A decade of experience trading Gold & silver is an edge itself
The purpose of this research paper is to formulate forecasts for the U.S economy and for the Gold and silver prices. As we are publishing this report Gold is trading at $1682 per ounce however the white metal is hovering around 15.30.March has apparently ended which has been the worst month ever recorded for the equity market. we have already seen the dow jones and the S&P 500 suffering the deepest quarterly drop since the Great Depression, exacerbated by a 60% oil price slump. The 10-year U.S. Treasury note yield is trading around 0.73% and the forecasts are seriously alarming. The province of Ontario has announced the current situation could last two years. Federal reserve bank of St . Louis president James Bullard predicted the U.S. unemployment rate may hit 30%. More than 16 million Americans have already lost their jobs in three weeks. Everything has been shut down or we could say the entire world has been shut down and if the situation will remain the same even for the next 8-12 months this would be way much worse than the Great depression. You don't need to be an analyst in order to understand the economics of collapse which we are witnessing right now.
As Simon Mair explains, "The economics of collapse is fairly straight forward. Businesses exist to make a profit. If they can’t produce, they can’t sell things. This means they won’t make profits, which means they are less able to employ you. Businesses can and do (over short time periods) hold on to workers that they don’t need immediately: they want to be able to meet demand when the economy picks back up again. But, if things start to look really bad, then they won’t. So, more people lose their jobs or fear to lose their jobs. So they buy less. And the whole cycle starts again, and we spiral into an economic depression."
The deadly virus is still continued to spread at a very high level especially in the United States, Europe, and the other counties. Total cases have reached 1,541,739 where deaths numbers have reached 90,095. Death figures have been more than doubled since our last article on the 2nd of April. In merely 9 days death numbers from 44,13 have reached 90,095. The numbers would be far higher than reported.
we believe the implications of the pandemic on the global economy would be very severe and when a finance minister commits suicide because of the fear of economic fallout from the coronavirus that's not a joke.
Thomas Schaefer, the finance minister of Germany's Hesse state, has committed suicide apparently after becoming deeply worried over how to cope with the economic fallout from the coronavirus."We are in shock, we are in disbelief and above all, we are immensely sad," Bouffier said in a recorded statement.
US Economic Outlook
PMI data
Manufacturing contracted in March, as the PMI® registered 49.1 percent, a 1-percentage point decrease from the February reading of 50.1 percent. “The PMI® contracted in March after expanding marginally in January and February. Three of the big six industries expanded, with Food, Beverage & Tobacco Products expanding strongly. Only one (Supplier Deliveries) of the PMI®’s 10 subindexes recorded expansion, down from four the previous month,” says Fiore. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
MARKIT PMI
Purchasing manager index
The IHS Markit US Manufacturing PMI was revised down to 48.5 in March of 2020 from a preliminary of 49.2 and below 50.7 in February. The reading pointed to the worst contraction in the manufacturing sector since August of 2009 amid weak domestic and foreign demand conditions following the outbreak of coronavirus. Output contracted solidly, dropping at the sharpest pace for over a decade as factories shut down and client demand dropped sharply. New orders fell at the joint-fastest pace since June of 2009, commonly linked to demand slumping due to the virus, with firms also registering a solid downturn in new export orders. Manufacturers cut their workforce numbers at the sharpest rate since October of 2009 and input prices rose only slightly. Finally, fears surrounding the longevity of shutdowns and the slow recovery thereafter led to the lowest degree of confidence since data collection for the series began in July of 2012.
Consumer index
The University of Michigan's consumer sentiment for the US fell to 71 in April of 2020 from 89.1 in March, missing market expectations of 75. It is the lowest reading since December of 2011 and the largest monthly decline ever recorded, preliminary estimates showed. Declines were seen for current conditions (72.4 from 103.7) and expectations (70 from 79.7). Inflation expectations for the year ahead dropped t 2.1 percent from 2.2 percent while the 5-year one increased to 2.5 percent from 2.3 percent. Data suggests that the free-fall in confidence would have been worse were it not for the expectation that the infection and death rates from COVID-19 would soon peak and allow the economy to restart. However, anticipating a quick and sustained economic expansion is likely to be a failed expectation, resulting in a renewed and deeper slump in confidence.
Building Permits
Building permits in the United States slumped 6.3 percent from a month earlier to a seasonally adjusted annual rate of 1.452 million in February 2020, from a 13-year high of 1.550 thousand in January, revised data showed. Authorizations for the volatile multi-family housing segment tumbled 20.6 percent to 0.447 million, while single-family permits rose 1.8 percent to 1.005 million. Permits declined across all regions.
Fed Funds Rate
The Federal Reserve announced a new stimulus package on April 9th , providing up to $2.3 trillion in loans, aimed to support households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic. "The Fed's role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible," said Federal Reserve Board Chair Jerome H. Powell. The move came as part of a Main Street Business Lending Program authorized by the CARES Act, the largest economic relief package ever passed by Congress. In March, the Fed lowered the target range for its federal fund's rate by 100bps to 0-0.25% and launched a massive $700 billion quantitative easing program.
