Gold & Silver Market Analysis for Wednesday 19th January

Kinesis Macroeconomic Analysis Inflation is dominating the market narrative today after the UK reported inflation running at its highest level in almost 30 years. The UK’s inflation rate for December was 5.4%, exceeding market expectations of 5.2%, illustrating that the cost of living is rising at its fastest pace since 1992.  Further evidence of how global a problem inflation is becoming, will come later today with Canada also reporting its December figure. If Canada’s inflation rate were to also exceed market expectations of 4.8% then this would be further evidence that rising prices are far from transitory, and a lasting problem for central banks to tackle. The Bank of England has already raised interest rates once but with inflation running hot, the likelihood of more hikes in the very near future has increased sharply.  While the UK may be the country in focus today, it is not alone in coming under pressure to switch away from the dovish environment that equities markets have benefited from for so long. In the US, Treasury yields are rising with expectations that they will break through the 2% level, as traders increase their bets that the Federal Reserve will be forced into a significant interest rate increase in March.  There are further signs that the stock market party may be overcome by Goldman Sachs disappointing results. As the economic outlook evolves, expect tech stocks and those most geared towards future growth to come under the most pressure, with investors preferring to have their jam today. Kinesis Gold Price Analysis Gold is stuck between a rock and a hard place. On the one hand, a high inflation environment should prove positive for gold with the precious metal considered a hedge against rising prices. However, with central banks across the world expected to increase interest rates to tackle inflationary pressures, this presents a headwind for gold. This contrasting outlook helps explain why the price of gold has barely moved for a couple of months now despite inflation being the talk of the town. As long as no clear new narrative arrives to change the outlook, expect gold to continue to doggy paddle along in its current lane of  $1,800-$1,820 an ounce for a while longer yet. Kinesis Silver Price Analysis While gold may be proving a dull asset currently, silver is catching the eye. Breaking through resistance at $23 an ounce has seen a rush of new buying with silver now marching up towards $24. The spike was triggered by the New York Empire State Manufacturing Index which rocked markets by turning negative for the first time in 20 months, sparking a rush of traders to unwind short positions on the metal.  Silver Price ($/oz) - from Kinesis Exchange With silver continuing to gain sharply this morning, the market will be following price moves closely to see if this is just a flash in the pan or the start of a sustained push, bringing back memories of last year’s WallStreetBets-inspired squeeze on the metal. Find out more about what Kinesis has to offer Learn More 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 in writing 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 renewable energy and the challenges of avoiding greenwash while investing sustainably. Rupert holds a Bachelor's Degree in Spanish, Portuguese and Latin American Studies (a key region historically for gold and silver!). Away from the laptop, Rupert also owns a couple of coffee shops called Forge Coffee back in his native county of Northamptonshire.

