➡ Michael Hartnett predicts a rise in gold value, which is supported by Goldman Sachs and Morgan’s Daily suggesting a shift in investment portfolios to include more gold. This is due to the Federal Reserve’s decision to cut interest rates, which is expected to boost the value of gold and silver. Meanwhile, the World Gold Council reports a decrease in physical gold demand in China and an increase in India. The market is now closely watching the Federal Reserve’s actions and their impact on the economy.

Today we’ll be discussing that headline. Jeffries puts gold at $6,600, but M2 points to nearly $12,000. Welcome to the Morning Markets and Metals with Vince Lanci. Where each morning Vince brings you the financial and precious metals news to get you ready for your day. And now, here’s Vince. Good morning everyone. I’m Vince Lanci and this is the Monday Morning Gold Fix market rundown. It’s 818. Today we’ll be discussing that headline. Jeffries puts gold at $6,600, but M2 points to nearly $12,000. We added some analysis to that. There’s the home page. We’re talking about the story in the top center and touching on a couple of other stories.

Lower left-hand corner, we just sent that out. We won’t be commenting on that now. Let’s go to the markets. Ten year yields are unchanged at $4.13. The dollar is $97.47 down $17. The S&P 500 is $66.41 down almost $20. The VIX is $16.16 up $70. Gold is $37.18 up $33 and change off its highs of $41 at one moment. Silver is $43.49 off its highs of $43.03 currently. Copper is $4.55 unchanged bid. WTI is down $41 at $62.38. Natural gas is $288. Bitcoin is $112, $700 down $2,500. Ethereum is $41.90 down $250. Palladium up $24.

Platinum up $12. That spread is now almost $250. Gold silver decidedly softer. Well, it was decidedly softer, but it looks like silver is getting back a little bit. Gold silver is $85 and change. Grains are offered to varying degrees. Soy is down one in 140 basis points. Corn is down 70 and wheat is down 70 basis points. So late last week, Chris Wood, who I’ve been reading for years out of Jeffrey’s, he’s positioned in Asia and he’s very well coordinated with the Asian markets and gold. And he’s been, you know, he’s one of the older guys doing it for years.

Anyway, they adjusted their model and said that gold should peak at $65.71. Let’s read a little bit of that. Chris Wood ties gold’s secular peak to U.S. disposable income and says the tie will be $65.71. We show money supply math paints a much higher price. Now, Jeffrey’s Chris Wood reaffirmed his long-term gold framework this year, noting the metal would need to reach about $6,600 per ounce to match its 1980 peak share of U.S. disposable income. That report, which we shared, highlights gold’s advance from $3,700 today, but frames $6,600 as a secular benchmark, not a trading target.

Gold fix did a comparative analysis that shows a more aggressive lens, similar to what other people talk about M2 is. Applying the same method that Chris Wood used, Chris Wood used, not Woods, using a more aggressive lens, using M2, suggests $11,900 per ounce. The divergence underscores the gap between using household wealth and systematic liquidity approaches. Here’s what I mean. In 1980, M2 and disposable income lined up with gold at $880, whatever it was. Over the years, see those lines there? Over the years, disposable income lagged. It’s the orange line, the pinkish line, and M2 increased.

I would suggest to you that the gap between the blue line and the purple line there, pink, whatever it is, are a reflection of the disparity in buying power of Americans since all that money was created. Between 1980 and 2000, they both have a similar slope in this graphic, but after, say, approximately 2009, after the great financial crisis, buying power remained the same by this measure, disposable income as M2 rent. So the question is, will gold go to $65.71, which is tied to our disposable income, prorated back from 1980, or will gold go to M2, which was also tied to gold’s price in 1980? Most people would say M2, and that’s why we say that even though Jeffrey’s number is a reasonable, solid target based on because every time we talk about this, have this conversation, more and more people are discussing literally going back to a hard money store of value, which is what you want is coming.

Whether inflation or stagflation for the economy, gold’s long-term ceiling may prove much higher than most expect. Full analysis is in the premium post. Jeffrey’s talking about gold. We had many other stories this weekend on various topics that all focus on gold from different angles. I’ll give you a line from each one of these so you can see what you’re looking at there. Hartnett by the bubble, but hedge it. That’s Michael Hartnett saying that we have committed to permitting a bubble and tolerating inflation. And if you’re a long mag seven, which who isn’t, this is what you should do to compliment that.

