself. For the latter see below from the MarketStrats chart guru MacNeil Curry.

What if... flows into inflation-protected bonds start extending into gold? At 0% real yield the yellow metal looks increasingly attractive versus TIPS at -0.60% and falling.

Gold chart: On the brink of a breakout. A break of 1833 targets 1930, potentially 1947. Real yields are supportive of higher gold prices

• On a medium term (multi-month) basis we have been bullish. The series of impulsive advances from the March/April lows and more recently from the Aug-08 and Sep-29 lows point to higher prices.
• While the lack of  upside acceleration has been increasingly frustrating price and pattern still point higher.
• Further supportive of higher gold prices is the strong inverse correlation btwn 10yr Real Yields and Gold (see chart 2) and the increasing likelihood that fact that 10yr Real Yields are set to make new all time lows (and resume their bull trend – see above)
• Indeed, a move above 1833 (14m channel top in brown and almost 4m ascending triangle resistance in royal blue) would confirm the bullish potential, targeting 1930 (swing target) ahead of 1974 (measured moves)
• Back through the Nov-03 low of 1760 warns of stalling, while a move below 1744 (Ascending Triangle support royal blue) would say that our bullish view is misplaced

* * *

Post scriptum 1: How will investors feel about an equity risk premium at 5.5% once real yields trade -1% all else equal?

Post scriptum 2 from Rzymelka: "You are crazy. 30y bond yields can never rally if inflation (term) premium reprices this much higher." Well.. in normal times that probably is true. But not after a major shock & policy response that jointly turbo charge BOTH the structural "savings glut" AND the cyclical "catch up recovery". In fact, the former puts the latter on steroids^2. Sounds crazy. Is crazy. So lever up. This will probably be the best (and possibly final) party of our generation."

[Piotr Berman + 82]

There are reasons to believe that inflation uptick is temporary.  Huge demands drops during early months of pandemic caused closure of the most vulnerable production facilities, not just in fracking oil/gas, and when the demand was restored, shortages started.   However, big uptick in energy prices lead to temporary closures of production now (like in "dry ice", frozen CO2), it can take a year or more to ripple effects to stabilize.

Central banks are more sophisticated than in Carter/Reagan years, so I am "personally" optimistic in the sense, I do not move my retirement nest away from stock mutual funds.  On the other hand, what is currently convincingly better?  Bonds yielding negative real interest?

 

[Starschy + 211]

Should you invest in Gold? My answer is no. When the Gold Price is back in the range of 1300-1500 USD you may add some Gold to your portfolio. Buying some few thousand Nornickel Stock would be a solid option. They have every kind of Metal.

[Tom Nolan + 2,443]

https://tradingeconomics.com/commodity/gold

Gold steadied around $1,860 an ounce on Tuesday, after rising toward the $1,900 level earlier in the day as the US dollar index extended gains for the second session to 16-month highs after Fed’s Bullard said the US central bank should tack in a more hawkish direction to manage the inflation risk. On the economic data front, both US retail sales and industrial output rose more than expected in October. Gold has been rising for the past two weeks to 5-month highs as investors bought it to hedge against rising inflation figures. The annual inflation rate in the US accelerated to a three-decade high of 6.2% in October, while the Euro Area consumer prices jumped 4.1%, the most since July 2008 and in Germany inflation hit the highest since 1993 at 4.5%. In China, prices advanced faster than expected to a 13-month high of 1.5%.

https://tradingeconomics.com/commodity/silver

Silver prices rallied to an over 3-month high of $25 per troy ounce, lifted by reignited inflation woes after US consumer prices jumped 6.2% in October, the steepest hike in the CPI since 1990. The precious metal also took advantage of US Fed Chairman Powell’s remarks last week, saying the central bank will be patient on the rate hike program. Earlier, US household inflation expectations accelerated to a record high of 5.7%, as consumers continued to suffer from rising household expenses, a New York Fed Survey showed.