Rupert Rowling
Rupert Rowling

19/01/2022

Ten Ways to Protect your Savings from Inflation

Most often the effects of inflation go unnoticed, especially when they vary fractionally, month-on-month. However, when rates are surging, and there's a rise in fuel and energy costs, the pressure on individuals is universally felt. Inflation is the loss of purchasing power over time. It means that the nation’s currency is reducing in value, while goods and services are becoming increasingly more expensive over time. Most recently, Turkey has been in the spotlight earlier this year for its sky-high inflation rate, last reported at 36% amid the country’s financial turmoil.  Many are now seeking investment alternatives to offset the damaging effects of inflation. As a more recent strategy, investors are now turning to cryptocurrencies like Bitcoin, as a store of wealth, instead of leaving their money in the bank.  Even though cryptocurrencies may not be the best store of value, due to their evident volatility, it is clear to see that investors are desperately seeking an alternative to fiat currencies - and their vulnerability against inflation. This article uncovers 10 investment strategies that can help you stay ahead of the curve, in order to protect your savings in the current, inflation-heavy environment.  Staying ahead of inflation Real asset prices are increasing day by day and many are noticing that living is becoming more and more expensive. In October 2021 inflation rates in the United States reached their all-time high at 6.2%, while inflation rates in the United Kingdom noticeably increased to above 2%. In many countries, inflation rates outpace the rate at which salary increases, at a great disadvantage to people and their hard-earned cash. Now, inflation rates are at an all-time high since those reached in 2009 - during the aftermath of the financial crisis. Inflation rates over the last 100 years 1. Gold Gold has historically been the asset class to successfully hedge against inflation, thereby proving it as a safe store of value. Other precious metals’ historical performance during times of increased inflation rates varied highly, whereas gold has maintained a steady increase of at least 500% in the past 20 years.  In the 1970s gold performed strongly in comparison to fiat currencies, while during the 1980s the returns were negative. More importantly, gold performs well during times of high volatility, especially within bear markets, even outperforming the stock market at times. With monetary platforms like Kinesis, investors can combat inflation by storing their gold in the Kinesis ecosystem, and simultaneously, earn a yield on their stored bullion holdings. In addition to the competitive appreciation of gold as an asset class, the yield enables users to gain a competitively high, positive return on their gold investment.  2. Cryptocurrency In the past few years, cryptocurrency markets noticed a huge surge and reached almost 3 trillion. Some of the currencies have even had 10,000x gains - enough to show an outperformance of all other asset classes. The reasoning behind using crypto as a hedge against inflation is that most of them have a limited - or finite - supply. For example, there is a total of 21 million Bitcoins which means that as more people want to hold them the demand will increase, while the supply stays the same. The biggest disadvantage of Bitcoin and other cryptocurrencies is their extremely high volatility. Due to this fact, you can see a mixed performance against fiat, but if you look at a longer time frame, the value of Bitcoin is increasing in comparison to fiat.  Bitcoin volatility vs other asset classes 3. Real Estate Buying a property and investing in real estate may be a good option to combat inflation. However, unlike the other assets mentioned above, it is no simple task to dip in and out of property investment, due to it being illiquid and requiring extensive management from the property owner. In the case of rental property, investors can manage - and hope to offset - the effects of inflation through contingencies like raising the rent for tenants each year. However, when inflation is escalating at an alarming rate, as it is today, this is not entirely feasible.  The biggest obstacle in the current economic environment is that residential properties are already overvalued in most countries. This is currently an issue in China’s property market, where house prices in Hong Kong have now surged to at least 46 times an individual's average income.  4. Commodities Commodities have proved to be one of the best assets used as a hedge against inflation. One study by Vanguard, for example, showed that for each 1% increase in inflation, commodities’ value increased between 7% and 9%. When we are talking about commodities we usually think about oil, agricultural crops, and livestock. However, commodities like oil are now beginning to lose ground as a thought-out investment, when a new wave of energy innovations like photovoltaic technology, could hold more potential for longevity.  Commodities perform well in specific situations but most of the time they are outperformed by other assets like stocks. 5. Equities In the past, the value of stocks outpaced inflation by around 7% on a yearly basis. This is one of the reasons why equities are usually one of the assets that investors give themselves the highest exposure to.  Investing in equities is a long-term game because during periods of increased inflation equities don’t tend to perform that well. The reason is that as prices rise, businesses have higher expenses, and that limits their growth as well as stock value. Investing in a single stock can be a risky investment strategy, so it's best to thoroughly consider the short, medium and long-term gain before committing to this investment type.  6. Dividend-paying stocks Choosing stocks that have a long history of paying dividends regularly is another good way to combat inflation. Some companies have even increased the dividends that they are paying out each year, such as 3M, and IBM. In addition to stock dividends, crypto dividends are another option for investors looking to increase their passive income on their crypto assets.  Crypto dividends are awarded to investors for completing certain actions with their crypto, such as through staking. However, it is important to consider the complexities here, by questioning whether there are terms for receiving crypto dividends, such as “lock-in periods”, for instance, where you cannot access your investment.  7. Inflation-protected annuity An annuity is a guaranteed payment from the insurance company that many people use for their retirement. The amount of money that you are being paid is usually lower in comparison to other asset classes, but the risk is also lower. There is also a possibility to add inflation protection, where the money you receive is connected to the CPI index. 8. Short-term bonds Short-term bonds are highly liquid and have a maturity of between 1 and 4 years. They are one of the safest options that are used during times of increased inflation, especially in comparison to equities.  Usually, increased inflation rates are followed by increased interest rates as well. This was observed last year, and continues at present, after the hawkish decision of the Federal Reserve produced an all-time high for the US Treasury bond yield, now sitting at 1.82%. 9. Fixed-rate loan Another option is taking a fixed-rate mortgage loan for 20-30 years with low interest, meaning that the rate stays the same in spite of any changes to the baseline interest rate of your country’s respective central bank.  However, it should be noted that any debt obligations always carry a certain level of risk. 10. TIPS Treasury inflation-protected securities are bonds issued by the US government. They rise together with inflation since it’s measured by the CPI, Consumer Price Index. When the value of TIPS increases, the interest paid increases as well, which protects investors especially during uncertain times of higher inflation. What is the future? Inflation is one of the many factors that investors need to be prepared for, especially when they are building an investment portfolio. To combat inflation it’s best not to leave your money “under the mattress”, but instead, invest it in various asset classes that hold - or better - increase in value over time, leveraging the initial value of your investment.  At times when inflation rates are on the rise could be the best moment to review your portfolio and investment decisions. Everyone wants to take home the value of their hard-earned cash, without worrying about losing that value due to uncontrollable factors, such as inflation. Since inflationary environments are becoming more of a norm than a rarity, investors must prepare to operate in a way that maximises the value of their investments, through analysing and diversifying their portfolio.  Want to protect your money in gold? Learn More

