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Asian Metals Market Update: Too much money is chasing too few goods

Gold’s ability to trade over $1820 resulted in short covering by day traders and jobbers ahead of the Federal Reserve meeting. There is also expectation that Federal Reserve will say that interest rates will remain near zero next year and further years. Additional stimulus package can also be announced anytime.

Gold and silver prices sell between September and early December due to delay in announcing additional stimulus by American senators apart from vaccine news. Gold and silver rising today due to additional stimulus package news in USA.

In 2021, long term fundamentals (six months and more) will dictate the price of every metal and energies. Right now focus has been vaccine related global normalization. Later from July 2021, traders and investment world will be focused on chances of interest rate hikes and long term side effects of covid-19 vaccine. Boom-bust type price moves will be there in all metals (not energies) and forex markets and crypto currencies. Long term sustained price rise will be there only where demand fundamental is positive. The world knows the supply side limitations. Peak mine supplies (after covid normalization) is already known. Focus on demand side fundamentals. Long term spreads (six months to nine months) will also give us a brief idea of fundamentals.

Right now traders and investment world is just focused on coronavirus vaccine and near normalization. Too much money is chasing too few goods. Purchasing power of paper currency is rotting. Paper currencies are scrap, they are long term untouchables. Only idiots and fools they leave keep high levels of cash and see a sharp decline in value. Smart investor convert alteast fifty percent of contingency fund (kept in banks and at home and office) into physical gold. Millennial are converting their cash into bitcoin and crypto currencies.

If gold and silver move into a bearish trend, then at the most the falling trend (if any) will continue till Easter. Thereafter a slow and steady price rise will be there on the journey to a new all-time high.  Vaccine and its positive normalization news will be history by Easter of 2021. Traders will be focused on economic growth, inflation, demand side fundamentals and interest rate trend and trend of bond yields. Gold will be the best performer when traders refocus on things other covid vaccine.

COMEX GOLD FEBRUARY 2021 – current price $1850.60

  • Gold can rise to $1871.10 and $1894.20 as long as it trades over $1830.
  • Gold will crash only if it trades below $1830.
  • There will be a very quick rise if gold manages to trade over $1856 today.

COMEX SILVER MARCH 2021 – current price $2443.50

  • Silver gets another chance to rise to $2508 and $2615 as long as it trades over $2396.
  • There will be sellers only if silver trades below $2396.

NYMEX CRUDE OIL (January 2021)  - current price $47.16

  • Crude oil can rise to $49.10 and $50.30) as long as it trades over $45.80.
  • There will be sellers if crude oil trades below $45.80 to 44.60 and $43.60.

COMEX COPPER MARCH 2021 – current price $352.85

  • Copper needs to trade over $347.10 till tomorrow to rise to $363.70 and $374.70.
  • Copper will crash only if it trades below $347.10.

Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees  have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. All analyses used herein are subjective opinions of the author and should not be considered as specific investment advice. Investors/Traders must consider all relevant risk factors including their own personal financial situation before trading. Prepared by Chintan Karnani

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