Gold again decisively breaks up and during yesterday’s trading session touched the $ 1,830 mark, but silver does not confirm such a bullish sentiment: it continued to storm the $ 26.50 level per ounce, but not very convincingly.
When gold and silver move in tandem, it usually indicates a bullish market sentiment.
Gold: Possible Reasons for Recovery
Among the reasons for the latest jump in prices is called the “dovish” attitude of the head of the Fed, Jerome Powell, in his speech in the House of Representatives on the problems of monetary policy and the US economy. As you know, financial and stock markets are struggling with the problem of the timing of the end of the bond purchase (quantitative easing) programs launched by the US monetary authorities many years ago – at the height of the Great Financial Crisis of the late 2000s.
One of the possible reasons for the sharp drop in gold prices in early June of this year, is precisely what Powell’s speech about the beginning of the reduction of the quantitative easing program in 2022, which then seemed too pessimistic to the markets, is called. Powell said today that the Fed is still not ready for a full-scale reduction of the COP, which seemed to have a good effect on gold.
Investors are also worried about the latest US inflation data. The broad consumer price index rose 5.4% in June, the highest in 13 years. The PPI rose 1% in June compared to May.
Inflationary fears, if they do not push the price of gold directly, but at least do not allow it to fall below.
Gold price at a crossroads: analysts’ opinions
Todd ‘Bubba’ Horwitz expressed an interesting opinion on the situation in the precious metals markets. He believes that gold and silver continue to seek direction. Rallying does not go up, but neither does it lead to sales. This is the real definition of market consolidation.
Eventually, gold prices will leave this range, breaking out of it up or down. The longer this breakthrough takes, the more powerful the movement will be.
For now, Horwitz believes the big move will be bearish, but also notes that in a few years time gold, silver and platinum will be worth more than they are now.
Noteworthy is the decreasing range of the price of silver, if over the past 12 months it shrank to $ 6, then a year earlier it was equal to $ 18.
The range here means the extreme high and low values of the price for a given period of time.
Nassim Taleb vs. Bitcoin
One of the main financial gurus of our time, an expert on statistical uncertainty analysis Nassim Nicholas Taleb (Nassim Nicholas Taleb) pours a bucket of cold water on the heated heads of the owners of bitcoins and cryptocurrencies in general.
In recent years, there has been a lot of talk about the fact that cryptocurrencies are almost the heirs of gold.
In his paper titled Bitcoin, Currencies, and Fragility, Taleb argues that Bitcoin’s multiple flaws make it impossible for them to be used as a currency.
One of the reasons for Bitcoin’s inability to win the battle against fiat currencies is the huge fluctuations in its price.
There is a confusion of “accepting bitcoin for payments” and pricing goods in bitcoin. In order to “price” in bitcoin, its price must be fixed for further conversion to floating currency, and not vice versa, Taleb writes.
He believes that bitcoin proponents mistakenly confuse the success of payment mechanisms and decentralized exchanges. For Taleb, bitcoins are simply too far removed from us. Government currencies are tightly linked to our economy and our way of life.
In order for the employer to be able to pay salaries in bitcoins, he needs to fix the proceeds in bitcoins. Moreover, in order for a seller to offer a can of beer in fixed bitcoins, they will have to pay in bitcoins for the direct and indirect costs of producing the drink.
Gold is a tangible and physical metal that partially supports its value, whereas bitcoin has a “path dependent problem.”
One of the conditions for acquiring monetary value is the ability to enter it in the ledger and receive support for this entry from motivated and interested people. For bitcoins, this is not possible.
Precious metals do not have this dependence due to their physical properties, in addition, they have thousands of years of tradition, which cryptocurrencies also do not have.
“Few assets in the history of finance have been more fragile than bitcoins,” Taleb writes. “Bitcoins cannot serve as a short-term or long-term store of value (their expected price does not exceed 0), they cannot serve as reliable protection against inflation, and worst of all, they do not even remotely serve as a safe haven for your investments, a shield against state tyranny or a means protection against disasters “.
