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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 $1712 per ounce however the white metal is hovering around 15.40.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 losing 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. 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.
Our macro model forecast Confirms Downturn Is already here.we believe that Coronavirus could push unemployment above Great Depression levels however recovery would be quick.The Precious metals and selected crypto-assets should be preferred in the investment portfolio and from a technical perspective, we believe oil prices present the biggest opportunity for investors.
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. we will keep you updated stay tuned!
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