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Gold Price Update: Q3 2021 in Review

What happened to gold in Q3 2021? Our gold price update outlines key market developments and explores what could happen moving forward.
The post Gold Price Update: Q3 2021 in Review appeared first on Investing News Network.

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Click here to read the previous gold price update.

2021’s third quarter saw gold stabilize in the US$1,700 to US$1,827 per ounce range after six months of volatility.

The yellow metal entered July at US$1,787.30 and shed 1.68 percent by the end of September to sit at US$1,757.20.

A 7 percent decline in demand stemming from exchange-traded fund (ETF) outflows outweighed recovery in other segments, specifically an 18 percent uptick in bar and coin demand year-over-year.

 

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Although gold has slid south since reaching a year-to-date high of US$1,903 on May 28, the metal is still trading in historically high territory. Over the last five years, values have increased 43 percent.

gold price performance, november 2016 to november 2021

Gold price performance, November 2016 to November 2021. Chart via Trading Economics.

Gold price update: Muted performance leads to flat prices

Gold’s muted performance throughout the third quarter has prompted many analysts to say the metal is undervalued. Year-over-year declines also seem disproportionately high because August 2020 saw gold reach an all-time high of US$2,068, while 2021’s Q3 high was US$1,827.

gold price q3 2021

Gold price performance, Q3 2021. Chart via Kitco.

July was the only month out of the quarter for gold to record an uptick (2.2 percent). In August, values trended flatly, and the price contracted by US$70 in September.

“Gold’s performance is consistent with its demand and supply dynamics and a macro environment of higher interest rates and risk-on investor appetite,” a Q3 World Gold Council (WGC) report states.

Despite being par for the course according to the WGC, many analysts are of the belief that inflation has yet to benefit the price of gold, a factor that could see the yellow metal rally in the months ahead.

“I am surprised gold’s not over US$2,000 an ounce right now,” said Ross Beaty, chairman of Equinox Gold (TSX:EQX,NYSEAMERICAN:EQX), during a September interview.

Although he was disappointed in gold’s performance over the summer, he did point out that US$1,800 is still very good. However, with all the macroeconomic factors at play, he believes gold should be higher.

Listen to the full interview with Beaty above.

“We are not just threatening higher inflation, we are experiencing higher inflation, and inflation is always a bullish case for gold,” he said, noting that the US dollar and markets will be unable to sustain these current highs indefinitely, and are likely to “crack,” aiding in a gold price uptick.

Gold price update: ETF outflows drive declines

Declines in ETF holdings were another factor that weighed on gold’s ability to sustain price growth. Total gold demand for Q3 was 831 tonnes (t), a 7 percent year-over-year decline.

“This drop was almost exclusively driven by ETFs — which swung from very large inflows in Q3 2020 to modest outflows this year — overshadowing strength in other sectors of demand during the quarter,” the WGC report reads. “Small outflows from global gold ETFs (-27t) had a disproportionate impact on the year-over-year change in gold demand, given the hefty Q3’20 inflows of 274t.”

Even though investment demand appears to be a key short-term driver for the gold price, Juan Carlos Artigas, head of research at the WGC, explained it is less impactful on the longer-term price.

“Investment demand does tend to influence, generally, the significant price movements, but we’ve been able to show through our historical analyses that the gold price reflects the balance of demand and supply — and when I say demand, I mean of all sectors,” Artigas said.

“So, while in the short term, if you look at the performance in a day, in a week, in a month, most of the drivers of gold may be linked to investment demand and trading and so on, once you start to look at a slightly longer period, whether it is over a year, then the other (demand) sectors do contribute.”

The 7 percent Q3 dip in gold demand was offset by a supply contraction. While mine production has steadily increased since January — adding 5 percent by October — a 12 percent decline in recycling led to an overall 3 percent drop in total supply.

Although investment demand contracted, the other pertinent sectors saw growth in demand.

“Jewellery, technology and bar and coin were significantly higher than in 2020,” the WGC report states. “Modest central bank purchases were a solid improvement on the small net sale from Q3’20.”

 

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Gold price update: Tailwinds ahead?

Gold’s lackluster Q3 performance is likely to be a launching point for higher prices in Q4 and beyond. The US Federal Reserve’s November announcement, where it said it will ease bond buying and other measures in the coming months, could be the first catalyst to gold’s uptick.