Doug Turner
Doug Turner

18/01/2022

Gold & Silver Market Analysis for Monday 17th January

Kinesis Macroeconomic Analysis China is the main talking point as a new week of trading gets underway in Europe with the People’s Bank of China unexpectedly cutting the interest rate on some of its medium-term loans. This surprising move, as the country seeks to tackle an economy that is now slowing after initially rebounding so impressively from COVID-induced lockdowns, is likely to herald further loosening of policy in the world’s second-largest economy.  China’s more accommodative stance marks it out in contrast to the direction most other central banks are taking. The UK is among the first to increase interest rates recently with others set to follow after a decade-long period of quantitative easing.   Tuesday will see the Bank of Japan announce its latest interest rate decision and while the bank is highly unlikely to move from its current rate of -0.1%, the announcement will be followed ever more closely after China’s unforecast shift.  Expectations are that the Bank of Japan won’t change for some time yet but the rhetoric is slowly changing after a long period of ultra-accommodative monetary policy. The central bank is reported to be instigating talks on when interest rates will rise now that inflation is inching higher. Talking of inflation, the UK and Canada will publish their inflation figures for December on Wednesday with both countries expected to report prints of about 5%. With gold considered a hedge against inflation, signs of consumer costs continuing to rise are likely to be supportive for gold prices.  Markets are lacking a clear direction so far, with no significant moves either way. Trading volumes are likely to be lower today, with the potential for higher volatility as a result. The New York Stock Exchange, Nasdaq and US bond markets all closed as the US celebrates Martin Luther King Jr Day. Kinesis Gold Price Analysis This inflationary environment should be positive for gold with the price now holding comfortably above the psychologically important level of $1,800 an ounce. Gold Price ($/g) - 15 mins - from Kinesis Exchange With no clear moves yet on currency markets and with reduced volumes for anything US-related today as a result of the public holiday, gold is likely to spend another day shuffling around the $1,820 level that has been its home for the last few days. From a dollar per gram perspective, that position translates into gold holding station at $58 per gram with today’s initial gains seeing it nudge towards $59. Kinesis Silver Price Analysis Silver’s outlook is looking promising after it climbed above $23 an ounce to trade near its highest level in two weeks. A slight weakening in the dollar coupled with the backdrop of inflation concerns paints an optimistic picture for silver and with the metal having broken through $23, further gains are likely. It’s worth noting that the gold/silver ratio is about 79, a level that is towards the lower band of its historic range, suggesting that there is scope for silver to outpace gold in the coming months. Find out more about what Kinesis has to offer Learn More 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 in writing 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 renewable energy and the challenges of avoiding greenwash while investing sustainably. Rupert holds a Bachelor's Degree in Spanish, Portuguese and Latin American Studies (a key region historically for gold and silver!). Away from the laptop, Rupert also owns a couple of coffee shops called Forge Coffee back in his native county of Northamptonshire.

Rupert Rowling
Rupert Rowling

17/01/2022

Gold & Silver Market Analysis for Friday 14th January

Kinesis Money Macroeconomic Analysis In the last few months, investors have been used to seeing inflation data surpassing expectations and forecasts. Yesterday, the opposite happened with the U.S. Producer Price Index for December posting a modest increase of +0.2% - well below the expected +0.4%. Notably, food and energy, two key sectors in the 2021 inflation rally, showed a decline from November. These figures could see some investors believe that inflation pressure is starting to ease. This scenario, in conjunction with a relatively dovish speech by Jerome Powell earlier this week, triggered a decline of the dollar. Indeed, the Dollar Index has fallen below 95 for the first time since mid-November. This has helped the precious metal sector with the gold price rebounding solidly, despite the 10 Year Treasury yields remaining well above the average of 2021 to about 1.70%-1.75%. Gold price 1h chart ($/g) from Kinesis Exchange Kinesis Money Gold Analysis Gold has started the new year showing significant resilience. The rebound seen in the last few days was certainly helped by the decline of the dollar, but we should consider that it happened while expectations for Fed rate hikes in 2022 jumped from 1 or 2 to 3 or 3.5. This all followed the December FOMC meeting and its hawkish meeting minutes, released earlier in January. Therefore, this positive movement should be considered significant. From a technical point of view, the main levels to follow remain unchanged. Bullion is still being traded at around $1,825, with the first resistance just a few dollars above, in the region of $1,830-$1,832. A clear climb above this level could encourage more investors to buy gold, opening space for an extended rally, with a potential target of $1,870 - a level last reached in November 2021. However, if gold doesn’t find the strength to break through $1,830, the price could continue its sideways dance between $1,800 and $1,830 seen in the last few days. Indeed, the first support zone is placed at $1,800 but this doesn’t seem in sight for now. Of course, macroeconomic indicators (particularly inflation and secondarily labour data) and Treasury yields, remain the main catalyst to follow to understand the next steps for gold. Looking at the price in dollars per gram, we can see that bullion is getting closer to $59 per gram. Kinesis Money Silver Analysis Silver seems to have forgotten – at least for the time being – the negative performance of 2021. Indeed, the precious metal is posting a gain of 4% from its price a week ago and is 8% above the level reached 30 days prior. The short-term momentum remains positive, with the spot price trying to break through the resistance zone at $23.30 to continue its recovery to the next key levels of $23.45 and $23.68-$23.70. A successful challenge of both these levels can be seen as a proper inversion (and no longer as a rebound) for the silver price. Find out more about what Kinesis has to offer Learn More Carlo Alberto De Casa is an external Market Analyst for Kinesis Money. He also writes as a technical analyst for the Italian newspaper La Stampa. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018. This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.

