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How High Can Gold Go In 2020?

How High Can Gold Go In 2020?

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How High Can Gold Go In 2020? Tyler Durden Mon, 07/13/2020 - 06:00

Written by Sam Laakso from Voima Insight.

Gold has had a great run over the past year. Gold prices have risen in every single currency on earth and in many currencies gold prices are up well over 30 percent from last summer.

In early January, I published an article (in Finnish) in a local financial newspaper where I articulated why gold would rise to $1800 per ounce during the first half of the year – a rise of 20 percent in just six months. As it turns out, gold did just that on the last day of June meaning that in the end my estimation was correct.

Although more volatile than expected, gold price in New York reached my target of $1800 per ounce during the first half of 2020 on the very last day. It has hit records against all other currencies.

So, what is my forecast for gold for the rest of 2020? How high can gold go this year?

My estimation

I see that there is an extremely optimistic atmosphere around gold at the moment. Investment banks are upping their target prices for gold left and right and my favorite sentiment metric, Twitter, has exploded after gold breached $1800.

I am known as a cycles analyst. In the past I have written rather extensively about how cycles work in the financial markets. You can read more about this topic at SKAL Capital and in my Thesis.

The cycles theory revolves around the thought that, as nature in itself, human nature cyclical cycling between optimism and pessimism. This transmits to the way people buy and sell financial assets and thus the prices of stocks, bonds, commodities, and gold also rise and fall in identifiable cycles.

Right now, the markets are telling me that the gold market is excessively optimistic due to the rise in gold prices over the past three months and that the cycle in gold is mature and thus ready to start the declining phase of the cycle. Once optimism reaches an extreme, prices tend to start the declining phase of the cycle.

Gold has risen strongly over the first half of the year. As you can see, strong uptrends are often followed by falling prices highlighted in yellow and I think we are close to one of those declines.

 

So how exactly I think that the second half of the year is going to play out for gold?

I think that we are close to a short-term top in the price of gold. We have not seen a long and exhausting multi-week decline in the price of gold, which would wash out the highest optimism in gold, for six months.

We did see a short lived and sizable correction in March during the global coronavirus selloff, but since the sharp decline (buying opportunity) was erased just as quickly as it came, I argue that the mental damage to gold market sentiment was not big enough.

As I am writing this article the price of gold is at an eight-year high, or $1816 per ounce to be exact, when measured in US dollars. However, optimism in the gold market is just as high. Calls for $1900 and $2000 gold are everywhere I look at.

The big picture fundamentals for gold are crystal clear and in favor for higher gold prices in the years to come. Central banks around the world are printing money faster than governments are able to spend it at zero percent interest rates = insanity. This type of reckless spending is definitely good for gold prices in the long run.

However, over the next two to three months I would not be surprised to see a multi week decline which would serve as a great buying opportunity in the big picture.

Gold is at a level of extreme resistance – breaking to new all-time highs not seen since 2011 – I think that it is likely that gold will start a corrective move before breaking to new all-time highs.

I think that once we get a short-term top on gold, over the next few weeks, we will see a move down to $1670 and possibly all the way down to $1600 in a painstakingly long but necessary correction. A multi week correction will wash out the excessive optimism surrounding gold. At the bottom of the correction, you will not be hearing calls for $2000 gold like you see now.

After we are done with the correction, I think that gold has a fair shot of reaching $1900 during the second half of this year. This would be the third consecutive year when gold has risen nearly 20% relative to the US dollar.

Another way of looking at it is that the US dollar has lost almost half of its purchasing power relative to gold in just three years.

How to act?

If you do not own any gold – buy it now with the big picture in mind. Even though I have been accurate with my latest predictions for gold in 2019 and 2020 my predictions are merely estimates and so I do not advise waiting for my prediction of a better buying opportunity to fulfill especially if you do not own any gold already.

I think that the pullback will act as a great buying opportunity for those who already have gold but are looking to add to their holdings – I certainly am.

