Gold patience will be rewarded | 26 March 2021
Gold Price Forecast relative to
Long Term Monthly (LT-M) - Medium Term Weekly (MT-W) - Short Term Daily (ST-D) - and Hourly (not shown) data.
(Previous week in brackets)
|Au Trend||↓ (↓)||↑ (↑)||↑ (↑)|
|Au % Risk
|54 (55)||16 (13)||69 (65)|
Total allocation 50% (50%)
Physical Gold: Nature's currency
26 March close: The past week Gold and in particular Silver continued to suffer from a much greater interest in crypto and equities. There is a growing tendency that precious metals are not that sexy anymore as inflation hedge. For us an incentive to be even more contrarian. We have seen some spectacular moves in all asset classes with many crypto tokens showing a few sharp moves down and up and down and up during the week. We increased our gold balance to 35% of total metals on Monday at the expense of Silver which we moved to 30% from 35%. No big deal but feels like a better balance as the ratio shows intermediate bottoming action. Now with the IMF suggesting a 650 Billion SDR airdrop which is yet to be officially decided and most probably approved come June, this is a signal of MMT is now being broadly adopted by more even the more conservative authorities. This and further helicopter fiat distribution and the continued surge in wealth from crypto trading could turn inflation into a fast upward spiral or a straight hyperbolic move. The very buoyant housing market benefits from still very low rate long term mortgages in most countries and adds to chances of sudden market changes. If that happens the move will very hard to stop and we shouldn't be surprised. As markets move to trigger a reset we anticipate a strong re-alignment of the Bitcoin/Gold ratio in the process and in favor of gold. Demand for gold should be expected to increase. It makes no sense predicting future levels. Holding Gold is a necessary condition for preserving one's assets. No Change.
19 March close: Gold has a estimated market cap of between 10 and 13 Trillion dollars, Silver 1.3T, Platinum $700 Billion and Palladium 80 Billion Crypto market Cap rose from 500 Billion at the start of December 2020 to the current $1.8 Trillion. Some of that 1.3 Trillion increase has been speculatively transferred from Precious metals. Except Palladium which is very expensive and has pure commodity value. These numbers are big and explains the massive and continuing price divergence between Precious metals an crypto and in particular Bitcoin. The Medium term and Long term risk weight trends in Gold still look very bullish as the super cycle has yet to finish and with strong investment inflation signals becoming a real issue for world markets. Monthly Long term risk weight has moved up a notch whilst being in a corrective downtrend. That may also be a technical hint that the medium term Weekly risk trend, as it turns up, will drag Monthly risk up with it. Technically we favor the metals look over Bitcoin at this moment. Other selectively chosen crypto's can be a different story. Gold remains a strong balanced hold in our portfolio. Based on strong fundamentals with full technical analysis support.
26 March comment
As discussed before, this quarterly chart shows a risk weight downtrend in a supercycle uptrend that should develop bearish divergence at some point in the future. That could be a near or more distant future with an impossible to predict and to be associated price level. All things being equal that price against US dollars will be north of 20,000, simply because that is the level where 120 years of trust in gold backed US$ public debt has averaged. 120 year That average could be calculated around 23% and has dropped from 100% to 3% since 1900. A Bitcoin and altcoin share in this equation will make some difference but not significant as the longer term wealth protection created from digital currency participation and diversification will be limited to just a few million people. And they may be taxed in the billions where Trillions are required.
Gold/Euro live price
26 March 2021 close: Daily risk weight is a bit overbought with GoldEUR closing the week at 1468 and 87% risk weight. Medium and long term time frames are resp. up and neutral. If a realignment of Gold is going to be part of a global debt reset Europe may have a reasonably strong position relative to the USA, but in the end there needs to be an agreement between the major economies of the world.
19 March 2021 close: This pair, now at €1465, looks firm er too having bottomed around 1410 2 weeks ago. Same core hold for Euro tax based investors.
12 March 2021 close: Gold vs Euro did develop bullish risk weight divergence in the Daily time scale which may be indicative of a bit more dollar strenght in coming weeks. Otherwise the technical picture is very much the same.
Gold/British Pound live price
26 March 2021 close: This weeks close is just one pound per troy ounce lower than last week's close. Daily shows some bearish divergence at 84% risk weight versus weekly at at 15%. Fridays setback may indicate that gold isn't ready to be embraced again, but patience will be rewarded for GBP tax based investors.
19 March 2021 close: Gold vs GBP looks to develop its strongest monthly close in 8 Months. We consider this a possible supporting signal that GBP's advance against most other currencies is coming to an end. Yet the same structural Gold market technical analysis applies. No Change holding a strong core Gold allocation for GBP tax based investors.