Outlook 2023: Will strong demand outlook lead to a rally in silver?

Source: The Economic Times | Markets | By Pawan Nahar

Synopsis: Silver, other than being a precious metal, has more usage in the industrial sectors and thus, industrial demand also guides its movement. Furthermore, gold also holds influence over silver prices.

Silver witnessed a roller-coaster ride in 2022, thanks to increased volatility in the bullion market and industrial metals but managed to deliver around 15% returns to investors. The metal faced bouts of profit taking but geopolitical tensions kept its demand intact.

Silver, other than being a precious metal, has more usage in the industrial sectors and thus, industrial demand also guides its movement. Furthermore, gold also holds influence over silver prices.

Rahul Kalantri, VP-Commodities, Mehta Equities, said, “In the mid of 2022, we saw see a significant fall in silver prices because of the low industrial demand due to a global slowdown and a drastic jump in dollar index as well as bond yields.”

Silver has its own return characteristics and is an attractive commodity in the present market conditions.

NS Ramaswamy, Head of Commodities, Ventura Securities said, “The gold-silver ra ..

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Silver Price Analysis: XAG/USD renews eight-month high above $24.00

Source: FXSTREET  By Anil Panchal

  • Silver price picks up bids to refresh multi-day high.
  • Overbought RSI can challenge XAG/USD bulls, $24.75 in focus.
  • Convergence of 21-DMA, bullish channel’s lower line highlights $22.70 as the key support.

Silver price (XAG/USD) portrays an uptick to refresh the eight-month high at $24.30 during Wednesday’s Asian session.

The bright metal rose the most since November 04 the previous day, which in turn propelled the RSI (14) towards the overbought territory. As a result, the quote’s further upside appears doubtful.

This suggests hardships for the XAG/USD bulls as they approach the upper line of the seven-week-old rising trend channel, close to $24.75 by the press time.

Even if the Silver buyers manage to cross the $24.75 hurdle, the 78.6% Fibonacci retracement level of the metal’s March-September downside, near $24.90, as well as the $25.00 round figure, will challenge the commodity’s further advances.

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1889-CC Morgan Dollar NGC AU58

The 1889-CC is the scarcest of the Carson City Morgans and one of the two biggest key dates in the series overall, trailing only the 1893-S in overall scarcity among circulation strikes. The mintage of 350,000 pieces was accomplished during the final quarter of the year, after the Carson City Mint reopened following a four-year hiatus in production during the first Grover Cleveland Administration. President Benjamin Harrison allowed the Nevada branch mint to reopen, being sympathetic to silver mining interests in the West. 

Offered at $22,500 delivered.
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PRECIOUS-Gold eases in narrow range as traders eye economic data

Source: Written by Arundhati Sarkar for Reuters 

Dec 21 (Reuters) – Gold prices eased in a tight range on Wednesday as the U.S. dollar firmed, although bullion was not far from a one-week high scaled in the previous session as traders looked ahead to impending economic data later this week.

Spot gold XAU= fell 0.2% to $1,813.23 per ounce by 0957 GMT, after rising more than 1% on Tuesday on the back of a dip in the dollar. U.S. gold futures GCv1 eased 0.2% to $1,822.70.

“After yesterday’s sharp rally, traders are waiting for fresh cues, especially from tomorrow’s GDP data and the performance of U.S. dollar,” said Hareesh V., head of commodity research at Geojit Financial Services.

Reports of a surge in COVID-19 cases in China may be another trend setter for the market, he said, adding prices are most likely to be choppy, possibly between $1,760 and $1,840.

The dollar index .DXY was firm on the day after a yen driven fall in the last session following a Bank Of Japan surprise policy tweak.

On the data front, the U.S. gross domestic product (third estimate) due on Thursday and the core personal consumption expenditure (PCE) price index scheduled on Friday are also on the investors’ radars.

Gold prices have risen nearly $200 since falling to a more than two-year low in late September as expectations around slower rate hikes from the Fed dented dollar’s allure.

“As we head into 2023, the Federal Reserve is expected to pivot in its rate hiking drive and the dollar is likely to soften, benefiting gold due to the inverted price correlation between the two assets,” Ricardo Evangelista, senior analyst at ActivTrades said.

While gold is traditionally considered a hedge against inflation it tends to loose its shine in a higher interest rate environment.