My advice for everyone thinking about buying gold has been simple for many years:

1) Decide how much of your money you are willing convert into gold

2) Buy gold with 50% of the amount immediately

3) Wait for a few months

a. If gold prices decline – Great! You have chance to buy lower

b. If gold prices rise – you have already bought the first half at lower prices and so you can buy more with peace in mind

Either way you are well off once you own at least some physical gold.

In early 2019, I published my thesis titled “The Future of Gold from 2019 to 2039” in which I explained in detail why I think that gold prices will reach at least $5000 over the next five to ten years. If you are interested in my view of the big picture for gold you can find my Thesis  here.

My long-term view still holds today – I think that gold prices are likely to rise every year for the next five to ten years.

The views expressed on Voima Insight are those of the author(s) and do not necessarily reflect the official views or position of Voima Gold.

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New research reveals gut microbiota link to colitis: intestinal epithelial axin1 deficiency offers protective effects

A groundbreaking study conducted by Jun Sun’s research team at the University of Illinois Chicago has revealed a new and critical role of Axin1 in regulating…

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A groundbreaking study conducted by Jun Sun’s research team at the University of Illinois Chicago has revealed a new and critical role of Axin1 in regulating intestinal epithelial development and microbial homeostasis. The research, published in the journal Engineering, highlights the potential therapeutic strategies for human inflammatory bowel disease (IBD).

Credit: Shari Garrett et al.

A groundbreaking study conducted by Jun Sun’s research team at the University of Illinois Chicago has revealed a new and critical role of Axin1 in regulating intestinal epithelial development and microbial homeostasis. The research, published in the journal Engineering, highlights the potential therapeutic strategies for human inflammatory bowel disease (IBD).

IBD, a chronic inflammatory disorder affecting the gastrointestinal tract, has been a significant health concern worldwide. The study focused on understanding the role of Axin1, a negative regulator of Wnt/β-catenin signaling, in maintaining gut homeostasis and host response to inflammation.

The research team analyzed Axin1 expression in human inflammatory bowel disease datasets and found increased Axin1 expression in the colonic epithelium of IBD patients. To further investigate the effects and mechanism of intestinal Axin1 in regulating intestinal homeostasis and colitis, the team generated new mouse models with Axin1 conditional knockout in intestinal epithelial cells (Axin1ΔIEC) and Paneth cells (Axin1ΔPC).

The results showed that Axin1ΔIEC mice exhibited altered goblet cell spatial distribution, Paneth cell morphology, reduced lysozyme expression, and an enriched presence of Akkermansia muciniphila (A. muciniphila) in the gut microbiota. Importantly, the absence of intestinal epithelial and Paneth cell Axin1 led to decreased susceptibility to dextran sulfate sodium-induced colitis in vivo.

Furthermore, when Axin1ΔIEC and Axin1ΔPC mice were cohoused with control mice, they became more susceptible to dextran sulfate sodium (DSS)-colitis, suggesting the protective role of Axin1 in the presence of a healthy gut microbiota. Treatment with A. muciniphila further reduced the severity of DSS-colitis, highlighting its potential as a therapeutic target.

Interestingly, antibiotic treatment did not change the proliferation of intestinal epithelial cells in the control mice. However, in Axin1ΔIEC mice with antibiotic treatment, the intestinal proliferative cells were significantly reduced, indicating the non-colitogenic effects driven by the gut microbiome.

These findings demonstrate the novel role of Axin1 in mediating intestinal homeostasis and the microbiota. The loss of intestinal Axin1 protects against colitis, likely through the regulation of epithelial Axin1 and Axin1-associated A. muciniphila. Further mechanistic studies using specific Axin1 mutations will be crucial in elucidating how Axin1 modulates the microbiome and host inflammatory response, paving the way for new therapeutic strategies for human IBD.

Jiaming Wu, editor of the subject of medicine and health of Engineering, commented, “This study provides valuable insights into the development of inflammatory bowel disease and offers potential therapeutic strategies for its treatment. By understanding the intricate interactions between Axin1, the gut microbiota, and host immunity, researchers can develop targeted interventions to restore intestinal homeostasis and alleviate the symptoms of IBD.”