Carlo Alberto De Casa
Carlo Alberto De Casa

14/01/2022

Do Cryptocurrencies Pay Dividends?

Cryptocurrency dividends pay the highest interest of all asset classes. A dividend is a share of profit paid by the company to its investors and shareholders. Currently, the interest rate that you get from banks is negligible, and stocks usually pay between 4-6%. Some coins with a higher market cap pay up to 10% and crypto stable coins pay up to 20%, while on some cryptocurrencies you can even earn up to 100% per year.  Usually, when people think about dividends they think of those that traditionally come from stock market investments. Crypto dividends appeared in 2018, with the introduction of decentralised finance. This gave people the ability to do yield farming, staking, liquidity providing, lending, and earn interest on their investment. Crypto dividends and different earning methods experienced a huge surge of demand and despite high volatility, they became the best way of earning interest. Just a few days ago, a tech and infrastructure company called BTCS Inc. announced that they will be the first Nasdaq-listed company to pay dividends to their shareholders in Bitcoin. Right after the announcement, their stock price increased by 44%. What are crypto dividends? Crypto dividends are rewards that are earned for holding or performing a specific action with different assets. The amount of dividend granted is frequently based upon the amount of cryptocurrency the investor holds or, if they receive dividends for performing a specific action, this could be through staking or claiming a reward on their platform. The interest rate is usually represented in annual percentage yield (or APY) and represents the returns over a period of a year. How to earn crypto dividends When it comes to the stock market, investors are paid from the profit that a company generates. In the cryptocurrency markets, there are many different principles of how and when dividends are paid. The most popular ways of earning dividends in the blockchain space are by staking, yield farming, lending, and airdrops. Staking is used in proof of stake protocols to verify transactions on the blockchain network. The number of coins you stake usually correlates with the number of transactions you verify and you receive rewards based on that. Yield farming is when you provide liquidity on a trading pair and you gain interest based on the usage of this trading pair. Usually, the returns on yield farming are higher but there is a risk of losing your investment if there is a drastic change in price. This is called impermanent loss. Crypto lending or borrowing is where you lend your cryptocurrency asset for a rate of interest that is repaid after a certain time. Usually, people offer their ETH or BTC as collateral to take stable coins or fiat which they can use to buy more crypto, gold, or even real estate. Crypto airdrops are distributions of specific coins or tokens to a community, usually in response to performing some action required by the company that offers the airdrop. The biggest airdrop was performed by Decred and the users that are still holding their tokens are estimated to have around $500,000. Another way to earn a passive income is through investing in stable coins, for example, by earning a return - or yield. Most often, your return is paid in the currency that you invested in, as is the case on the Kinesis Money platform which pays out in physical gold and silver, for storing precious metals in its ecosystem.   As with investing, it is important to consider the extent of the risk posed, as well as things like safety or “lock-in” terms. With stable coins like Kinesis' KAU and KAG, there is the added benefit of securing value over time with the currencies backed by physical precious metals, in addition to no “lock-in” terms, that gives utility and liquidity to users’ investments. Crypto dividends methods and coins Depending on your preference, you should choose a combination of options that will combine high returns for the risk you are willing to take. Here are some of the best options for earning interest on your crypto.  Ethereum 2.0 is currently the asset that is staked the most with almost 160 billion. The largest platform for staking ETH 2.0 is Lido finance with an interest rate of 4.8%. Even though the risk and reward ratio is great, you won’t be able to use your Ethereum until ETH 2.0 is released — and the date for that is still unknown. Curve finance or CRV is the largest liquidity pool built on the Ethereum chain. Currently, there are 23.3 billion assets locked on the platform. The curve became famous for its market-making algorithm which allows users to exchange stable coins that are pegged to fiat. The interest rate for fiat is pretty high, around 20%, and since prices won’t change a lot, it decreases the chances of impermanent loss. Maker DAO or MKR is a decentralised lending and borrowing platform. It is currently second (by size) with 19 billion assets locked. On Maker DAO, usually, people provide ETH or some other cryptocurrency as collateral and loan DAI as a stable coin. If the price of collateral goes down, you either need to provide more of it or you need to accept a 13% loss. There are many ways and platforms where you can earn dividends on your assets. Make sure to do your own research, especially if you are looking to earn interest on some smaller coins. Trading vs dividends Many people think that they need to do daily or swing trading to get earnings in the crypto markets but, as we’ve discussed, there are other ways of getting passive income.  Daily traders try to identify good entry and exit points and execute the trades from a few minutes to a few hours. Swing traders are doing the same thing, but usually, the trades last from a few days up to a few months. Since the frequency of the trades in swing trading is lower they are usually aiming for a bigger return per trade. In today's markets, crypto dividends can be high, and just by holding or staking assets, investors can outperform most traders. Also, volatility is decreasing over time which lowers the potential for traders to identify good entry and exit points and get the same returns as they were able to do in the past. Due to this, most people will fare better by staking and earning passive income than trading. Future of crypto dividends Decentralised finance is still a new and fast-evolving field in the blockchain space. We had many different tries and different approaches to earning interest on your crypto. Many of them failed, many of them are still in the experimental phase and evolving as well. The most recent boom was Olympus DAO and its forks that are giving over 1000x per year if the price remains the same. We are still early and decentralised finance is one of the most bullish segments in the blockchain industry. To find out more about cryptocurrency investment, see our blog Learn More

