Market Analysis

Keep up to date with the latest news in the global financial market, gold, silver and macroeconomic data analysis and information, prepared for Kinesis by leading precious metals market analysts. Your in-depth insight into the world of investing, trading and managing your gold and silver capital. Keep track of the current gold and silver price movements on the exchange, the short-term and long-term physical gold price predictions and most up-to-date price charts with explanation, updated every Monday, Wednesday and Friday. Save, trade and invest your gold and silver with Kinesis.

Gold Holds Onto Gains Despite Healthy US Economy Increasing Chance of Fed Hikes

Gold starts a new week trading at around $1,775 an ounce as investors assess the likely trajectory of the Federal Reserve’s interest rate hikes in the wake of the positive jobs data released at the end of last week. The figures showed the US had added double the number of jobs that was anticipated, giving the Fed greater scope to increase its series of interest rate hikes as it tries to curb inflation without risking tipping the economy into recession. While gold did drop a little on Friday in the wake of this news, it has largely held on to the gains it has made since late July, illustrating that support for the precious metal is strengthening. As such with gold’s upside gains capped by the potential of more aggressive rate hikes by the Fed and other central banks across the world, there now appears to be sufficient support to prevent the price falling to the $1,700 an ounce level seen in July. How strong that support proves to be will be tested when the Fed’s next interest rate decision is announced at the end of this month. Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience inwriting about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News. As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewableenergy and the challenges of avoiding greenwash while investing sustainably. This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.

Rupert Rowling
Rupert Rowling

08/08/2022

Silver Holds Above $20 as Investors Weigh Positive US Economic Outlook vs Fed Hikes

Silver is holding above the crucial threshold of $20 an ounce, underlying the metal is creeping back in favour among investors after spectacularly losing support over the previous three months. Strong jobs data can be interpreted in two contrasting ways for silver. The metal’s use in a range of industries, including in electric vehicles, mean that signs of a strong US economy are positive for silver demand. Equally, the robustness of the US economy gives the Federal Reserve greater confidence to implement the series of interest rate hikes it is planning, which would be a negative for silver as rising interest rates reduce the investor appeal of the non-yield-bearing metal. The fact that silver remains above $20 despite the increasing likelihood of upcoming large interest rate hikes by the Fed points to the slight shift in the narrative surrounding the metal. With the bottom reached in July, the fundamental outlook which has this year being a record year demand-wise has been allowed to reenter investors’ thoughts. How much ground silver can recover is likely to be capped by the aggression of the Fed but investors will be anticipating that silver can continue to trade in the $20s with this slightly more optimistic medium-term outlook. Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience inwriting about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News. As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewableenergy and the challenges of avoiding greenwash while investing sustainably. This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.

Rupert Rowling
Rupert Rowling

08/08/2022

Silver Climbs Back Above $20 as Support Firms Up Despite Prospect of More Fed Hikes

Silver has climbed back above the crucial threshold of $20 an ounce that it has been flirting with for much of this week. This is an important indicator that support remains for the precious metal and will increase optimism among silver investors who are still recovering from a brutal few months. It is interesting to note that silver has been able to make some gains this week despite the rhetoric over the trajectory of future rate moves by the Federal Reserve remaining very hawkish, with Loretta Mester the latest senior Fed official to chime in with the need for more large rate hikes. It was the Fed’s switch to a hawkish policy earlier in the year that triggered silver’s multi-month price slump so the fact the metal has been able to hold its level and even make tentative gains does emphasise that the bottom was indeed reached in late July. The deterioration of relations between the world’s two superpowers, the US and China, following House Speaker Nancy Pelosi’s trip to Taiwan has bolstered demand for haven assets such as silver but the metal hasn’t benefited as much as gold, the ultimate haven asset. With silver now having held above $20 an ounce, investors can look upwards and hope for further recoveries of the price lost in the last few months. How much ground can be recovered will depend on how much the Fed raises interest rates over the coming months with the prices seen in April remaining a long way off for silver still. Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience inwriting about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News. As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewableenergy and the challenges of avoiding greenwash while investing sustainably. This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.

Rupert Rowling
Rupert Rowling

05/08/2022

Gold Challenges $1,800 as Rising US-China Tensions Boost Metal’s Haven Appeal

Gold is ending the week trading close to $1,800 an ounce as the precious metal has found support from rising tensions between the US and China following Nancy Pelosi’s visit to Taiwan as well as fears that major economies are facing recession. Yesterday brought confirmation that the Bank of England would indeed raise its benchmark rate by 50 basis points but rather than this prove a negative for gold as rising interest rates typically are, the supporting commentary was the focus with the central bank painting a pretty pessimistic picture of the country’s economic outlook. Across the Atlantic the rhetoric remains very hawkish with Cleveland Federal Reserve Bank President Loretta Mester reiterating the bank’s commitment to bringing inflation down which may require interest rates to be raised above 4%. Today’s release of the latest US jobs data will provide the latest indicator of the health of the US economy with the expectation that for now at least the employment picture remains positive. This will give the Fed further scope for future rate rises without risking tipping the economy into recession. In such an environment gold’s upside gains are likely to be capped with $1,800 an ounce an obvious near-term resistance level. Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience inwriting about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News. As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewableenergy and the challenges of avoiding greenwash while investing sustainably. This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.

