Comex gold $1,135.8 per troy ounce
Comex silver $15.825 per troy ounce
Comex copper $2.4835 per pound
Merry Christmas Miners,
The good, the bad and the ugly for gold prices - hey, it ain't all that bad for 2017! My input to this morning's Weekly Kitco Gold Survey:
A strong U.S. dollar and rising interest rates have been significant headwinds for gold since post-election. However, if inflation expectations rise with nominal rates in 2017 the impact to gold price is lessened and possibly reversed if real rates turn negative. One hopeful sign for the yellow metal has been the concurrent rally in the 10-year break-even rate (i.e. spread between 10-year Treasurys and TIPS). Unfortunately the uptrend was broken Monday suggesting the inflation trade is overdone - at least for now - a bearish development for gold.
On the bullish side of the ledger, there are indications that the Russian central back believes there is value to increasing their already substantial gold position. In the last two months, Russia has purchased 2.5% of the total world production - a significant increase, some 82 tonnes. It will be instructive to see if China follows this trend. Central banks may be seeing something ahead markets are missing.
The question becomes whether 2017 will be a repeat of 2013 with gold losing value across a broad set of assets, which included stocks, commodities and currencies, or stabilize in a range above $1,100. There are some encouraging signs that the latter case will prevail. I remain optimistic that gold will regain its mojo in the coming year falling in a range of $1,125 to $1,320 per ounce*.
An important gold ratio to watch is gold-to-S&P500 or AUSP. The ratio bottomed in early-December of last year and reversed to a bullish trend, peaking February 11. This morning remains near a new low made Tuesday, a fall of 27% from that high.
However, gold is still holding ground with the embattled euro and yen. Post-election, gold in euro and yen terms are converging and safely above 2013 lows [chart below]. Additionally, gold ratios relative to copper and oil are stabilizing near historically less extreme levels which is a healthy sign [Chart to Watch, below]. Geo-political events and/or a bump in inflation expectations could restore some glitter to gold in 2017.
For December there may be more pain ahead. However, gold at the $1,115 per ounce-level is a tempting "buy."
My vote is down. Gold target for next week is $1,120 per ounce; Silver, $15.9 per ounce
*My pre-election October range for gold price was $1,240 to $1,320 per ounce, Winter 2016 Edition of the Mining Quarterly Storms Never Last: Positive News for Gold, Oil & Copper
Elko Daily Free Press Editor Marianne Kobak McKown has put together another dandy. The Winter Edition of the Mining Quarterly has great columns on Newmont Mining Corp.'s Twin Creeks Mine, Cripple Creek and Victor Mine (Colorado), Barrick Gold Corp.'s Cortez Hills, EP Minerals' unique product and the Kinross expansion of Bald Mountain.
Chart to Watch
Here's an importanat chart to watch. Click on the image for a larger size:
in the strong dollar era