Doug Turner
Doug Turner

13/01/2022

Gold & Silver Market Analysis for Wednesday 12th January

Kinesis Money Macroeconomic Analysis Yesterday, Jerome Powell appeared at the Senate for his re-nomination, as his second term mandate begins. In the hearing, he confirmed that the high rate of inflation was seen as a threat by the Federal Reserve, stating that the US central bank plans to raise interest rates this year in an attempt to run down its trillionaire balance sheet.  It seems that the markets were already well aware of the inflation risk, especially after the minutes from the FOMC meeting last December were released. Powell was calm while stating that the Federal Reserve is expecting month-over-month inflation to be moderate in the months ahead. That being said, the year-over-year inflation figures could be on the way to reaching a historical average in the second part of 2022, after the recent rally in which a three-decade-high was reached.  After a series of hawkish interventions, yesterday's speech was, in fact, interpreted as slightly more on the dovish side. Although, the Fed remains on track for (at least) 3 rate hikes in 2022. The markets are currently pricing 3 rate increases with certainty, with the anticipation of an additional fourth hike (25 basis points) in December 2022.  Overall, the market reaction was positive, with stock indices closing the day positively and Europe opening in green this morning. However, the US dollar has slowed its upwards climb, while the 10-year treasuries yields remained above 1.70%. The focus is now moving to US inflation data (to be released at 14:30 CET), as a continuation of the price rally which could influence the Fed’s upcoming decisions. Kinesis Money Gold Analysis Following Jerome Powell’s intervention with the Senate, the gold price rebounded to reach a one-week-high. Despite the markets’ expectation that interest rates will rise significantly in the next few months, investors are showing a significant interest in gold. Bullion jumped to $1,820 and is now just a dozen dollars off the resistance level placed at $1,830-$1,832. A clear surpass of this threshold would open space for new recoveries, while a signal of weakness would be evident with a decline to $1,800.  Kinesis gold ($/g) chart - 1h - from Kinesis Exchange Today's main catalyst is likely to be the release of US inflation data. Any figures below expectations, could curb the dollar's rebound and help gold continue on its path to recovery. Kinesis Money Silver Analysis Today, silver is now consolidating the recovery it has undergone over the last few days. The price seems to be stabilising between $22 and $23, while the risk zones of $22 and $21.5 are well out of reach. A surpass of $23 would certainly be a positive signal for silver, while the price currently remains in its consolidation phase. Find out more about what Kinesis has to offer Learn More Carlo Alberto De Casa is an external Market Analyst for Kinesis Money. He also writes as a technical analyst for the Italian newspaper La Stampa. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018. This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.

Carlo Alberto De Casa
Carlo Alberto De Casa

12/01/2022

What's The Difference Between Gold And Bullion?