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Silver Price Analysis: XAG/USD seems poised to retest multi-month high, north of $24.00

Source: By Haresh Menghani

  • Silver catches fresh bids on Tuesday and rallies to the $24.00 neighbourhood.
  • The technical setup favours bulls and supports prospects for additional gains.
  • A break below the $22.80 confluence is needed to negate the positive outlook.

Silver gains strong positive traction on Tuesday and rallies to a fresh daily high, back closer to the $24.00 mark in the last hour. The white metal, however, trims a part of its intraday gains and retreats to the mid-$23.00s heading into the North American session.

Given the recent bounce from a confluence comprising an ascending trend-line extending from November low and the 100-period SMA on the 4-hour chart, the bias seems tilted in favour of bulls. The positive outlook is reinforced by the fact that oscillators on the daily chart are holding comfortably in the bullish territory and have again started gaining traction on the 4-hour chart.

That said, RSI (14) on the 1-hour chart flashes slightly overbought conditions and holds back traders from positioning for any further gains. Nevertheless, the XAG/USD still seems poised to surpass the $24.00 mark and retest the multi-month top, around the $24.10-$24.15 area touched earlier this month. Some follow-through buying should pave the way for additional near-term gains.

On the flip side, the $23.30 horizontal support now seems to protect the immediate downside ahead of the $23.00 mark and the aforementioned confluence, currently around the $22.80 region. A convincing break below will negate the constructive set-up and prompt aggressive technical selling. The XAG/USD might then slide to the next relevant support near the $22.00 round figure.

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Blast White1904-S Barber Half NGC MS65

Pop 1. Two Finer at NGC. Blast white. A meager mintage of 553,038 Barber Half Dollars was struck at the San Francisco Mint in 1904. Most of the mintage circulated heavily in the regional economy and few high-quality examples were saved by contemporary collectors. As a result, the 1904-S is one of the most challenging issues in the Barber Half Dollar series, especially in high grade. This spectacular Gem exhibits sharply detailed design elements. The virtually pristine brilliant surfaces are lustrous and appealing. Nice Price Guide comp, too!

Offered at $28,000 delivered.
We do business the old fashioned way, we speak with you. Give us a call for price indications and to lock trades.(800) 257.3253
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Gold: Rally on the Cards as Economic Downturn Gathers Pace

Source: By Sunshine Profits (Arkadiusz Sieron)

Business activity declined sharply in December. It signals an upcoming recession – a time that suits gold particularly well.

The economic downturn is gathering pace. The flash US PMI Composite Output Index came at 44.6 in December, down from 46.4 in November. It was the sharpest decline in business activity since May 2020, excluding the initial pandemic period, since the Great Recession. The strong decrease in new orders drove the decline in business activity, as inflation and higher interest rates dampened demand.

Both services and manufacturing are suffering. The Flash US {{ecl-106US|Services}} Business Activity Index registered 44.4 in December, compared to 46.2 in November. The fall in the services was the fastest in four months and among the quickest in the series history that started in October 2009.

Meanwhile, the Flash US {{ecl-829USManufacturing PMI}} posted 46.2 in December, down from 47.7 in November. It was the fastest downturn since the initial pandemic period in 2020, which was driven by one of the sharpest declines in new orders since the global financial crisis of 2008-9.

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A Rare 55 (O) in 55 – 1855-O Liberty Double Eagle NGC AU55

This issue is one of the rarest New Orleans twenties. After the first four emissions of double eagles from the New Orleans Mint (in 1850, 1851, 1852, and 1853), there were considerably fewer coins made in 1854, producing a major rarity in the Liberty double eagle series. Only 70 to 80 pieces are believed to be extant today in all grades, with most falling in the Very Fine to Extremely Fine level of preservation (Douglas Winter,  Gold Coins of the New Orleans Mint, 1839–1909). Just a handful of Uncirculated survivors have been certified. The NGC population is 12 with 10 graded higher. In hand, this particular example is lighter in color, as well as considerably more lustrous and eye-appealing than seen in our images.

Listed at $74,400 in the CDN CPG and $72,500 in the NGC price guide.