[Tom Nolan + 2,443]

https://oilprice.com/Energy/Energy-General/The-Real-Winner-In-The-War-Between-Fossil-Fuels-And-Renewables.html

The Real Winner In The War Between Fossil Fuels And Renewables

By Felicity Bradstock - Nov 17, 2021, 1:00 PM CST

• While the impact of fossil fuels on the environment is commonly understood, casual observers may not be aware of the environmental footprint of renewable energy  due to its heavy reliance on metals
• As the energy transition continues and demand for fossil fuels begins to plateau, demand for copper and other metals is set to soar
• Within the U.S. and in other metal producing countries such as Chile there is a lot of uncertainty and environmental risk associated to copper mining 

Join Our Community

The pressure from international organizations and governments to transition quickly away from fossil fuels is driving up demand for other natural resources dramatically. While the world focuses on leaving coal, oil, and gas in the past, as we invest heavily in renewables, one issue has been largely overlooked – the hefty use of metals in renewable energy projects.

As governments, international organizations, and environmental activists around the world ramp up the pressure for energy companies and consumers to switch from traditional energy sources to renewable alternatives, the reliance on metals is increasing year on year to support the budding renewables industry. Copper is one of the high-demand metals in question, used in many components needed for the generation of solar, hydro, thermal, and wind energy, as well as in electric vehicle (EV) batteries. In fact, around 25 percent of copper use was associated with green energy in 2021, a figure that is expected to increase to 40 percent in 2022. For this reason, the estimated demand for copper is expected to increase by 350 percent by 2050. This has also driven up the price of the metal, with copper doubling in price in the U.S. between 2019 and 2020.

We’re now seeing a battle in the U.S. over whether copper mining should go ahead or not. There seems to be a generational divide in some mining towns, with youths enthusiastic about the new economic potential copper mine developments would bring. However, the older generations and the former miners of towns across the U.S., like Superior in Pinal County’s Copper Corridor, deeply distrust big mining firms, which have previously extracted metals without considering the impact on the landscape and leaving a huge mess in their wake.

In New Mexico, there is now talk of reopening the Sierra County Copper Flat Mine, which closed down during the 1980s as copper prices plunged. Resource company Themac Resources is in the process of applying for a 12-year mining permit, which could see New Mexico become a hub for copper mining, with Freeport-McMoRan’s Chino and Tyrone copper mines proving to be extremely lucrative, as the company expects copper demand to double in the next five years. The reinvigoration of the metals markets could see greater investment in failed mines and disused terrain across the U.S. as the demand for copper, nickel, cobalt, and lithium increases.

However, local residents and environmentalists worry that the development of new mining areas will bring about the age-old concern of contaminants spilling over from the projects into the groundwater, and increased levels of pollution in the area. So, the battle between the lesser evil continues – fossil fuels versus renewable energy relying on metals. 

Some states are already taking action to prevent the environmental degradation mining would bring. For example, in Minnesota, the Forest Service recently proposed a 20-year ban on mining in the state’s Boundary Waters zone, which would halt the Antofagasta Plc Twin Metals copper and nickel development, for fear of it destroying a 1 million-acre preserve. 

As the need for copper increases, it is clear that retrieving enough of this metal to meet demand will not be an easy feat. Alongside opposition in the U.S., other copper-rich regions are dealing with their own challenges. In Chile, the world’s largest copper-producing country, the country’s political support is polarized heading into the presidential vote this Sunday. The mining sector is concerned about the potential impact either candidate would have on the industry, with campaigns hinting at increases in royalties on mining profits. The country is currently debating a controversial mining royalty bill and with the state of political instability of the country, the outlook for Chile’s copper industry is uncertain.

Despite challenges in production, there is no sign of the demand for copper and other metals letting up, as global leaders coming out of COP26 feel even more pressure to perform on green policy promises. If the countries that have pledged net-zero carbon emissions are successful in their aim, the price of copper, nickel, cobalt, and lithium could increase fourfold, totaling $13 trillion accumulated over the next two decades.

