While the Federal Reserve talks about tightening monetary policy, the Chinese central bank is heading in the opposite direction. This could boost gold demand in that country even further.
Earlier this month, the People’s Bank of China announced a 0.5% cut in financial institutions’ required reserve ratio (RRR). According to the World Gold Council, this move will inject about $1.2 trillion yuan into the Chinese economy.
Silver delivery in December surged to levels not seen since last spring and reversed the downward trend in place since last summer.
This analysis focuses on gold and silver physical delivery on the Comex. See the article What is the Comex for more detail.
Inflation is sizzling hot. Gold has historically served as an inflation hedge. So, why hasn’t gold caught a bid?
In a word, confusion.
Taper tantrums and fear of Fed rate hikes have generated massive confusion in the markets. People are selling gold when they should be heavily buying gold in the dips.
And at the root of this confusion is the failure to account for real interest rates.
In October, Chinese gold imports reached the highest level since December of 2019 as the market continues to recover after taking a hard hit during the coronavirus pandemic.
According to the latest data from Chinese customs, the country imported 123 tons of gold in October. That was a 38-ton month-on-month increase.
China ranks as the world’s number one gold consumer.
Gold looked very strong through mid-November. Trends in September and October had been pointing to a breakout. The market delivered sending gold up through $1870. Unfortunately, hard resistance kept the bulls in check, despite repeated attempts to breakthrough.
The previous price analysis presumed that a Brainard nomination at the Fed would be the catalyst needed to break through $1880. It also assumed that a Powell nomination, though expected, would bring gold back down to some extent.
Unfortunately, the gold market took the Powell news harder than expected.
Gold inventories in Comex vaults increased for only the second time since February this year.
This analysis focuses on gold and silver within the Comex/CME futures exchange. See the article What is the Comex? for more detail. The charts and tables below specifically analyze the physical stock/inventory data at the Comex to show the physical movement of metal into and out of Comex vaults.
‘Tis the season for Christmas specials.
I’m not going to lie – even as a grown man, I love watching Christmas specials. Snoopy decorating his dog house. The Grinch folding up the Christmas tree like an umbrella and stuffing it up the chimney. And Frosty the snowman melting in the greenhouse.
We got more bad inflation news this week as the Federal Reserve wrapped up its final FOMC meeting of the year. Supposedly, the central bank has launched its war on inflation. Has it though? In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about inflation and the Fed meeting and explains why it looks more like the Fed is taking a pea shooter into a bazooka fight.
Russians have gone on a gold-buying spree.
According to Russian media reports, investors in the country have bought a record amount of gold since 2014 despite prohibitively high taxes.
The federal government continues to run big budget deficits as spending skyrockets. Increasing tax revenues are the only thing keeping the deficits from blowing up even further. But how long will this tax windfall last?