Category Archives: Precious Metals

The stock market’s “systemic problem” is rearing its ugly head again. The 10-year Treasury yield (^TNX) has surged nearly 50 … Continue reading →

This week, we’ll close out our chart analysis for 2024 with a look at a long term combo chart with … Continue reading →

Excerpt from this week’s: Technical Scoop: January Trifecta, Energy Sign, Jobs Week

So how did markets perform in 2024?

Commodities were decidedly mixed. Natural gas (NG) was the big winner for 2024, up 44.5%. NG at the EU Dutch Hub gained 56.0%. Others, we note, were gold +27.5%, silver +21.4%, copper +3.5%, oil +0.1%, while platinum was a loser, down 9.8%. Palladium was also a loser, down 20.2%. Gold stock indices were positive with the Gold Bugs Index (HUI) up 13.3% and the TSX Gold Index (TGD) up 18.4%. Note that the gold stock indices lagged both gold and silver. Energy indices didn’t fare as well. While the TSX Energy Index (TEN) gained 10.4%, the ARCA Oil & Gas Index (XOI) fell 5.3%. Commodities once again should be at the forefront in 2025, with potential upward pressure on energy prices and continued positive up moves from the precious metals.

Selected Commodities Performance 2024

Source: www.stockcharts.com

Noteworthy in 2024 was the performance of the US$ Index. While the US$ Index was gaining 7.2% in 2024, the euro fell 6.2%, the Swiss franc dropped 7.3%, pound sterling was down 1.7%, and the Japanese yen was off 10.3%. The Canadian dollar fell about 8.0%. Given wars, economic problems and more, funds flowed into the U.S., sparking demand for U.S. dollars. Funds primarily went into the stock market as the investors feared U.S. bonds, given the massive size of the U.S. Federal debt (123% of GDP) and the potential for even larger increases in debt. Despite the massive flow into U.S. dollars and the U.S. stock market, gold did exceptionally well. If the U.S. dollar is rising, gold normally falls moving inversely to the US$. The same occurs with interest rates as long-term U.S. interest rates rose despite the Fed cutting rates. Gold, instead of falling against rising U.S. interest rates rose and a US$ Index, rose instead. The 10-year U.S. treasury rose in yield by 18.3% (prices that move inversely to yields fell 4.1% in 2024) before considering the coupon. Gold rose 27.5% in 2024. Gold is a currency and a contrarian signal.

Read the FULL report here: Technical Scoop: January Trifecta, Energy Sign, Jobs Week

Disclaimer

David Chapman is not a registered advisory service and is not an exempt market dealer (EMD) nor a licensed financial advisor. He does not and cannot give individualised market advice. David Chapman has worked in the financial industry for over 40 years including large financial corporations, banks, and investment dealers.  The information in this newsletter is intended only for informational and educational purposes. It should not be construed as an offer, a solicitation of an offer or sale of any security.  Every effort is made to provide accurate and complete information. However, we cannot guarantee that there will be no errors. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the contents of this commentary and expressly disclaim liability for errors and omissions in the contents of this commentary.  David Chapman will always use his best efforts to ensure the accuracy and timeliness of all information. The reader assumes all risk when trading in securities and David Chapman advises consulting a licensed professional financial advisor or portfolio manager such as Enriched Investing Incorporated before proceeding with any trade or idea presented in this newsletter. David Chapman may own shares in companies mentioned in this newsletter. Before making an investment, prospective investors should review each security’s offering documents which summarize the objectives, fees, expenses and associated risks.  David Chapman shares his ideas and opinions for informational and educational purposes only and expects the reader to perform due diligence before considering a position in any security. That includes consulting with your own licensed professional financial advisor such as Enriched Investing Incorporated.   Performance is not guaranteed, values change frequently, and past performance may not be repeated.

  Continue reading →

Gold dimmed by rising treasury yields in Monday trading, extending Friday’s losses, amid renewed concerns about inflation by Federal Reserve … Continue reading →

Gold may continue to rise this year, supported by safe-haven demand amid heightened geopolitical tensions and fears over a potential trade war hurting economic growth, ICICI Securities said in its outlook for 2025.Geopolitical tensions in the Middle East and Eastern Europe may continue to make gold valuable as a hedge against uncertainties.Major central banks could continue to ease monetary policy with inflation hitting near their targets, it said, adding that central banks may also keep buying gold to diversify their reserves. However, a strong dollar and a rise in U.S. Treasury yields may provide some headwinds to gold prices. Continue reading →

For the third year running, our forecasts for the price of gold have come true. In December 2023, we pointed … Continue reading →

By Johann M Cherian and Purvi Agarwal (Reuters) -Wall Street was set for a higher open on the first trading … Continue reading →

NEW YORK (AP) — U.S. stock indexes are starting 2025 with some modest moves Thursday. The S&P 500 rose 0.3% … Continue reading →

A Texas Republican has introduced bills that would create transactional currencies backed 100 percent by gold and silver. The passage of this legislation would open the door for people to easily use sound money in everyday transactions and create competition for rapidly depreciating fiat dollars.

