Gold's Run Is Far From Over, Argue Analysts

Citing the current persistent environment of low or negative interest rates around the world, some analysts believe the metal can reach as high as $8,000.

Gold has now closed its second consecutive week above its previous all-time high, and considerably so. The $1,911 figure that was so often cited was blazed through as the metal breached the high from 2011 and kept on climbing. Despite calls for a pullback a week prior, gold closed Friday's trading session at $1,976, having traded comfortably in that range throughout the day. With $2,000 looking to be the next capture, analysts and banks have differing opinions as to how high gold can go, although they appear unanimous in terms of the trajectory.

Barry Dawes, executive chairman at Martin Place Securities, sees $3,500 as a target that's reachable in the next two years. Although it might seem lofty, such a climb would not be unprecedented, and Dawes is far from the only issuer of this forecast. Over the past two years, gold has already demonstrated the ability to appreciate by nearly 50%. There is also no shortage of figures in finance who are expecting such movements, with Quadriga Igneo fund manager Diego Parrilla listing $5,000 as a possible level over the next three to five years.

To Dawes, the most impressive part about gold's performance was the ease with which the metal cleared both $1,800 and its previous all-time record, as some had thought the metal might encounter resistance around both levels.

Goldman Sachs, whose analysts have consistently upgraded their gold forecast over the previous months, now sees gold reaching$2,300 over the next 12 months. Previously, they had pegged $2,000 as the level to reach within that timeframe. Goldman cited the persistent environment of low or negative interest rates around the world as a primary reason for their bullish view. Besides this, concerns over the economic recovery moving forward, worries over the dollar's status and a flare-up between the U.S. and China have all acted as powerful tailwinds. The events over the last couple of months seem to have aggravated existing issues between the two nations, with each of them shutting down the other's consulate in a clear display of rapidly-worsening relations.

Juerg Kiener, managing director of Swiss Asia Capital, has a similarly bullish forecast for gold's price based on the technical picture. In a recent interview with CNBC, Kiener delved into the technicals and explained that gold's current price movement looks to be signaling $2,834 in the near future, stating that his long-term expectations are even higher. Kiener also noted that gold has historically bounced back seven to eight times higher from its bottom. In Kiener's example of a $1,050 bottom, gold would eventually go on towards $8,000. Interestingly enough, many pundits have stated that gold had reached a bottom of $1,200 in 2018.

Gold Surges to Top of U.S. Import List

The list of imports into the U.S. was shaken up in May, with gold surging 1,700% from 2019 to now stand at the top import. Here's what's behind the change.

Released last week, the Census Bureau's much-anticipated report lived up to expectations, if only in terms of impact. Perhaps the most shocking number in the report pertained to U.S. trade data, revealing that April's 20.91% year-to-date plunge in trade was followed by a 29.83% plunge in May. There were upsides, too, such as the government's announcement that it posted 4.8 million jobs in June and signs that the domestic trade deficit is shrinking.

Yet whatever the upsides seem to be, Forbes contributor Ken Roberts believes that a closer look into the trade data reveals some major red flags that are likely being overlooked. As Roberts notes, U.S. exports made up for only 36% of overall U.S. trade in May, which might be the lowest export-to-import ratio on record. As Roberts explains, the trade deficit doesn't paint an accurate-enough picture of the economy, and it appears to be masking one of the biggest monthly falls in exports relative to imports ever.

The curiosities related to the trade data don't stop there, though, as an overview of the goods that are being brought in has made international trade look closer to a portfolio reassessment. Normally, computers are the top U.S. import, with passenger vehicles not trailing too far off. In May, however, imports of foreign vehicles fell by a massive 76.88% compared to the same month last year. 

Meanwhile, gold replaced computers as the top U.S. import for the month, with the value of gold imports increasing some 1,700% compared to the previous months of May.

These numbers somewhat tie into both the intense demand for physical gold in recent months and supply shortages in key places. As Switzerland, a top gold processor and exporter, all but closed up shop due to safety precautions, worries over supply escalated. What started as a supply concern among bullion buyers soon translated to questions over whether there would be enough physical gold to cover the metal's derivatives.

But even the well-documented scramble to obtain bullion by virtually every party over the past few months might not have prepared analysts for the import figures. $3.07 tons of gold were brought into the U.S. in March, followed by $7.54 billion in April and $8.77 billion in May. In the past decade, monthly gold imports into the U.S. exceeded $2 billion on just three occasions. Furthermore, the combined bullion imports between March and May eclipsed 2016's annual figure, which was the highest on record.

The Fundamentals for Gold Are As Strong As Ever

Although businesses are reopening, the economy faces multiple headwinds, including massive debt and deficit spending. Here's why that's good for gold.

As businesses slowly reopen after nearly a three-month lockdown, FXEmpire's Arkadiusz Sieron delves into what Americans, along with gold investors, can expect as the climate normalizes. Although dubbed the "Great Unlock", the reopening isn't a single sweeping action performed by the government, just as the lockdown wasn't.

Sieron notes that various state-level entities, as well as citizens themselves, began applying preventive measures before any governmental say-so and, in some cases, extended the measures past the mandatory level. Similarly, the reopening of the economy and the continuation of business will be far from the flip of a switch that some are expecting.

