Summary
- Escalating military conflicts between Israel and Hamas have increased the demand for gold and silver.
- Gold is expected to have its best week in terms of spot price performance since the 2023 bank failures in March.
- Hamas launched a multi-front attack on Israel with rockets and infiltrated the border by air, land, and sea.
- Recent headlines suggest increasing violence and Israeli forces entering Gaza.
- Market commentators speculate on the possibility of a gold price correction amidst geopolitical turmoil.
- Gold derivative data shows bullish price patterns, but the future of gold remains uncertain.
- Rigged CPI data and inflation debates have garnered attention, with some experts challenging the notion that inflation is under control.
- Record high 401k hardship withdrawal volumes and rising monthly mortgage costs relative to median household incomes raise economic concerns.
- Silver and gold markets closed the week riding on escalating geopolitical risks.
- The spot silver price closed just under $23 per ounce, while the spot gold price cleared $1930 per ounce.
- The spot gold-silver ratio is expected to finish the week at 85.
- The short-term drivers for gold are less significant than the challenges faced by the US and global banking system.
Escalating Conflict and Precious Metals
Escalating military conflicts between Israel and Palestinian group Hamas bolstered the safe bid for gold and silver this week.
Gold is likely to close its best week in spot price performance since last March 2023 bank failures fiasco. More on that topic later in this week's update.
The ruling Hamas militant group in the Gaza Strip carried out an unprecedented, multi-front attack on Israel at daybreak last Saturday, firing thousands of rockets as dozens of Hamas fighters infiltrated the heavily fortified border in several locations by air, land and sea and catching the country off-guard on a major holiday.
Geopolitical Unrest and Gold's Future
Headlines as of this afternoon Friday October 13, 2023 suggest escalating violence and Israeli boots entering Gaza.
On the gold related front regarding this week's geopolitical turmoil, some market commentators are openly speculating that a further gold price correction camp is too late to the price sea change. Of course more time will tell on that short-term take.
While some underlying gold derivative data is giving off bullish price patterns, what comes of gold in the coming weeks and months is still obviously unknown.
New rigged CPI data this week, and phony economists are publicly declaring the price inflation war is won. I'm not making this up, literally twitter fact checked Krugman's nonsensical tweet so onlookers could get better informed about his nonsensical view.
Others piled on his silly comments by either using basic logic, or merely the past 3 years of price data to show that recent price inflations have already inflicted major damage on Main Street.
We are now seeing record high 401k hardship withdrawal volumes, as new US home monthly mortgage costs compared to median household incomes have not hit levels this high, at least not near this high in generations.
The silver and gold markets closed this week mainly riding up on ratcheting geopolitical risks outstanding.
The spot silver price climbed and closed just under $23 oz ask price, and the spot gold price cleared $1930 oz bid to finish the week.
The spot gold silver ratio looks like it will finish the week flat at 85.
The recent bullish short term drivers for gold bullion are not as important as what is happening underneath the US and global banking system still.
For instance this week speaking to the American Bankers Association, fiat Federal Reserve Vice Chair of Supervision, Mr. Michael Barr bluntly stated the following.
Basically blocking and tackling for at some stage sharply increased capital reserve mandates for US Banks especially the large commercial casinos, many of whom did not hedge the fastest increase of interest rates over the last 40 years.
Leading to this ongoing graphic of potential underwater bank bond holdings still threatening the system.
Even with over $100 billion in bank bailouts with one year term loans outstanding we are already seeing calls for more interventions and bank bailouts in op ed pieces.
This here was a call for $1 trillion TARP 2.0 for trapped asset relief programs for underwater bank balance sheets.
This article's suggestion led to scorching hot takes like this one basically stating that BoA is already on the edge of insolvency as we increasingly move nearer to 6% Federal Funds rates.
Onlookers' anger and cynicism seems warranted as many banks spent the last handful of years buying back and pumping their stock prices often reaping outsized bonuses in the process.
All while using accounting trickery to bamboozle unsecured depositors and investors about outlying risks associated with exposure to their business models.
It certainly feels for myself and other onlookers that large portions of the global banking system are headed toward a comeuppance of epic proportions.
Such large seemingly inevitable outsized default risks are one of the major reasons we own and maintain prudently sized net worth positions in physical bullion.
That will be all for this week's SD Bullion Market Update.
As always to you out there, take great care of yourselves and those you love.
