A relatively muted Asian session for gold and silver. 2021 is a year in which physical gold demand skyrocketed but investment demand in gold falls with passing of each day. For the masses gold is not an inflation hedge anymore. Crypto currencies are an inflation hedge. I better not comment on silver as 2021 is not yet over. A fall after FOMC in silver and silver will trade below $1900 for a very long time. Masses will continue to prefer gold over silver. Silver performance this year is shoddy.
Gold and silver are not able to rise after inflation hits multi decade high in most nations. The immediate question is what can make gold price break past $1900 in the short term. My breaking past I mean gold has to trade over $1900 for two consecutive months to attract short term hot money. In my view only if global stock markets move into a bearish trend for thirty trading sessions that gold price will be able to break $1900. In 2021 global stock markets have not fallen on daily closing basis for more than seven continuous trading sessions US dollar Index sinking to 91.00 quickly will also result in $1900+ price move very quickly.
FOMC, bank of England, bank of Japan and European central bank meetings will all impact the price of precious metals, bond yields and US dollar Index. Key technical resistances have to be broken in gold and silver to start a rapid rise. Copper and crude oil have to hold key technical support to be in a short term bullish zone.
In FOMC meeting trades will try to assess how quickly they plan to finish unwinding its bond-buying program and pick up signs of when it may start to raise rates in 2022. “A Reuters reports says that Bets on earlier rate increases have also grown. Traders late on Friday saw a more than 50% chance of a rate hike by May 2022, up from a roughly 30% chance a month ago.” In my view the Federal Reserve chairman Powell has to be direct on interest rate hike for next year. A hawkish FOMC statement will imply that the Federal Reserve will wait and assess the negative impact of “Omicron” virus on US economy and give a direct view on January 25-January 26 meeting.
The “Omicron” variant is just an alibi to force the double vaccinated people to take the booster jab. At this rate people will be forced to take a jab every six months as some new variant of coronavirus emerges. Only large pharma companies will be benefit. Nations and states will increase taxes under the cover of providing free jabs to masses. End to end the real disposable income will sink (using purchasing power parity). The pharma company’s nexus with mafia politicians has been exposed. I expect a more mass unrest in every nation and regime changes. Physical Gold is the only long term hedge against politicians treating masses as vaccine guinea pigs.
COMEX SILVER MARCH 2021 (current market price $2226.40)
- Weekly Support: $1967.30, $2015.50, $2063.60, $2139.50 and $2178.50.
- Weekly Resistances: $2260.50 and $2301.50
- Bullish View: Silver has to trade over $2137.50 to rise to $2301 and $2523.
- Bearish trend will be there if silver gets a daily close below 2137.
How to trade and invest in 2022
No one will dare invest in silver after looking at this year performance. I prefer to be a contrarian as I expect industrial metal traders to switch to silver from copper. Silver is by product of copper mines. Copper smelters generate large amounts of unrefined silver every year. Some copper traders will switch to silver as price outlook for copper is not so bullish for Q1 of 2022. By not so bullish I mean is that copper price will not rise to $12000 in Q1 of 2022.
Launch of multiple silver exchange traded fund in India in Q1 2022 implies that silver is undervalued as on date.
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