Traders and experts often discuss gold and the commodities market, but the specific terms “gold” and “bullion” are actually quite different. While gold encompasses all forms of the metal and ways to trade in its market, including coins and bars, bullion includes the physical forms of other precious metals also traded, like silver and platinum. It’s important to understand these differences and the various forms gold can be invested in, so you can choose the best form for your goals and needs. The Gold Market Trading in the commodity market includes precious metals like gold, silver, and platinum. Historically, gold is valuable and has been used as currency. Its price remained relatively consistent until the 2008 financial crisis, when its price nearly doubled. In 2019 the price of gold increased by 13%, while in 2020 it went up by an incredible 26%. By contrast, 2021 wasn’t a great year for gold, due, in part, to the Federal Reserve announcing that the banks would increase interest rates sooner than expected. That caused the price of gold to decline by almost 4% in comparison to 2020. Gold price in 2021 There are many reasons to invest in gold since it is often viewed as a safe option compared with other investments. It often happens that the value of other asset classes like the FTSE 100 goes down, while the price of gold goes up. Here are some of the reasons gold is a good investment: Preservation. Gold’s long history makes it an attractive, secure form of long-term investment and wealth preservation. Its value continues to grow slowly, though it is less impacted by inflation and volatility. Hedging. Generally, gold maintains its value or prices even improve as the dollar falls. It is also not directly impacted by interest rates and is a scarce asset. This behaviour makes investing in gold a popular hedging technique, acting as insurance against economic events. Portfolio diversification. A portfolio made up of many different types of assets generally reduces risk and is stronger against volatility. Gold is often negatively correlated to the stock market, meaning that even as the stock market falls, gold may remain steady or prices may increase. Including gold can help diversify your portfolio and provide some protection against unforeseen events. Stock opportunities. Stocks in gold companies can usually maintain profitability even when the gold price is low. Many companies also pay dividends, making gold stocks a valuable buy for investors. Gold trading can take on a variety of forms: you can trade physical gold, purchase shares in gold mining companies, invest in gold ETFs, or trade in gold options and futures. Each of these methods provides different benefits and challenges and involves using different risk strategies. In this article, we’ll focus on trading in physical gold through bullion, coins, and bars. Investing in Bullion Gold bullion is physical gold that is at least 99.5% pure, in the form of bars or ingots. Investors can purchase bullion from banks or brokers online or in person, and store it themselves or with a third-party custodian. While you can buy the actual bars, investing in gold and silver bullion is easier to do via ETFs or futures contracts. It can sometimes even be considered legal tender. ETFs contain a collection of securities, which typically track an underlying index. Gold bullion ETFs track gold certificates, which can be exchanged for physical gold or the cash equivalent. While it’s not the same as owning a physical gold bar, investing in gold ETFs still grants access to the bullion market.  Futures contracts are agreements to sell and deliver gold bullion to the buyer at a set date for a set price. Until this happens, the buyer only owns a paper gold contract, which can be sold before the expiry date or rolled forward into a new one. It’s worth noting that this trade is in contracts, not shares. They can be quite profitable but also lead to heavy losses if the bullion price changes unfavourably. As a result, futures trading is usually suited for experienced investors. Options contracts are similar to futures in that the buyer and seller agree on a specific price of gold at a certain date. The difference is that with options trading the buyer doesn’t have an obligation to go through with the purchase while on the futures contract the trade will be executed. Banks often hold gold bullion as reserves, which is used to settle an international debt or stimulate the economy through lending. A central bank lends gold bullion to a bank, which sells the gold or lends it to mining companies, while the central bank receives the cash equivalent. If the bank sells bullion on the spot market, it receives cash.  This addition of gold in the market reduces its price, hopefully enough that the bank can buy it back at a lower price than it was originally sold for. If the bank lends the bullion to a mining company, it is usually repaid from the company’s future mining output. A mining firm would borrow the gold to finance a project or in a forward hedge contract, in which gold that has not yet been mined is pre-sold to buyers. Investing in Gold Coins Another way to invest in gold is to buy gold coins or bars; physical forms of gold that are typically more available and more manageable for everyday use. Coins, naturally, are more flexible, since you could sell a portion of your gold collection by selling some coins rather than your entire gold bar. Some coins may also have varying values if they are rare or antiques. Gold coins or bars can be purchased online or in person, too, through brokers, banks, or pawnshops, and stored independently. As the historical basis for most nations’ currency, gold coins can be safe investments and sold when the market price best suits the investor. Pros and Cons of Physical Gold Both of these methods involve owning physical gold, which has the benefit of control and the challenge of actual storage. Since investors hold the physical bar or coins, they can sell at any time the price is most attractive, and hold it when it is not. As outlined above, gold is generally considered a safe investment and a way to diversify and hedge your investment portfolio. However, it can be difficult to store bars of gold – they take up a lot of space, and could be lost or stolen. Many brokers offer insurance options for physical gold, or it can be stored at a bank. There are some websites where you can buy, sell, and store physical gold through a broker, and thus not have the responsibility of storing it yourself. Is Bullion or Gold a Better Investment? When comparing the difference between investing in gold or in bullion, it is important to consider your investment needs. While investment in bullion through ETFs, Futures or Options contracts enable you to incorporate gold into your portfolio, investors, however, do not have legal title ownership of the bullion. Instead, investors simply profit from the speculative or tracked value of gold as an asset, such as through its market price or the extent of its availability on the market.  For investors looking to access the fullest extent of benefits that physical gold offers, investment in gold coins, bars or digital gold, may be a more preferable option. In this way, investors can build their wealth, by being protected against market volatility, currency fluctuations and inflation risks, as well as being able to physically redeem their gold. Ultimately, the best investment choice will greatly depend on the investor’s goals, and the extent to which they intend to utilise their gold investment.