Rep. Mark Dorazio filed HB1049 and HB1056. The language in both bills is nearly identical, but they add the provisions to different sections of the Texas code.

Under the proposed law, the Texas Comptroller would issue gold and silver specie (coins) through the Texas Bullion Depository and establish gold and silver transactional currency defined as “the representation of gold and silver specie and bullion held in the pooled depository account.”

The Texas legislature established the Texas Bullion Depository in 2015. The depository received its first deposits in the summer of 2018. The following year, the state exempted precious metals in these depositories from taxation.

Under HB1049 or HB1056, the depository would be required to hold enough gold and silver to back 100 percent of the issued transactional currency.

Holders of gold and silver specie and currency would be able to use it as “legal tender in payment of debt” in the state of Texas. The gold and silver-backed currency would be electronically transferable to another person.

Gold and silver-backed currency would be redeemable in specie or at the spot price of gold in U.S. dollars minus applicable fees.

In practice, the passage of HB1049 or HB1056 would allow anyone to conduct business transactions using gold or silver.

Practical Impact

The passage of this legislation would create a sound money alternative to U.S. dollars in both physical and electronic form.

Using gold and silver-backed transactional currency, any person or entity would be able to do business using a debit card that seamlessly converts gold and silver to fiat currency in the background. Private individuals and businesses would be able to purchase goods and services using assets held in the Texas Gold Depository in the same way they use dollars held in a bank today.

Gold and silver-backed transactional currency would give people a way to shield themselves from the rapid loss of purchasing power inherent in the fiat dollar.

In most states, citizens must pay debts and taxes with Federal Reserve Notes (dollars), authorized as legal tender by Congress, or with coins issued by the U.S. Treasury — very few of which have gold or silver in them.

But the United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.”

The creation of a transactional gold and silver currency would take another step toward that constitutional requirement, ignored for decades in every state. It could also set the stage to undermine the Federal Reserve’s monopoly on money by introducing competition into the monetary system.

Private gold transactional currencies already exist. For instance, Goldbacks are notes made embedding a small amount of pure gold in a polymer sheet. But unlike the proposed state-issued Texas transactional currency, Goldbacks don’t have any legal standing, despite state names printed on the notes. They are not considered legal tender. Using Goldbacks is essentially a voluntary barter transaction.

Reversing the Gresham Effect

Could the injection of sound money into the Texas economy begin to drive out bad money, i.e., dollars that are losing purchasing power at a dizzying pace?

Gresham’s Law is an economic maxim that states “bad money” drives out “good money.”

But under the right circumstances, it might be possible to reverse Gresham.

Named in 1857 by economist Henry Dunning Macleod after Sir Thomas Gresham, an English financier during the Tudor dynasty, Gresham’s law is technically a theory that people tend to hoard money that has higher intrinsic value, such as gold or silver, and spend money with lower intrinsic value, like devaluing fiat paper dollars. 

In effect, people spend what they don’t want to keep.

This played out in practice when the federal government removed silver from quarters and dimes in 1964. Today, it is nearly impossible to find silver coinage in circulation.

In a paper for the Mises Institute, Professor William Greene argued that the injection of easily usable sound money into the economy could create a reverse Gresham effect.

“Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a ‘reverse Gresham’s Law’ effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes).

This would happen as people become aware of the fact that gold and silver purchasing power remains relatively constant, while it takes more and more fiat money to buy the same basket of goods.

“As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.”

In effect, government fiat money would fall out of use, breaking the Fed’s monopoly on money.

The key is to make it easier to use gold and silver in everyday transactions. The reason bad money drives out good is that governments put up barriers to using sound money in day-to-day life. That makes it more costly to spend gold and silver and incentivizes hoarding. When you remove legal and tax barriers, you level the playing field and allow gold and silver to compete head-to-head with Federal Reserve notes. On an even playing field, gold and silver beat fiat money every time.

Next Steps

HB1049 and HB1056 will be assigned to House committees when the 2025 legislative session begins on Jan. 14. Once in committee, they will need to get a hearing and pass the committee by a majority vote before moving forward in the legislative process.  Continue reading →

Gold is on course for its biggest yearly gain since 2010. It’s up 26.82% in 2024 and has managed 46 record closes this year-the last being on Oct. 30, when it settled at $2800.80.Futures were rising in early trading, up 0.2% to $2,622.70 a troy ounce.The precious metal has gained over the course of the year on safe-haven demand amid geopolitical tensions, monetary policy easing, and a streak of central bank purchases. Continue reading →

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