Issue 57 – The week of March 20th, 2023

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

This week’s reports will take a back seat to news from the banking world not just in the US but also from hallowed global banking halls such as Switzerland. More on this is below.

Monday will see the release of Reserve balances at regional Fed banks from the banking industry. Given the action in that field over the past 10 days, more eyes will be examining this data. Any fall in reserves will be a sure bullish moment for precious metals, especially gold.

Tuesday will see the release of CAD CPI with mixed expectations from market participants for the result. The number is not expected to rise or fall very much. Look for a continuation of falling inflationary pressures that would normally lower precious metals pricing, but will be offset by fears from the roiling banking sector. Also note that the US existing home sales will be released and are expected to show strong gains. This could add to inflationary pressures as people acquire mortgages before the next round of potential FED interest rate hikes. If the number meets or exceeds expectations, look for a precious metals boost.

Wednesday: ECB President Lagarde will speak. She will most assuredly address the current banking situation. She was one of the first high-level bankers to acknowledge the banking crisis that started in 2007. Global participants will be listening very closely to what she has to say. Later in the day, the US FED will release their interest-rate policy decision and expectations are for a 25 basis point hike at this meeting. Yet another bullish indicator for precious metals, if it comes to fruition.

Thursday will see announcements that are more pertinent this week than in other weeks. These will be interest rate decisions from the Swiss national bank and the Bank of England. The Swiss are expected to leave rates unchanged, and the British are expected to hike rates by 25 basis points.

Friday will have a couple of interesting moments to end the week off. US durable goods orders are expected to indicate a small rise, which will show economic growth continuing to expand. In Canada, retail sales are expected to show robust growth from the previous release, also indicating strong economic sentiment. Regional FED president Bullard will speak on the FED interest rate decision announced earlier in the week. This could be the last moment for precious metals to climb higher for the week.

Geopolitics

So, the past week has a very distinct 2008 feel to it without so much panic. The Silicon Valley Bank collapse was quickly contained with many of the related foreign entities being protected by their respective authorities. SVP was the 18^th largest bank in the US and by no means had a national presence. The primary account holders there were venture capitalists that fund start-up tech companies. Under FDIC regulations $250,000 of deposits will automatically be covered without question. Guess what? Venture capitalists tend to have more than that in the bank. So, what did the White House do? They quickly announced they would cover all deposits for SVP accounts. Deposit holders’ funds are safe. However, their speculative plays are subject to the vagaries of the market which is in a moment of flux right now. Tourniquets have been applied but blood has already been spilled. This loss is not like 2008 which was based on loans being issued to people that should never have qualified for them. This is much more of a niche moment in which many of the big players have stepped up to prevent further contagion.

Across the pond, on the continent, a similar moment has occurred in Switzerland. Credit Swiss no longer exists. They were swallowed up by Union Bank Switzerland after their collapse on Friday. This is a bigger kettle of fish. This was heavily brokered by the Swiss government, the Swiss national bank, UBS and CS. CS shareholders were not given the option to vote on the deal. CS shareholders will get 1 UBS share for approximately every 28 CS shares they hold. This puts the value of CS at about $3.15 billion. At market close on Friday it was worth about $8 billion. Oh my, that is quite the haircut.

I guess these events might have something to do with gold moving up and testing the $2000 handle a rise of $120 in the past week.

The Call

Given the turmoil in the banking sector at the moment and a slew of interest rate decisions this week all signs point to higher precious metals prices. Contagion is still paramount in traders’ lexicon at the moment. The $2000 handle will be an important technical and psychological battleground this week.

Last Week in Review

• Precious metals made some significant gains last week in banking sector fears. Gold made a $113 gain for the week and silver climbed $1.72.
• Global central banks coordinate liquidity relief as banking sector fears grow

	Gold	Silver
Open	1877	20.65
High	1990	22.66
Low	1871	20.57
Close	1976	22.37