Doug Turner
Doug Turner

11/01/2022

Gold & Silver Market Analysis for Monday 10th January

Kinesis Money Macroeconomic Analysis Last Friday, the US Bureau of Labor Statistics released the nonfarm payroll data which, safe to say, missed analysts' expectations. Before the release, the forecasts anticipated an increase of around 400,000 new employees, while the official data certified a growth of only 199,000 job units.  It should be noted that figures for the months of October and November last year were positively revised, with an additional +141,000 units. Furthermore, the unemployment rate declined to 3.9%, while average wages grew by 0.6% on a monthly basis. Could these figures change the upcoming decisions of the Fed?  It’s unlikely, even if they have a wider impact overall. The minutes of the FOMC meeting held in December showed that bankers are focusing more on inflation rather than labour data. Within the meeting minutes, the word “inflation” was used a total of 75 times, in conjunction with a hawkish emphasis. Therefore, the expectations for at least 3 interest rate hikes in 2022 is reasonable, and further supported, by the rebound of the US Treasury yield seen in the last 10 days. In this week's economic calendar, the consumer price index will be revealed on Wednesday, closely followed by the producer price index. These two indicators will be strictly followed by both investors and the Federal Reserve. Kinesis Money Gold Analysis Last Friday, the gold price experienced a moderate rebound, after US labour data disappointed investors. On the Forex market, the greenback has lost ground, with the dollar index falling below 96 points.  To put this in context, bullion jumped from $1,786 to $1,796, confirming an inverse correlation with the dollar. The rebound was curbed by the resistance zone placed at $1,800, meaning that bullion has started this week with a slight decline. Overall, the gold price shows little volatility at present, with only marginal movements (by a few dollars). Gold price ($/g) chart - 1h view - from Kinesis Exchange Even if the main focus for the Federal Reserve is on curbing the growth of prices, a weaker US labour market could reduce pressure on the central bank to instigate further hawkish decisions.  From a technical point of view, a surpass of the $1,800 mark would denote strength for gold, even if a clear positive signal would only come about with a return of the price above the $1,830 resistance zone.  Kinesis Money Silver Analysis The weakness of US nonfarm payroll data was a positive catalyst for silver, as well as for gold. The grey metal rebounded in the later trading hours of Friday last week from $22 to $22.4, before slowing down to $22.3 in today’s early trading.  From a technical point of view, the rebound seen on Friday was encouraging, even if a confirmation signal is still needed. It is true that the medium-term trend remains weak, after the decline of the last few weeks. The next resistance zones are placed at $23 and $23.4; a surpass of these thresholds would open space for new recoveries. However, a new fall for silver below $22 would be considered a negative signal, with the next support zone target placed at $21.5. Find out more about what Kinesis has to offer Learn More Carlo Alberto De Casa is an external Market Analyst for Kinesis Money. He also writes as a technical analyst for the Italian newspaper La Stampa. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018. This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.

Carlo Alberto De Casa
Carlo Alberto De Casa

10/01/2022

Gold & Silver Market Analysis for Friday 7th January

Kinesis Money Macroeconomic Analysis Today, the importance of central bank monetary policy and its domino effect on investment decisions is clear to see. Earlier this week, the Federal Reserve released the meeting minutes for the FOMC meeting held in December last year, giving further insight into upcoming policy decision-making.  It is already widely accepted that the US central bank no longer recognises inflation as “transitory”. Although, the meeting minutes showed a hawkish tone on their part, as policymakers could be preparing for an increase in rates sooner than expected. In fact, some officials expressed a preference for a quicker path towards rate hikes, in order to curb inflation and reduce the bank’s $8.8 trillion balance sheet. The minutes included some particularly hawkish comments:  “Inflation readings remained high, and various indicators suggested that inflationary pressures had broadened in recent months”.  As mentioned, other comments also focused on the broadness of the Fed's current balance sheet. Some bankers noted that “the Federal Reserve's balance sheet was much larger, both in dollar terms and relative to nominal gross domestic product (GDP), than it was at the end of the third large-scale asset purchase program in late 2014”. The hawkish mode of the Fed had a number of effects on the financial market. The most remarkable was the increase in the US 10-years yields, which jumped above 1.70%, and the overall correction of stock markets.  The technology sector was hit, as it generally is, paying fewer dividends. The US Dollar experienced a modest recovery, while gold and silver showed a moderate decline, as a consequence of the increase in bond yields.  The next few trading sessions will give further insight into how the markets understand and respond to the FOMC meeting minutes. Another situation to consider is the one unfolding right now in Kazakhstan, which has resulted in dozens of victims. Due to the clashes over the last few days between protestors and the police, Russia has sent paratroopers to help the president regain control of the country.  Any escalation of the turmoil could increase the demand for gold as a safe-haven asset. Kinesis Money Gold Analysis Already, the bullion price has been hit by the hawkish tone of the FOMC minutes. The rally of the treasury yields generated a decline for gold, which lost the support zone of $1,800, hitting a low of $1,790.  Gold price ($/g) has fallen below $58 per gram - 1h chart from Kinesis Exchange From a technical point of view, the gold price has returned to the former lateral channel between $1,760 and $1,800, as investors await new catalysts. Any further hawkish indication from the Federal Reserve could trigger a negative impact on gold, while a slowdown of inflation growth (or any other suggestion of a push towards rate hikes) could be a positive market driver for gold.  Kinesis Money Silver Analysis During yesterday’s trading session, the rebound of bond yields generated a sell-off on silver, which lost 4%. The spot price of silver has now plummeted from $23 to $22.1, now approaching the support zone of $22.  The technical scenario for silver appears relatively fragile. A break-down of the support area of $22, will open space for a further decline to the next key level, placed at $21.5. This has been, importantly, the lowest level reached by silver in the last 18 months. Find out more about what Kinesis has to offer Learn More Carlo Alberto De Casa is an external Market Analyst for Kinesis Money. He also writes as a technical analyst for the Italian newspaper La Stampa. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018. This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.