As an example, Sieron points to the restaurant industry, which accounts for around 16 million jobs in the U.S. Even if the government was to allow all establishments to fully open up, many consumers would find themselves with a newfound skittishness in regards to being in a large and dense crowd. 

This is just one example of how the economy could struggle to get back on its feet for some time.

This brings Sieron to the idea of a V-shaped or quick recovery, one which many are hoping for, and yet one that even the Federal Reserve isn't too optimistic on. All of these issues tie closely to gold and how the metal was performing throughout the pandemic.

It's no secret that the metal was the best-performing asset during the onset of the lockdown, as unprecedented uncertainty caused it to soar to seven-year highs. As one might infer from gold inching just below $1,700 last week, traders are likely hoping that the heaps of stimulus and heightened economic optimism will pour over into the coming months. In truth, however, the global economy was far from flourishing heading into the pandemic.

Interestingly enough, the broad asset sell-off in March was the first major hurdle that gold experienced in more than six months, as the metal had been climbing due to numerous sturdy fundamentals. The tables began to turn around mid-2019 as central banks embraced low or negative interest rates, which have all but become the norm as a response to the pandemic. The slicing of benchmark rates brought to the forefront all of gold's strong tailwinds, which many pointed to as the metal's perfect storm.

To be sure, the return to pre-pandemic economy strength will be a gradual process, with plenty of question marks along the way. Yet perhaps the most important takeaway for gold is that the global economy was in a state of contraction prior to any mention of the virus, while the domestic economy was feeling the weight of seemingly unsolvable debt and excessive fiscal spending, along with a host of other issues. Besides potential currency debasement as a result of stimulus measures, the pandemic could also strengthen gold's upwards trajectory by greatly exacerbating the issues of federal and national debt, to speak nothing of the economic sluggishness itself.

UBS Predicts Higher Gold Prices in Near Future

A strategist from the bank explains their bullish outlook, particularly regarding the shift in investor sentiment brought on by the global pandemic.

In a recent interview with CNBC, Joni Teves, a precious metal strategist at UBS Investment Bank, shared the bank's outlook for gold over the coming months, particularly regarding the shift in investor sentiment brought on by the global pandemic.

According to Teves, the slump that gold experienced during March's broad market selloff is long gone, and the metal is primed to continue climbing as it has been doing since mid-2019. Over the past weeks, gold has consistently closed trading sessions around $1,700, with frequent climbs to around the $1,720 level.

Teves and her bank believe that the steady upwards trend will continue, placing $1,790 as the target level for gold in the short-term. Over a slightly longer period, Teves thinks that there is plenty of room for gold to move past $1,800.

Speaking about the reasons for her bullish forecast, Teves explained that investor interest in the metal continues to grow, both among individual investors and funds that were short gold not too long ago. Teves attributes this to nearly unprecedented levels of uncertainty and expectations of low growth that were a significant talking point even before the pandemic hit. Likewise, plummeting interest rates will diminish the appetite for bonds, lowering the amount of choices investors have to hedge their portfolios and diverting attention to gold.

Fat Prophets' resources analyst David Lennox shares the view that central bank actions will continue to greatly benefit gold from various angles. Whereas certain currencies might have been seen as a safe or attractive investment prior to the coronavirus outbreak, the debasement of fiat due to monetary stimulus will rapidly change this notion. Lennox, like many other analysts, also points to the worrisome issue of global debt, one for which there is no solution in sight and will greatly worsen as various governments scramble to mitigate the damage to their economies caused by the coronavirus.

As a side note, the World Gold Council's end of April report revealed that the coronavirus was the biggest driver of gold demand, with investors piling into the metal and funds buying the most gold they have in four years. Prior to the coronavirus, global central banks were spearheading bullion demand and have doubled their yearly purchases between 2018 and 2019. Keeping the WGC's report in mind, it should be interesting to see how the gold market's demand dynamics move, along with the figures themselves, as the situation progresses.

Get Ready for Skyrocketing Inflation (And Gold), Says CIO

As the Fed swiftly acts to save the US economy, one financial expert predicts that inflation will a necessary component. Find out what this would mean for gold.

Photo by Flickr.com | CC BY | Photoshopped

According to Forbes contributor Bob Haber, the U.S. has wholly embraced Modern Monetary Theory (MMT), a concept that makes many an economist recoil. In its most basic definition, MMT is an amplified version of quantitative easing (QE) that essentially allows central banks to print as much money as they please and ostensibly offset the resulting inflation through taxing the wealthy.

While zero or negative interest rates and QE were already present around the world before the coronavirus, Haber notes that those loose monetary policies will soon seem moderate. He acknowledges that the Fed needs some tools to battle the unraveling recession, yet as the hyperinflated economies of Venezuela and the Weimar Republic show, uncontrolled money printing only moves in one direction.

In essence, inflation is the only way out of the existing economic woes that have combined with the latest blow to create a uniquely difficult situation. Ahead of the pandemic, the U.S. was already dealing with $23 trillion of debt and over $1 trillion of fiscal deficit, two issues that many considered unsolvable. Now, Haber expects the debt bubble to climb to $30 trillion by the end of 2020, paired with the likelihood of increased federal spending to stimulate the economy. To add, there is also an ongoing pension crisis that will hardly change for the better with recent developments.

