Gold

The Global Precious Monthly Metals Index (MMI) fell 4.7% for this month’s MMI value, as gold prices slipped to close November.

December 2021 Global Precious MMI chart

MetalMiner has launched a full suite of precious metals as part of the MetalMiner Insights platform. 

Gold price ups and downs

gold price

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As MetalMiner Insights subscribers may have noted — the Insights platform now offers a suite of precious metals price points — the U.S. gold bullion price surged in the middle of the month before falling back.

After opening the month at $1,784 per ounce, the U.S. gold bullion price surged to $1,867 per ounce by mid-month. However, the price backtracked down to $1,785 per ounce as of the start of December.

Meanwhile, the U.S. dollar, which historically correlates inversely with gold, picked up momentum in November. After falling to just over 93 to close October, the U.S. dollar rose as a high as 96.88 as of Thanksgiving. Since then, the dollar fell closer to 96 before trading sideways.

Inflation at nearly 40-year high

Earlier this month, the U.S. government reported the Consumer Price Index for the last 12 months increased by 6.8%. Inflation is at its highest level in nearly 40 years.

According to the Bureau of Labor Statistics, the 12-month increase marked the largest jump since June 1982.

Gold prices also posted gains Friday on the heels of the latest inflation report.

Meanwhile, elsewhere in the inflation report, higher energy prices continued to weigh on consumers.

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The Global Precious Monthly Metals Index (MMI) rose by 5.8% this month.

November 2021 Global Precious MMI chart

MetalMiner has launched a full suite of precious metals as part of the MetalMiner Insights platform. 

MetalMiner launches precious metals suite in MetalMiner Insights

In case you missed it, MetalMiner has launched a full suite of precious metals as part of the MetalMiner Insights platform.

This includes a complete suite of catalytic converter precious metals, which are particularly useful for automotive end-use applications.

For gold and silver watchers, the new offerings include short- and long-term forecasts for gold and silver.

Visit the MetalMiner Insights landing page for more information.

Gold price gains

Speaking of gold, the U.S. gold bullion price made some gains in October.

After opening the month at $1,757 per ounce, it opened November at $1,784 per ounce. The gold price has continued to gain in November, closing Nov. 10 at $1,832 per ounce.

Meanwhile, the U.S. dollar, which historically correlates inversely with gold, lost some ground in October. After opening the month just over 94, the U.S. dollar index slipped just below that mark to open November.

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In the first part of this series, we discussed monetary inflation, the history of gold as a store of value and how digital assets, like Bitcoin, may be the next big thing in the technology of money.

Bitcoin and gold

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The narrative of gold being the premier store-of-value asset has captivated like-minded investors for centuries. In this follow-up piece, we will compare gold and Bitcoin across the first three properties of sound money: portability, uniformity and divisibility.

MetalMiner has launched a full suite of precious metals as part of the MetalMiner Insights platform. This includes a complete suite of catalytic converter precious metals, which are particularly useful for automotive end-use applications.

Portability

An important part of any money is one’s ability to transport it across space and time. What good is any form of money that you can’t bring with you?

The portability of gold largely depends on the quantity one owns. For example, a few gold coins are extremely portable and can be stored in a wallet or a pocket. However, a larger investor will have more trouble moving large quantities.

Gold is currently trading at approximately $1,800/oz. An investment of $180,000 in gold weighs in at around 6.25 pounds. Meanwhile, an investment of $1.8 million weighs 62.5 pounds (and so on). A wealthier individual might not care as much about transportation costs. However, the larger the gold investment is, the more difficult and costly it will be to send across the world.

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$3,623,000,000,000 — that is the increase of M2 money supply in 2020.

By now, there should be no surprise what the effect of printing 23% of total USD has on commodity markets.

Store-of-value assets Bitcoin and gold

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Aluminum breached $3,000 per metric ton this week. Carbon steel price action is only now seeing moderate relief after what seemed to be a never-ending spike since August 2020.

Due to everchanging price increases, some manufacturers now face quotes that expire within 24 hours of issuance. It’s fair to say that the general MetalMiner audience has felt the pain of monetary inflation in some form or another.

M2 money supply chart

M2 money supply. Souce: Board of Governors of the Federal Reserve System (discontinued by the Fed since February 2021)

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Gold as a store of value

While MetalMiner’s expertise is primarily in base metals, we also like to keep a close eye on larger macroeconomic factors.

Avid readers of our market updates are familiar with occasional articles on oil, tariffs, and precious metals, such as gold.

During times of rapid inflation, gold has historically served as the primary vehicle among store-of-value assets for institutional investors — and for good reason.

The physical properties of element 79 make it practically indestructible. Unlike the dollar, gold also has a high stock-to-flow ratio due to steady mining activity.

Considering all of this, it’s questionable how gold has stayed relatively flat for the last year.

During the past 15 months, the dollar has trailed down nearly 5%. Meanwhile, gold has barely moved a percent compared to the price in June 2020 and previous all-time highs in 2012.

So, what’s the deal here? Is another speculative asset taking market share from gold? Or is this simply a market irregularity?

