At the beginning of the week, an ounce of 999 gold cost $1,813 per unit. Seven days later, gold is up 9.65% against the US dollar to its current spot price of $1,988 an ounce. Gold’s rise comes at a time when confidence in the global banking system is at an all-time low and five major banks have been bailed out. An ounce of fine silver also increased this week from $20.01 to $22.59, up more than 12%.
Gold and silver prices jumped on the back of the banking crisis and expectations of the weakening of the Fed
The price of gold is approaching $2,000 an ounce after many US and international banks showed signs of extreme weakness. The Federal Reserve loaned banks $164.8 billion in five days, wiping out nearly 50% of the U.S. central bank’s monetary tightening. Thus, the market expects a discouraging interest rate hike this month, perhaps within 25 basis points, or even no interest rate hike after the financial turmoil that the banking sector is facing. According to Bart Melek, head of global commodities strategy at TD Securities, this is “good news for gold.” Kitko News said.
“Markets are coming to the conclusion that the Fed will raise rates another 25 basis points and then wait a bit to see what happens,” Bart Melek explained. “From a gold standpoint, given the disruptions in the banking system and the willingness of the US Treasury to help, we could benefit from an adjustment that would allow inflation to stay at a higher level for longer.
Gold is up 9.65% against the US dollar last week and silver is also up 12.61% over the past seven days. Meanwhile, the US dollar index (DXY) fell from 105.65 at the start of the week to 103.864 today. Statistical analyst and market forecaster Northstar tweeted 21 days ago about gold’s performance over the years against DXY. “In 1974, the DXY index was at 105 [et] gold was worth $150,” Northstar said at the time. “In 1981, the DXY index was at 105 [and] gold cost $450. Today DXY is at 105, [and] gold costs 1810 dollars. Don’t be afraid of the rise in the US dollar index – over time, gold tracks the destruction of purchasing power.
In 1974, DXY was worth $105 and gold was worth $150.
In 1981, DXY was worth $105 and gold was $450.
Today DXY is 105 and gold is $1810.
Don’t be afraid of the growth of the US dollar index – over time, gold accurately tracks the fall in purchasing power#gold #silver #preciousmetals #inflation #trading #investment
— North Star (@NorthstarCharts) February 25, 2023
Mike McGlone, senior macroeconomist and commodities strategist at Bloomberg, called gold a “resting bull market” three days ago on March 15. “Gold appears to be a rare bull market amid most of the risky assets and commodities that have turned around since overfishing due to the excess liquidity associated with the pandemic,” Mike McGlone said in a Bloomberg press release. “The drop in crude oil could be part of a deflationary spark that will lift the metal above resistance at $2,000 an ounce. Based on history, the 300 rapidly falling commodities, the banking crisis and the tightening of the Federal Reserve is an oxymoron that could trigger a Fed reversal that will support gold,” added Mike McGlone.
Silver can show much higher returns than gold; Bitcoin ready to trade like gold and long-term US Treasuries
Richard Mills, owner of forwardoftheherd.com, said on Friday that he believes silver could show a much bigger uptrend than gold. silver’s rise is underestimated. “Current signs show that silver is heavily undervalued,” said Richard Mills. “Right now, on the morning of March 17th, the ratio of gold to silver is 88:1, which means it takes 88 ounces of silver to buy one ounce of gold.” Richard Mills added that when gold reached $2,000 an ounce, “silver jumped to nearly $30 an ounce, up 147%.” The investor said the silver-to-gold ratio had just fallen from over 100:1 to just over 64:1, and he believes that the significant gain in silver “could easily be repeated.”
#Banking issues may define #Bitcoin, crypto-dollars – Bitcoin may evolve to trade more like long #US Treasury bonds and #gold as banks are stressed by the collapse in bond prices. Bitcoin holding above $25,000 is a clear sign of the strength of the divergence pic.twitter.com/BH7GLI5vop
— Mike McGlone (@mikemcglone11) March 18, 2023
Many gold and silver advocates have high hopes for the future of precious metals. In addition, while Mike McGlone believes that current macroeconomic events will affect gold, the market strategist also believes that banking problems could be a tipping point for Bitcoin (BTC). “Bitcoin could move closer to long-term US Treasuries and gold as banks struggle with falling bond prices. Holding bitcoin above $25,000 is a clear sign of the strength of the divergence,” said Mike McGlone.
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