Insider trading is when someone makes a deal utilizing secret information

Insider trading is when someone makes a deal utilizing secret information to get an unfair advantage over other investors.

insider trading

In recent years, the use of cryptocurrency has exploded, with many people investing in digital currencies such as Bitcoin and Ethereum. As with any rapidly developing financial market, there is the potential for illegal activities such as insider trading to take place. Insider trading involves individuals using confidential information to make trades that give them an unfair advantage over other investors. This type of activity is illegal in traditional financial markets, and regulators are now taking steps to crack down on insider trading in the cryptocurrency market.

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Insider trading in the cryptocurrency market can take many forms. For example, individuals with access to confidential information may use this information to buy or sell cryptocurrency before the information becomes public. Alternatively, insiders may tip off their friends or family members about upcoming news or events that could affect the value of a particular cryptocurrency, allowing them to profit from the information.

One example of insider trading in the cryptocurrency market is the case of Coinbase employee, Rohan Jain. Jain allegedly used confidential information about Coinbase's upcoming support for Bitcoin Cash to purchase the cryptocurrency before the announcement was made public. Jain then sold the Bitcoin Cash after the price surged following the announcement. The Securities and Exchange Commission (SEC) brought a case against Jain, and he was ordered to pay a $300,000 fine and barred from trading securities for a period of six months.

The SEC is responsible for enforcing federal securities laws in the United States, and they have been actively investigating insider trading in the cryptocurrency market. In November 2018, the SEC settled charges against two individuals who were accused of insider trading in the cryptocurrency market. The individuals were alleged to have traded on confidential information about a company's planned initial coin offering (ICO), making profits of over $1.4 million. As part of the settlement, the individuals were required to pay fines and penalties totaling over $1.1 million.

Regulators around the world are also taking steps to crack down on insider trading in the cryptocurrency market. In Japan, the Financial Services Agency (FSA) has been working to tighten regulations around cryptocurrency exchanges, including rules related to insider trading. In December 2018, the FSA issued a warning to six cryptocurrency exchanges regarding their internal controls around insider trading. The FSA has also proposed new rules that would require cryptocurrency exchanges to report any suspicious trades or transactions that could be linked to insider trading.

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The European Securities and Markets Authority (ESMA) has also highlighted the risks associated with insider trading in the cryptocurrency market. In a statement released in February 2018, the ESMA warned investors about the potential for insider trading in the cryptocurrency market, stating that "there is a risk that the price of cryptocurrencies could be manipulated by traders who have access to confidential information or who are able to influence the market in some other way."

In addition to regulatory action, cryptocurrency exchanges themselves are taking steps to prevent insider trading. Many exchanges have implemented strict rules around the trading of digital assets, including measures to detect and prevent insider trading. For example, some exchanges require employees to sign non-disclosure agreements and prohibit them from trading on the platform. Others use advanced analytics tools to monitor trading activity for suspicious patterns that could indicate insider trading.

Insider trading is a serious crime in traditional financial markets, and regulators and exchanges are now taking steps to prevent it from occurring in the cryptocurrency market. While the cryptocurrency market is still relatively new and unregulated, it is clear that insider trading will not be tolerated. As the market continues to evolve and mature, it is likely that additional measures will be put in place to prevent insider trading and other forms of illegal activity. In the meantime, investors should be aware of the risks associated with cryptocurrency investments and take steps to protect themselves from insider trading and other fraudulent activities.

Tim Moseley

The Fed US dollar may stop gold’s record run next week

The Fed, US dollar may stop gold's record run next week

With so much uncertainty dominating financial markets, most analysts expect it's only a matter of time before gold prices hit new record highs above $2,000 an ounce.

However, with the market looking slightly overstretched, it might be challenging for gold to hit its new target next week. The cautious outlook for gold and silver comes as the precious metals saw significant breakout moves above $2,000 and $25 an ounce, respectively.

The gold market is looking to end the week up nearly 2% as the June contract last traded at $2,023.70 an ounce; meanwhile, silver continues to outperform, with prices ending the shortened trading week up more than 3% as the May contract trades at $25.04 an ounce.

This past week, gold and silver have significantly benefited from a sharp drop in bond yields, which in turn has weighed on the U.S. dollar. The U.S. dollar Index is looking to end Thursday at critical support around 102 points.

According to some analysts, if the U.S. dollar finds some momentum, it could prompt investors to take some profits on their bullish gold bets.

"It again looks like the U.S. dollar is trying to establish a short-term uptrend on its daily chart while June gold looks a bit top-heavy. We've seen this story before, though, and it usually ends with the greenback falling and gold strengthening," said Darin Newsom, senior market analyst at Barchart.com.