To Haber, there is only one path for the Fed, and it is a clear one. The central bank has already printed $1.4 trillion over the past two weeks, with the Bank of America equating this to $1 million printed every minute. Evercore ISI estimates that the Fed's $5.7 trillion balance sheet, one that the bank was looking to reduce not too long ago, could double by July. If it does, it will represent 50% of the national GDP, a baffling contrast to the 5% it represented in 2008. As Haber notes, the only remedy for this is to wholeheartedly embrace inflation in order to make $1 trillion seem closer to $100 billion.

Just as the Fed has a single path of action ahead, so do investors looking to respond to the paradigm shift that has arrived. The average investor who previously held a gold allocation between 5% and 10% will need to reassess the landscape and consider increasing said allocation to 15%-20% as the money supply expands.

As Haber points out, investors haven't been waiting around for inflation to take its toll and have already jumped on the gold wagon to protect their wealth. When gold prices peaked in 2012 around $1,900, large funds held 82.5 million ounces of gold. Now, Bloomberg data shows that fund holdings have already climbed to 91.2 million ounces. Aside from commercial investors going long gold across the board, Haber also points out that mining companies have warned that the production of the metal has essentially peaked. Haber firmly believes that gold is not only primed to soar past its all-time highs, but also keep moving up so long as the Fed sticks to its ultra-loose policy.

Gold and Silver Continue to Show Promise

With precious metals enjoying solid performances in 2019, Institutional Investor's Gregor Spilker outlines why he believes the future continues to be bright.

As Institutional Investor's Gregor Spilker points out, 2019 has been a good year for the precious metalsmarket. All four precious metals have enjoyed sizeable gains since the start of the year, as investors' appetite for risk-off assets has intensified amid various geopolitical escalations. Yet, as Spilker notes, gold has managed to stand out from its fellow metals by a considerable margin as the market continues its best run in years.

Gold first breached the $1,400 level in June, its highest mark in six years, on the back of a dovish turn by the Federal Reserve. Gold's performance was all the more impressive given that the outbreak happened during what is generally regarded as the metal's weakest quarter. Having managed to avoid the usual summer doldrums, gold climbed as high as $1,553 at one point, with private banks across the board upping their price forecasts for 2019 and 2020. Year-to-date, the yellow metal is up nearly 20%.

Gold's stellar run further highlighted the strange valuations in the silver market. Although the two metals generally move together and silver also saw its share of gains this year, the gold/silver ratio is currently just shy of 87, which is not too far off from September's all-time record of 92. With an average of 64 over the past two decades, silver's price is roughly 33% lower in contrast to gold than it has been in recent years. Analysts and pundits have pointed out that instances such as these have resulted in a massive price catch-up in the silver market, and Spilker notes that some investors are bracing for a normalization of the gold/silver ratio.

Platinum is experiencing similar price issues, with an unprecedented $600 premium on gold over platinum. This is especially conspicuous, as the metal was priced higher than gold before 2010. Spilker believes that a reduction in demand from the automotive industry is partly to blame, adding that both investors and jewelers may want to capitalize on historically low prices.

Yet palladium, whose demand is twice as dependent on the automotive sector, has managed to move above $1,600 for the first time ever this year. In doing so, it has nearly doubled in price compared to the lows of July 2018. According to Spilker, this could be a result of tighter emission standards, a move away from diesel engines and the relatively few mining options available.

Nonetheless, for most investors, gold's breakthrough across multiple long-held resistance levels over the span of just a few months has been the tale of the tape this year. With numerous forecasters calling for gold to hit $1,600 and above in 2020 and the silver market potentially facing a major price explosion, there appears to be plenty more action in store for precious metals as we move into next year.

Here's Why One Analyst Sees Massive Upside Remaining for Gold

After already surging above $1,500 this year, Frank Holmes writes in Forbes that he sees reason for gold to go much higher in 2019. Find out why here

Earlier last week, gold briefly fell below $1,500 before jumping back to its current level above $1,520. Forbes contributor Frank Holmes believes dips like these present a tremendous buying opportunity considering what's in store for the metal. In his latest analysis, Holmes outlined three key reasons why gold could surge far past its recent 52-week highs.

As his first reason, Holmes lists the often overlooked, but paramount factor of U.S. inflation. Despite expectations that consumer prices would rise when President Trump took office due to his trade policies, the official rate of inflation has remained still for the most part over the past couple of years. Now, however, things might be finally catching up.

The August inflation reading showed that core consumer prices rose to an 11-year high, amounting to a 2.4% growth year-on-year. This represents the biggest inflation spike since September 2008. Adding to that, August's report also showed the biggest monthly rise in medical care costs since 2016 and record increases in health insurance costs. Combining this with the effect that import tariffs are likely to have, Holmes thinks that we are headed for a period of rapidly-rising inflation that will catch many off-guard. Gold has historically acted as the premier hedge in order to combat inflation and protect one's savings.

Holmes further points to what he calls the negative-yield phenomenon: currently, $17 trillion of global debt trades with a negative yield, which has helped pushed gold to all-time highs in a number of top currencies. Although negative-yielding bonds haven't reached the U.S. yet, Holmes expects Treasuries to soon be affected by the phenomenon as well.