In addition to the increase in mining, the race is on to find environmentally friendly alternatives to these metals for use in renewable energy components, as well as to improve metal recycling methods to make the use of these resources more sustainable. There is significant potential for reuse, as copper has an infinite recycling life and in 2020 an estimated 35 percent of the U.S. copper supply came from recycled copper products.

While governments, companies, and consumers around the world vow to make the switch away from fossil fuels to renewable energy, it is important to consider the increased resources required to power this industry. Demand for copper, nickel, cobalt, and lithium will increase dramatically before alternatives or widescale recycling methods are achieved, meaning the need for new mines and increased production over the next decades. Going into this new era, we must consider whether ramping up metal extraction will be the environmental concern of the future, as we are dealing with coal, oil, and gas today. 

By Felicity Bradstock for Oilprice.com

[KeyboardWarrior + 527]

4 hours ago, Tom Nolan said:

As the energy transition continues and demand for fossil fuels begins to plateau,

I believe this is what they were saying last year. 

[Tom Nolan + 2,443]

https://www.zerohedge.com/commodities/gold-breakout-imminent

Gold Breakout Imminent!

by Tyler Durden

Thursday, Nov 18, 2021 - 06:30 AM

Authored by James Rickards via DailyReckoning.com,

This is getting ridiculous. And that’s a good thing.

By “this,” I mean the price of gold, and by “ridiculous,” I mean repetitive to the point of absurdity. That’s OK. The prospects for gold from here are highly positive.

 

By now, readers are tired of my description of gold trading as range-bound between $1,700 per ounce on the low side and $1,900 per ounce on the high side, with $1,800 per ounce as the central tendency. That’s completely accurate but also highly repetitive, since it has held true with only brief and minor exceptions for the past year.

This pattern emerged in November 2020 after gold fell from its all-time high of $2,069 per ounce on Aug. 6, 2020. The predictable question from investors is: “Fine, we get it. But, when does the pattern break either to the upside or downside? What’s next for gold?”

That’s where the good news begins. Yes, gold has been range-bound, but the range is getting smaller. While swings of 5% in a matter of days were common as recently as last summer, that volatility has cooled off. Gold still moves up and down in price, but the swings are much more compact.

The central tendency is still $1,800 per ounce, but the swings are more tightly bunched between $1,750 and $1,850 (again, with a few exceptions). That’s a 5.5% band to replace the prior 11.0% band.

We’re also seeing a pattern of lower highs and higher lows as compression continues. That’s a technical pattern called a pennant because it looks like a sports pennant if you draw converging lines through the highs and lows.

A pennant is a setup for a breakout. The breakout can occur in either direction, but it’s more common for the breakout to continue the trend that existed before the consolidation.

Whether we take the $1,685 price on March 30, 2021, the $1,725 price on Aug. 9, 2021, or the $1,722 price on Sept. 29, 2021, it’s clear that this pennant formed in the wake of an uptrend. This suggests that the breakout will be to the upside and it will occur soon.

There’s a run of fundamental data that supports this technical view.

The first piece of evidence is that the real price of physical bullion today is not $1,864 per ounce (according to the COMEX gold futures contract price), but closer to $2,000 per ounce according to my gold bullion dealer sources.

The difference between the two prices is about 8%.

The problem with this pricing method is that a normal dealer commission is around 2.5%. Any commission higher than that is not really a commission. It’s a reflection of scarcity, delivery delays and other logistical issues in getting actual physical bullion instead of paper gold contracts.

In other words, $1,925 per ounce is the real price of real physical bullion. Everything else is just paper.

The second fundamental factor is that Russia is back in the game. As readers know, Russia has increased its gold reserves by 1,700 metric tonnes since 2009. Gold reserves were 600 metric tonnes in 2009 and are 2,298.5 metric tonnes today, a 283% increase in the past twelve years.

The Central Bank of Russia has pursued this acquisition plan in a steady and incremental way under President Putin and Central Bank Chief Elvira Nabiullina. Acquisitions of gold were regular in amounts of about 5 to 30 metric tonnes per month like clockwork to avoid disrupting the market.