“The good news is once we see some actual action in regard to Fed tightening, that typically marks a bottom in the gold price, and the silver price as well, because the speculators, having bought the rumor of Fed action, then sell the news,” Brien Lundin, editor of the Gold Newsletter, said during an August interview with the Investing News Network. “That releases some of the selling pressure, some of the shorting pressure on the metals. So that typically marks a bottom.”

Listen to Lundin discuss the precious metals market and what supercycles are ahead.

Following the November 3 decision from the Fed, which said it will begin reducing the monthly pace of its net asset purchases by US$10 billion for Treasury securities and US$5 billion for agency mortgage-backed securities, the gold price rallied above US$1,800.

Values rose from US$1,761 on November 3 to US$1,818 on November 5, a 3.19 percent increase.

“The long-term picture is good, I’m still very bullish and positive on that,” said Lundin. “But for gold its near-term future is much more uncertain than its long-term future. I think we can all be fairly confident that the gold price is going to be much higher two, three, four and five years down the road.”

Marc Lichtenfeld, chief income strategist at the Oxford Club, pointed out that gold’s price depression corresponds with upward momentum in the larger stock market.

“Other than the occasional big price decline that lasts a day or two, the market’s still in a broad uptrend and there’s kind of no reason to think it’s going to stop for awhile,” said Lichtenfeld.

“We had interest rates starting to move higher and then they plunged, keeping investors in stocks and making stocks really the only place to go for the immediate future.”

Hear Lichtenfeld’s thoughts on market dynamics and what will propel gold higher.

“I don’t see anything changing unless we do see some kind of dramatic event out in the world like we saw with COVID-19 or something,” Lichtenfeld said.

The role of gold as a hedge against uncertainty may come more into focus as the end of the year approaches and economies prepare to revise monetary policy. However, as the WGC’s Artigas explained, interest rates could counter some of that upside.

“Gold still can face headwinds from potentially higher interest rates,” he said. “The opportunity cost of holding gold is one of the drivers of performance, and especially in the short and the medium term, interest rates tend to influence gold’s behavior significantly, especially in a period where investors are looking to understand how central banks will behave.”

Artigas went on to say that central banks are integral players in the gold ecosystem and are an important factor in the long-term performance of the dual metal.

The third quarter saw central banks continue to be net buyers of gold for a 12th consecutive year, although there were a few months in recent years where the institutes were net sellers. According to the WGC, global reserves grew by 69 tonnes during Q2 and have added almost 400 tonnes year-to-date.

While analysts and market watchers are divided about which factors led to gold’s weak performance in Q3, the consensus is still that gold is positioned to profit from inflation and risk mitigation.

“A general malaise appeared to have taken hold in financial markets during Q3, particularly during September,” the WGC’s Q3 overview concludes.

“Seeing bonds and equities fall together (-4.7 percent and -0.9 percent respectively) runs counter to the experience investors have grown used to for over two decades. Should that continue with gold picking up steam, it could boost gold’s appeal as a risk hedge going forward.”

 Don’t forget to follow us @INN_Resource for real-time updates! 

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

 

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The post Gold Price Update: Q3 2021 in Review appeared first on Investing News Network.

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Spread & Containment

Why Is The VIX So Low? A Surprising Answer Emerges In The Market’s Microstructure

Why Is The VIX So Low? A Surprising Answer Emerges In The Market’s Microstructure

One of the most frequent questions tossed around Wall Street…

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Why Is The VIX So Low? A Surprising Answer Emerges In The Market's Microstructure

One of the most frequent questions tossed around Wall Street trading desks (and strip clubs), and which was duly covered by Bloomberg recently in "Fear Has Gone Missing in Wall Street’s Slow-Motion Bear Market", is why despite the crushing bear market and the coming recession, does the VIX refuse to rise sustainably above 30, or in other words, why is the VIX so low?

As Goldman's Rocky Fishman wrote in a recent note "Option Markets Take the SPX Bear Market in Stride" (available to professional subs), "one of the most popular questions we have received is why the VIX hasn't surpassed its March peak (36) despite the SPX being lower than it was in March and realized vol being higher than it was in March."

Here, Fishman notes that implied volatility was unusually high in March, and the current VIX level (29) is only slightly low for the current level of realized vol. Furthermore, a VIX around 30 typically happens with the 5Y CDX HY spread above 600, and although it has risen steadily it's currently in the mid 500's.