Besides extremely disappointing showings by the 10-year Treasury and a much-feared yield curve inversion, Holmes also notes that the Federal Reserve has shown a willingness to cut rates in quick succession. A week ago, President Trump encouraged the Fed board to push rates to zero or below zero to compete with other top economies, after previously calling for a rate cut of 100 basis points. Should U.S. yields indeed fall into negative territory, it would not only eliminate a main haven competitor but also cause an immense surge in gold prices in dollar terms.

Negative-yielding U.S. debt is far from the only economic concern, as Holmes lists a slew of geopolitical and economic risks as his third reason for why gold is poised to keep moving higher. The trade tensions have played their part in slowing global growth, as factory production worldwide has now contracted for two straight months. The likelihood of a no-deal Brexit has also brought gold to an all-time high in pound sterling terms, as British investors rushed to the metal in preparation of turmoil. Flare-ups like the unrest in Hong Kong and the recent attack on Saudi Arabia's oil facilities have also kept investors on their toes.

In an interesting note, Netherlands' central bank (DNB) recently hinted to a belief that the monetary system could collapse, and that gold would serve as the asset to rebuild it. Holmes found this to be very much in line with the portfolio strategy of the official sector, as global central banks have been net buyers of bullion since 2010 and have lately upped their purchases by a tremendous margin.

Analysts Predict That Gold Has Enough Force To Move Above $2,000 An Ounce

Gold has seen colossal momentum so far this year, enabling the metal to pick up generally 20% since January

Gold has enjoyed tremendous momentum so far this year, allowing the metal to gain roughly 20% since January. The strength of its drivers became especially prominent this summer, when gold climbed above six-year highs during what is normally its weakest quarter.

Although gold continues to make moves above $1,530 an ounce and many analysts have upgraded their near-term forecast to $1,600 an ounce, a MarketWatch article reports others are seeing $2,000 as a more realistic level in gold's immediate future.

In a recent publication, Brien Lundin, editor of Gold Newsletter, drew a line between what he sees as short- and long-term factors powering gold's remarkable run. The former category includes the now-infamous U.S.-China trade war, whose ongoing escalation has sparked fears that the dispute will bear a heavy toll on the global economy, sending investors flocking towards safe-havens.

According to MarketWatch, other short-term boosters include renewed threats of a recession occurring in the U.S., which were present throughout the Federal Reserve's hiking schedule but came to special prominence due to the recent inversion of the yield curve in both the 2-year and 10-year Treasuries. The likelihood of successive rate cuts by the Fed and persistent weakness in global economic data reports have also played their role as gold's near-term tailwinds. Deric Scott, vice president and senior analyst at precious-metals retailer Metals.com, has also pointed to conflict in Hong Kong and Iran as two events that have been pushing investors towards safety.

Yet both Lundin and Stan Bharti, chief executive officer of private merchant bank Forbes & Manhattan, believe that there is a much stronger force driving gold's prices, which will ultimately result in gold surpassing its all-time highs. In the MarketWatch article, Bharti notes the last 8-10 years have seen investors jump onto the bullish bandwagon in the stock market in a low-interest environment. Yet Bharti thinks that this era is drawing to a close, and that inflationary concerns will once again drive investors back to hard assets.

Lundin also sees the likeliness of heightened inflation as a key element to higher gold prices, as gold has historically acted as the premier hedge against depreciating currencies. The analyst thinks that any indication of quantitative easing (QE) in the U.S. would send gold soaring. Recently, both the Fed and the European Central Bank have hinted towards looser monetary policies in the near future, including a possible return to QE programs.

Over the short-term, Bharti sees gold jumping from its current levels to reach $1,600 in the next quarter. By the end of next year, the CEO expects gold prices to climb above $2,000 an ounce. Lundin echoed Bharti's sentiment, stating that gold's climb to $1,800 or $2,000 is a near-certainty over a longer stretch of time.

The Drivers Helping Gold Stay Above its Six-Year High

There's more than meets the eye when it comes to gold's recent performance.

Last Wednesday, the Federal Reserve met market expectations by cutting interest rates for the first time since 2008. The 25-basis-point cut was priced in for much of July after the Fed shifted its monetary policy and, while definitely supportive of gold prices, did little to change the metal's upwards trajectory. Gold is still hovering near six-year highs, having ended the last trading session at $1,443 an ounce.

Although Fed Chair Jerome Powell left open the possibility of more rate cuts later this year to support the economy, an article on Newsmax reports that there are many other drivers pushing gold towards its third straight month of gains.

The metal's haven appeal has taken center stage amid widespread concerns over global growth and fears over a possible recession. According to a gauge by the Fed Bank of New York, the risk of a U.S. recession happening in the next 12 months is at its highest since 2008. The International Monetary Fund (IMF) once again reduced its growth outlook, already the lowest since the financial crisis, and added that things are unlikely to change in 2020.

