It doesn’t matter how much is thrown at the gold market; despite its recent price performance, it remains a highly resilient asset.
Yes, the precious metal still has some major ground to cover before we see new bullish interest coming into the market. But let’s not underestimate how much support there is for the precious metal at these elevated prices.
This week we saw gold prices once again hold support above $1,900 an ounce, and they’re looking to end the week above initial resistance at $1,930 an ounce. All this comes as markets look for the Federal Reserve to continue to tighten its monetary policy. This environment has pushed the yield on 10-year bonds back to 4%.
Because of the Fed’s aggressive stance, we are seeing major banks take a more neutral view on gold for the second half of the year. Both Bank of America and BMO Capital Markets have downgraded their year-end average gold and silver prices.
However, gold is shrugging off the higher bond yields, as they have had little impact on the U.S. dollar, which is ending Friday at a two-week low.
Many analysts are turning bullish on gold because they believe that if gold can withstand these headwinds, what happens when the Federal Reserve does end its tightening cycle and prepares to pivot its monetary policy?
…the EXCEPTION to debt!
This was the main message from the World Gold Council this week as it released its mid-year outlook. The analysts noted that in the current environment, gold has less to lose on the downside and more to gain on the upside as the global economy sees an end to higher interest rates and the threat of a potential downturn.
This asymmetrical performance is why gold remains a valuable asset in any portfolio, according to the WGC.
Not only is gold seeing solid support, but it could start to attract some major attention as the potential for a shift in the global economy emerges. Friday, state-run RT reported that the Russian government confirmed that BRICS nations Brazil, Russia, India, China and South Africa plan to introduce a new trading currency backed by gold.
This is the latest evolution of the ongoing de-dollarization trend that has prompted central banks to buy gold at an unprecedented pace.
“Gold, Mr. Bond.”
The official announcement is expected to be made at the BRICS summit in South Africa in August. This should support gold’s long-term bull rally, but many analysts remain skeptical about what this will look like.
Will the world see the return of a gold standard, or will the precious metal just be used to create value and stability, similar to what central banks have been doing for the past year? We will have to wait for the details of the new BRICS currency to see if it has the potential to rival the U.S. dollar’s global dominance, but even the speculation should provide some bullish momentum for gold.
Written by Neils Christensen for KITCO ~ July 7, 2023
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About admin
Please allow me to introduce myself; I am Jeffrey Bennett, President of Kettle Moraine, Ltd., the parent of Sierra Madre Precious Metals.
I have been married for 53 years with two children and four grand-children, a veteran of Viet Nam, student of history (both American and film), and was host for fifteen years of Perspectives on America on the alternative airwaves, covering such subjects as, health and wellness, news, political satire, education and editorial commentary on current events through the teaching of history, and Protecting Your Wealth. In early 2018, I took a several month hiatus to complete some family business but returned to airwaves April 17, 2018).
At the age of ten, I sat in a bank-vault in the Citizens Bank of Mukwanago, Wisconsin with my grandfather going through bags of old American Peace dollars, hand-selecting each coin as dated rolls of 20 coins were carefully put together and rolled. Learning of the history of these beautiful pieces of Americana, I asked my grand-father, "Why are we doing this?" to which he replied, "Because someday they are going to do the same thing with the silver in our money that, that (S.O.B.) Roosevelt did with gold in 1933." It took only six-years for his prediction to come to pass at the hands of a disciple of Roosevelt's... and what will a Federal Reserve 'dollar' purchase today - and what will that old 90% Silver Peace Dollar purchase?
Although at the age of ten, there was little understanding of the meaning of it all, over the next half-century I became well-versed on the subject matter. During this summer of my education, I began to purchase silver coins as a collector and some small, international gold coins two years later - not an easy feat in the shadow of the Roosevelt confiscatory policies of 1933. Although those policies remained in effect until the mid-1970's, it was not until 1991 that I found that one could make a living providing precious metals and collectible, historic numismatic coins to a willing and concerned clientele.
It was also during that year, that I began a relationship with one of the first Trust companies to give the public access to gold and silver as part of an Individual Retirement Account (IRA) - and Kettle Moraine, Ltd., founded in 1995, but have ceased providing service due the the intense change-over of the provider.
In November 2011, after a 15 month broadcast on another network, I returned to the airwaves with my then revamped program, Life, Liberty & All That Jazz, and for over 28 years, I have been proud to serve the family of listeners of my numerous broadcast programs for physically-held precious metals for investors and collectors alike. On March 23, 2020 I launched my brand new - appropriately named program, The Edge of Darkness on the Republic Broadcasting Network, and thus continue to remain available to our long time clients and their families. Ah yes - find out what "inter-generational" wealth provision has done for our clients over the past three decades.
Don't buy the sizzle of that steak until you understand the cost! In other words, don't buy the bull being dispensed by the 'rare coin' pitchmen until you understand the full story. We, at Sierra Madre Precious Metals, will be proud to serve your needs.
