Metals Minute 154: Gold Repricing Higher
The metals are mixed this week, with gold down 2.1% to $1,644, silver down 3.5% to $18.70, platinum up a fraction to $914, and palladium down 5.6% to $2,059. A year ago today, gold is down 7%, silver is down 21%, platinum is down 13%, and palladium is down 2.5%. Dollar strength temporarily manifests as weakness in precious metals prices, offering an excellent opportunity to purchase.
Temperatures across Europe have been milder than expected, helping ease the ongoing energy crisis and allowing storage facilities to be filled before the traditional Nov 1 deadline. Meanwhile, supply sources remain uncertain for 2023.
While higher interest rates have pushed the dollar up and gold down in the short run, real interest rates are still negative compared to inflation. Macro analyst Luke Gromen mentioned this morning that the only way to salvage the financial order and system is to have much higher gold prices. Many governments have been increasing physical gold holdings in anticipation of potential gold repricing and rebalancing of government balance sheets.
New precious metals exchanges such as the Shanghai Exchange are already indicating a divergence between the paper spot price quoted in London (lower), and the physical gold price quoted elsewhere (higher).