Rupert Rowling
Rupert Rowling

05/08/2022

A Bottom may be Forming in the Precious Metals Sector

HUI: SPX Ratio The chart below shows the HUI: SPX ratio, where HUI is the Amex Gold Bugs Index 14 major gold-producing companies, and the SPX represents the S&P 500 stock market index. The price of gold is shown by the black line, with the data recorded from the year 2000.  The only time mining stocks have been cheaper relative to the stock market was in late 2000, when the secular precious metals bull market was emerging. Since late 2015, when the ratio fell to its current level, the mining stocks and precious metals have been in an uptrend, albeit with a high degree of volatility. What also stands out in the chart is that the spread between the price of gold and the HUI: SPX ratio is considerably wider now than it has been at any time going back to at least 2000. For me, this suggests that not only might a bottom be forming, but any move higher has a strong possibility of sustainability. A Bottom in the Gold Market? The rallies in the sector since late 2015 have been relatively short in duration - six months in 2016 and twenty-two months from late 2018 to August 2020. By "sustainability," I mean a bull move that lasts at least three years, like the ones from 2001-2004, 2005-2008 and 2008 to 2011. I’ve received many emails on the question of whether people should be selling, hedging or holding at the moment. I have been struggling with that dilemma ever since I sold a big position in NUGT puts. Direxion Daily Gold Miners Index Bull 2X Shares (NUGT) is a leveraged exchange-traded fund (ETF), I was using to hedge at the end of April. While I regret not keeping the hedge in place with 20/20 hindsight, the current decline in the sector is reaching historic extremes. Sell or Hold? That is the Question As for whether or not to sell at this point. I'm going to hold. I've survived sell-offs like this in the summers of 2006 and 2008 plus the sell-off in late 2018. I would be shocked if the sector is entering an extended decline like the one that occurred from last 2011 to the end of 2015. One reason, aside from the glaring strength of the fundamentals that support much higher prices in the precious metals sector, is that there has not yet been a frenzied, parabolic, high-volume price-chasing move higher. The best example of that is the run-up in the entire sector that occurred in late 2010 and into the spring of 2011. Indicators of Metals Sector Bottoming I'm starting to see several indicators that have been present in the past when the precious metals sector is bottoming. Both gold and the mining stocks (Amex Gold Bugs Index) are as extremely cheap/oversold relative to the S&P 500 as at any time going back to 2001 when the precious metals bull was beginning. Second, the hedge funds per the weekly Comex Commitment of Traders report are now net short both paper silver and gold (the gross short position exceeds the gross long position). It's rare when the hedge funds go net short Comex gold futures. The banks are net long silver contracts and they are aggressively covering their gross gold short position. Historically, this positioning in Comex gold and silver futures between the banks and the hedge funds has often preceded big moves higher in the entire precious metals sector. Finally, Newmont Mining (NEM) after its post-earnings blood-bath in the stock market on July 25th is at its most oversold technically going back to 1987 (the Dow plunged 25% in October 1987). This is another indicator that the sector may be bottoming. Precious Metals & Stock Market Divergence This is not to say that gold, silver and mining stocks will not go lower from here. Anything can happen if the stock market falls off of a cliff, the risk of which is quite high currently. However, I believe that most of the potential sellers are now sold out of their long positions in the mining stocks. Furthermore, in addition to being short gold and silver futures contracts, the hedge funds are also likely shorting mining stocks via GDX. In any indication of rally in the sector, the hedge funds will quickly cover their short positions and go long. It's my strong conviction that ultimately, whether or not the stock market has a considerable amount of additional downside - and I believe it does - at some point the precious metals sector will diverge positively from the rest of the stock market and head eventually to new all-time highs. See November 2008 to March 2011 for an example of this occurrence. Dave Kranzler is a hedge fund manager, precious metals analyst, and author. After years of trading expertise build-up on Wall Street, Dave now co-manages a Denver-based, precious metals and mining stock investment fund. This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis. The views expressed in this article are those held by Dave Kranzler and not Kinesis.

Dave Kranzler
Dave Kranzler

04/08/2022

Gold Holds Near $1,760 as Haven Demand From US-China Tensions Offset by Hawkish Fed

Gold is trading around $1,760 an ounce as it finds itself being pulled by two contrasting factors. The visit of US House Speaker Nancy Pelosi to Taiwan has increased political tensions between China and the US with China increasing military operations in the area in response and increasing demand for safe-haven assets such as gold as a result. However, gold’s potential gains from this deteriorating political outlook is offset by the latest comments from Federal Reserve officials that point to further large interest rate hikes with Charles Evans forecasting an increase of 50 to 75 basis points in September. In this environment of ever-rising interest rates, gold’s appeal diminishes due to its lack of yield. While Fed officials have been speaking about future rate hikes, tomorrow is set to bring another actual interest rate increase with the Bank of England expected to raise its benchmark rate by 50 basis points. Historically, even during the depth of Donald Trump’s US Presidency when US-China relations were historically low amid a trade war, the situation has ultimately resolved itself in a harmony of sorts. So while Pelosi’s Taiwan trip is causing a short-term increase in tensions, when this stern rhetoric and military show of strength fades, market focus will return to interest rates and the negative long-term impact that is likely to have on gold. Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience inwriting about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News. As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewableenergy and the challenges of avoiding greenwash while investing sustainably. This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.

Rupert Rowling
Rupert Rowling

03/08/2022