Leading Index for the United States
The leading index for each state predicts the six-month growth rate of the state's coincident index. In addition to the coincident index, the models include other variables that lead the economy: state-level housing permits (1 to 4 units), state initial unemployment insurance claims, delivery times from the Institute for Supply Management (ISM) manufacturing survey, and the interest rate spread between the 10-year Treasury bond and the 3-month Treasury bill.
Real-time Sahm Rule Recession Indicator
Sahm Recession Indicator signals the start of a recession when the three-month moving average of the national unemployment rate (U3) rises by 0.50 percentage points or more relative to its low during the previous 12 months. This indicator is based on "real-time" data, that is, the unemployment rate (and the recent history of unemployment rates) that were available in a given month. The BLS revises the unemployment rate each year at the beginning of January when the December unemployment rate for the prior year is published. Revisions to the seasonal factors can affect estimates in recent years. Otherwise, the unemployment rate does not revise.
Our macro model forecast Confirms Downturn Is Already Here
Coronavirus could push unemployment above Great Depression levels however recover would be quick
Precious metals and selected crypto-assets should be preferred in the investment portfolio
From a technical perspective, oil prices present the biggest opportunity for investors.
Neeraj Pandey is head of economics and research analyst at goldsilveranalyst.com.
This is an opinion column. The thoughts expressed are those of the author.
Implications on Gold and Silver
The Global Emergency Rate Cut, Rapidly growing cases of COVID- 19, Implication of countries lockdowns, Continuous falling of U.S bond yield and DXY , Rising tension in U.S.-China trade talks, Significant drop in U.S major stock indices along with other major countries indices, Fear of severe Global economic Depression all are supporting the safe-haven buying at the moment. we believe the major collapse within equities is under development we shouldn't hope for a major trend reversal in U.S major stock indices soon. Healthcare experts are predicting 12 to 18 months' time in order to develop a vaccine against corona. Governments and Major central banks around the world continue to inject liquidity into the financial market The yellow metal has made a recent top around the $1,691 area however we don't see gold stopping here. After breaking above gold could test $1840-$1850 zone.we could witness significant rally in gold prices if gold prices are able to trade above $1700 accompanied with strong volume . In our several recent reports, we tried to Inform you regarding the opportunity to enter long in silver . The weakness in silver dragged the Gold-silver ratio to its all-time high, level of 125 which means the amount of silver required to buy one ounce of gold . At the moment silver prices should be at $25 per ounce under the average Gold-silver ratio of the last 20 years which is 65. We would recommend you enter long if gold prices break above $1695 and prices settled above $1700 accompanied with strong volume . A short term trade has been added in our portfolio in gold in 1610 with the stop being placed at 1585. we will keep you updated stay tuned!
As Simon Mair explains, "The economics of collapse is fairly straight forward. Businesses exist to make a profit. If they can’t produce, they can’t sell things. This means they won’t make profits, which means they are less able to employ you. Businesses can and do (over short time periods) hold on to workers that they don’t need immediately: they want to be able to meet demand when the economy picks back up again. But, if things start to look really bad, then they won’t. So, more people lose their jobs or fear to lose their jobs. So they buy less. And the whole cycle starts again, and we spiral into an economic depression."
The deadly virus is still continued to spread at a very high level especially in the United States, Europe, and the other counties. Total cases have reached 1,541,739 where deaths numbers have reached 90,095. Death figures have been more than doubled since our last article on the 2nd of April. In merely 9 days death numbers from 44,13 have reached 90,095. The numbers would be far higher than reported.
we believe the implications of the pandemic on the global economy would be very severe and when a finance minister commits suicide because of the fear of economic fallout from the coronavirus that's not a joke.
Thomas Schaefer, the finance minister of Germany's Hesse state, has committed suicide apparently after becoming deeply worried over how to cope with the economic fallout from the coronavirus."We are in shock, we are in disbelief and above all, we are immensely sad," Bouffier said in a recorded statement.
US Economic Outlook
PMI data
Manufacturing contracted in March, as the PMI® registered 49.1 percent, a 1-percentage point decrease from the February reading of 50.1 percent. “The PMI® contracted in March after expanding marginally in January and February. Three of the big six industries expanded, with Food, Beverage & Tobacco Products expanding strongly. Only one (Supplier Deliveries) of the PMI®’s 10 subindexes recorded expansion, down from four the previous month,” says Fiore. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
MARKIT PMI
Purchasing manager index
The IHS Markit US Manufacturing PMI was revised down to 48.5 in March of 2020 from a preliminary of 49.2 and below 50.7 in February. The reading pointed to the worst contraction in the manufacturing sector since August of 2009 amid weak domestic and foreign demand conditions following the outbreak of coronavirus. Output contracted solidly, dropping at the sharpest pace for over a decade as factories shut down and client demand dropped sharply. New orders fell at the joint-fastest pace since June of 2009, commonly linked to demand slumping due to the virus, with firms also registering a solid downturn in new export orders. Manufacturers cut their workforce numbers at the sharpest rate since October of 2009 and input prices rose only slightly. Finally, fears surrounding the longevity of shutdowns and the slow recovery thereafter led to the lowest degree of confidence since data collection for the series began in July of 2012.