The U.S. dollar's and gold's future could be determined by just a handful of reports next week, starting with Friday's March Nonfarm payrolls report. Markets will be closed Friday for the Easter long weekend; however, the U.S. government will be open and will release the report.

Analysts note that investors and traders will have to wait until markets open Sunday before they can react to the data. According to consensus forecasts, economists expect the economy to create 288,000 jobs last month. Analysts note that anything better than expected will be bullish for the U.S. dollar and gold negative.

"As gold fires, long signals on all gauges of momentum, the upcoming jobs report could be of notable importance. On the one hand, a weak number could be a catalyst to see if the macro investors, who have thus far held notable dry-powder during the latest rally, add to their long positions. On the flip side, a strong report could bolster Fed expectations, and could see CTAs modestly reduce their positions if prices don't hold above $2026/oz," said commodity analysts at TD Securities.

   Retail Investors and analysts remain bullish on gold, but the precious metal might need a rest

While the U.S. labor market has been surprisingly resilient since early 2022, economists note that there are signs the tide is starting to shift, highlighting weakness and raising recession fears.

"If tomorrow's NFPs follow on the steps of recent data releases, showing signs of weakness in the US labor market, then I would expect further dollar weakness and the corresponding upside for the precious metal," said Ricardo Evangelista, senior analyst at ActivTrades. "I can see gold breaking through the previous maximum of $2069 touched during the summer of 2020."

Craig Erlam, senior market analyst at OANDA, said that because of current market conditions and sentiment, Friday's employment data would have to significantly surprise to the upside.

"Any disappointing data or even numbers in line with expectations and we will see gold make a run to its record highs," he said.

Aside from the jobs report, analysts note that inflation data next week could also provide some support for the U.S. dollar. Economists have said that a strong jobs market and persistently high inflation could force the Federal Reserve to continue to raise interest rates.

There are growing expectations that the Federal Reserve's tightening cycle has ended. The CME FedWatch Tool shows that markets see a roughly 50/50 chance that the central bank will leave interest rates unchanged between 4.75% and 5.00%.

While another 25 basis point hike in May would create a headwind for gold, many analysts don't see it as a game changer for the precious metal. Many analysts note that in this environment, investors will just have to wait a little longer before record highs are seen again.

Sean Lusk, co-director of commercial hedging at Walsh Trading, said that even if gold is technically overbought at current levels, there is solid support in the market.

"There are solid reasons why we are trading at these levels. We are seeing significant diversification into precious metals because of major uncertainties in the world," he said.

Lusk added that if gold does test support around $2,000, investors might want to buy micro gold futures to test the waters.

Looking beyond U.S. interest rates, Lusk said the ongoing banking crisis would continue supporting gold as a safe-haven asset.

Next week's data

Wednesday: U.S. CPI, Bank of Canada monetary policy decision, FOMC minutes

Thursday: U.S. PPI, U.S. jobless claims

Friday: Retail Sales, preliminary University of Michigan consumer sentiment

By

Neils Christensen

For Kitco News

Time to Buy Gold and Silver

Tim Moseley

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Tim Moseley

The Trust Crisis Of Banks Worsens Ensuing Initial Collapse Of SVB A Plus for Crypto

The Trust Crisis Of Banks Worsens Ensuing Initial Collapse Of SVB. A Plus for Crypto

The US banking sector is facing a crisis of trust following the collapse of Silicon Valley Bank, which has left many Americans, particularly those without insurance for their deposits, anxiously trying to determine if their money is safe. A recent report found that more the 186 banks, or 5% of all banks in the country, are in danger of failing. The article outlines the analysis, identifies the risk factors to watch out for, and explains why investing in cryptocurrency could be a genuine safe-haven option.


Source: SSRN Papers-Full Study

As the above screenshot shows, the study is titled ‘Monetary Tightening and US Bank Fragility in 2023; Mark-to-Market Losses and Uninsured Depositor Runs?’  It was written by four academics from distinguished universities in the United States on March 13th, 2023. 

The report begins with a brief explanation of why so many US banks are at risk of going under and pertains to all the assets banks hold on their balance sheets. These are US bonds (US government debt) and mortgage-backed securities (MBS) (bundles of mortgages). US Bonds and MBSs are the safest assets a bank can hold, at least according to regulators, and why banks tend to invest most of their customers' deposits in US bonds and MBSs.


Images sourced at Investopedia.com

These assets earn interest for the banks and thus make it possible for them to offer services with low or no fees. However, when interest rates rise, the value of US bonds and MBSs decreases. The reasons for this are many, but the main takeaway here is that higher interest rates result in US bonds and MBSs crashing. If the value of these assets falls too much, banks can become temporarily insolvent. 