In April of last year, the clock stopped. Russia reduced its holdings slightly in April, July, August, September and October 2020 and January and April 2021. Holdings were unchanged in November and December 2020 and February, March, May and June of 2021.

Now, Russia is back on the buy side. It purchased 3.1 metric tonnes in July 2021 and another 3.1 metric tonnes in September 2021 (August was unchanged). Analysts should not mistake this renewed purchasing as a buying binge by Russia. It’s something more subtle.

Russia is running the world’s most sophisticated hedging operation inside its global reserve account of hard currencies and gold. The object is to maintain gold at about 20% of total reserves. This goal was achieved in early 2020, which accounts for the fact that purchases tailed off after that.

Russia’s reserves are now bulging because of the steeply higher price of oil. This increases Russia’s dollar reserves since oil is priced in dollars. If dollar reserves are increasing and Russia wants to maintain gold at 20% of total reserves, it has to buy more gold to maintain the allocation. This is no different than what everyday investors do when they rebalance target portfolios to account for large gains or losses in a particular asset class.

It’s also consistent with Russia’s hedging objectives. If the dollar retains its value, gold may not move much in price. Still, the allocation of gold in the portfolio acts as insurance. If the dollar crashes in value, the dollar price of gold will soar and Russia’s losses on its dollar portfolio will be offset by gains on its gold portfolio.

In its current form, the dollar is losing value, at least in relation to oil. The dollar price of gold has not moved much. So, that’s an opportune time to buy gold to maintain the hedge without paying a premium. The Russians are masters of this kind of dynamic hedging (unlike Americans). They just proved it again through the combination of expensive oil (generating revenue) and steady gold prices (offering an attractive entry point at which to maintain the hedge).

But Russia’s not alone. Other major central banks that have added materially to their gold reserves in recent months are Thailand (90.20 metric tonnes), Brazil (53.75 metric tonnes), Turkey (8.67 metric tonnes), India (8.4 metric tonnes) and Qatar (3.12 metric tonnes). Some central banks were net sellers, but the total sales of the top five were less than 25 metric tonnes, far smaller than the total additions.

And of course, China has acquired massive amounts of gold in recent years, which has been part of a concerted overall strategy. And recently, Chinese gold imports from Hong Kong hit a five-month high, up nearly 60% in September.

These central bank purchases were in anticipation of a declining dollar and higher dollar inflation. The central banks are buying gold to stay ahead of the curve. Shouldn’t you do the same?

[Tom Nolan + 2,443]

Go to article for full zoom of Image

https://www.zerohedge.com/commodities/visualizing-how-much-gold-world

Visualizing How Much Gold Is In The World?

by Tyler Durden

Thursday, Nov 18, 2021 - 08:40 PM

Gold has retained its value throughout history, partly due to the fact that it is indestructible.

As Visual Capitalist's Govind Bhutada details below, that means that virtually all the gold in the world that has been mined is still around in one form or another. Some of it may have turned into jewelry, while some might be sitting inside vaults as bullion. So, just how much gold have we mined, and how much of it is left beneath the ground?

This infographic from Kalo Gold visualizes all the gold in the world that’s above ground and the identified reserves that we have yet to mine.

[Tom Nolan + 2,443]

Kitco News VIDEO

Don't invest in gold until you understand these fundamentals - Gary Wagner gives price targets

https://youtu.be/nvIecOOIi1o

[Tom Nolan + 2,443]

https://community.oilprice.com/topic/24880-the-5-billion-hoard-of-metal-the-world-wants-but-can’t-have/

https://oilprice.com/Energy/Energy-General/Why-US-Steel-Output-Is-On-The-Rise.html

Why U.S. Steel Output Is On The Rise

By Ag Metal Miner - Nov 21, 2021, 10:00 AM CST

• On Monday, President Joe Biden signed the Infrastructure Investment and Jobs Act into law on the heels of months of debate in Congress.
• The $1 trillion bill includes hundreds of billions of dollars for infrastructure improvements for roads, bridges, the electric grid and more.
• The U.S. steel industry will likely emerge as one of the biggest winners in America’s infrastructure revamp.