Offered at $67,500

Offered at $67,500 delivered.
We do business the old fashioned way, we speak with you. Give us a call for price indications and to lock trades.(800) 257.3253
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Private, Portable, Divisible Wealth Storage

Price is based on payment via ACH, Bank Wire Transfer or Personal Check.
Major Credit Cards Accepted, add 3.5%
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Rare 1860-O Liberty Double Eagle NGC AU50

Gold bullion deposits were always small at the New Orleans Mint after the San Francisco Mint opened in 1854. As a result, mintages of double eagles were modest in later years and only 6,600 Liberty twenties were struck at the famous Southern facility in 1860. There was little numismatic interest in branch mint issues in general, and double eagles in particular, in 1860. Few 19th century collectors could afford to set aside extensive date runs of twenty dollar coins for their collections, and the few who could preferred to update their holdings by purchasing a gold proof set from the Philadelphia Mint every year. Accordingly, few high-quality examples were saved by contemporary collectors and the issue is elusive in high grade today. Doug Winter notes, “Properly graded AU55 and AU58 1860-O double eagles are very rare and I know of only one or two with claims to Uncirculated.” Unfortunately, the population data for this issue has been inflated by resubmissions and crossovers. Probably no more than 85 to 95 examples survive today in all grades. 

While not apparent in pour images, this example exhibits strong luster with partially reflective surfaces at the peripheries of each side. The NGC population is 13 with 37 graded higher.

Listed at $64,800 in the CDN CPG and $70,000 the NGC price guide.

Offered at $61,300 delivered.
We do business the old fashioned way, we speak with you. Give us a call for price indications and to lock trades.(800) 257.3253
9:00 AM – 5:00 PM CST M-F
Private, Portable, Divisible Wealth Storage

Price is based on payment via ACH, Bank Wire Transfer or Personal Check.
Major Credit Cards Accepted, add 3.5%
Offer subject to availability.

Robust Gold Yields in the Cards

Source: By Bart Melek, Global Head of Commodity Strategy, TD Securities

After over a decade scraping the bottom, 12-month gold lease rates have moved distinctively higher to trend above 50 bps, as US monetary policy started to tighten aggressively.

With the Fed continuing to take rates higher in the face of sky-high inflation, real interest rates will continue to rise at an accelerated rate across much of the short end of the Treasury curve. With that, speculative long activity will wane amid higher carry and rising opportunity costs. This implies that gold yields should reach multi-decade highs into 2023.

The widespread view that gold does not offer a yield is a misconception. While income generation from gold is generally not available to most private investors, central banks can actively manage their holdings to deliver returns. This can happen in two major ways: (a) bullion reserves can be lent out to earn the gold deposit rate, or (b) the metal can be swapped for dollars at the gold offered forward rate (GOFO) or the swap rate.

While central banks are also likely to capitalise on the higher gold yield environment by making gold available to the market, they are unlikely to reduce holdings. Gold reserves offer the benefit of being highly liquid holdings, which possess both pro and counter cyclical properties, are a well-recognised store of value for many millennia and are considered strategic assets which are no one’s liability. Physical holdings are also impervious to sanctions.Gold Interest Rate Mechanics

Central banks can generate material yield from gold holdings via uncollateralised loans to a bullion bank. Given that the yellow metal is a monetary asset for central banks, it can be lent out on a term deposit like any other currency in their reserve portfolio. Most commonly, a central bank will place gold on deposit with a bullion bank, in return for a deposit rate. Maturities can vary, but 1-month, 3-month and 12-month tenures are the most common. At maturity, the gold is returned with the interest paid either in gold or fiat.

Deposit rates are derived and set independently by bullion banks. Due to gold’s inherently lower risk (eg. no one’s liability), the yellow metal tends to deliver lower returns than corporate or even government bonds.

Yield from their gold holdings can also be generated via a gold swap, or more specifically, a repurchase agreement that simulates a swap. In this instance, a central bank sells its gold to a bullion bank with the promise to buy back the gold at a later date. The central bank pays interest equivalent to the GOFO rate (forward swap rate).

In this context, the GOFO rate is akin to a US dollar loan using gold as collateral. Formally, it is defined as the rate at which market-making members of the London Bullion Market Association (LBMA) will lend gold on swap against US dollars. The central bank is then able to reinvest the funds at LIBOR (more recently SOFR) and earn the premium between the dollar rate and GOFO, which amounts to the gold lease rate.

The gold lease rate is typically an over-the-counter instrument, it can be best comprehended through the interaction of the demand and supply of borrowed gold, which will be the focus for the purpose of discussion.

Entering a forward sale agreement

Exiting the forward sale agreement

Source: World Gold CouncilDecades-High Gold Yields – A Potential Boon For Central Banks

While volatile, we project that the market environment is conducive to delivering consistently higher positive lease rates, which should be quite accretive for central banks willing to deposit metal with a bullion bank in good standing.

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