xau/usd aka... Go Gold!

[⭐ Peter]

Go gold!

 

 

https://www.clivemaund.com/article.php?id=6598

 

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 However, the key point to keep in mind is that once gold succeeds in breaking above the key $2100 level it’s on and we just had a clear demonstration of how important this level is on Monday when the “big guns” were brought in to stop it holding a breakout above this level – and they won’t be so successful in future.

 

[⭐ Peter]

Big picture 😀

 

 

[⭐ Peter]

Gold Prices Predicted To Hit Record Highs Of $2,300 In 2024

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“Following on from a surprisingly robust performance in 2023, we see further price gains in 2024, driven by a trifecta of momentum chasing hedge funds, central banks continuing to buy physical gold at a firm pace, and not least renewed demand from ETF investors,” said Saxo Bank’s Ole Hansen, according to Reuters.

JP Morgan predicts gold to see a “breakout rally” starting in the middle of this year due to Federal Reserve’s interest rate cuts. The bank expects gold to hit a peak of $2,300.

Meanwhile, UBS projects gold prices to hit $2,150 by the end of this year if the rate cuts were to take place.

 

https://www.zerohedge.com/commodities/gold-prices-predicted-hit-record-highs-2300-2024

[⭐ Peter]

Gold Priced In World Currencies Is In A Parabola.

Expect A Mania At Some Point As The Trend Accelerates

 

 

Above is a FIAT currencies roadmap chart, since it is made up of all the underlying major currencies. It is the collected [world] FIAT [currencies] vs gold chart.

[⭐ Peter]

Can we call it a textbook stair steps pattern?
😀

 

 

 

[⭐ Peter]

A couple of charts...

 

 

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COMMENT:

Higher rates are supposed to compete with Gold for investment, and that has been correct historically. Currently, the potential problem with this correlation is it assumes Gold is only bought by Americans. If 2023 taught us anything, that is simply not true. Americans reduced exposure to Gold as the financial correlation implies. The Rest of the World however, doesn’t care as much about US rates as it used to.

 

 

 

 

 

 

 

 

 

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Central Banks: The Defining Factor

The near sea-change in central bank gold activity in the last couple of years has had a profound influence on the gold market. After a long period of declining interest in holding bullion, the opposite trend has emerged. The official sector has emerged once again as powerful participants in the bullion market and gold is enjoying a renaissance among reserve managers.

After years of playing a relatively secondary role, central banks moved center stage in 2022 purchasing 1,082t of gold that year, more than double the previous year, according to the IFS (see chart 12). This represented the highest level of purchases since 1968, helping to take gold above USD2,000/oz.

 

 

 

https://www.zerohedge.com/news/2024-01-13/bank-calls-cbs-defining-factor-raising-gold-targets-200

[⭐ Peter]

 

 

 

[⭐ Peter]

The USD and its purchasing power

 

 

 

 

 

 

 

 

 

 

 

[⭐ Peter]

China Public Now Buying Gold Like Crazy

China is now the world’s biggest retail buyer of gold.

And Chinese households are increasingly turning to gold bullion and jewelry for wealth protection. China's jewelry purchases rose 8% last year, according to the China Gold Association.

Meanwhile, demand for gold coins jumped nearly 16% in 2023. Chinese gold-backed exchange-traded products added 10 tons to their holdings. And the People’s Bank of China increased its gold reserves by a whopping 225 tons.

The PBOC has also implemented measures to make it easier for bank account depositors to convert cash into gold. 

[⭐ Peter]

What is the spot gold price and how is it calculated?

 

What is spot gold?

Traders buy and sell physical gold on specific types of financial markets called ‘spot markets’. A spot market is a particular type of market where traders must present whatever it is they’re selling for immediate delivery. Buyers must be ready to pay for their investments too.

Traders settle these transactions ‘on the spot’, hence the name. Activity on the market sets the gold price internationally in US dollars.  

 

How is the gold price calculated for futures?

Spot markets determine the buying price of gold now, at this very moment. As well as a spot, or current, price for gold, there’s also an extensive futures market. Instead of buying or selling gold now, you enter into a contract to buy or sell gold at a future date, otherwise referred to as “futures trading”.

These contracts, priced in troy ounces, let you speculate on what the gold price will be in the future. That could be in 24 hours or in 10 years, it’s up to you.

Futures contracts are generally for 100 troy ounces and you can buy them on dedicated, regulated, and highly liquid exchanges like the CME.

Unlike over-the-counter markets, the owner of the gold bullion doesn’t deliver to you when the contract expires. Instead, traders sell off the gold they have “bought” on a futures contract. They buy back any they have “sold”. At this point, they make their actual profit on the trade or have to pay back the losses. 

Because you don’t need to pay or deliver the gold when you agree to the contract, traders can build up large positions. These positions can be many times greater than if all trades had to be physically backed up.

The potential gains are much greater if the price of gold moves in the right direction over the timeframe of the contract. Equally, the potential losses are much greater if the price falls.

 

How is the gold price determined?

As well as spot gold and futures prices, there is also the daily London Bullion Market Association (LBMA) gold price. This is the global benchmark price for physically delivered gold in London, which traders set twice a day.

Originally, this involved four banks meeting twice a day in a room near the Bank of England. They would carry out a verbal auction that would determine the price. Over time, this evolved from an auction over the phone to now being fully electronic. ICE Benchmark Association now administers this. Every day, 16 direct participants contribute towards deciding the price.