Meanwhile, even as the VIX has fallen moderately since late April, both vol risk premium and skew have both fallen dramatically.

Picking up on this quandary, overnight JMorgan also joined the discussion with its analyst Peng Cheng laying out his own thoughts on why the VIX remains so low (note is also available to professional subs), and similar to Goldman notes that the current bear market, despite being deeper in magnitude, has produced VIX levels well below the peak observed during previous market sell-offs:

However, unlike Goldman which mostly analyzes the VIX in the context of a macro framework, JPM's Cheng offers observations based on his analysis of market microstructure in both equity and options markets.

Cheng starts with the previously noted low realized volatility: as the JPM strategist writes, YTD, the SPX realized vol, measured on a close to close basis, is only 25.5, which means that delta-hedged put options would have lost money in the gamma component. From a technical perspective, JPM believes that return volatility is dampened by a lack of intraday price momentum and increasingly frequent occurrences of intraday price reversal. As seen in the next chart, intraday reversal has only started to become noticeable in the last two years. Prior to that, intraday momentum was the dominant market behavior.

This diminishing intraday price momentum has had a non-trivial impact on realized volatility, according to JPM which estimates that if the intraday return correlation remained the same as pre-pandemic, YTD volatility would be close to 28.8, or 3.3 vol points higher than realized.

As an aside, those asking for the reason behind this change in intraday patterns in the last couple of years, Cheng notes that "this is a complex topic" but in short, his view is that it is a result of 1) crowding in intraday momentum trading strategies and 2) a potential shift in option gamma dynamics as discussed below.

Supply/demand of S&P 500 options: Although the estimation of market level option gamma profile is highly dependent on many factors, including assumptions on open interest, OTC options, and leveraged ETFs, etc., in a report published earlier this year, JPM's quants presented a more dynamic estimation of the gamma profile by using tick level data. Specifically, they assigned directions to SPX and SPY option trades based on their distance to the best bid/offer at the tick level, rather than the constant assumption of investors being outright long puts and short calls. The updated results are shown below.

Tha chart shows that starting in 2020, the put gamma imbalance has fallen meaningfully. This is the result of investors’ changing preference from buying outright puts to put spreads for protection, in JPM's view. And year to date, the decline in gamma demand has not improved. Moreover, and echoing what we have said on several recent occasions, JPM notes that judging from the outright negative put gamma imbalance in early 2022, it appears that investors have been monetizing hedges that had been held since 2021 - note the consistently positive and relatively elevated put gamma imbalance throughout 2021, which suggests that protections were put on during this period.

More in the full note available to pro subs

Tyler Durden Wed, 06/29/2022 - 15:05

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Dr. Stephen Kingsmore receives prestigious Precision Medicine World Conference 2022 Luminary Award

SAN DIEGO, Calif. – June 29, 2022 – Rady Children’s Institute for Genomic Medicine® (RCIGM) today announced that Stephen Kingsmore, MD, DSc, President…

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SAN DIEGO, Calif. – June 29, 2022 – Rady Children’s Institute for Genomic Medicine® (RCIGM) today announced that Stephen Kingsmore, MD, DSc, President and CEO, was presented with the Precision Medicine World Conference (PMWC) 2022 Luminary Award at this year’s conference in the Silicon Valley region of California for his innovation in rapid neonatal molecular diagnoses using whole-genome sequencing.

Credit: Rady Children’s Institute for Genomic Medicine

SAN DIEGO, Calif. – June 29, 2022 – Rady Children’s Institute for Genomic Medicine® (RCIGM) today announced that Stephen Kingsmore, MD, DSc, President and CEO, was presented with the Precision Medicine World Conference (PMWC) 2022 Luminary Award at this year’s conference in the Silicon Valley region of California for his innovation in rapid neonatal molecular diagnoses using whole-genome sequencing.

The Luminary Award recognizes the recent contributions of prominent figures who have accelerated precision medicine into the clinic. Additional PMWC 2022 honorees included Dr. Albert Bourla, Pfizer, for his extraordinary achievement in leading the record-time development of a vaccine and antiviral drug against the coronavirus and Dr. Stephen Hoge, Moderna, for overseeing R&D of the first antiviral synthetic mRNA vaccines ever created, including the one against COVID-19.