You should hedge it by either doing X or Y. X is gold and Y is buying small cap stocks. So that’s a must-read if you have 401k money and you’re considering divesting from mag seven stocks. What should you put in it? Well, gold’s rally is nothing like the 1979 blow-off. Now that may be changing as we’re talking here, but be clear. One of my concerns was that this rally was like 1979 and dad attracted a nice piece on that. And we broke it down and wrote it up and added some graphics.

And the answer is using the past as prologue, which is always dangerous. Your intuition that this is a blow-off top is not a blow-off top, I should say, is correct by the measures that matter. Third story, Deutsche Bank gold to average 4,000 silver 45 and 2026. The mainstream legacy media had some headlines to the effect last week that gold to go to 4,000 and silver to $45 and 26. No, it’s gold to go to 4,300 and silver to go to 4,826, average 4,045, respectively. We have that full report broken down logically and intuitively for anybody who wishes to understand that from a bank analysis point of view.

The next piece there, pal to save jobs now, worry about inflation later. We really liked that. That was TS Lombard, Steven Blitz. And we have been saying, we said it today, that inflation is going to be tolerated higher because we need to grow ourselves out of it. Well, Steven puts it from a macro economics point of view. And the macro economics point of view essentially says the same thing that I just said, but he puts it in a sense of actually disposable income, the fact that we’re not spending more, the fact that the wealthy are hoarding, they’re not leveraging.

And he underlines the problem as being, while we’re growing the manufacturing part of the economy, we must keep the consumer part of the economy going. So the car that’s driving down the street needs to have an engine swap while it’s in the middle of the race. And so we think that’s a very relevant piece from a point of view that we had considered enough. China solar downgraded on overpricing and weak demand. This is a concern. One of the things that people that think China is struggling, and China is struggling from many points of view, is that if China can’t sell stuff to the US, who’s it going to sell to? Well, it can sell to all the BRICS, but not at the price that they’re charging.

So there is deflationary risk in their economy in general, even though market isn’t showing it right now, but in solar specifically. And so Goldman Sachs downgraded China’s solar companies saying their prices are too high, they’re not going to move it. And that’s a negative for silver. Now, does the market care about it right now? No, of course not. That’s down the road type of stuff. It also means down the road, they’ll be looking for ways to conserve and use less silver in their production. So innovation has got to come down the road.

Finally, China’s new gold multi-pass, that’s what we call it, loosens import restrictions. One of the reasons you have a differential between Shanghai gold and say London gold, or forget London gold, it’s there, but it doesn’t really matter. COMEX spot versus Shanghai gold is because China has capital controls and you can’t just go out and buy gold anytime you want it. They throttle it, they organize it, and they release it with allocations. And those allocations tend to cause a rush. And so the domestic price goes higher. And one of the ways to stop the domestic price going higher is to let that demand filter into the market and not have to be allocated every month or every quarter.

You can do it maybe once every half a year. And they’re loosening their capital controls a little bit. And in doing that, the Shanghai premium should close relative to the rest of the world. That means Shanghai should drop because there’s no more piling in waiting to go. I need to buy the gold now. I need to get my order in now, as opposed to a more continuous liquidity. And so the Shanghai premium should drop, but the rest of the world should rise. So the whole thing should converge at a higher price if China’s demand is real.

If China’s demand is not real, then it converges at the lower price. And that’s the idea. That’s what happens. You’re creating a more robust market that way. Those are some of the stories that we had out. We want to bring your attention to this one in case you missed it. This is down the road, but not down the road that far the way things are going. About a month ago, Michael Hartnett said he believed gold revaluation would happen. And he said why it would happen. And we had been studying that for a while as well.

And he doubled down on it when people said it wouldn’t happen, like Scott Beset. And so we broke it down with some graphics. And in case you missed it, if you’re wondering why gold’s rallying, well, maybe the concept of revaluation is a problem for people that don’t own enough gold. Coming soon, rethinking the 60-40 portfolio, Morgan’s Daily basically came out and stole a page from, I wouldn’t say stole, borrowed a page from Goldman Sachs. Goldman Sachs about a month ago said the 60-40, quoting them, the 60-40 portfolio is dead. And so they were saying without putting a number on it, they were saying you need to swap some bonds for gold and swap some bonds for oil, but mostly gold.

And they were basically saying it’s 60-20-20. Morgan’s getting a lot of press now. I will be writing about that. But essentially, the west is being put on notice to buy gold. Have you noticed that? I don’t think it’s random. UBS raised their silver price target last week. We have that report. UBS reiterates go for gold. They don’t change their target there. Post-fed rate cuts, what to do. That’s a piece we’re working on. HSBC raises silver targets. But HSBC is way behind the curve on that. They’re not raising their silver targets aggressively.

