Issue 56 – The week of March 13th, 2023

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

• Compared to last week this week will be comparatively light for reports being released. Monday has no reports of note being released.
• Tuesday will see US CPI released. Markets will be watching this for signs of continued inflation growth that will push the Fed to continue its policy of further interest rate hikes. A rise in CPI will shave off some of the gains precious metals made last week. Markets are currently expecting either an unchanged rate or a slight decrease. At the end of the day, FOMC member Bowman will be speaking. Look for comments on the CPI report as an initial indicator of Fed intentions.
• Wednesday sees PPI and Retail Sales reports released. Fed watchers will be watching both reports to see if inflationary pressures are beginning to abate yet.
• The remainder of the week is going to be relatively quiet with no major releases due.

Geopolitics

The Perth Mint is being investigated by the LBMA after allegations arose that they shipped some $9 billion worth of gold that had been cut with copper to the Shanghai Gold Exchange over three years. Both the mint and the exchange have publicly denied this occurred yet there are growing calls to determine what happened. Considering the scope of the allegations it will most likely take some time to get to the bottom of the story.

Regarding the collapse of the Silicon Valley Bank last week in California there were reports of runs on banks in the affluent area of Los Angeles, Brentwood. This is an area where movie stars live. These are not the kind of people that line up in the rain to get into a bank. When a fundamental moment like this occurs, smart investors sit up and take note. It is for these moments that people hold precious metals in their portfolios.

The Call

Precious metals, gold specifically, should have good support this week as jittery markets digest the collapse of the Silicon Valley Bank. With a quiet report schedule, markets will be looking for a cue from the developing situation in the US banking world. Specifically, the question being asked by fund and money managers is “How much exposure do we have to this event?” Along with “Will this event cascade to other institutions?” Since HSBC has now stepped in to acquire SVB, will this be enough to assuage fears of greater market contamination?

Last Week in Review

• Precious metals prices moved higher last week primarily on the news of the Silicon Valley Bank collapse the largest bank to fail in the US since 2008.
• The US dollar lost ground on Friday after jobs data showed weakening inflationary pressures which further lifted prices for precious metals.
• Canada bans Russian steel and aluminum imports