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Metal Market Report March 2022 - Week 4 Edition

March 2022 - Week 4 Edition

Gold ETF Flows Continue Strong in February

Earlier this year, we reported the largest single-day in buying of gold exchange-traded funds (ETFs) since their inception in 2004.  That happened in January.  We also reported that Goldman Sachs was the “lonely bull” among major Wall Street or European bankers in predicting gold prices above $2,000 this year. Their base projection is $2,150 gold with a potential of $2,500 gold if ETF buying catches fire, once again.

Through February 23, 2022, – the day before Russia invaded Ukraine – data from Refinitiv Lipper showed gold and other precious metal ETFs have seen an inflow of $4.7 billion after witnessing outflows worth $7.8 billion last year. After the invasion, all indications are that gold ETF buying is accelerating in March.

Following the Russian invasion of Ukraine on February 24, Goldman upgraded their gold forecast and the likelihood of $2,500 gold this year. They said that increased concerns of a U.S. recession could push gold ETF inflows to 600 metric tons, with $2,350 gold in three months and $2,500 in six months. Here’s their forecast:

“Given the material upward revision in investment and demand assumptions, we now upgrade our 3/6/12-month gold targets from $1,950/2,050/2,150 an ounce to $2,300/2,500/2,500 per ounce,” wrote Mikhail Sprogis, Sabine Schels and Jeffrey Currie of Goldman Sachs in a recent note. That’s because gold ETF demand, according to Goldman Sachs, is building aggressively for the first time since 2020, and “This momentum is only set to accelerate, as our strategists think the market has not yet priced in a U.S. growth slowdown, which our economists believe is needed to curb inflation.”

As America’s Gold Expert, my personal prediction on gold stands at $2,200 per ounce.

A report just released by the World Gold Council (“Gold ETF Flows: February 2022: Inflows continue amid high inflation and geopolitical risk, March 2022”) states that in February, global gold ETFs drew net inflows of 35,300 metric tons, worth $2.1 billion, mostly from European and North American buying.  North American and European buying were about equal in February, at 21,400 tons ($1.3 billion) each, while Asia saw net selling, mostly from China. The lion’s share of buying was in the SPDR gold ETF.

By nation, the U.S. is far and away the largest accumulator of gold ETFs, with Canada a net seller. The largest net seller is China, which likely sold gold to raise funds for their bankrupt real estate enterprises.

 

If this trend continues, Gold will likely move beyond my prediction and reach the Goldman Sachs’ $2,500 price projection by the fall of 2022,

Gold Holds Amid Interest Hike

Gold traded between $1,920 and $1,940 over the weekend and is up Monday morning, March 21, on the continuing war in Ukraine, entering its second month later this week. Also, the Federal Reserve’s FOMC (Open Market Committee) statement last week revealed that the Fed may want to raise interest rates up to seven times this year, but Fed Chair Jerome Powell also predicted inflation would be down to 2.7% by year’s end – which seems to nullify the need for so many rate increases. He also said the economy would “flourish,” when other signs point to slow growth, or even risks of a recession, so he was clearly trying to “talk the stock market up,” and it worked, as top stock indexes turned on a dime and rose 6+% last week.

Coins, Pork Chops and Proposals

Two weeks ago, I was in Colorado Springs at the American Numismatic Association’s National Money Show. I was buying coins for our clients and networking with leading dealers from across the country. Most agreed with me that the coin market remains hot, overall, and many quality rare coins that we deal in and recommend are becoming harder to find and are rising in price.

On the day I arrived for the convention, it began snowing and the next day, as I made my way to the convention it was two-degrees outside. However, that would not deter me in my quest for numismatic knowledge and coins for our clients. Later that day, I was honored at a lunchtime presentation by the president of the ANA, Dr. Ralph Ross, with the 2022 ANA Presidential Service Award. This is award given for outstanding service to the organization – the largest and most prestigious coin organization in the country and the only one chartered by Congress.

While there, I had a little fun at an exhibit where you can place your head into a mock $100,000 1934 gold certificate – the largest denomination U.S. banknote ever produced. The real banknote features President Woodrow Wilson but my version features me, Mike Fuljenz.

My wife accompanied me to the show this year and on our final night there, she and I went to a nice restaurant at the convention hotel. As we looked over the menu, I decided to order the Italian fried porkchop. When it came out it was huge and extended outside the edges of the dinner plate. As I wondered where they found such a large porkchop, my wife suggested I take a photo of it to show our friends its largesse.

No sooner than I had taken a photo with my cell phone of the porkchop than a young man sitting at a table to my left asked if I would take a photo of, he and the young lady accompanying him. As he noted, I was taking a photo of a porkchop, after all, so I figured why not. He handed me his phone and as I got ready to take the photo of him with his date, he got down on one knee, pulled a small box containing a diamond ring from his pocket and proposed to the young lady. I snapped pictures as quickly as I could and then the entire restaurant began clapping for the young couple when she said, “yes.”

Soon after, three little girls came running up from another table to her to see her new engagement ring. They were giddy with excitement.

The restaurant sent over a couple of glasses of champagne for their special moment and an amateur photographer secretly bought their dinner. It just goes to show you that you never know what’s going to happen when you take a picture of a porkchop, especially at a money convention.

 

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