Various global economies are playing their part in the IMF's grim outlook as each suffers its own industrial slowdown. Singapore, which boasted a prosperous economy not too long ago, now faces the risk of a recession as its exports fade. Shrinking factory output in countries like Germany and France also points to weaker growth in Europe in the near future, backed by the European Central Bank's own slashing of the growth forecast. China's economy has also found itself on shaky grounds due to increased pressure on its exporters.

Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, recently told Bloomberg that countries worldwide are in the midst of a cyclical downturn in industrial growth. Achuthan expects this downturn to continue, adding that Powell had previously alluded to deeper problems holding the global economy back.

Besides recessionary concerns, gold has received plenty of support from wary buyers as a new crisis appears to flare up on a weekly basis states Newsmax. The long-standing trade dispute between the U.S. and China is now looking to envelop several other nations as well. Brexit remains an issue to be resolved three years after its vote was passed, and tensions in Hong Kong and over the Strait of Hormuz have also given investors pause.

James Steel, chief precious metals analyst at HSBC Securities, said that investors are turning to gold due to its liquidity and independence from any government, particularly during a time of mounting global debt and less appealing bond choices. Large speculators are once again bullish on gold's long-term outlook, having recently boosted their positions to their highest since September 2017. In a post published last month, billionaire investor and founder of Bridgewater Associates Ray Dalio spoke about a global economic paradigm shift that will include depreciating currencies and international conflict. Dalio added that gold and other precious metals will continue being outperformers in this new environment.

Gold Price to Push Higher Between 2nd and 3rd Quarter

Orchid Research believes recession fears will help gold's price trend continue.

In their latest analysis, precious metals firm Orchid Research went over some of the reasons that should push gold even higher between the second and third quarters. According to an article on Kitco, despite summer traditionally being gold's weakest period, the metal has seen tremendous price action over the past few weeks and continues to hold steady above the $1,400 level.

Most agree that the major inflows in gold stem from increasing fears over the global economy's state, as well as the Federal Reserve's policies. Orchid's analysts think we're in for a continuation of this trend over the next few months, as fears over a potential crisis persist.

According to Kitco, the report points out that gold has managed to hold strongly and move around six-year highs even against a robust dollar, illustrating the amount of appetite for safe-haven assets among investors. The analysts said that recession fears could very well drive gold prices even higher moving forward, especially in the face of the Fed's recent policy decision.

Nearly every tightening cycle in the U.S. has ended in a recession, and the Federal Reserve has been on a rate-hiking tear since 2015. However, Kitco reports that the force of their recent U-turn suggests that a likely upcoming recession could be more impactful than previous ones. Far from merely ending their hiking schedule, Fed officials immediately suggested that a lengthy period of rate cutting could be on the way.

This, according to Kitco, reinforced the view that U.S. growth is slowing down and that the era of optimistic investment is drawing to a close. President Trump's push for a more dovish Fed board, which include ample rate cuts and a potentially weaker greenback, only served to strengthen this notion.

The Fed's Treasury spreads model alone has steadily upped the chances of a recession occurring in the U.S., moving them from 29% in May to 33% in June. Many analysts are far more pessimistic when taking other factors into account and believe that a U.S. recession this year is a near-certainty.

Besides a fear-inducing growth slowdown, Orchid said that gold will keep benefiting from central banks' ceaseless increases in bullion purchases. Last year, the official sector blew away all forecasts by buying over 650 tons of physical gold combined. A major point of this development has been the re-entry of several countries whose central bankers have shown little interest in bullion over the previous decade. Orchid noted that the past few months have seen steady buying from nearly every emerging-market country, supporting the notion that central bank gold demand is ramping up heavily. China has recently served as the premier example of this, as the PBOC made a loud return to the gold market with 74 tons of gold bought in the first five months of 2019. In June, China's central bank showed no signs of slowing down by adding another 10.3 tons of gold to its reserves.

Orchid also noted that, at current prices, silver offers tremendous value to potential investors. Relative to gold, the metal currently sits at its cheapest point since 1992, providing a very interesting alternative proposition during a time of geopolitical and economic uncertainty.

Gold Fever Spreading as Prices Breach $1,400

FXEmpire's Stephen Innes lays out why gold is the asset to keep your eyes on.

Last week, FXEmpire's Stephen Innes commented in a Yahoo article on gold's rapid upswing, in which the metal went over $1,350 after weeks of lingering below the $1,300 level. At the time of publication, the metal had just touched the $1,350 mark before moving lower. Innes was adamant that we were seeing the beginning of a shift towards safe-haven assets amid mounting risks and threats to the global economy.

Since then, Yahoo reports gold has blazed past $1,400 within a week's time and reach $1,411 on Friday, the highest level in almost six years. The move stunned even optimistic forecasters who expected the level to be reached later in the year, as summer traditionally tends to be a tepid month for gold prices. The action solidified Innes' view that a veritable gold fever is on the horizon, as all the pieces appear to be falling into place.

Perhaps the most remarkable thing about gold's breakout, states the article, is that it happened during a time of a robust greenback and U.S. equities. As Innes noted, both were holding firmly as gold surged to the $1,350 level, hinting that the price action is being driven by pure investor appetite.

Innes also points out that gold is currently supported by various favorable factors, such as lower U.S. rates and dovish looks from Fed officials. According to Innes, however, the real driver of the gold rush comes in the form of fear over geopolitical risks.