This insolvency is temporary because when US bonds and MBSs mature, meaning the loan terms end, the bank receives the total value of the underlying asset. Again, the mechanics of this are many, but just know that US bonds and MBSs don't lose money if they are held to maturity, and why banks don't report the losses on US bonds and MBSs when interest rates rise. 

Most information about losses on debt securities held by banks is immersed in the glossaries in their SEC filings. It is not considered a significant problem until that bank has major liquidity issues. It’s because it's not a loss until they sell, and in the case of US bonds and MBSs, they won't lose anything if they hold them to maturity. 

This accounting practice is arguably controversial. These so-called unrealized losses are acceptable if the bank isn't forced to sell any of these assets at a loss, specifically customer withdrawals.  It’s what happened to SVB and why it sank. However, there is one crucial detail to keep in mind. 92.5% of SVB's deposits were uninsured by the Federal Deposit Insurance Corporation (FDIC). 

For context, the FDIC only ensures bank deposits up to $250,000 per account. Any amount above that is considered uninsured. SVB experienced a bank run because its uninsured depositors could see that it had many unrealized losses. This led to speculation that SVB didn't have enough money to honor all withdrawals. 

As such, this bank run may not have happened if most deposits were insured, i.e., under $250K per account. SVB had so many uninsured deposits because the bank provided accounts and banking services primarily to small and medium-sized businesses, startups, and entrepreneurs in Silicon Valley. These clients typically require lots of cash liquidity to pay their employees, make acquisitions, etc. 

Around $9 trillion of bank deposits in the United States are uninsured, roughly 50% of all bank deposits. Banks have been happily investing these uninsured deposits into US bonds and MBSs. The problem is that interest rates have risen, and their unrealized losses have proliferated. At the end of 2022, US banks collectively had unrealized losses totaling more than $600 billion. Interest rates have risen more since then, so these losses are likely even more prominent now.

In short, US Banks have lots of unrealized losses and also lots of uninsured depositors who are concerned that banks can't honor withdrawals because of these unrealized losses. The authors examined over 4,000 banks in the study to see which ones were most at risk and why. 

Unrealized Losses

First, the study highlighted that 42% of all bank deposits had been invested into regular MBSs, with another 24% invested in commercial MBSs, i.e., commercial real estate loans, US bonds, and other asset-backed securities (ABS). The authors then tried to calculate the unrealized losses on these assets. After crunching the numbers, the authors found the following, 

“The median value of banks' unrealized losses is around 9% after marking to market. The 5% of banks with worse unrealized losses experience asset decline of around 20%.” 

Note that ‘marked to market’ means ‘assuming sold today.’ In lay terms, the average American Bank has unrealized losses of around 10%, and 5% of the most vulnerable banks have unrealized losses of 20%. 

So if depositors were to rush and withdraw from these banks, they would get 90% of their money back at the average bank and 80% back at a vulnerable bank. Not surprisingly, these unrealized losses were the smallest for Global Systemically Important Banks (GSIB), including JPMorgan and Bank of America. GSIBs have less than 5% of unrealized losses. The average non-GSIB has 10% unrealized losses, and SVB wasn't even the worst. 

The authors found that more than 11% of US banks had larger unrealized losses than SVB when it collapsed. They estimate that as many as 500 other banks could have failed based purely on unrealized losses. The reason why only SVB went down was because of the high number of uninsured deposits. The authors then provide a series of scenarios to showcase how uninsured depositors could react to rising interest rates.

Uninsured Depositors Waking Up

The first scenario assumes that the uninsured depositors stick around and wait. The other three scenarios surmise they withdraw and invest in other assets, which provides a higher interest rate than a savings account. Understand that insolvency fears related to unrealized losses aren't the only reason why uninsured depositors withdraw money from a bank. 

The primary reason why they would do this is that they want to earn a high-interest rate on their large deposits. This desire for yield increases as interest rates rise. Unfortunately for the banks, it's hard for them to provide competitive interest rates on savings accounts without losing lots of money. This is why many US banks haven't increased their interest rates on savings accounts, despite interest rates increasing. They’re making lots of money off their depositors. However, if they were to raise interest rates on savings accounts, they wouldn't make nearly as much money. 

In the study, the authors assume that most uninsured depositors are sleepy, meaning they aren't rushing to withdraw to earn a higher interest rate elsewhere. However, this is starting to change; besides the banking crisis, the high-interest rates that are still rising in other regions tempt those sleepy uninsured depositors into waking up and moving their money elsewhere. If they do this, banks with large, unrealized losses will start going under as they won't be able to honor all withdrawals. 

How Many Banks At Risk?

Naturally, the authors assess whether banks have enough assets to honor these upcoming withdrawals from uninsured depositors. They assume that the FDIC doesn't close down banks that come under stress, which is significant because the FDIC is likely to do this if banks start getting squeezed. 