“I am honored to receive this award and be among this extraordinary group of past and present recipients focused on the clinical adoption of precision medicine,” said Dr. Kingsmore. “At RCIGM, we are transforming pediatric healthcare through the power of Rapid Precision Medicine™ by offering the fastest delivery of rapid Whole Genome Sequencing™ to enable prompt diagnosis and targeted treatment of critically ill newborns and children in intensive care. We know that time matters – a fast, molecular diagnosis can make the difference between improved outcomes and a lifetime of disability, or even life itself.”

Dr. Kingsmore leads a multi-disciplinary team of scientists, physicians, genetic counselors, software engineers and bioinformaticians who are pioneering the use of rWGS® to enable precise diagnoses for critically ill newborns. In 2021, he led the RCIGM team to set a new record of 13.5 hours for achieving the fastest molecular diagnosis using rWGS, breaking his previous 2018 world record of 19.5 hours. 

PMWC is the largest and original annual conference dedicated to precision medicine. PMWC’s mission is to bring together recognized leaders, top global researchers and medical professionals, and innovators across healthcare and biotechnology sectors to showcase practical content that helps close the knowledge gap between different sectors, thereby catalyzing cross-functional fertilization and collaboration in an effort to accelerate the development and spread of precision medicine.

Rady Children’s Institute for Genomic Medicine

Rady Children’s Institute for Genomic Medicine is transforming neonatal and pediatric health care by harnessing the power of Rapid Precision Medicine™ to improve the lives of children and families facing rare genetic disease. Founded by Rady Children’s Hospital and Health Center, the Institute offers the fastest delivery of rapid Whole Genome Sequencing™ to enable prompt diagnosis and targeted treatment of critically ill newborns and children in intensive care. The Institute now provides clinical genomic diagnostic services for a growing network of more than 70 children’s hospitals. The vision is for this life-changing technology to become standard of care and enable clinicians nationwide to provide rapid, personalized care. Learn more about the non-profit Institute at RadyGenomics.org. Follow us on Twitter and LinkedIn.

Media Contact:

Ben Metcalf
bmetcalf@rchsd.org
+1 (619) 822-8593
 


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Government

Fauci Suffers “Much Worse” COVID Symptoms After ‘Paxlovid Rebound’

Fauci Suffers "Much Worse" COVID Symptoms After ‘Paxlovid Rebound’

Fully-vaxx’d and double-boosted mask-admirer Anthony Fauci is suffering.

Two…

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Fauci Suffers "Much Worse" COVID Symptoms After 'Paxlovid Rebound'

Fully-vaxx'd and double-boosted mask-admirer Anthony Fauci is suffering.

Two weeks ago, we reported that President Biden's chief medical adviser had COVID.

The 81-year-old reportedly had 'mild symptoms' and of course he 'said the words'...

Of course, Fauci followed the CDC guidelines and ingested the government-blessed treatment - Paxlovid - due to his age and possible risks from the virus.

So, that should have been it right?

But no. During an event at Foreign Policy’s Global Health Forum, Fauci admitted he had not had a good experience:

“After I finished the five days of Paxlovid, I reverted to negative on an antigen test for three days in a row,” Fauci said Tuesday .

“And then on the fourth day, just to be absolutely certain, I tested myself again. I reverted back to positive.”

Interestingly, Fauci admitted:

"...this is becoming more and more typical based on more clinical studies..."

As Bloomberg reports, large numbers of patients have reported the phenomenon, often called Covid rebound or Paxlovid rebound, of returning symptoms after taking a full course of Pfizer’s drug.

While Pfizer Chief Executive Officer Albert Bourlasaid in May that doctors could prescribe a second course of treatment to such patients, US drug regulators have said there’s no evidence that a repeat will help.

However, Fauci said he started taking a second course of Paxlovid after experiencing symptoms “much worse than in the first go around.”

Now near completion of the five-day oral treatment, he said he was still enduring symptoms but felt “reasonably good.”

Finally, as we reported less than two weeks ago, Pfizer stopped enrolling in a clinical trial for Paxlovid for standard-risk COVID-19 patients after the latest results suggested the drug did not reduce symptoms or hospitalizations and deaths to a statistically significant degree.

Watch the full interview below: (forward to around 5:26:00):

Not exactly encouraging news...

Tyler Durden Wed, 06/29/2022 - 11:45

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