The recent heating of tensions between the U.S. and Iran over the drone shootdown in the Strait of Hormuz represents a red-flag that some traders might be overlooking, but Innes isn't. Having traded gold for decades, Innes knows full well how the threat of military conflict can escalate safe-haven demand even during times of prospering economies.

The latter part has looked especially questionable as of late, as the escalating U.S.-China trade war has the global markets more  worried than they have been in a long time. The tariff conflict comes during a time of both domestic and global growth slowdown, as well as a reasonably high consensus among analysts that a U.S. recession is around the corner. Investors are also anxiously awaiting the upcoming G20 summit, as it could signal more bad news for risk assets.

Innes has long maintained that gold is a must-have inclusion to any portfolio, adding that the rapid break above the $1,350 level should be sufficient to awake dormant investors and allow them to reach the same conclusion. Interestingly enough, central bankers have been the most consistent gold bulls, as the official sector continues to load up on bullion at a record pace and irrespective of any market fluctuations. According to Yahoo, China's purchase of 16 tons of bullion is only the most recent example of how central banks will continue to act as the strongest pillar of gold demand.

Given his previous prediction that gold will jump to $1,400 an ounce in 2019 from the $1,200 levels in late 2018, it should be interesting to see how far gold can go from this point, as Innes shows exhilaration for the metal's prospects going into 2020.

Degussa Analysts Show Gold Has Beaten the U.S. Dollar for Nearly 50 Years

While the U.S. Dollar is subject to systemic shock, gold benefits from it.

In less than a week, gold bounced back from a lengthy tepid period to gain roughly 5%, bringing it to a three-month high. The outperformance could be seen as a victory against a persistently strong dollar, which has kept gold prices subdued over the previous months despite intensifying haven demand.

However, according to an article on Kitco, analysts at Degussa explained why gold has been beating the dollar for nearly 50 years, even during times when the greenback seemed unshakeable. Compiling data from 1970 to 2018 and focusing on gold prices in real terms by taking inflation out of the equation, Degussa's team found that gold has returned an average of 5.9% each year.

In contrast, holding U.S. dollars in a three-months old bank account would have annualized an average return of 4.6%. The results of the study largely stem from the dollar's continued loss of purchasing power, as the greenback has lost as much as 85% in that regard since 1970.

The analysis comes as investors worldwide begin to doubt the stability of supposed safe-haven currencies and the monetary systems built around them. As Degussa's analysts noted, much of the global monetary system rests on the U.S. dollar keeping its value, yet there are signs that the greenback could soon find its role compromised.

With the ongoing threat of China dumping an immense amount of U.S. bonds and a national debt of over $22 trillion, one could make the argument that the greenback hasn't looked as vulnerable in a while. Like all currencies, Kitco states the U.S. dollar is subject to systemic shocks, yet its status makes these scenarios particularly menacing. As the world's reserve currency, a rapid faltering of the U.S. dollar and the ensuing loss of confidence in it could plunge the entire global economy into chaos.

Gold, on the other hand, suffers no threat from questionable central bank policies or collapsing economies, but rather benefits from them, reports Kitco. The only cited downside to owning gold comes in the form of a perceived opportunity cost of holding it during times of higher interest rates. With the Federal Reserve's quick shift from a hawkish standpoint to one that signals concern, even this perceived downside has been eliminated.

Degussa's analysts think that the economic outlook is fairly straightforward. The steady trickle towards negative interest rates by the world's major economies will create a situation where owning bonds punishes investors instead of rewarding them. Add to this the ever-shakier haven currencies, and the analysts say people will once again be reminded that gold is the only true safe-haven asset with no clause or vulnerability.

The latter point couldn't be timelier, as most agree that the era of risk-on investment is drawing to a close. According to Kitco, U.S. stocks are about to end a decade-long bull run as growth concerns reverberate across the globe. As central banks prepare to debase currencies further through more money-printing programs, the impending move towards safety-oriented strategies could look more like a panicked rush than a steady migration.

Gold is Only Life Raft Available to Investors From Sinking Global Currencies

Peter Grosskopf sees gold as only viable choice of protection against coming storm.

In a recent note regarding the state of the markets, Peter Grosskopf, CEO of Sprott Inc, likened currencies around the world to a sinking ship. And according to the executive, gold is the only life raft available to investors looking to preserve their wealth.

According to an article on Kitco, given the amount of looming risks, Grosskopf is shocked that investors are still clinging to the waning stock market instead of flocking towards gold. Global debt continues to spiral out of control, with the latest IMF report placing the figure at a staggering $184 trillion.

Domestic investors may be more concerned with U.S. debt, which surpassed $22 trillion not too long ago reports Kitco. Numerous economists have cautioned that a national debt of $24 trillion would mark a point of no return, a warning that was echoed by President Trump himself. Considering the speed at which the debt is expanding, Kitco states the latter figure could likely be reached within a few years' time.

Perhaps even more so than the amount of debt in question, Grosskopf finds governmental response to the issue alarming. For the most part, governments around the world have not only ignored the mounting domestic and global debt, but also continue to entertain loose fiscal policies. The U.S. is on the cusp of reaching a budget deficit of $1 trillion, yet federal spending has only increased in recent times.