This takes place at 10:30 am and 3 pm London time. ICE conducts a series of 30-second auctions until they achieve a balanced price. They publish the price of gold in US dollars and convert the price into sterling and Euros based on the exchange rate at the time.  

 

https://kinesis.money/blog/gold/what-is-the-spot-gold-price-and-how-is-it-calculated/

[⭐ Peter]

Historic & Massive Silver Upside Overshoot On The Way With Sentiment At Rock Bottom, Plus A Look At Gold

 

Silver Overshoot On The Way

Very big picture there is a massive divergence between GOLD & SILVER. Last time the two had a larger divergence like this, silver played catch-up big time. And this time, silver will break out of a 43-year+ cup and handle. So the over-shoot this time should be absolutely mega.

Silver About To Begin Mega Outperforming Gold, Expect Red Line (SILVER) To Break Above (ORANGE LINE) Gold (SEE 2 PREVIOUS OVERSHOOTS)

 

Gold Breakout

Graddhy out of Sweden:  Gold has broken out on quarterly and is still holding its backtest, plus holding above 2000 level. As said, the longer this breakout holds, the more likely the third huge bull phase has begun. Still, sector sentiment is getting worse, which is just what we want to see now.

With Sentiment At Rock Bottom: Gold Is Performing Beautifully, Ready To Accelerate Higher

 

Gold vs Money Supply

Graddhy out of Sweden:  This chart clearly shows how undervalued GOLD is relative to the US currency supply.

Imagine The Revaluation For The Price Of Gold That Is In Front Of Us (PURPLE LINE)

https://kingworldnews.com/historic-massive-silver-upside-overshoot-on-the-way-with-sentiment-at-rock-bottom-plus-a-look-at-gold/

[⭐ Peter]

Gold vs. $, Central Banks purchasing behaviour, 10 years chart

 

[⭐ Peter]

 

 

 

[⭐ Peter]

A tale of two markets

Feb 23, 2024

Alasdair Macleod

 

Technical conditions for gold and silver differ radically.

In silver, Comex’s Producers & Merchants category is net short of over 31,000 contracts, representing 155 million ounces. This is because over 50% of mine production has silver as a secondary metal to copper, zinc etc., so it makes sense to hedge price volatility.

With this category taking the short side, it permits the Swaps to job a more even book, reflected in the chart below. 

 

 

In fact, on the last Commitment of Traders figures (13 February), Swaps were net long of 1,822 contracts, while the hedge funds (Managed Money) were net short of 8,983 contracts. 

 

 

We can see how this category can easily go even more short, historically as much as 50,000 contracts. So while hedge funds going net short and the Swaps going net long is a good oversold indicator, it is too early to say that silver’s price will find support at current levels.

Accordingly, traders would be wise to await further developments.

 

 

Meanwhile, the position in the Comex gold contract is markedly different. The Producer & Merchant category here is barely net short, compared with the past. With underlying credit and monetary developments likely to guarantee gold’s value, they are in no hurry to hedge. This is plain to see in my next chart.

 

 

 

This leaves the burden of the short side to the Swaps, which is why they cannot close down their short positions:

 

 

As can be seen, despite the collapse in Open Interest, gross Swap shorts are $40bn between 23 traders (averaging $1.74bn each) and the longs are $15.75bn between 24 traders (averaging $66 million).

 

Open interest in this contract has virtually collapsed, which is next.

 

On this basis, we can say that gold is more oversold than silver

https://www.goldmoney.com/research/a-tale-of-two-markets

[⭐ Peter]

 

 

 

https://mises.org/journal-libertarian-studies/populist-case-gold-standard

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[⭐ Peter]

 

 

 

[⭐ Peter]

Shanghai Gold vs. Comex Gold

physical gold vs. paper gold

$30/oz price difference

 

physical silver vs. paper silver

$3/oz price difference

[⭐ Peter]

Profit taking bites

A shakeout was due, but the background for gold and silver is very bullish both technically and fundamentally

MACLEODFINANCE / MAR 22, 2024

Meanwhile, speculative paper market positions on Comex, and presumably in London as well, have increased against a background of bullion shortages. This is reflected in the Managed Money category Comex gold contract, comprised mainly of hedge funds. The next chart shows how their net position and the gold price have evolved:

 

On 10 October 2023, hedge funds were net short of 26,767 contracts when gold sold off to $1823. With gold hitting a peak of $2160 on 12 March (the last COT release), hedge funds were net long 141,083 contracts. That’s a turnaround of 167,850 contracts representing 522 paper tonnes.  

This rapid swing from deep bearishness to overt optimism reflects unstable speculation. It is easily taken out by the Swaps, comprised of professional traders (mostly bullion banks) who take the short side. All they need to do is to mark down paper prices at the appropriate time to take out the stops.

Fortunately for the Swaps, hedge funds keep coming, and jobbing on the short side is extremely profitable. But there is a problem. In the past, the bullion banks close to the miners and refiners have easily persuaded them to hedge production forward, allowing the Swaps to put a cap on their net short positions. With the rise in the gold price, this category has reduced is forward hedging, illustrated in our next chart:

 

Consequently, the dollar value of the Swaps remains stubbornly high at $53bn gross and $36.7bn net. There are 29 Swap traders short, giving an average exposure of $1.83bn:

 

This is high, which stretches their financial resources. The possibility that one or more of the Swaps might get into difficulties could become an issue if the gold price continues to rise.

alasdairmacleod.substack.com

 

[⭐ Peter]

Shanghai gold price vs. New York gold price