Consumer index
The University of Michigan's consumer sentiment for the US fell to 71 in April of 2020 from 89.1 in March, missing market expectations of 75. It is the lowest reading since December of 2011 and the largest monthly decline ever recorded, preliminary estimates showed. Declines were seen for current conditions (72.4 from 103.7) and expectations (70 from 79.7). Inflation expectations for the year ahead dropped t 2.1 percent from 2.2 percent while the 5-year one increased to 2.5 percent from 2.3 percent. Data suggests that the free-fall in confidence would have been worse were it not for the expectation that the infection and death rates from COVID-19 would soon peak and allow the economy to restart. However, anticipating a quick and sustained economic expansion is likely to be a failed expectation, resulting in a renewed and deeper slump in confidence.
Building Permits
Building permits in the United States slumped 6.3 percent from a month earlier to a seasonally adjusted annual rate of 1.452 million in February 2020, from a 13-year high of 1.550 thousand in January, revised data showed. Authorizations for the volatile multi-family housing segment tumbled 20.6 percent to 0.447 million, while single-family permits rose 1.8 percent to 1.005 million. Permits declined across all regions.
Fed Funds Rate
The Federal Reserve announced a new stimulus package on April 9th , providing up to $2.3 trillion in loans, aimed to support households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic. "The Fed's role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible," said Federal Reserve Board Chair Jerome H. Powell. The move came as part of a Main Street Business Lending Program authorized by the CARES Act, the largest economic relief package ever passed by Congress. In March, the Fed lowered the target range for its federal fund's rate by 100bps to 0-0.25% and launched a massive $700 billion quantitative easing program.
Leading Index for the United States
The leading index for each state predicts the six-month growth rate of the state's coincident index. In addition to the coincident index, the models include other variables that lead the economy: state-level housing permits (1 to 4 units), state initial unemployment insurance claims, delivery times from the Institute for Supply Management (ISM) manufacturing survey, and the interest rate spread between the 10-year Treasury bond and the 3-month Treasury bill.
Real-time Sahm Rule Recession Indicator
Sahm Recession Indicator signals the start of a recession when the three-month moving average of the national unemployment rate (U3) rises by 0.50 percentage points or more relative to its low during the previous 12 months. This indicator is based on "real-time" data, that is, the unemployment rate (and the recent history of unemployment rates) that were available in a given month. The BLS revises the unemployment rate each year at the beginning of January when the December unemployment rate for the prior year is published. Revisions to the seasonal factors can affect estimates in recent years. Otherwise, the unemployment rate does not revise.
Our macro model forecast Confirms Downturn Is Already Here
Coronavirus could push unemployment above Great Depression levels however recover would be quick
Precious metals and selected crypto-assets should be preferred in the investment portfolio
From a technical perspective, oil prices present the biggest opportunity for investors.
Neeraj Pandey is head of economics and research analyst at goldsilveranalyst.com.
This is an opinion column. The thoughts expressed are those of the author.
Implications on Gold and Silver
The Global Emergency Rate Cut, Rapidly growing cases of COVID- 19, Implication of countries lockdowns, Continuous falling of U.S bond yield and DXY , Rising tension in U.S.-China trade talks, Significant drop in U.S major stock indices along with other major countries indices, Fear of severe Global economic Depression all are supporting the safe-haven buying at the moment. we believe the major collapse within equities is under development we shouldn't hope for a major trend reversal in U.S major stock indices soon. Healthcare experts are predicting 12 to 18 months' time in order to develop a vaccine against corona. Governments and Major central banks around the world continue to inject liquidity into the financial market The yellow metal has made a recent top around the $1,691 area however we don't see gold stopping here. After breaking above gold could test $1840-$1850 zone.we could witness significant rally in gold prices if gold prices are able to trade above $1700 accompanied with strong volume . In our several recent reports, we tried to Inform you regarding the opportunity to enter long in silver . The weakness in silver dragged the Gold-silver ratio to its all-time high, level of 125 which means the amount of silver required to buy one ounce of gold . At the moment silver prices should be at $25 per ounce under the average Gold-silver ratio of the last 20 years which is 65. We would recommend you enter long if gold prices break above $1695 and prices settled above $1700 accompanied with strong volume . A short term trade has been added in our portfolio in gold in 1610 with the stop being placed at 1585. we will keep you updated stay tuned!
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