Central banks won't be able to sweep the problem under the rug for much longer, said Grosskopf, as a growing number of pension and entitlement programs are placed into question. As has often been the case, Grosskopf believes that central bankers will respond to the issue with even more lax policies.

A prime example of this is the Modern Monetary Theory (MMT), a more intense version of traditional quantitative easing programs. According to Kitco, because of the MMT's populist nature and the promise of easy money, the supposed solution has quickly gained public support. Grosskopf, like most other economists, find the notion of MMT not only unsustainable, but also likely to end up undermining the global economy.

The appeal of MMT to the average person means that the model is being used as a political tool, which Grosskopf believes will expedite the economic avalanche that's already taking place. And while there are a few safe-haven options available, Grosskopf sees gold as only viable choice of protection against the coming storm.

Whereas other havens like government bonds or reserve currencies are highly vulnerable to crises, Kitco states gold is the only asset that has kept its value regardless of the sort of economic downturn unraveling locally or globally.

Grosskopf also reminded investors that gold has acted as a currency for millennia, stating that the metal has a good chance of returning to this role. As the weight of global debt becomes too great and currencies grow shaky, Grosskopf thinks gold will once again become an accepted medium of exchange.

Gold/Silver Ratio Suggests Silver's Day is Coming

Lobo Tiggre says silver recovery coming, with the possibility of gaining a minimum of 25%.

Like many analysts before him, Kitco's Lobo Tiggre recently took note of just how disproportionate the gold/silver ratio is. According to the Kitco article, the ratio remains at historic highs of around 85, meaning that roughly 85 ounces of silver are needed to buy one ounce of gold.

Tiggre thinks this perfectly illustrates the harshness of silver's price lag behind gold. Over the past few decades, the ratio has stood firmly between 50-60, which should put silver prices above $21 an ounce based on gold's current standing. Going back further, the gold/silver ratio was usually tied closer to the metals' natural supply. U.S. law initially set the ratio in coinage at 15:1, while Ancient Rome had it at 12:1. According to the article, a ratio of even 18 would translate to silver prices of roughly $70 an ounce.

All this is happening during a time when demand for silver is flourishing, both among investors and manufacturers. While there isn't a clear explanation as to what's causing diminished silver prices, Tiggre places the blame on excessive above-ground supply due to silver mostly being mined as a byproduct of other industrial metals. Because these metals have been doing very well lately, a surplus of silver ore has been dug up that should become depleted in the near future. In reality, true silver mine production has been falling behind demand for years, reports Kitco.

Tiggre believes we can take cues from past occurrences where the gold/silver ratio was so out of proportion. In each of the three instances over the last two decades, an excessively-high ratio quickly made way for a major rebound in silver prices. Tiggre notes, however, that there are several technical differences this time around.

Silver was always more volatile than gold, meaning that spikes in gold prices such as those in 1980 and 2010 led to even greater spikes for silver, states the articles. Exacerbating this point is the fact that silver prices have been moving further away from gold since 2011. If previous charts are any indicator, this means that the next instance of silver playing catch-up will be momentous.

There are other factors that could expedite or intensify silver's comeback. A potential strengthening of China's economy could offset the global growth deceleration and provide silver with even more tailwind. Jewelry demand is already expected to intensify in the Asian nation this year, and an economic boom would deplete silver's available supply even faster. The latter will happen largely due to solar panel production, explains Tiggre, as manufacturers will no longer be able to cut production costs through silver once panel demand ramps up.

To Tiggre, the question of silver's recovery has long become a matter of when, not if. Instead, the analyst is now searching for optimal entry points before a price leap that should, according to historical precedent, see silver gain a minimum of 25%.

Gold Market Could See Major Breakout

Brexit troubles could help clear the path for gold to reach $1,400 an ounce by year's end.

Gold prices have remained virtually unchanged over the past week, even as a surprisingly optimistic jobs report gave the stock market some much-needed breathing room. According to a recent article by Kitco, however, the lack of any real price movement in the gold market may represent a calm before the storm, one that could end in a major breakout.

Gold’s price invariably thrives during times of geopolitical strife, writes Kitco, and there appears to be no shortage of the latter coming from different corners of the globe. Britain's troubles surrounding their exit from the European Union have made the headlines of most outlets in recent days as Theresa May's government appears unable to broker a deal with Brussels.

With the April 12 deadline for a satisfactory agreement fast-approaching, May requested that negotiations be postponed until June 30. According to the article, should the EU dismiss the request, Britain will be forced into a hard exit from the alliance, which could have numerous dire consequences. These include a devaluation of the sterling and even a potential revision of the Irish border.

Although a Brexit extension could help avoid this scenario, it will further erode the trust of British citizens as their parliament struggles to satisfy Brussels, suggests Kitco. The situation plays into existing tensions in the eurozone, which include Italy's opposition to Brussels' budget terms, an ongoing migrant crisis and an increasingly dovish European Central Bank.

The ECB recently downgraded its growth forecast and placed into question the prospect of hiking interest rates this year. An official announcement is scheduled for next week, and confirmation that rates will remain stationary could provide gold with additional leverage.

