I will call the rise in gold price as a short covering rally before the Federal Reserve chairman’s testimony before US senate today and tomorrow. If gold and silver rise from Thursday and into next week then get ready for a very big rise and another historical rise. Physical buyers and physical investors of gold and silver are bullish on gold and silver and are buying on dips. Short term investors are cautious in gold and are yet to invest (in ETF and futures) aggressively. This despite an over $50 price reversal from the lows.
There is too much money floating around. Central banks on the pretext of covid stimulus continue to create more and more money every day. Instead of going for medical treatment for covid and its variants, the big five pharma companies are opting for vaccines. Vacccines will take a lot of time to get a real positive impact as compared to medical treatment for covid. Super excess money supply will be there for the rest of the year. Most of stimulus money goes to anything which gives them good returns. Stocks are rising, bond yields are rising, base metals are rising, energies are rising, bitcoin and crypto currencies have reached Mars and looks headed for Jupiter. The end result will be hyperinflation. There will be a bust anytime in the next four months. If you are long when the asset class gets busted then capital will be eroded.
World has never seen soon much central bank printed money. The excess price rise of any asset class will be much longer than most of us expect. A never ending liquidity expansion by central banks can result in a never ending asset price rise. But when the price of asset class busts then there will be a whirlpool of losses among the retail investors.
Gold and only physical gold is the best hedge against a potential future collapse of any asset class. I do not see much downside from here for gold. Momentum for copper and industrial metals are bullish. There can be very sharp two way price moves in all base metals. Crude oil looks set to break $70 if it manages to trade over $60.00 for the next seven days.
COMEX SILVER MARCH 2021 – current price $2826.50
- Silver has to trade over $2670 till Friday to rise to $3058 and $3391.
- Silver will crash only if it trades below $2670 till Friday.
COPPER MAY 2021 – current price $419.85
- Key resistance is at $422.60.
- Copper needs to break and trade over $422.60 to rise to $430.20, $437.60 and $450.20.
- Copper will crash only if it trades below 411.10 today (in USA session).