It seems that crypto enthusiasm is really waning, as the main support for cryptocurrencies is the rise in their price. Recently, he has stopped and interest in them has sharply diminished.
What will happen to the ruble exchange rate in mid-July and autumn?
As of Wednesday, July 14, the Russian ruble seemed to have heeded the opinion of analysts from five banks, quoted by the Kommersant newspaper in the consensus forecast on Monday, and came close to the mark of 74.03 rubles they named. per US dollar. By the end of Wednesday day, it is trading at the level of 74.17 rubles, that is, it has more than half covered the distance to the consensus mark of the forecast from the level of Monday (74.4 rubles).
Analysts of the Bank of St. Petersburg note that the dollar / ruble quotes may be positively affected by the “softness” of the speech of the head of the Fed, Jerome Powell, which we are now seeing.
Analysts remain moderately optimistic about the ruble for the traditionally problematic autumn for Russia. According to Maksim Petronevich from Otkritie Research, a decrease in political risks along with high rates of the Russian Central Bank may become a factor in strengthening the ruble by the end of the year to 72-73 rubles per dollar.
According to Artem Tuzov from the Univer Capital investment company, the ruble exchange rate may rise to 70 rubles due to high oil prices and the withdrawal of the US dollar from the NWF, which will lead to purchases of other currencies and reduce the dollar turnover.
The price of gold: a technical picture
Gold price yesterday broke through the 50-day moving average, trading intra-session above $ 1,830. This is undoubtedly a bullish sign, at least from a technical point of view.
The next important target for the gold price remains the $ 1.860-1.870 area. If this level is broken, the price of gold rushes to the level of $ 1.900-1.915 USD.
Russian investment coins
During the summer lull, the Russian coin market continues to delight with good news.
If at the beginning of the month we learned about the appearance on the sale of a series of gold St. George the Victorious coins weighing 1/2 ounce, then at the beginning of this week there were reports about the return to Russia of the unique Konstantinovsky ruble, bought by billionaire Alekperov for $ 2.6 million.
Each copy of the Konstantinovsky ruble has a unique history, – says Vagit Alekperov. – Our specimen has a transparent origin, good provenance. It was struck with genuine stamps. Moreover, we even know by whom and when.
The coin was exhibited at the Museum of the International Numismatic Club. Read about the other most expensive and gold coins of Russia here.
Meanwhile, there are persistent rumors that the Central Bank has once again run out of gold investment coins George the Victorious with a denomination of 50 rubles (1/4 ounce weight, or 7.78 grams of gold). Russian mints are now minting them, and the coins should reappear in the fall. So far, this does not seem to be a problem, because banks have bought these coins, and the available reserves may be enough for a couple of months. In addition, the Central Bank began to release gold Georges in denominations of 100 and 200 rubles (15.55 grams and 31.1 grams of gold, respectively) – which also allows meeting investment demand.
In this regard, it is worth recalling that when in January of this year the Central Bank of Russia did not release coins at all, the “premium to the exchange” of gold Georgievs MMD reached levels of + 20-25% – that is, the price of these coins was 20-25% higher than the exchange price gold in them.
In general, over the past 12 months, the “premium to the exchange” of new gold Georgievs has been steadily holding above 15%, due to the existing deficit and irregular supplies from the Central Bank.
Currently, this premium from leading private dealers fluctuates in the range of 9-12% to the metal – which is the minimum for the last 12 months.
There is reason to believe that this premium will not fall below current levels, since the selling price of gold Georgievs with a face value of 50 rubles in the Central Bank is determined by the formula exchange + 7%, and for new coins with denominations of 100 and 200 rubles – the exchange + 6%.
Taking into account the commissions of banks and dealers, it is unlikely that these premiums will fall below 9% – that is, we can say that these premiums are currently at their minimum, and are likely to grow in the future. We believe that the price of gold will rise along with the premiums, and as a result, the price of gold coins. Follow our news and quotes!