Gold/USD Price forecast | 16 October, 2020 | IMF monetary reform
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.
GOLD FORECAST
(Previous week in brackets)
| Gold/USD | LT-M | MT-W | ST-D | |||
|---|---|---|---|---|---|---|
| 1899 (1928) | ||||||
| Au Trend | ↓ (↓) | ↓ (↓) | ↓ (↑) | |||
| Au % Risk Weight |
80 (80) | 45 (46) | 57 (52) | |||
| PM Distribution Total allocation 50% (50%) |
Au:35% | Ag:45% | Pt:20% | |||
Gold/USD live price
A NEW BRETTON WOODS MOMENT
16 October:: On October 15, 2020 the IMF posted the Plenary Speech of its MD Kristalina Georgieva signalling a potential realignment of the Bretton Woods agreement. That speech can be seen following this link
How significant is this? And does it relate to our views expressed in this April 17, 2020 update discussing the need for a hard asset realignment in order to revalue global debt to an acceptable ratio to GDP?
Mrs Georgieva says that the Sars-Cov2 Black Swan event alone has accellerated central bank footing by 7,5 Trillion dollars and the IMF appears extremely concerned that this creation of more debt, reaching 125% of GDP in advanced economies in 2021, drives potential turmoil in financial markets unless unsustainable debt is restructured without delay. There is zero price discovery. The price of all asset classes are now 100% controlled by financial authorities around the globe. The proposal for monetary restructuring is still unknown of course but will likely include a strong technical element whereby retail banks in their traditional form will no longer be necessary. As a result, precious metals should be held even without looking at charts, albeit difficult, as we are now given a signal to prepare for something big. And that is the significance.
Chartwise, gold is now downtrending in all timeframes, whilst the near 100% expectation of bearish divergence in the Medium and Long term timeframes hasn’t yet materialized. We will await such event with patience even if a possible stockmarket crash temporarily drives down prices in profitable asset classes like Gold and Silver in order to cover losses and margin calls. No Change.
09 October:: 2% Dollar weakness pushed all asset classes up by similar expected percentage points during the 2nd half of the week. With Daily showing a solid upmove in all tools, it could push weekly risk into turning up again and bullish divergence position versus Monthly. If that happens the subsequent rally could be quick. Against a quick rally is a developing temporary bearish divergence within the hourly timeframe. The risk combination of time frames and the currently higher close again above the 2011 highs is likely to limit any downside reaction. No Change.
Gold/Euro live price
16 October:: The story on Gold/USD can be replicated for Gold/EUR although we have seen a mild bearish divergence indication in Weekly and Monthly timeframes. Maybe the dollar will be managed higher again and support the virtual equity market, at least until after the US elections. Gold has held above the 1386 handle 2012 high for 10 months which is a very positive sign for price strength in the long term.
09 October:: Gold vs Euro shows a very similar pattern as against USD. A strong hold.
Gold/British Pound live price
16 October:: The story on Gold/EUR can also be replicated for Gold/GBP. Different conditions apply due to more limited gold reserves by the Bank of England and a possible no deal Brexit risk. Gold is at least a Medium term hold expecting a fiat currency realignment.
09 October:: Gold/GBP looks technically well supported. No change.