As the headline suggests, there’s a mysterious trillion-dollar elephant in the room: Bitcoin.

Rise of Bitcoin

Whether through general media conjecture or more focused education, the “B word” has no doubt permeated the minds of investors since the beginning of the COVID-19 pandemic. A 900% increase during an 18-month period is going to turn heads, one way or another.

The Bitcoin community often uses the expression “digital gold” due to the striking similarities of its properties to gold. Parallels in terms like “mining” are easy enough to spot.

But what is it that makes them similar in principle?

Historical gold price chart

Gold fixing price in London bullion market, based in U.S. dollars. Source: ICE Benchmark Administration Limited via Federal Reserve Economic Data

A brief history of metals as money

When looking at the history of civilizations, money has come in many forms: beads, salt, cattle, etc.

The core reason why all of these failed as monetary vehicles is largely due to ease of production. For example, if a small colony used rocks as a form of money, mining stone quarries could significantly increase the supply with minimal effort (i.e., inflation). As stone production was accessible even for ancient civilizations, the value of the stone is drastically devalued upon each new quarry founded, akin to the dollar devaluing upon each new dollar printed by the Federal Reserve.

As time progressed, societies introduced sounder forms of money. In fact, the term “sound money” stems from the sound gold made when dropped from a distance.

When metals became the primary usage of money, gold soon became the global monetary standard due to its core properties. Gold requires drastically more energy and resources to mine, making new production more difficult than other materials. The longevity of gold’s uniformity also provides assurance that it will not corrode or deteriorate over time. The sound money principles of scarcity and durability are the foundations of what made gold attractive as a store-of-value asset. It is also why countries have used it as a monetary standard for centuries.

However, in 1971, the United States officially got rid of the gold standard. Thus began the era of unbacked fiat currency.

Money in the digital age

The 21st century is what some might call the digital age.

In the past 10 years, we’ve witnessed the dematerialization of everyday things into a digital realm: photos on Instagram, music on Spotify, social interactions on Facebook, video on Netflix, and the power to access and distribute all of this to 7 billion people with smartphones and computers.

When Bitcoin was introduced in 2009, it began with modest roots at a market cap of only a few hundred dollars.

Today, Bitcoin stores over $1 trillion dollars’ worth of value. It is now accepted as legal tender in the country of El Salvador.

Blockchain, the technology upon which Bitcoin is founded, presents the idea of money itself dematerializing into digital, decentralized and trustless networks.

Over the course of the following weeks, we will candidly explore the similarities and differences between gold and Bitcoin across the six properties of sound money: durability, portability, uniformity, divisibility, scarcity and acceptability.

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The Global Precious Monthly Metals Index (MMI) fell by 5.2% for this month’s reading, as gold prices dipped throughout June.

July 2021 Global Precious MMI chart

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Gold price slides in June

gold price

Olivier Le Moal/Adobe Stock

The gold price lost steam in June.

The price opened the month at around $1,870 per ounce before closing at just over $1,800 per ounce.

However, the price has showed some signs of recovery in early July. Gold neared $1,830 per ounce as of Wednesday.

Meanwhile, the U.S. dollar gained strength throughout June. (Gold and the dollar are typically inversely correlated.)

The U.S. dollar index opened June at just under 90 before closing the month at 92.44.

Elsewhere, 30-year treasury yields have dipped below 2% for the first time since February.

The 30-year yield opened June at 2.30% before closing the month at 2.06%. The 30-year yield then fell to 1.91% to July 8.

The 10-year yield opened June at 1.62% and closed the month at 1.45%.

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The Global Precious Monthly Metals Index (MMI) rose by 1.3% for this month’s reading, as the gold price rose to around $1,900 per ounce.

June 2021 Global Precious MMI

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Gold price picks up to close May

gold price

Olivier Le Moal/Adobe Stock

The gold price made steady gains in May, rising to around $1,900 per ounce to close the month.

Since then, however, the price dropped to around $1,860 per ounce to start June. The gold price then bounced back to around $1,890 per ounce Wednesday afternoon.

Meanwhile, the U.S. dollar index, which generally moves inversely to the gold price, dropped in early May. After that, the dollar trended sideways, closing Tuesday at 90.08.

In other economic indicators, the U.S. 30-year treasury yield, which also generally moves inversely to the gold price, fell to 2.21% on Tuesday. The yield curve rate marked its lowest level since March 2.

The 10-year yield fell to 1.53%, its lowest since March 10.

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gold price

Olivier Le Moal/Adobe Stock

The Global Precious Monthly Metals Index (MMI) gained 5.3% for this month’s index value, as the gold price surged to start the year but couldn’t hold onto those gains.

January 2021 Global Precious MMI

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Gold price ups and downs

Amid ongoing economic uncertainty, a falling dollar and the coronavirus pandemic, many market watchers are keenly interested in the fortunes of gold.

While numerous analysts predicted gold could reach $2,500 per ounce last year, that didn’t happen.

The gold price did reach as high as $2,034 per ounce in early August, inspiring speculation with respect to how much further the price had to run.

