Gold and Silver have been consolidating since October 2024. A stronger US Dollar and higher market yields have created a stronger headwind. The fact that demand from China has slowed somewhat has also contributed to the fact that the precious metals have not been able to make further advances. On the whole, however, it must be mentioned that the price of Gold in particular has held up very well despite the difficulties – which is a sign of strength for the future.But there is new hope: Currencies have a high correlation with the growth of their central banks’ assets with a three-month lag. And the assets of the European Central Bank (ECB) have recently risen, so there is a good chance that the Euro is about to recover more strongly.Gold has a high correlation with the Euro; quite simply, the US Dollar also falls when the Euro rises. The headwind of a rising US Dollar in the Gold market could weaken…
The second headwind for Gold was rising US market yields. The balance of power indicates that we should have reached a (temporary?) high in US market yields. Thus, this headwind in the Gold market could also weaken…
The media recently reported that China has resumed buying Gold in international markets. Indeed, since mid-2024, a small premium has reappeared in the Shanghai Gold market compared to London/Chicago. Encouraging, even if it never reaches the level it had in mid-2023 before the big price explosion…
The premium in the Shanghai Silver market is still high compared to London/Chicago: even if it is no longer in double digits, the current premium of 6-8% indicates that physical demand for Silver from China remains very high…
Smart investors in Shanghai continue to accumulate Gold, but with great caution…
For the first time since October, sentiment has turned positive again…
Even if the picture in London/Chicago is different, the conclusion is the same: for the first time since October, the West is no longer distributing in the Gold market…
The sentiment of western Gold investors is still pessimistic, but has improved massively recently…
The US Dollar also has a high correlation with the Gold/Silver Ratio. This is because Silver is also an industrial metal and benefits from an economic upturn, just like the US Dollar. Should the US currency now consolidate, the Gold/Silver ratio should consequently also reduce from the current high of 88x – which means that Silver should again outperform Gold… Conclusion: There are increasing signs that the consolidation in the Gold and Silver markets should soon be over. The headwinds are dying down. This means that there is a good chance that the precious metals will once again approach their all-time highs, which they reached last fall.More By This Author:Somebody’s Gonna Get Hurt… One Of The Surprises In 2025 Could Develop In The Oil Market Up With The Escalator, Down With The Elevator…