Gold is sending a statement to the investment arena that this bull run is real and sustainable. Firmly holding above the $1,900.00 level last week has fence straddlers giving additional looks to the yellow metal as a hedge to inflation and the predicted recession on the horizon. Opening the week at $1,925.00 and holding steady throughout to the close at $1,927.00, it was not so much the meager gain as it was the signal sent to skeptics that holding this mark is a sign of strength for gold. The US Dollar is experiencing weakness of late which has a positive effect on the direct correlation of its relationship with gold.
Gold is priced in dollars globally. With other major economies making moves to bypass the dollar in oil transactions, the end of the petrodollar is nigh. Russia, the second largest producer of oil, is demanding payment for their energy products to Europe in either Gold or Rubles. Saudi Arabia, the third largest producer of oil in the world, has decided to bypass the dollar for oil transactions with the most prominent customer being natural resource giant China. The BRICS alliance, Brazil, Russia, India, China, and South Africa, have all but eliminated the dollar in international dealings and have formed the New Development Bank as an alternative to the International Monetary Fund.
The need to hold more US Dollars in foreign reserve coffers is diminishing. These greenbacks will be repatriated home to the United States where they must be dealt with through inflation, which is essentially a devaluation of the currency. The United States is not the first Sovereign Nation to hold Reserve Currency Status. It was Great Britain before us, France before England, and the Netherlands before them. There is not a date on the calendar to identify when reserve currency status was lost by these previous superpowers. And there is no date on the calendar in our future when the US Dollar looses hegemony. The process is slow and methodical in history and presently. We are losing the ability to be reckless with our money as a nation, as other sovereign nations now have options over the dollar. Gold is trying to tell us this right now.
Silver had a tougher time last week as selling pressure appeared midweek. Opening trading on Monday at $24.28 profit taking drove the shiny metal down to $23.40 before the bulls recognized the opportunity and pushed the spot price back up half a dollar to close at $23.94. Silver has made a monumental move since Q3 2022 and some profit taking along the way is not unexpected. What is unexpected is a change in the demand to own physical Silver.
Physical demand is only growing stronger even with premiums at historic highs. Unlike the electronic or paper markets for silver, the physical price does not experience sell-offs for profit-taking. As GMRgold has previously reported, there will be a point in the future where the two prices, spot and physical, will find a common price closer to parity. This is most likely going to be closer to the physical price than the electronic price. When searching for physical silver, just know that you are going to pay more of a premium than you expected or have in recent years. This is indicative of the early stages of a bull market.
“Experts” around the world are revising their forecasts for the precious metals bull that is just beginning. Juerg Kiener, managing director and chief investment officer of Swiss Asia Capital grabbed headlines recently when he announced he forecast gold prices up to $4,000.00 in 2023. It is always a good time to buy gold and silver bullion and coins. Sometimes are better than others. How much will Precious Metals go up? That is anybody’s guess. But one thing is for sure, up is good.