Gold cooled off in the ensuing weeks before heating up again throughout December and early January. The gold price reached $1,957 per ounce during the first week of January before retracing, dropping to $1,828 per ounce as of Jan. 10.

Meanwhile, the U.S. dollar — which generally correlates inversely with the gold price — hit a two-year low back in August (when gold reached its 2020 peak). From the beginning of November to early January, the dollar lost approximately 5% of its value.

However, the dollar has staged a small rally over the last week. The U.S. dollar index fell to 89.44 as of Jan. 5 before bouncing back to 90.47 on Jan. 11.

So what could drive the price this year?

“Physical demand could pick up in 2021,” MetalMiner’s Stuart Burns wrote last month. “China is forecast for potentially double-digit growth in 2021 with a strong tailwind from this year’s stimulus measures and a robust recovery in consumption.

“India, the other major physical gold market, does not look as positive. The country will likely have a slow vaccine rollout and is facing severe banking risks. That could hamper the Indian economy’s recovery in 2021. In turn, a slower recovery could impact consumer appetite for spending, with unemployment up and some sectors still struggling.”

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The Global Precious Monthly Metals Index (MMI) gained 1.5% for this month’s index value, as the gold price has lost some of its gains from the summer.

December 2020 Global Precious MMI chart

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Gold price gains

MetalMiner’s Stuart Burns recently checked in on the gold price and where it might be expected to go in 2021.

As precious metals watchers know, the gold price has enjoyed a sharp rise this year amid the global pandemic.

“The bulls are predicting a resurgence in the price to U.S. $2,300 per troy ounce in 2021,” Burns wrote.

“Goldman Sachs stated last month they had a target of $2,300, as recovery from the coronavirus-related recession fuels higher inflation next year. Goldman’s economics team sees inflation rising to 3% next year before weakening through year-end. Further fuel could be added from a recovery in demand from India and China.”

However, in the short term, the gold price has retraced since its August peak.

“Investors rotated out of safe havens into riskier assets on hopes of a vaccine-induced economic boom next year,” Burns explained.

“The story here is more conflicting. Yes, vaccines appear to be coming faster than London buses in rush hour.

“However, so are infection rates and hospitalizations.”

So, as with most commodities and commercial sectors, much of what happens next depends on the the world’s ability to get the pandemic under control and begin to return to pre-pandemic routines of life.

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The gold price has been on the rise during the pandemic this year. As infections rise, vaccines loom on the horizon and economies gradually recover, what do we expect from the gold price in 2021?

Gold price bulls

The bulls are predicting a resurgence in the price to U.S. $2,300 per troy ounce in 2021.

Goldman Sachs stated last month they had a target of $2,300, as recovery from the the coronavirus-related recession fuels higher inflation next year. Goldman’s economics team sees inflation rising to 3% next year before weakening through year-end. Further fuel could be added from a recovery in demand from India and China.

Punchy, you may think.

The gold price rose strongly in the first half of 2020, in large part due to the fall in both nominal and real yields. An increase in safe-haven investment demand in the wake of the virus-induced economic slump also contributed, Capital Economics wrote recently. The research house explained the the price rise has been strong since the start of 2019, riding an 18-month surge in demand for ETF holdings as a safe-haven investment. That is a process that gathered pace in the face of the pandemic.

Gold price retraces after August peak

However, the gold price has dipped from its August peak. Investors rotated out of safe havens into riskier assets on hopes of a vaccine-induced economic boom next year.

The story here is more conflicting. Yes, vaccines appear to be coming faster than London buses in rush hour.

However, so are infection rates and hospitalizations.

It will be a dark winter, as actual vaccination rates fail to live up to expectations and people continue to die. However, markets generally look forward, not at the present. The expectation remains that, sooner or later, markets will recover as vaccinated immunity spreads through the population.

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Scottish Highlands

EyesTravelling/Adobe Stock

People have mined, refined and valued gold since Mesopotamian times, with records of early gold jewelry from 2600 BCE — but what about gold from the Scottish Highlands?

Anyone who has seen images of Egyptian Pharaoh Tutankhamun’s tomb created almost entirely of gold in 1223 BCE can only wonder at the volumes of gold that must have been refined over 3,000 years ago.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Gold from the Scottish Highlands

Yet, investors today are still fascinated with gold. However, gold’s actual uses are limited (outside of jewelry and high-end electronics).

Unfortunately, as a recent Daily Mail article quotes Scotgold CEO Richard Gray, who said “gold mines are where god put the gold,” not by extension where we would like them.

So, it has taken a strong gold price and political blessing for Scotland’s only domestic gold miner, the aptly named Scotgold, to gain permission to develop gold reserves in the Trossachs National Park. The park is in an area of outstanding natural beauty and is home to some of the best-preserved oak woodlands in Scotland.

Gold mining and Scotland are not activities and locations that one immediately makes an association between. In fact, more Scots rushed to California’s gold rush than ever mined at home.  However, gold prospectors have looked for gold in Scotland’s rivers for centuries.

The country is in the broad gold belt that stretches from Scandinavia across Greenland to Canada with, in places, similar topography and geology.

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