The good news is that all bar two American banks have enough assets to honor withdrawals from uninsured depositors. The bad news is that the authors don't specify which two banks are at risk, but they conclude that this little risk means additional bank runs are unlikely for the time being. 

For Good Measure

As an extra, the authors analyzed the possibility of what would happen if uninsured depositors ran. They did a number of simulations of bank runs, from 10% to 100% of uninsured depositors withdrawing their assets. 


Source: SSRN Papers-Full Study

What's concerning is that the ten banks most at risk of experiencing a bank run are large. As the authors cite in the study, 

 “The risk of run does not only apply to smaller banks. Out of the 10 largest insolvent banks, 1 has assets above $1 Trillion, 3 have assets above $200 Billion (but less than $1 Trillion), 3 have assets above $100 Billion (but less than $200 Billion), and the remaining 3 have assets greater than $50 Billion (but less than $100 Billion).” 

Unfortunately, the authors don't specify which banks these are but reveal how sensitive US banks are to bank runs. They concluded that even if just 10% of uninsured depositors withdrew their money from banks, 66 banks would go under. If 30% of uninsured depositors withdrew their money, 106 banks would go under. If half of all uninsured depositors ran, 186 banks would fail. This underscores that at least a few dozen banks are at risk of going under over the coming months. 

This is ultimately due to the fatal combination of significant unrealized losses due to rising interest rates and withdrawals from uninsured depositors seeking higher yields from these rates. The final simulation was if 100% of uninsured deposits withdrew all their assets from US banks. They insisted that this simulation is worth doing to assess the state of the US banking sector. Surprisingly only about half of US banks would go under. 

The authors then conclude by highlighting that the value of assets held by US banks is more than $2 trillion lower than what's being reported, thanks to unrealized losses-based accounting. They reiterate that hundreds of banks are at risk of going under if uninsured depositors withdraw. They warned that even small numbers of withdrawals from uninsured depositors could lead to unrealized losses being realized. This would lead to more bank runs, evolving into an even bigger banking crisis than we've seen. They go as far as to suggest regulations to address this. 

For starters, banks should start changing how they report their unrealized losses so that bank depositors have a better sense of how underwater their banks are. Because of the lack of transparency, the authors manually calculated these unrealized losses using complex maths. The authors acknowledge that this won't solve the insolvency risks many banks face, so they recommend that banks be forced to increase their capital requirements. 

This coincides with what Michael Barr, the Fed’s Vice-chair for Supervision, has been busy doing. Michael had been examining capital requirements for banks before the banking crisis began. Maybe he saw the banking crisis coming or was preparing to take advantage of it to introduce regulations. Michael Bar’s anti-crypto speech indicates the second possibility is the most likely. Michael has been desperate to increase his powers, presumably to consolidate the banking sector to assist in the rollout of a central bank digital currency

Be Vigilant of The Risk Elements

Which risk factors should you be aware of when analyzing banks? I am not a financial adviser. Still, my research into this convoluted accounting system revealed that the two main risk factors are unrealized losses and uninsured deposits. It is at risk if your bank has many unrealized losses and uninsured deposits. The problem is that it takes work to estimate these unrealized losses. Moreover, not all uninsured deposits are prone to flight. Remember that most of them are required to pay employees at small companies. 

Also, as mentioned above, most banks with many uninsured deposits tend to be smaller, i.e., not GSIBs. In theory, this makes them inherently riskier than GSIBs. In practice, though, when a non-GSIB goes under, it gets acquired by a GSIB. This means your assets could be safer at a small bank. If you read the article about bank bail-ins, you'll know that GSIBs can be risky. 

If a non-GSIB goes under, it gets acquired by a big bank, and customer deposits are kept, but if a GSIB goes under, customer deposits are used to bail them out. As recently happened with Credit Suisse and its takeover by UBS. The arguably political deal required capital from somewhere to satisfy UBS. According to WSJ, the Swiss government was desperate to avoid the appearance that this was a taxpayer-funded bailout.

GSIBs are also more likely to comply with investment ideologies, like ESG. As discussed in this article, the Bank of America is one of the big institutions behind the ESG movement. Some of its affiliates are introducing individual ESG scores for their customers. 

Small banks may also have challenges because around 80% of commercial real estate loans come from small banks. In addition to being wrecked by higher interest rates, commercial real estate is struggling because people must return to the office. 50% of office spaces in the US are empty. This means that small banks are at a higher risk of sitting on larger unrealized losses, which is consistent with the findings of the study. 

If that weren't bad enough, these losses would likely increase as time passes, even if interest rates start coming down because work from home is probably here to stay. Even if uninsured depositors are less likely to withdraw from small banks due to the purpose of these deposits, just a small number of withdrawals could therefore cause severe issues for small banks. 

