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Metal Market Report November 2021 - Week 2 Edition

November 2021 - Week 2 Edition

Gold Prices On The Move

Gold shot up $28 Friday from $1,790 to $1,818, then to over $1,825 Monday morning. Last week’s major statements from the European Central Bank (ECB), Bank of England and the Federal Reserve indicated that there would be no interest rate increases in the foreseeable future, gave gold a competitive advantage with zero (even below zero) interest rates in Europe and Japan. This also drove long-term U.S. interest rates lower, with the benchmark 10-year Treasury rate going below 1.5%.

Gold rose over $1,830 to a near five-month high Tuesday morning after the U.S. Bureau of Labor released the October Producer Price Index (PPI), reflecting another 0.6% monthly (7.2% annual rate) gain in prices charged for goods and services at the producer level. Prices in this index have now risen 8.6% this year.

Gold Offers a Glittering Opportunity” – Barron’s, November 8, 2021

In the first five weeks of the fourth quarter, gold is up nearly $100 per ounce from $1,730 on September 30 to $1,826 (+5.55%) on November 8. Silver is up even more, on a percentage basis, rising over $3 per ounce, from $21.52 at the end of September to $24.54. That’s a 14% increase. As usual, the mainstream press starts to write positive articles about precious metals after they make their initial moves. Barron’s published a great article this past weekend, entitled, “Gold Offers a Glittering Opportunity,” by Randall W. Forsyth.

Barron’s repeats some points that we have been stressing here, namely that “fiat currencies” can be and have been “printed seemingly without limit” and even the small “tapering” of new money announced last week “comes after a more-than doubling” of the Fed’s balance sheet since COVID-19 struck in March 2020.

In the same issue of Barron’s, Myra Saefong also covers gold in their Commodities Corner column. She says, “the precious metals prices may have room to rise before the year is done.” She cites negative real interest rates – meaning that the rate of inflation is now far above the prevailing interest rates, so investors are guaranteed to lose buying power by storing their cash in banks or U.S. Treasury instruments. Historically, this is the time when gold prices tend to soar as an inflation hedge against depreciating currency values.

My Predictions for 2022: $2,000 to $2,200 Gold, $27 to $30 Silver, $100 to $120 Oil … And a Return to Somewhat Common Sense in Government

Last week’s elections (and metals market recovery) gave us a small foretaste of what we are likely to see in 2022. I’m not necessarily predicting a massive Republican Revolution – as in 1994 and 2010, when Republicans took back the House in huge reversals of Congressional power. However, I will predict a “return to somewhat common sense” spending by BOTH Republicans and Democrats. Yes, I think the Republicans will take back the Senate and probably the House but I also think some more Democrats will be chastened enough to act more responsibly and independently going into the mid-term 2022 elections, if they want to be re-elected.

I will also predict that inflation will not be “transitory.” It will not stop growing. Already, some of the largest and most prestigious mainstream investment firms are predicting oil prices over $100 per barrel in the first half of 2022. Goldman Sachs and BlackRock, the world’s largest asset manager, said last week that there is a “high probability” of oil hitting $100 a barrel, while Bank of America sees $120 per barrel crude oil prices by June 2022. Natural gas, heating oil and coal have risen even faster and will also keep rising. This means inflation is far from “transitory,” as Fed Chair Jerome Powell has said all year long.

With rising federal spending and deficits, plus rising inflation, I am prepared to predict that gold prices will return to over $2,000 in the year 2022, and silver could deliver a similar 10% gain from here, to $27 per ounce. But if inflation rates accelerate to double digits and crude oil reaches $120 per barrel by mid-2022, I will go further and say that gold could reach $2,200 in 2022, and silver could rise as high as $30 per ounce.

No matter how high precious metals rise, rare coins can rise even more. Even this year, with precious metals slightly down, I have seen many rare coin categories rise steadily since last March. In many recent months, I’ve seen many asking prices rise 3% to 5% per month for coins I am seeking to buy for our clients. Now is the time to lock in some of these great rare coin values before they rise even higher. Call your account representative today.


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