Displaying items by tag: gold

Tuesday, 19 March 2024 07:08

Is Money Moving from Gold into Bitcoin?

Many have speculated that one of the catalysts for the rally in bitcoin is due to precious metals investors shifting allocations. Both assets offer protection against inflation and appeal to investors concerned about long-term monetary and economic instability. Gold and bitcoin have also enjoyed strong performances in recent months and are trading at or close to all-time highs.

However, this conjecture is not correct, according to JPMorgan. It doesn’t see outflows from gold ETFs into bitcoin ETFs. Instead, the bank notes that institutional investors, retail investors, and hedge funds have been buyers of futures of both assets since February. Since February, about $7 billion of bitcoin and $30 billion of gold futures have been bought. It also notes that both assets are extended over a short-term timeframe, leading to the risk of a pullback.

JPMorgan also believes that MicroStrategy’s recent purchase of $1 billion in bitcoin in 2024, in addition to its $1 billion purchase in Q4 of last year, has also contributed to upward pressure for bitcoin. According to the bank, this does lead to more risk in crypto as “bitcoin purchases by MicroStrategy add leverage and froth to the current crypto rally and raise the risk of more severe deleveraging in a potential downturn in the future.”

Finsum: Many believe that one of the catalysts for the rally in bitcoin is that precious metals investors are shifting allocations. However, this is not correct, according to JPMorgan. 

Published in Eq: Energy

Gold prices ended the year on a strong note by making all-time highs and finished the year with a 13% gain. Next year, the outlook remains bullish due to expectations that real interest rates will decline as inflation falls and the Fed shifts to a dovish policy, leading to increased demand. JPMorgan has a year-end forecast of $2,300.


Some of the factors that could lead to gold outperforming are the economy being weaker than expected which could lead to more aggressive cuts by the Fed. Additionally, there is a risk that geopolitical tensions could inflame even further whether it’s in the Middle East or the conflict between Russia and Ukraine. Budget deficits in the US remain high for the foreseeable future with another close and contentious presidential election on the horizon.


Another positive catalyst for gold prices is that central banks are net buyers. According to the World Gold Council, they will purchase between 450 and 500 tons in the upcoming year. This is in addition to strong investing demand from ETFs which have seen substantial increases in assets over the past year.


The major risk to the outlook is if the economy remains robust enough so that the Fed can keep the fed funds rate elevated for a longer period of time. During the last 2 ‘soft landings’, gold had a total return of -1.6%, while Treasuries returned 16% and equities were up 33%.

Finsum: Gold prices are flirting with all-time highs. Recent catalysts for strength include geopolitical turmoil and expectations that the Fed is in the midst of a pivot.  


Published in Wealth Management
Monday, 05 July 2021 14:18

Gold Poised For a Big Rally

(New York)

Everyone jumped off the three-month gold rally last week after regional Fed President Jim Bullard spoke of tightening in response to the recent CPI releases. This erased over a month of gains in a week as the price sank from $1900 to nearly below $1780. However, the Hulbert Gold Newsletter Sentiment Index which tracks the average recommended gold exposure among a subset of short-term gold timers is at -9.7%. This contrarian take is that gold rallies when this index sinks. The typical threshold for this index is -14.8%, but the dramatic move could be enough to start to buy. This index is one of the key items to watch as the price of gold falls so that you don’t miss the rebound.

FINSUM: Additionally Powell made it very clear that inflation is transitory and Bullard is in the minority on the FOMC. The Fed won’t pull back the reins until inflation is above its long-term goal and persistent.

Published in Comm: Precious
Friday, 11 June 2021 15:43

Gold is Getting Interesting

(New York)

With the huge CPI number hitting the tape yesterday, gold had a predictable reaction: it rose. Since bottoming out a few months ago in the $1,600 range, it has since risen to over $1,900 as inflation fears have picked up. However, inflation is not the only thing driving the metal, as the Fed is playing a big role too. If the Fed stays dovish, and therefore the path of rates looks to stay low, then gold is in a great position—higher inflation with little rate risk from the Fed.

FINSUM: Gold is in a good spot. The Fed will only start hiking if inflation really jumps, which would push gold higher anyway. If inflation is more mild, then at least their won’t be rate pressure.

Published in Comm: Precious
Tuesday, 08 June 2021 17:27

Find the Right Gold Stocks for Your Portfolio

(New York)

Many investors want gold exposure without holding any of the precious metals directly. Some have gone the route…see the full story on our partner Magnifi’s site

Published in Comm: Precious
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