[ronwagn + 6,290]

25 minutes ago, Tom Nolan said:

https://community.oilprice.com/topic/24880-the-5-billion-hoard-of-metal-the-world-wants-but-can’t-have/

https://oilprice.com/Energy/Energy-General/Why-US-Steel-Output-Is-On-The-Rise.html

Why U.S. Steel Output Is On The Rise

By Ag Metal Miner - Nov 21, 2021, 10:00 AM CST

• On Monday, President Joe Biden signed the Infrastructure Investment and Jobs Act into law on the heels of months of debate in Congress.
• The $1 trillion bill includes hundreds of billions of dollars for infrastructure improvements for roads, bridges, the electric grid and more.
• The U.S. steel industry will likely emerge as one of the biggest winners in America’s infrastructure revamp.

The taxpayers will be the biggest losers with the overall plan. The government would take over child care (a large portion), and many other socialist plans that are not in our best interest. Infrastructure be essential construction, bridges, roads, not making cronies wealthy in return for kickbacks. 

You may be correct about the steel "investment" but I am against the greater package because inflation is our biggest problem and this will only fuel it and big government in general. We need smaller, leaner government, no illegal aliens, secure borders, the Three Rs taught etc. Bigger government already exists in our larger cities, which are all hellholes IMHO.

[ronwagn + 6,290]

On 11/18/2021 at 11:19 AM, Tom Nolan said:

https://www.zerohedge.com/commodities/gold-breakout-imminent

Gold Breakout Imminent!

by Tyler Durden

Thursday, Nov 18, 2021 - 06:30 AM

Authored by James Rickards via DailyReckoning.com,

This is getting ridiculous. And that’s a good thing.

By “this,” I mean the price of gold, and by “ridiculous,” I mean repetitive to the point of absurdity. That’s OK. The prospects for gold from here are highly positive.

 

By now, readers are tired of my description of gold trading as range-bound between $1,700 per ounce on the low side and $1,900 per ounce on the high side, with $1,800 per ounce as the central tendency. That’s completely accurate but also highly repetitive, since it has held true with only brief and minor exceptions for the past year.

This pattern emerged in November 2020 after gold fell from its all-time high of $2,069 per ounce on Aug. 6, 2020. The predictable question from investors is: “Fine, we get it. But, when does the pattern break either to the upside or downside? What’s next for gold?”

That’s where the good news begins. Yes, gold has been range-bound, but the range is getting smaller. While swings of 5% in a matter of days were common as recently as last summer, that volatility has cooled off. Gold still moves up and down in price, but the swings are much more compact.

The central tendency is still $1,800 per ounce, but the swings are more tightly bunched between $1,750 and $1,850 (again, with a few exceptions). That’s a 5.5% band to replace the prior 11.0% band.

We’re also seeing a pattern of lower highs and higher lows as compression continues. That’s a technical pattern called a pennant because it looks like a sports pennant if you draw converging lines through the highs and lows.

A pennant is a setup for a breakout. The breakout can occur in either direction, but it’s more common for the breakout to continue the trend that existed before the consolidation.

Whether we take the $1,685 price on March 30, 2021, the $1,725 price on Aug. 9, 2021, or the $1,722 price on Sept. 29, 2021, it’s clear that this pennant formed in the wake of an uptrend. This suggests that the breakout will be to the upside and it will occur soon.

There’s a run of fundamental data that supports this technical view.

The first piece of evidence is that the real price of physical bullion today is not $1,864 per ounce (according to the COMEX gold futures contract price), but closer to $2,000 per ounce according to my gold bullion dealer sources.

The difference between the two prices is about 8%.

The problem with this pricing method is that a normal dealer commission is around 2.5%. Any commission higher than that is not really a commission. It’s a reflection of scarcity, delivery delays and other logistical issues in getting actual physical bullion instead of paper gold contracts.

In other words, $1,925 per ounce is the real price of real physical bullion. Everything else is just paper.

