Gold and silver have both rallied in recent weeks, with the price of gold pushing to $1,900 an ounce. But is this rally sustainable?
Following is some technical analysis of both the gold and silver markets.
You have a choice. Do you take an Olympic gold medal? Or the Lombardi Trophy?
Don’t make a hasty decision that you might regret.
There was more bad inflation news this week. So, the Fed is about to ramp up the inflation fight, right? Not so fast. In this episode of the Friday Gold Wrap, host Mike Maharrey argues that the central bank isn’t set to go to war with inflation because it can’t. And he explains how St. Louis Fed President James Bullard let the cat out of the bag.
The last article highlighted the strange things going on in the gold market. Specifically:
- Cash settlement instead of delivery for February
- Increased open interest in March
- Slightly higher spread cost in April.
Recent weeks have seen several flashing yellow signs in the gold market.
Gold continues to flow out of COMEX vaults at a rapid pace. Inventory fell 3% in the last month alone.
This analysis focuses on gold and silver within the Comex/CME futures exchange. See the article What is the Comex? for more detail.
The US Treasury realized a monthly surplus of $118.7 billion in January. It was the first budget surplus since September 2019 and the largest since it realized a $160 billion surplus in April of 2019.
The surplus was driven by high revenue from a continued surge in Individual Taxes. This was combined with shrinking expenditures due to the expiration of the child tax credits that ended on December 31. The surplus for the month also was helped by $70 billion in proceeds from a wireless spectrum auction.
The Federal Reserve still seems to be hoping that inflation will just go away on its own or that it can jawbone it down by projecting a few little rate hikes. But the Consumer Price Index data keeps dashing its hopes. In this episode of the Friday Gold Wrap, host Mike Maharrey talks about the January CPI and the Fed’s proposed “fight” against inflation. He also discusses the demand forecast for silver this year.
The latest seasonally adjusted inflation rate for January was 0.65% month over month, with a non-seasonally adjusted annual rate of 7.48%. Both of these numbers came in above expectations.
As hypothesized last month, it was very possible that Omicron temporarily restrained inflation in December and a rebound should be expected. It did not take long for the rebound to occur!
After a strong 2021, demand for silver is expected to hit a record high in 2022, according to the Silver Institute’s Global Demand Forecast.
The Silver Institute projects silver demand will hit a record 1.112 billion ounces this year with growth in most key areas. That would represent an 8% year-on-year increase.
In December 2021, the US ran up a total trade deficit of -$80.7 billion, just a tick shy of the record -$80.8 billion set in September. The Goods Deficit increased by 3.2% to come in at -$101.4B, eclipsing the -$100B mark for the first time ever.
This capped off a year in which the trade deficit shattered the record set back in 2006.