The research team’s findings have significant implications for the field of gastroenterology and hold promise for the development of novel treatments for IBD. As further studies are conducted, the scientific community eagerly awaits the potential therapeutic breakthroughs that may arise from this research.

The paper “Profiling the Antimalarial Mechanism of Artemisinin by Identifying Crucial Target Proteins”, authored by Shari Garrett, Yongguo Zhang, Yinglin Xia, Jun Sun. Full text of the open access paper: https://doi.org/10.1016/j.eng.2023.06.007. For more information about the Engineering, follow us on Twitter (https://twitter.com/EngineeringJrnl) & like us on Facebook (https://www.facebook.com/EngineeringPortfolio).

 

About Engineering

Engineering (ISSN: 2095-8099 IF:12.8) is an international open-access journal that was launched by the Chinese Academy of Engineering (CAE) in 2015. Its aims are to provide a high-level platform where cutting-edge advancements in engineering R&D, current major research outputs, and key achievements can be disseminated and shared; to report progress in engineering science, discuss hot topics, areas of interest, challenges, and prospects in engineering development, and consider human and environmental well-being and ethics in engineering; to encourage engineering breakthroughs and innovations that are of profound economic and social importance, enabling them to reach advanced international standards and to become a new productive force, and thereby changing the world, benefiting humanity, and creating a new future.


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New findings on hair loss in men

A receding hairline, a total loss of hair from the crown, and ultimately, the classical horseshoe-shaped pattern of baldness: Previous research into male…

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A receding hairline, a total loss of hair from the crown, and ultimately, the classical horseshoe-shaped pattern of baldness: Previous research into male pattern hair loss, also termed androgenetic alopecia, has implicated multiple common genetic variants. Human geneticists from the University Hospital of Bonn (UKB) and by the Transdisciplinary Research Unit “Life & Health” of the University of Bonn have now performed a systematic investigation of the extent to which rare genetic variants may also contribute to this disorder. For this purpose, they analyzed the genetic sequences of 72,469 male participants from the UK Biobank project. The analyses identified five significantly associated genes, and further corroborated genes implicated in previous research. The results have now been published in the prestigious scientific journal Nature Communications.

Credit: University Hospital Bonn / Katharina Wislsperger

A receding hairline, a total loss of hair from the crown, and ultimately, the classical horseshoe-shaped pattern of baldness: Previous research into male pattern hair loss, also termed androgenetic alopecia, has implicated multiple common genetic variants. Human geneticists from the University Hospital of Bonn (UKB) and by the Transdisciplinary Research Unit “Life & Health” of the University of Bonn have now performed a systematic investigation of the extent to which rare genetic variants may also contribute to this disorder. For this purpose, they analyzed the genetic sequences of 72,469 male participants from the UK Biobank project. The analyses identified five significantly associated genes, and further corroborated genes implicated in previous research. The results have now been published in the prestigious scientific journal Nature Communications.

Male-pattern hair loss is the most common form of hair loss in men, and is largely attributable to hereditary factors. Current treatment options and risk prediction are suboptimal, thus necessitating research into the genetic underpinnings of the condition. To date, studies worldwide have focused primarily on common genetic variants, and have implicated more than 350 genetic loci, in particular the androgen receptor gene, which is located on the maternally inherited X chromosome. In contrast, the contribution to this common condition of rare genetic variants has traditionally been assumed to be low. However, systematic analyses of rare variants have been lacking. “Such analyses are more challenging as they require large cohorts, and the genetic sequences must be captured base by base, e.g., through genome or exome sequencing of affected individuals,” explained first author Sabrina Henne, who is a doctoral student at the Institute of Human Genetics at the UKB and the University of Bonn. The statistical challenge lies in the fact that these rare genetic variants may be carried by very few, or even single, individuals. “That is why we apply gene-based analyses that first collapse variants on the basis of the genes in which they are located,” explained corresponding author PD Dr. Stefanie Heilmann-Heimbach, who is a research group leader at the Institute of Human Genetics at the UKB at the University of Bonn. Among other methods, the Bonn researchers used a type of sequence kernel association test (SKAT), which is a popular method for detecting associations with rare variants, as well as GenRisk, which is a method developed at the Institute of Genomic Statistics and Bioinformatics (IGSB) at the UKB and the University of Bonn.