The second fundamental factor is that Russia is back in the game. As readers know, Russia has increased its gold reserves by 1,700 metric tonnes since 2009. Gold reserves were 600 metric tonnes in 2009 and are 2,298.5 metric tonnes today, a 283% increase in the past twelve years.

The Central Bank of Russia has pursued this acquisition plan in a steady and incremental way under President Putin and Central Bank Chief Elvira Nabiullina. Acquisitions of gold were regular in amounts of about 5 to 30 metric tonnes per month like clockwork to avoid disrupting the market.

In April of last year, the clock stopped. Russia reduced its holdings slightly in April, July, August, September and October 2020 and January and April 2021. Holdings were unchanged in November and December 2020 and February, March, May and June of 2021.

Now, Russia is back on the buy side. It purchased 3.1 metric tonnes in July 2021 and another 3.1 metric tonnes in September 2021 (August was unchanged). Analysts should not mistake this renewed purchasing as a buying binge by Russia. It’s something more subtle.

Russia is running the world’s most sophisticated hedging operation inside its global reserve account of hard currencies and gold. The object is to maintain gold at about 20% of total reserves. This goal was achieved in early 2020, which accounts for the fact that purchases tailed off after that.

Russia’s reserves are now bulging because of the steeply higher price of oil. This increases Russia’s dollar reserves since oil is priced in dollars. If dollar reserves are increasing and Russia wants to maintain gold at 20% of total reserves, it has to buy more gold to maintain the allocation. This is no different than what everyday investors do when they rebalance target portfolios to account for large gains or losses in a particular asset class.

It’s also consistent with Russia’s hedging objectives. If the dollar retains its value, gold may not move much in price. Still, the allocation of gold in the portfolio acts as insurance. If the dollar crashes in value, the dollar price of gold will soar and Russia’s losses on its dollar portfolio will be offset by gains on its gold portfolio.

In its current form, the dollar is losing value, at least in relation to oil. The dollar price of gold has not moved much. So, that’s an opportune time to buy gold to maintain the hedge without paying a premium. The Russians are masters of this kind of dynamic hedging (unlike Americans). They just proved it again through the combination of expensive oil (generating revenue) and steady gold prices (offering an attractive entry point at which to maintain the hedge).

But Russia’s not alone. Other major central banks that have added materially to their gold reserves in recent months are Thailand (90.20 metric tonnes), Brazil (53.75 metric tonnes), Turkey (8.67 metric tonnes), India (8.4 metric tonnes) and Qatar (3.12 metric tonnes). Some central banks were net sellers, but the total sales of the top five were less than 25 metric tonnes, far smaller than the total additions.

And of course, China has acquired massive amounts of gold in recent years, which has been part of a concerted overall strategy. And recently, Chinese gold imports from Hong Kong hit a five-month high, up nearly 60% in September.

These central bank purchases were in anticipation of a declining dollar and higher dollar inflation. The central banks are buying gold to stay ahead of the curve. Shouldn’t you do the same?

I always liked silver but it seems that it is cheaper to mine, so that holdings have depreciated in real value? Still a hedge against a rapidly inflated dollar?

[footeab@yahoo.com + 2,187]

25 minutes ago, ronwagn said:

I always liked silver but it seems that it is cheaper to mine, so that holdings have depreciated in real value? Still a hedge against a rapidly inflated dollar?

Real value silver has drastically fallen in relation to gold as we have found mountains of the stuff.  Silver is a truly stupid investment IMO.  Why?  Peru.  Peru literally has several MOUNTAINS of silver it is just sitting on that is dirt cheap to mine.    Anytime the price goes up they just mine a tiny bit more.  Yes, several other countries have lots of silver as well, but it is harder to access. As far as I am concerned, at this point, silver is just an industrial metal. You would be better off investing in nickel mining, lithium mining, copper mining.  Though their inflation already happened so a bit behind the curve. 

Edited November 22, 2021 by footeab@yahoo.com

[ronwagn + 6,290]

On 11/13/2021 at 8:02 PM, footeab@yahoo.com said:

The REAL CPI is buy a car, a house, property(anywhere) and it all matches the blue line.  The Red is based on the cost of food prices only for the most part or cost of a toaster which are NOT major expenses in your life in comparison. 

