My Gold News | 21 February 2023

Gold May End Like A Lion [Global Nuggets Newsletter]

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Gold began November like a lamb but may end like a lion

Global Nuggets


‘Gold began November like a lamb but may end like a lion’, Gary Wagner, Kitco Metals

Analysts have been saying it for weeks if not months. Both the gold and silver prices have been held down for months, due to an historically strong US dollar. Both metals have underperformed over the past 6 months against what have been unprecedented times – economic turmoil and geopolitical unrest. The US dollar has risen and risen. But last Friday, all this changed, and many believe that this could be a turning point not just for precious metals but for the economic landscape. In one day, silver rose by 7.64% against the US$ and gold by 3.12%. Importantly, these prices firmed up and didn’t fall back. The US dollar fell back hard to a 3-week low. What’s changed? The US economy slowed as interest rates started working. If this continues, there will have to be a change of direction by the Fed. This, combined with the US mid-term elections on Tuesday, and the paralysis that could result, with a possible resurgent Trump, have shaken things up. These distant events have a direct effect on the price of precious metals, as do events in Europe, Ukraine and China. Precious metals analysts have turned far more bullish, with market sentiment indicating that we should be seeing higher prices in the mid-term. The oldest quality control measure in the world had drastic penalties – what is the Trial of the Pyx? In what seems like a living scene from Harry Potter, there is an annual event in London that controls the quality of coinage not just for the UK but also New Zealand. This includes gold and silver Britannias and all commemorative coin. Since 1179, the Guilds from the City of London have met in late January to assess the accuracy of coinage produced over the preceding year, termed a ‘trial’. The Master of the Mint is effectively ‘on trial’ to prove that coins of the ‘realm’ are made in accordance with the weights and measures agreed. Back in 1279, it was agreed that 2 coins from every coin production run from the Royal Mint would be locked in a box (called a Pyx). If it was found that the Mint was understating the value of the coins (given they were all gold and silver at the time), the Master of the Mint could be sent to the Tower of London to have his head removed. Luckily in 2022 the penalties are not so draconian, although the process of assessing the accuracy of the coins is just as precise. Today, it’s a short ceremony and a long lunch in the depths of winter with a lot of pageantry. I’ve had the privilege of attending several times – the last time at which I was seated next to the Ambassador for New Zealand, as all NZ coinage produced by the Royal Mint goes through the same process.  

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