Possible relevance of rare variants in male-pattern hair loss

The research involved the analysis of genetic sequences from 72,469 male UK Biobank participants. Within this extensive data set, Bonn geneticists, together with researchers from the IGSB and the Center for Human Genetics at the University Hospital Marburg, examined rare gene variants that occur in less than one percent of the population. Using modern bioinformatic and statistical methods, they found associations between male-pattern hair loss and rare genetic variants in the following five genes: EDA2R, WNT10A, HEPH, CEPT1, and EIF3F.

Prior to the analyses, EDA2R and WNT10A were already considered candidate genes, as based on previous analyses of common variants. “Our study provides further evidence that these two genes play a role, and that this occurs through both common and rare variants,” explained Dr. Stefanie Heilmann-Heimbach. Similarly, HEPH is located in a genetic region that has already been implicated by common variants, namely the EDA2R/Androgen receptor, which is a region that has consistently shown the strongest association with male-pattern hair loss in past association studies. “However, HEPH itself has never been considered as a candidate gene. Our study suggests that it may also play a role,” explained Sabrina Henne. “The genes CEPT1 and EIF3F are located in genetic regions that have not yet been associated with male-pattern hair loss. They are thus entirely new candidate genes, and we hypothesize that rare variants within these genes contribute to the genetic predisposition. HEPH, CEPT1, and EIF3F represent highly plausible new candidate genes, given their previously described role in hair development and growth.” Furthermore, the results of the study suggest that genes that are known to cause rare inherited diseases affecting both skin and hair (such as the ectodermal dysplasias) may also play a role in the development of male-pattern hair loss. The researchers hope that the puzzle pieces they have discovered will improve understanding of the causes of hair loss, and thus facilitate reliable risk prediction and improved treatment strategies.

The research was supported by funding from the Medical Faculty of the University of Bonn. Prof. Dr. Markus Nöthen, Director of the Institute of Human Genetics at UKB and co-author of the study, is a member of the Transdisciplinary Research Area (TRA) “Life and Health” at the University of Bonn. The publication costs in open access format were funded by the DEAL project of the University of Bonn.


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The New York Fed DSGE Model Forecast— September 2023

This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE)…

This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since June 2023. As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our DSGE model Q & A.

The New York Fed model forecasts use data released through 2023:Q2, augmented for 2023:Q3 with the median forecasts for real GDP growth and core PCE inflation from the Survey of Professional Forecasters (SPF), as well as the yields on ten-year Treasury securities and Baa-rated corporate bonds based on 2023:Q3 averages up to August 30. Moreover, starting in 2021:Q4, the expected federal funds rate between one and six quarters into the future is restricted to equal the corresponding median point forecast from the latest available Survey of Primary Dealers (SPD) in the corresponding quarter. The current projection can be found here.

The change in the forecast relative to June reflects the fact that the economy remains resilient in spite of the increasingly restrictive stance of monetary policy. Output growth is projected to be almost 1 percentage point higher in 2023 than forecasted in June (1.9 versus 1.0 percent) and somewhat higher than June for the rest of the forecast horizon (1.1, 0.7, and 1.2 percent in 2024, 2025, and 2026, versus 0.7, 0.4, and 0.9 in June, respectively). The probability of a not-so-soft recession, as defined by four-quarter GDP growth dipping below -1 percent by the end of 2023, has become negligible at 4.6 percent, down from 26 percent in June. According to the model, much of the resilience in the economy so far stems from the surprising strength in the financial sector, which counteracts the effects of the tightening in monetary policy. Inflation projections are close to what they were in June: 3.7 percent for 2023 (unchanged from the previous forecast), 2.2 percent for 2024 (down from 2.5 percent), and 2.0 percent for both 2025 and 2026 (down from 2.2 and 2.1 percent, respectively). The model still sees inflation returning close to the FOMC’s longer-run goal by the end of next year.