The findings of the study suggest this risk is already there. All it takes is 10% of uninsured deposits to move. In sum, small and big banks come with their own risks, and it's up to you to decide which risks you'd instead take. Diversifying your deposits is an option, but the fact that every bank operates using this fractional reserve model means your money will never be genuinely risk-free in their coffers. 


Image credit: Markethive.com

Cryptocurrency To The Rescue

This is where cryptocurrency comes in. Cryptocurrencies ostensibly have only one risk: their current price volatility. There are, of course, risks associated with things like improperly written code, but the largest and most established cryptocurrencies have been battle tested every day for over a decade. 

Aside from that, cryptocurrencies are one of the best hedges against the banking system. When you hold a cryptocurrency, there is no counterparty risk. That crypto is genuinely yours, and there isn't some greedy banker going and investing your crypto into a basket of risky, commercial real estate loans behind your back. 

This characteristic alone makes cryptocurrency valuable. Also, cryptocurrency lets you send a transaction to whoever you want, whenever you want, and for however much you want. This is the true definition of financial freedom, and its importance was fully displayed when Nasdaq halted the trading of bank stocks during the recent banking crisis. 

Nobody can turn off the decentralized cryptocurrency exchange and prevent people from trading. You will always be able to trade. Take a second to consider; that blocking transactions, halting trading, and freezing assets will only become more common as CBDCs are rolled out. This will make the financial freedom aspect of cryptocurrency ever more critical, along with the decentralization that underlies it. 

Without decentralization, crypto's value proposition quickly disappears. That's why instead of wasting time assessing the unrealized losses and uninsured deposits of banks, you should learn about what makes a cryptocurrency genuinely decentralized. After all, the days of commercial banks are numbered; the thousands of existing banks will inevitably consolidate into a handful of mega banks, and governments will nationalize these mega banks. 

Financial freedom in the traditional financial system will be gone when that happens. At the same time, economic freedom in the crypto ecosystem will only continue to grow. By the grace of God, it will rise to the point that it's capable of accommodating the billions of people who will pull out of the traditional financial system as it becomes ever more centralized and ideological. 

Both monetary mechanisms will take years to play out, but it's already clear that the global financial system is splitting into two structures: free and sovereign and one that is not. You now have the once-in-a-millennium opportunity to choose which system to participate in. It’s critical to make that decision before it's made for you. 

This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

 

 

Editor and Chief Markethive: Deb Williams. (Australia) I thrive on progress and champion freedom of speech. I embrace "Change" with a passion, and my purpose in life is to enlighten people to accept and move forward with enthusiasm. Find me at my Markethive Profile Page | My Twitter Account | and my LinkedIn Profile.

 

 

 

 

 

Also published @ Substack.com

Tim Moseley

Gold sees routine corrective profit-taking pullback

Gold sees routine corrective, profit-taking pullback

Gold prices are modestly down in midday U.S. trading Thursday. Silver prices are slightly up. Both metals are seeing some normal chart consolidation after hitting 12-month highs on Wednesday. Gold and silver bulls still have the strong near-term technical advantage to suggest the path of least resistance for prices remains sideways to higher. April gold was last down $6.30 at $2,014.90 and May silver is up $0.068 at $25.105.

Some upbeat U.S. jobless claims numbers rallied the U.S. dollar index briefly before it backed off later on. But this was enough to prompt a pullback in gold prices and some profit taking.

Global stock markets were mixed overnight. U.S. stock indexes are mixed at midday. Risk appetite this week has down-ticked. Reads a Wall Street Journal headline today: "Bank failures; high inflation; rising rates. Is the resilient jobs market about to crack?" A three-day holiday weekend for many markets likely has sellers in the gold and silver markets tentative, as both markets have seen their prices come up from their daily lows as midday approaches.

In overnight news, reports said that as the price of gold is back above $2,000 an ounce the countries of Brazil, Russia, India, China and South Africa all plan to increase their gold reserves. This is due to "an increasingly bipolar geopolitical world—exacerbated by the war in Ukraine, says an ING analyst. He added such is a "structural positive for gold and structural negative for the U.S. dollar."

 Bank of America is looking for $2,100 gold price by Q2

The U.S. data point of the week is Friday's U.S. employment situation report for March from the Labor Department. The key non-farm payrolls number is seen coming in at up 238,000, compared to a rise of 311,000 in the February report. The U.S. markets will have to wait until Monday to react to the data, as they are closed on Friday for the Easter holiday.

The key outside markets today see the U.S. dollar index slightly down after hitting a two-month low Tuesday. Nymex crude oil prices are slightly down and trading around $80.25 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.28% and has fallen this week.