Carlo Alberto De Casa
Carlo Alberto De Casa

07/01/2022

Gold & Silver Market Analysis for Wednesday 5th January

Kinesis Money 2021 Summary and 2022 Outlook for the Year Ahead To summarise last year, there are some pivotal topics that should be mentioned. Among these, it is important to consider the continued bullish trend of stocks, with the S&P 500 up year over year (YoY) by 26.9%, and over 28% accounting for dividends. In addition to this, many commodities have achieved significant gains.   Another crucial topic to cover here is the monetary policy of central banks. In summer 2021, the Federal Reserve started preparing the markets for the impending tapering process, otherwise understood as the reduction of the liquidity in the system. This was later announced in November of last year.  In December, the U.S. Central Bank increased the speed of the tapering process with the target of its completion by the end of March 2022 - instead of the original plan for June 2022. This year, the number of rate hikes is expected to increase from one to three.  As a result of the tapering process, the greenback regained strength last year, with the US Dollar index recovering 96 points. Meanwhile, the EUR/USD trading pair fell to 1.13.  The appreciation of the American currency, the “dominant dollar”, was also favoured by the unchanged dovish attitude of the European Central Bank. However, December was witness to the conflict between Miss Lagarde’s confirmation that inflation was expected to be transitory and Jerome Powell’s statement that US price growth was no longer a transitory situation. So, what should we expect for 2022?  The few topics already mentioned are likely to remain central this year, and it seems they are strictly linked. Monetary policies could curb inflation, slowing down the rally of some industrial and agricultural commodities. On top of this, the US 10 years treasury yield notably finished 2021 in the region of 1.50%, before jumping to 1.65% in the first two trading sessions of 2022. The movement of the US 10 year bond yields is certainly an indicator of inflation expectations for the next few years, and should be closely monitored. Commodities in 2021 As mentioned, 2021 was the year of the commodity sector, especially the energy sector. Both WTI (West Texas Intermediate, the benchmark of US oil) and North European Brent rose by more than 50%. In addition, natural gas achieved a similar performance, despite experiencing greater volatility. During late summer, the price was up 120% YTD, before slowing down in the final quarter of the year. Another extraordinary performance was achieved by coffee, which jumped by 76%. Among agricultural commodities, cotton rose by 44% and wheat by around 22%. Furthermore, the performance of industrial metals was positive, with copper up by 23%, nickel by 26% and zinc by 30%. Even better than this was steel, which jumped by 40%. All this, of course, exacerbated the effects of inflation, generating various problems in the supply chain.  The scenario, as it will be pointed out, has been different for precious metals.  Precious Metals in 2021 In 2021, precious metals were one of the few raw materials down last year. Gold posted a loss of almost 4%, while silver declined by 11%. Palladium, despite the massive gains seen during previous years, lost around 20% last year. It should be pointed out that the negative performance of gold must be contextualised within the main macroeconomic scenario. Many investors still preferred betting on stocks, in an attempt to achieve quick gains.  In 2021 we saw a hawkish Federal Reserve, with a growing number of rate hikes expected for 2022 - a factor that could implicitly make holding gold more expensive.  Unlike in 2013, when the announcement of tapering generated a “taper tantrum”, the reaction of gold twas composed in 2021 with a drop of only a few percentage points, confirming the resilience of bullion to various market scenarios. Gold chart from Kinesis Exchange - $/g - 1h timeframe Kinesis Money Gold Analysis In 2021, the gold price started with a decline from $1,830 to $1,800, after the recovery of US bond yields. Within the support zone of $1,800, we have seen buyers being very active, and the price now recovering to $1,815. From a technical point of view, a new positive signal would be highlighted with the surpassing of $1,830. However, a decline below $1,800 could bring the gold price back into the lateral channel of $1,760 and $1,800. Analysing the price in dollars per gram, bullion remains traded above $58. Find out more about what Kinesis has to offer Learn More Carlo Alberto De Casa is an external Market Analyst for Kinesis Money. He also writes as a technical analyst for the Italian newspaper La Stampa. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018. This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.

Carlo Alberto De Casa
Carlo Alberto De Casa

05/01/2022