The output gap is projected to be somewhat higher over the forecast horizon than it was in June, consistent with the fact that the surprising strength of the economy is mainly driven by demand factors such as financial shocks, as opposed to supply factors. As in the June forecast, the gap gradually declines from its current positive value to a slightly negative value by 2025. The real natural rate of interest is estimated at 2.5 percent for 2023 (up from 2.2 percent in June), declining to 2.2 percent in 2024, 1.9 percent in 2025, and 1.6 percent in 2026. 

Forecast Comparison

Forecast Period2023202420252026
Date of ForecastSep 23Jun 23Sep 24Jun 24Sep 25Jun 25Sep 26Jun 26
GDP growth
(Q4/Q4)
1.9
 (0.2, 3.6) 
1.0
 (-1.9, 4.0) 
1.1
 (-4.0, 6.3) 
0.7
 (-4.2, 5.7) 
0.7
 (-4.4, 5.8) 
0.4
 (-4.7, 5.5) 
1.2
 (-4.2, 6.6) 
0.9
 (-4.5, 6.3) 
Core PCE inflation
(Q4/Q4)
3.7
 (3.4, 3.9) 
3.7
 (3.3, 4.2) 
2.2
 (1.5, 3.0) 
2.5
 (1.6, 3.3) 
2.0
 (1.1, 2.9) 
2.2
 (1.2, 3.1) 
2.0
 (1.0, 3.0) 
2.1
 (1.1, 3.2) 
Real natural rate of interest
(Q4)
2.5
 (1.3, 3.7) 
2.2
 (1.0, 3.5) 
2.2
 (0.8, 3.7) 
1.8
 (0.3, 3.2) 
1.9
 (0.3, 3.4) 
1.5
 (-0.1, 3.0) 
1.6
 (-0.0, 3.3) 
1.3
 (-0.4, 3.0) 
Source: Authors’ calculations.
Notes: This table lists the forecasts of output growth, core PCE inflation, and the real natural rate of interest from the September 2023 and June 2023 forecasts. The numbers outside parentheses are the mean forecasts, and the numbers in parentheses are the 68 percent bands.

Forecasts of Output Growth

Source: Authors’ calculations.
Notes: These two panels depict output growth. In the top panel, the black line indicates actual data and the red line shows the model forecasts. The shaded areas mark the uncertainty associated with our forecasts at 50, 60, 70, 80, and 90 percent probability intervals. In the bottom panel, the blue line shows the current forecast (quarter-to-quarter, annualized), and the gray line shows the June 2023 forecast.

Forecasts of Inflation

Source: Authors’ calculations.
Notes: These two panels depict core personal consumption expenditures (PCE) inflation. In the top panel, the black line indicates actual data and the red line shows the model forecasts. The shaded areas mark the uncertainty associated with our forecasts at 50, 60, 70, 80, and 90 percent probability intervals. In the bottom panel, the blue line shows the current forecast (quarter-to-quarter, annualized), and the gray line shows the June 2023 forecast.

Real Natural Rate of Interest

Source: Authors’ calculations.
Notes: The black line shows the model’s mean estimate of the real natural rate of interest; the red line shows the model forecast of the real natural rate. The shaded area marks the uncertainty associated with the forecasts at 50, 60, 70, 80, and 90 percent probability intervals.

Marco Del Negro is an economic research advisor in Macroeconomic and Monetary Studies in the Federal Reserve Bank of New York’s Research and Statistics Group.

photo of Gundam Pranay

Pranay Gundam is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

Donggyu Lee is a research economist in Macroeconomic and Monetary Studies in the Federal Reserve Bank of New York’s Research and Statistics Group.

Ramya Nallamotu is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

photo of Brian Pacula

Brian Pacula is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

How to cite this post:
Marco Del Negro, Pranay Gundam, Donggyu Lee, Ramya Nallamotu, and Brian Pacula, “The New York Fed DSGE Model Forecast— September 2023,” Federal Reserve Bank of New York Liberty Street Economics, September 22, 2023, https://libertystreeteconomics.newyorkfed.org/2023/09/the-new-york-fed-dsge-model-forecast-september-2023/.


Disclaimer
The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).

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