Technically, April gold futures prices hit a 12-month high Wednesday. Bulls still have the strong overall near-term technical advantage. Prices are in an uptrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at the all-time high of $2,078.80, scored in March of 2022. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week's low of $1,950.00. First resistance is seen at today's high of $2,033.30 and then at this week's high of $2,033.80. First support is seen at $2,000.00 and then at Tuesday's low of $1,979.00. Wyckoff's Market Rating: 8.0

May silver futures prices hit a 12-month high Wednesday. The silver bulls have the strong overall near-term technical advantage. Prices are in a steep uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $27.50. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at this week's high of $25.295 and then at $25.50. Next support is seen at today's low of $24.695 and then at $24.50. Wyckoff's Market Rating: 8.0.

May N.Y. copper closed up 220 points at 400.85 cents today. Prices closed near mid-range today. The copper bulls have the slight overall near-term technical advantage but have faded recently. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the March high of 417.45 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 382.20 cents. First resistance is seen at today's high of 403.15 cents and then at Tuesday's high of 407.15 cents. First support is seen at today's low of 397.10 cents and then at this week's low of 392.60 cents. Wyckoff's Market Rating: 5.5.

By

Jim Wyckoff

For Kitco New

Time to Buy Gold and Silver

Tim Moseley

Gold futures consolidate forming a base at recent highs above 2030

Gold futures consolidate forming a base at recent highs above $2030

The solid breakout that moved gold futures above $2000 to a high of $2043 yesterday, and $2049.20 today indicates a new level of support well above $2000 per ounce.

Currently, the most active June 2023 futures contract is fixed at $2037.10 a net decline of $1.1 or 0.05%. The fact that gold did not immediately sell off as it has in the past after hitting the highest price since gold hit $2077 last year indicates strong bullish market sentiment that continues to drive gold higher and more importantly hold those recent high prices.

Today’s fractional decline occurs with dollar strength which indicates that there are still traders bidding the precious metal higher although not enough to take gold futures higher on the day.

The same cannot be said for spot gold which is currently fixed at $2020 which is a net gain of $0.30. According to the Kitco Gold Index (KGX), today’s spot prices are a combination of investors bidding spot gold higher by $6.60 coupled with dollar strength taking gold lower by $6.30, thereby creating a fractional gain of $0.30. The dollar is currently up 0.30% and the index is fixed at 101.57.

The force that propelled gold well above $2000 yesterday was weaker U.S. economic data. The data suggested that the Federal Reserve could certainly consider slower rate hikes and a pause of rate hikes sooner. According to the CME’s FedWatch tool, there is a 55.9% probability that the Federal Reserve will not raise rates at the May FOMC meeting and begin to pause raising rates as they assess whether their former rate hikes indicate that their actions have put inflation on a firm trajectory towards their target of 2%.

The next key event that will shape the Federal Reserve’s decision will be Friday’s jobs report. This is because the Federal Reserve is laser-focused on the extremely robust labor market as a strong higher inflationary component.

On a technical basis, there is no resistance until $2069 the highest closing price for gold futures on record. With a short-term bias, you can use today’s low of $2026 as a potential solid support level.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

Tim Moseley

Breakout in gold takes futures to a high of 204340 in striking range of record high

Breakout in gold takes futures to a high of $2043.40 in striking range of record high

A solid breakout in gold moved futures pricing well above $2000 in trading today. Currently, the most active June 2023 contract is trading up $39.10 or 1.94% and fixed at $2039.40. That puts gold within striking range of the all-time high of $2088 as well as the record closing price for gold futures at $2069.40.

Dollar weakness contributed roughly 25% of the gains in gold today but it was market participants actively bidding the precious yellow metal higher that caused this current rally to accelerate. The dollar is currently down 0.53% and the dollar index is fixed at 101.25.

The primary fundamental event that propelled gold well above $2000 was weaker U.S. economic data. This data suggests that the Federal Reserve could certainly consider slower rate hikes and a pause of rate hikes sooner.

For the first time since May 2021, available new job positions have dropped below 10 million. Today CNBC reported that "Job openings fell below 10 million in February for the first time in nearly two years, in a sign that the Federal Reserve's efforts to slow the labor market may be having some impact. Available positions totaled 9.93 million, a drop of 632,000 from January's downwardly revised number, the Labor Department reported Tuesday in its monthly Job Openings and Labor Turnover Survey."

Because the Federal Reserve has been laser-focused on the extremely robust labor market as it uses its tools to reduce inflation today's report confirms that recent action by the Federal Reserve is beginning to have an impact as seen in the contraction of job openings.

The probability that the Federal Reserve will not raise rates at the May FOMC meeting has increased dramatically. According to the CME's FedWatch tool, there is a 58.7% probability that the Federal Reserve will leave its terminal rates of 4.75% to 5% and beginning a period of pausing rate hikes. However, there remains a 41.3% probability that the Fed will raise rates by ¼% in May.

