Fort Kobbe Vaults

A look at Gold and Silver Charts (03.23.2023)

© Hedgeye Risk Management, LLC with permission granted by Hedgeye, reproduction and republication is expressly prohibited.

Because of the seriousness of the banking crisis I will once again try to tackle the issue. 

The global banking picture looks worse and worse. I believe that one way to save the depositors, is to quasi nationalize the tier one big banks, with the government effectively doing this recently by backstopping (SVB) or forcing a sale (Credit Suisse) and wiping out the equity and debt holders, an option probably not afforded to the smaller tier two, three; banks, as they are not systemically important enough. If these banks fold, it will be you and me that will sink with them. 

Looking at the numbers, the FDIC insurance system which covers  “smaller” accounts under $250,000.00, would be in enormous trouble should a contagious failure occur, as they do not have anywhere near enough reserves for all the exposure and would require a bail out themselves.

We are looking at coverage of under two percent of the potential losses. None of us will be saved should the greater system fail and the financial institutions perceived safe now, might have exposures in ways we do not foresee and risk models do not evaluate at present.

So dollars could just be issued to cover losses and no one would lose?

Not so fast… What would happen to the value of your existing dollars if suddenly there is the issuance of huge amounts of dollars to cover losses?

The issue with banking is that by its very nature, it is illiquid, and thus, the money doesn’t need to be disappearing, but the funds need to be dispersed before the bank receives them; this may lead the bank to sell assets at a lower value, causing the insolvency and that is how this can spiral.

Plastering over this with “new money”,  will only hasten the inflation effect as the velocity of money increases. We have already seen the results of years of currency issuance with the dollar depreciating by ninety eight percent. 

We have a long way to go before the banking problem is resolved.

Gold & Silver

Gold Investor_Hedgeye cartoon

The chart below shows, firstly, the beautiful cup and handle formation that has developed over the previous ten years. A pattern that usually portends a large break upwards. 

Jesse Felder of ‘The Felder Report’, and reproduced by Hedgeye has drafted the chart showing parallel trend lines. In the past week, intra day, the price touched $2,010.00; which pops it over the trend line and produces a possible breakout.

This is the third attempt to break out, so may well be successful. The price has pulled back and hopefully this is just a test prior to an upward push.

In view of the banking crisis and dangers to the financial system, as well as the conflicts  between Russia/Ukraine, China/Taiwan, UN/Haiti, Israel/Iran and new alliances between Russia/China and BRICS and the potential new additions to the BRICS and numerous other reasons for the price to run, it would be appropriate for gold to react upwards.

Gold Felder Report 202303

I am somewhat surprised that the physical silver price has lagged to the extent that it has and even more so, while there has been some recovery in the stock prices of the miners, they have not taken off to recover their huge undervaluation. The catch up should happen, the timing and positioning will be critical.

Look at the Gold & Silver charts

TodayLast Week
Gold price today$ 1,976.00$ 1,924.00
Silver price today$ 22.90$ 21.80
Gold: Silver ratio today86.29:188.13:1
Gold Miners Bullish Percent Index44.8337.93
Dollar Index101.97104.49
Dow: Gold Ratio
(BahaUS 32,216.00/Gold price 1,976.00)
Current USA inflation rate (Dept. of Statistics)6.0%6.4%

Gold’s low of the week was $1,935.00 and the high was $2,010.00, now trading at around $1,978.00

  • The monthly chart for Gold is neutral but recovering the losses of the previous month.
  • The weekly chart has altered from sell to a weak buy and on this time line appears that it will hold.
  • The daily chart gave a buy due to the banking turmoil. I am scared to call a full on buy as the indicators are giving me an overbought signal.
$GOLD Gold - Continuous Contract (EOD) CME 23 March 2023

The low for Silver this week was $22.15 and the high $23.11, trading around $22.88 at present.

  • Silver on the monthly chart has given a sell signal. It is looking as if there is a reversal taking place.
  • The weekly chart is flirting with a buy and if it holds this level or improves in price shall do so.
  • The daily chart has a buy signal but appears overbought at this level and may pull back. It is however, back inside the long term trading range.
$SILVER Silver - Continuous Contract (EOD) CME 23 March  2023

Our partner has stock of both gold, silver and Goldbacks in our vaults available in Panama, please contact us for more.

On the charts, the blue vertical lines are our proprietary system buy signals and the red vertical lines are system sell signals – for information purposes only.

Please contact us to arrange the purchase and storage of your gold and silver requirements in a safe, insured, location outside of your jurisdiction.

This is my interpretation of the market and is not to be taken as financial advice. Before making any buy or sell decisions I recommend that you consult with your professional financial advisor.

Larry Simon
Larry Simon

Larry Simon was educated at the University of Witwatersrand, Johannesburg, South Africa and is an experienced businessman specialised in management, investment and finance.

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