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“The Gold reset is a process, not an event”
Today
Discussion: Entrenched inflation and WGC 2025
Premium: WGC 2025 Gold Outlook
Discussion:
WGC Gold Outlook 2025
The World Gold Council predicts a range-bound but resilient performance for gold in 2025, contingent on four key drivers: economic expansion, risk, opportunity cost, and momentum.
Gold is poised for its best annual performance in more than a decade – up 28% through November. Behind this, central bank and investor buying have more than offset a notable deceleration in consumer demand. Asian investors have been a near constant presence, while lower yields and a weakening US dollar in Q3 fuelled Western investment flows. However, it is gold’s role as a hedge amidst rising market volatility and geopolitical risk that most likely explains its remarkable performance.
The report concludes, "Gold’s role as a hedge remains firmly cemented, particularly in an environment of geopolitical uncertainty and financial market volatility." Potential risks, such as central bank demand deceleration or prolonged monetary tightening, could introduce headwinds, but the interplay of these factors underscores gold’s strategic value.
Continues at bottom…
Inflation is Getting Entrenched
There is a good leading indicator for US inflation. It includes in its inputs commodities, money growth, and lagged inflation. As the chart below shows, that indicator had moved sideways and has remained above 2% for the last 18 months.
CPI auto-correlates which is one of the reasons why inflation can become entrenched, as it looks to be today.
Full Analysis:
News/Analysis:
Equity Recap:
US equities retreated on Thursday after a hotter than expected inflation report. Large caps bested small caps: S&P 500 (-0.54%) vs. Russell 2000 (-1.38%). MSCI Emerging Markets (EEM) and MSCI EAFE (EFA) declined 0.50% and 0.88% respectively.
Market News: AI is Dangerous
"The producer price index increased 0.4% for November, higher than the Dow Jones consensus estimate for 0.2%. However, excluding food and energy, core PPI increased 0.2%, meeting the forecast. First-time claims for unemployment insurance totaled a seasonally adjusted 242,000 for the week ending Dec. 7, versus the 220,000 forecast and up 17,000 from the prior period." CNBC the bottom is in
"OpenAI has finally released the real-time video capabilities for ChatGPT that it demoed nearly seven months ago- infectious tentacles spread
"Warner Bros Discovery said it is restructuring into two operating divisions, one focused on the legacy cable TV business and the other on streaming and studios.WSJ- out with the old
"Apple’s ambitious plan to create in-house components for its devices will include switching to a homegrown chip for Bluetooth and Wi-Fi connections starting next year: Bloomberg- Era of Hardware
"Beneath a stock market that goes from one record to the next lies a concerning trend for some Wall Street strategists: Fewer stocks are buttressing the advance. Bloomberg- 12 months later….
"The European Central Bank cut interest rates by a quarter-point to 3 per cent, as it watered down its hawkish language and warned that growth would be weaker than it had previously forecast. FT- dooomed to be out of sync withFED
"Trump’s economic advisers are considering doubling the state and local tax deduction, a popular — but expensive — tax break that could deliver big savings to many residents of New York, New Jersey, and California. Bloomberg- interesting but incomplete
Politics/Geopolitics:
US President-elect Trump said "For the great privilege of accessing our markets, these foreign companies should hire our incredible American Workers, instead of laying them off, and sending those profits back to foreign countries", via Truth Social.
US President-elect Trump is weighing options for stopping Iran from being able to build a nuclear weapon, including the possibility of preventive airstrikes, according to WSJ.
US Secretary of State Blinken says that in the last few weeks he has seen encouraging signs that a Gaza ceasefire is possible
Israeli Defense Minister orders Israeli troops to prepare to remain on Mount Hermon during winter months, via Reuters citing a statement
Russian attacks on Ukrainian energy facilities were more focused on gas infrastructure this time, via Reuters citing sources.
US Sectary of State Blinken says that in the last few weeks he has seen encouraging signs that a Gaza ceasefire is possible.
Data on Deck:
MONDAY, DEC. 9 10:00 am Wholesale inventories
TUESDAY, DEC. 10 8:30 am U.S. productivity (revision)
WEDNESDAY, DEC. 11 8:30 am Core CPI
THURSDAY, DEC. 12 8:30 am Core PPI Nov.
FRIDAY, DEC. 13 8:30 am Import price index1
FINAL MARKET CHECK…
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