There is no technical resistance in gold futures until $2069 the highest closing price for gold futures on record. There is solid support for gold at $2013 which is the 38.2% Fibonacci retracement of the most recent leg of the rally. In other words, there is a high probability that gold futures will not only hold above $2000 but challenge the all-time record close.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

Tim Moseley

Gold futures close above 2000 for the first time since March 2022

Gold futures close above $2000 for the first time since March 2022

It has been just a little over one year ago that gold futures traded and closed above $2000 per ounce. On March 8, 2022 gold futures opened above $2000 per ounce, traded to a high of $2078 and closed at approximately $2043. Even though gold futures were able to close well above $2000, that price point was unsustainable. On the following day, March 9, 2022, gold opened at approximately $2060 and strong selling pressure drove prices back below $2000 closing at $1988.

Two weeks ago, gold challenged the key psychological level of $2000 per ounce on three occasions, however, gold was unable to sustain gains above $2000 on each occasion.

Today, the most active June 2023 futures contract opened at $1990, traded to a high of $2008, and as of 5:40 PM EST is fixed at $2001.70. Gold futures gained $15.50 or 0.78%.

Bullish market sentiment for gold has been evident since November of last year after hitting a triple bottom at approximately $1620 (from September to November). November 3 marked the lowest value of the triple bottom and the end of a multi-month correction. The first leg of the current bull market moved gold from $1620 to approximately $1975 during the first week of February.

The chart above is a 480-minute bar chart of gold futures (June contract month). It highlights a Western technical chart pattern called a triangle. According to topstockresearch.com, Symmetric Triangles are another type of triangle chart pattern used by traders. Again, like ascending and descending triangles it takes a few weeks to a few months for this type of pattern to form.

This pattern is composed of a lower ascending trendline which acts as support, and an upper descending trendline which forms the current level of resistance. Prices in this pattern will oscillate between the upper-level resistance trendline and the lower-level support trendline. During a bullish market scenario, you look for pricing to break above resistance, this typically occurs after multiple attempts to breach either the low or the high occurs with a breakout to the upside.

The question as to whether or not gold will be able to sustain its pricing above $2000 per ounce can only be answered after it has held that price point on a closing basis for a number of days.
 

By

Gary Wagner

Time to Buy Gold and Silver

Tim Moseley

Gold price sees triple-digit gains in March but can it set record highs in April?

Gold price sees triple-digit gains in March, but can it set record highs in April?

Gold gained $150 in March — its best month since July 2020. And with analysts seeing markets contradicting the Fed's messaging, gold has a lot more upside, including testing and breaking record highs in April, according to analysts.

The gold market is wrapping up March just below $2,000 an ounce. This is up 7% on the month and 9% year-to-date — the best monthly performance since July 2020 and the best quarterly result since Q2 2020.

The collapse of Silicon Valley Bank three weeks ago triggered the banking crisis, which revised the markets' Federal Reserve outlook from more rate hikes to rate cuts.

"This could morph into a financial crisis. There's been a large decline in market values of assets on the books across the regional banking sector in a significantly tighter environment. Not only was there a loss of market value but also large outflows of deposits from less restrictive to more restrictive banks," TD Securities global head of commodity strategy Bart Melek told Kitco News. "The Fed is less likely to be overly hawkish as we move into 2023."

And even with turbulence subsiding, gold is still trading at higher levels. "Gold hasn't come back down very far even though banking fears are abating for the moment. This is a strong sign and is very encouraging for gold bulls," Gainesville Coins precious metals expert Everett Millman told Kitco News.

Even though the Fed has not signaled that it is debating a rate cut, markets are starting to price that in. "With the bank space turbulence and inflation pointing down, I suspect that the market is looking past a lot of the Fed's hawkish rhetoric and is calling for a pivot that is significantly ahead of the dot plots," Melek pointed out.

Investors should pay close attention to the incoming data as any weaker-than-expected number increases the chance of a rate cut this year.

"With the risk of a hard landing for the economy on the rise, this increases the chances that inflation will fall more quickly and allow the Fed to respond with interest rate cuts before the end of this year," said ING chief international economist James Knightley.

Next week, traders will be getting the March employment report. Market consensus calls are projecting for the U.S. economy to have added 240,000 jobs and for the unemployment rate to have remained at 3.6%.

Following March events, TD Securities is now projecting gold to average $1,975 in Q2, $2,050 in Q3, and $2,100 in Q4.

Gold's first week of April

The gold space could experience some losses in the short term, warned Millman. "There is some downside risk. A relief rally in equities can drive some money out of gold," he said.

A solid support level is around $1,900 and $1,850, and immediate resistance is at $2,000 an ounce and then $2,060-70, he said.

