Look at gold, silver, oil and the stock market collapse in Brazil.
The Buyers Haven’t Left The Gold Market
October 27 (King World News) – Jack Prandelli: Gold is back near $4,000.
After inflation, it’s still worth about 4.5x its 1934 value.
In 1934 Washington fixed the price at $35 an ounce, about $890 in today’s money.
Spot gold is about $4,005 this morning.
For 37 years the fixed price was a trap.
US consumer prices roughly tripled, so by 1971 that $35 was worth about $290 in today’s money.
Once the market took over, the catch-up was fast.
January 1980 averaged $675, about $2,920 today.
Gold is still about 37% above that famous peak.
The 2011 peak never got there.
In today’s money it was about $2,630…
Listen to the greatest Egon von Greyerz audio interview ever
by CLICKING HERE OR ON THE IMAGE BELOW.
What moved gold this month is rates.
Gold pays no interest.
With $115 oil pushing up inflation, traders now see an 82% chance of a US rate hike in December.
Last week gold fell below $4,000 for the first time since mid-July, its worst week in about 4 months.
The buyers haven’t left…
-Gold ETFs took in a record $ 31bn in Q3, $ 10bn of it during September’s dip
-Central banks bought a net 39 tonnes in August, led by China
The miners still have a cushion, but it’s thinner:
-All in cost: $1,785 an ounce in Q1, up 16% in a year
-Record margin in Q1: $3,076 an ounce, earned at a higher price
-At about $4,005 today: roughly $2,200
That’s more than a quarter of the record margin gone, while costs rise for a 28th year in a row.
Margin per ounce is the number I’m watching.
Silver vs Oil
Patrick Karim: It’s happening!
KING WORLD NEWS NOTE: Crude Oil Has Broken Out Decisively On The Upside vs Silver. Expect Oil To Dramatically Outperform Silver
Monday’s Huge Plunge In Brazil
Ole Hansen, Head of Commodity Strategy at SaxoBank: Agriculture: Monday’s near 9% slump in the Brazilian real following the surprise election result triggered selling across several of the country’s major agricultural commodities traded in US dollar-denominated futures, including coffee, sugar, cotton and soybeans.
A weaker real increases the local-currency value of dollar-denominated export revenues, potentially encouraging Brazilian producers to accelerate sales while improving the competitiveness of their products in global markets. This matters given Brazil’s dominant position in agricultural exports, particularly soybeans, sugar, coffee and cotton. Sugar, where hedge funds had built their largest net long position in five years as recently as last week, tumbled 5.6%, highlighting the risk of long liquidation when positioning becomes crowded. Coffee fell 3.7%, while soybeans ended the session down 1.3%.
The Mother Of All Crises!
To listen to Alasdair Macleod discuss the mother of all crises as well as what to expect next from gold, silver, oil and more CLICK HERE OR ON THE IMAGE BELOW.
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