On the domestic front, the Federal Reserve's dovish turnaround in March already helped boost gold prices. The minutes from the meeting will be released on Wednesday, and market watchers will be looking to scour the transcript for details on just how far the Fed intends to pull back.

Although a potential U.S.-China trade deal could subdue gold prices in the short term, President Trump said that negotiations will likely last for weeks, leaving investors with little certainty. The culmination of the Mueller probe did little to calm domestic political tensions, and Trump's collision with Russia over Vladimir Putin's support of Venezuelan president Nicolas Maduro is yet another source of concern.

Traders are now waiting for next week's CPI and PPI reports, and Kitco says signs of rising inflation would likely translate to immediate short-term gains in gold prices. Over the longer term, gold should receive plenty of support as equities resume their downtrend, said Ross Strachan, senior commodities economist at Capital Economics.

Combined with weaker growth projections in both the U.S. and Europe, Strachan believes the path has been cleared for gold to reach $1,400 an ounce by year's end.

ABN AMRO Predicts Gold to Reach $1,400 Before End of Year

Georgette Boele says gold hasn't lost any luster from the previous months, and its outlook for the rest of the year is still exciting.

As gold moves back and forth across the $1,300 level, Kitco reports that Dutch bank ABN Amro stands by its prediction that the metal will see $1,400 an ounce before the end of the year. Georgette Boele, the bank's coordinator of foreign exchange and precious metals strategy, explained in her latest precious metals report why she sees gold heading higher and higher as the year progresses.

Despite occasional dips, Kitco writes that gold remains comfortably in the green since the start of the year. Furthermore, prices have held their ground above the 200-day moving average even during periods of selling, something Boele sees as very optimistic.

Boele and her firm believe gold hasn't lost any of its luster from the previous months, and that the metal's outlook for the rest of the year is still exciting. Although the troubles in equities have lessened a major hurdle for the gold market, Boele noted that a persistently robust U.S. dollar and a sudden, albeit short-lived, spike in Treasury yields will be gold's main competitors in the near-term.

Nonetheless, the analyst thinks that gold could climb to the $1,365-$1,375 level over the next few months even in the face of these headwinds. Later in the year, Boele expects the pressure from the U.S. dollar to subside, driven largely by a change in policy by the Federal Reserve.

It's hard to argue that years of monetary tightening have weighed on gold, even though the metal's price held up with as many as four rate hikes per year. Many experts think that 2019 will be the year when the Fed finally dials down on its hawkish strategy, or even reverses it, writes Kitco. Boele concurs, adding that the Fed's gradual wrap-up of its hiking cycle will be accompanied by dovishness from other central banks.

The latter point has already been highlighted by the European Central Bank's announcement that it would not raise interest rates for the rest of the year. In the same announcement, the ECB also slashed its growth forecast by a wide margin, which many interpreted as another bullish signal for gold, reports Kitco.

The spike in yields should also prove to be inconsequential, says the article, as analysts have pointed out that Treasuries are on a long-term downwards trajectory, with the yield curve nearing flat status. A flat yield curve signaled the last two market crashes, building on existing concerns that an economic slowdown and a possible recession are on the way.

Gold Ready to Recapture Levels Not Seen Since 2016

Sprott Money CEO says current landscape is more favorable for gold than two years ago.

2016 was the last time gold climbed past the $1,370 level, brought up by a string of geopolitical concerns and a weaker dollar. But now, having already crossed the $1,340 mark, the metal looks ready to recapture levels last seen two years ago, while also setting new records in the process, reports Kitco.

In an analysis on Sprott Money, Global Pro Traders CEO David Brady explained why he thinks the current landscape is even more favorable for gold than 2016 was. According to a recent Kitco article, despite a robust greenback, which is often seen as one of its main headwinds, gold still managed to surpass $1,340 an ounce since the start of the year.

This display of strength is set to continue, said Brady, who sees gold heading towards the 2016 high of $1,377 this year, largely driven by central bank policies. As Brady noted, the Federal Reserve might be looking at a policy U-turn after hiking interest rates on an annual basis since 2015.

According to Kitco, the recent dovish stance expressed by Fed officials could soon make way for quantitative easing (QE), an inflationary policy that has heavily benefited gold in the past. Brady and other analysts contend that a new QE program will drive prices up, yet without the prospect of higher rates or Treasury yields. This will be the perfect environment for gold to stage its bullish run, said Brady.

The strategist feels that the recent sentiment turnaround among money managers is testament enough that gold is soon heading up. In just fourteen weeks, speculators slashed their short gold positions by more than half, which speaks good things about the metal's direction, reports Kitco.

Past the Fed situation, Brady feels that central bank policies around the world will likewise prove supportive of gold. As the CEO noted, all of these policies are ultimately setting fiat currencies up for depreciation, and gold is often cited as the best and surest protection from wealth erosion.

After hitting the $1,377 mark, Brady expects gold to pull back and potentially test several support levels along the way. This pullback, however, will merely act as part of an over-arching upwards trend that will eventually lead gold to new highs before the end of the year.

Meanwhile, Brady expects the opposite to happen with the dollar index (DXY). After so many months of persistence, the CEO finally sees the DXY peaking and falling to a figure as low as 80, which will be another highly bullish development for gold.