"When you look at the shorts vs. longs in gold futures, the sentiment is still fairly neutral. If you see some swing in public perception, what's happening with the dollar or the U.S. economy, it could swing sentiment, and gold would be the first to react to that," Millman noted.

Banking crisis

It is unclear whether the volatility in the banking sector is over. But all the extra lending overseen by the Fed is yet to slow down, said Bannockburn Global Forex chief market strategist Marc Chandler.

"The banking stress that roiled the markets this month has eased. However, the emergency lending by the Federal Reserve, via the discount window and the new Bank Term Funding Program hardly slowed in the past week ($152.6 bln vs. $163.9 bln)," Chandler said Friday.

Barclays warned that the banking crisis is likely far from over, as a "second wave" of deposit outflows is coming.

"We think the first wave of outflows may be nearly over … But the recent tumult regarding deposit safety may have awakened 'sleepy' depositors and started what we believe will be a second wave of deposit departures, with balances moving into money market funds," Barclays strategist Joseph Abate said in a note.

A second wave of outflows is likely to be triggered by "sleepy" depositors moving their savings from banks to money-market funds for better and safer returns, Abate clarified.

"It is too hard to shift balances or to establish a new relationship with another institution unless there is a large, convincing yield pickup. But some of it could reflect the fact that after 15 years of near-zero rates, depositors are not in the habit of paying much attention to the yield on their cash balances," Abate said.

 

Next week's data

Monday: ISM manufacturing PMI

Tuesday: U.S. factory orders

Wednesday: U.S. ADP nonfarm employment, ISM services PMI

Thursday: U.S. jobless claims

Friday: U.S. nonfarm payrolls

By

Anna Golubova

For Kitco News

Time to Buy Gold and Silver

Tim Moseley

What Is Marketing Creation and How do you Define Value Creation from a Marketing Perspective

What Is Marketing Creation and How do you Define Value Creation from a Marketing Perspective

marketing

Market creation is a challenging process that requires a deep understanding of customer needs and the competitive landscape. It involves identifying unmet needs and developing products or services that are uniquely positioned to meet those needs. This requires a significant investment of time, resources, and expertise to develop and bring the product to market.

Value creation is a crucial aspect of marketing because it helps businesses differentiate themselves from competitors and create a loyal customer base. Value can be created through a variety of ways, including providing high-quality products, excellent customer service, competitive pricing, and unique features or benefits. By creating value for customers, businesses can develop a strong reputation and brand identity, which can lead to increased sales and revenue.

From a marketing perspective, value creation is also about understanding the customer's journey and developing products or services that solve their problems at every touchpoint. This requires businesses to invest in customer research and feedback to identify pain points and areas for improvement.

In addition to understanding customer needs, market creation also involves developing a comprehensive marketing strategy that includes market research, segmentation, targeting, positioning, and promotion. By understanding the competitive landscape and developing a unique value proposition, businesses can effectively launch their product or service and gain market share.

Overall, market creation and value creation are essential components of successful marketing and business growth. By identifying unmet needs and creating products or services that meet those needs, businesses can differentiate themselves from competitors and build a loyal customer base. With a comprehensive marketing strategy and a commitment to value creation, businesses can successfully launch new products and services and achieve long-term success in the market.

In summary, market creation is the process of identifying and developing a new market, while value creation refers to the process of creating value for customers through the development of products or services that meet their needs and desires. Together, market creation and value creation are essential for successful marketing and business growth.

markethive

Here are some ways to get better at market creation:

  1. Research and analyze the market: To create a new market, you need to have a deep understanding of the existing market and the potential opportunities for growth. This requires conducting thorough market research and analyzing the competition to identify unmet needs and areas for growth.

  2. Identify customer needs: The key to market creation is identifying customer needs that are not currently being met. Conducting market research and gathering customer feedback can help identify these unmet needs.

  3. Develop a unique value proposition: Once you have identified the customer needs, develop a unique value proposition that sets your product or service apart from the competition. This could be in the form of a unique feature, a better customer experience, or a more affordable price point.

  4. Create a comprehensive marketing strategy: A comprehensive marketing strategy is essential to successfully launch a new product or service. This should include market research, segmentation, targeting, positioning, and promotion.

  5. Test and iterate: Once you have developed your product or service and launched it into the market, you need to continuously test and iterate based on customer feedback. This will help you improve your product or service and stay ahead of the competition.

  6. Invest in talent: Market creation requires a team of talented individuals with diverse skill sets. Invest in talent by hiring people with expertise in marketing, product development, sales, and customer service.

  7. Stay agile and adaptable: The market is constantly changing, and businesses that are able to adapt quickly will have a competitive advantage. Stay agile and adaptable by monitoring market trends and adjusting your strategy as needed.

Tim Moseley

The Artist that came out of the Winter