Food, fuel for that car and house, ridiculously low home interest rates if you already own one. The low home interest rate just raises the prices builders and owners can sell for. It makes real estate investment trust investors rich, as they buy up used homes and turn them into rentals. The marginal family who needs a house suffers badly. Nobody is building "starter homes" anymore like in the fifties. They are either condos, town homes, or very expensive. Or remain a renter like most Europeans have to. On the other hand you can move to areas of the United States where nice homes are cheap but prices will remain stable so not a get rich investment. If I had stayed in my first home in West Covina, California it would be worth about 700,000. It is inferior to the house I now own in Decatur, Illinois that is worth about 150, 000 an sits on a beautiful acre with an extra garage I just added. 

If I had endured living in West Covina as it got built up, I would have been very unhappy, but would have a spare 550,000 gross profit to spend. Money which would be nice, but not really needed right now. The area I lived in in West Covina was semi rural at the time, but is now quite crowded. The Los Angeles metro area now stretches all the way to Banning and will eventually meet up with Palm Springs etc. 

[ronwagn + 6,290]

7 minutes ago, footeab@yahoo.com said:

Real value silver has drastically fallen in relation to gold as we have found mountains of the stuff.  Silver is a truly stupid investment IMO.  Why?  Peru.  Peru literally has several MOUNTAINS of silver it is just sitting on that is dirt cheap to mine.    Anytime the price goes up they just mine a tiny bit more.  Yes, several other countries have lots of silver as well, but it is harder to access. As far as I am concerned, at this point, silver is just an industrial metal. You would be better off investing in nickel mining, lithium mining, copper mining.  Though their inflation already happened so a bit behind the curve. 

Thanks, I was thinking about copper. Aluminum also looks promising. If I were younger, I would possibly open a small foundry to melt down aluminum cans etc. Maybe I could corner the local market! https://worldscholarshipforum.com/wealth/how-much-are-aluminum-cans-worth/

Edited November 22, 2021 by ronwagn

[Andrei Moutchkine + 828]

24 minutes ago, ronwagn said:

I always liked silver but it seems that it is cheaper to mine, so that holdings have depreciated in real value? Still a hedge against a rapidly inflated dollar?

Silver has some kind of industrial uses that causes it to disappear first out of bankers vaults.

Check out this, though

https://en.wikipedia.org/wiki/Aureus

Look at the funny table, which got the purchasing power of the gold coin issued by reigning hegemony, from Caesar's Rome, through the British Empire and ending in US Gold Eagles. You can see how it goes down, but way slower than the silver and paper currency regular people got to use.

Another colloquial definition of such a coin is "a suit of fine clothing or laborer's monthly wages" and you can start it ever earlier / higher for Athens, with whatever coin they used being higher than Caesar's 1.0 Supposedly, this still worked to the beginning of the 20th century, when Sears & Roebuck catalogue still meant anything. So, make it a laborer's monthly mortgage and health insurance premium? Cause Bill Gates' aristocratic suit of fine clothing is a Coke-stained Microsoft T-Shirt these days.

 

[Andrei Moutchkine + 828]

8 minutes ago, footeab@yahoo.com said:

Real value silver has drastically fallen in relation to gold as we have found mountains of the stuff.  Silver is a truly stupid investment IMO.  Why?  Peru.  Peru literally has several MOUNTAINS of silver it is just sitting on that is dirt cheap to mine.    Anytime the price goes up they just mine a tiny bit more.  Yes, several other countries have lots of silver as well, but it is harder to access. As far as I am concerned, at this point, silver is just an industrial metal. You would be better off investing in nickel mining, lithium mining, copper mining.  Though their inflation already happened so a bit behind the curve. 

Another big mistery of silver is how come it is not used as a metallization layer in latest chips? It is an even better electric conductor than copper and is perfectly workable by photolitographic means. When they switched from aluminum to copper metallization, they had to introduce nanoscale-precision milling machines for it. Which was originally just due to Intel aping IBM.