But it’s interesting to read their fundamentals. And we noticed that the World Gold Council put out two reports. And one was China, physical demand is dropping and India, physical demand is growing. And we tend to think that they work together on that. Anyway, those are the stories coming this week. This week, data, PCE, which is an inflationary indicator and can pretty much be extrapolated from the previous data. We don’t think that’s the most important data, at least for the market gyrations, because the Fed is throwing in the towel on inflation, so to speak, and they’re focused on the economy now.

So PMI and new home sales might be more important this week. Because at this point, the market is focused on the Fed’s dovish cut, 25 basis points with another 75 coming, which is odd because the Fed is now converging with the marketplace. In doing that, the market’s now taking cues from that. I mean all markets. And so if you’re a stock person, you’re looking at that saying, OK, if the PMI comes out bad, bearish news is bullish for stocks. Stocks should rally. If the PMI’s come out strong, and the economy is doing well, then stocks should sell off.

So they’re worried about him trimming one of his three cuts. That’s how I would take it. Let’s take a look at the chart. There’s the four month range that we charted so well. I mean, if it’s not going anywhere, your lines are perfect, right? And here we are now. So we’re well off the highs. One of the things we talked about on Sunday, I just sent that out to founders, and I’ll send that out again in the CFTC conversation, was well, there were two things worth bringing up. One was this high. And one of the founders, Nigel, was very focused on it.

And he was right to be focused on it because this is the day that the Fed cut. And the market rallied on the news, interpreting it as bullish, and then slammed one day, two days. And this high was 370749 on my chart. And we had a very nice five minute conversation about this. So we pretty much all put our heads together, and this is what we came up with. And I said it at the end. I said, okay, this is the hawkish based on his speech. And the market came off for two days during these two days Shanghai sold, that’s what I observed.

And then this day, befuddling everyone, the market just took off again. And so the question is, who was selling here at 3707? And the answer is either it’s a producer that’s going to be there after the Fed, or it’s someone who isn’t going to be there after the Fed, because they were just selling into these two days lower. And so our conclusion was you buy the Sunday open, which you know, which you should have done. Well, you do what you want to do. You watch to see how it behaves during Europe. You’re nervous during Europe, right? And then at the 4am mark, you watch it again, because the 4am mark will be your indication of if there’s US buying coming in.

And so there is US buying coming in, because the market makers bought in anticipation that we get above 3707. And that selling is not there. So your caveat for the rest of the day is you’re bullish unless we get below 3707. Because at that point, then maybe your producer, if it was a selling producer will come in and say, I’m going to sell it here and drive it down the 3707 and then stop their selling there. Who knows? But that’s what’s going on. Silver, well off its eyes now, but this is where we are.

I mean, you know, Fed cutting is more bullish for silver than gold. And that’s all I have to say about it. But I do want to come back to gold. The other point I wanted to make the second point is I hadn’t looked at it in a long time. But when you’re looking at the commitment of traders, you look at other reportables, you look at funds, you look at the swap dealers, and you look at the producers, and you look at the end users, and you see how they interact. And how they interact tells you if the market is normal, nervous, bearish, bullish.

And the numbers just wouldn’t line up for me. And then they’re on the far right, you know, there’s a category called non-reportables. And I’ve neglected that for years. But the non-reportables bought 24 to 25,000 contracts last week. And the non-reportables are the retail of the retail. They’re the one lots retail that are so small, they don’t have to report what they are. I’m a head juror, I’m a speculator. They don’t have to report it because they’re one lots. That was the retail buying 24,000 contracts going into Fed week because the retail is back.

So they were buying ETFs because they were told to buy ETFs and they were covering their one lot shorts. And how many contracts did the bullion bank sell last week? 24,000. And that’s 24,000 contracts, they ain’t getting back. They can only get them back if a fund sells them to them now. So that’s it. This market is changing perspective now. If I was trying, I’d consider selling them to the rally, but they’re not. So why not? Because something big is going on. As we said, things are happening faster now and they’re materially happening.

We’re not sure what it is, but anyway, I’m Vince. Have a great day. Well, thanks for watching this morning’s Markets and Metals with Vince Lancy. We sure appreciate you tuning in and starting your day with us here. Hope you enjoyed the show and we’ll see you again tomorrow. Please note that this video is not intended as legal licensed financial trading advice and is to be used for informational purposes only. Please contact your financial advisor before making any decisions. And thanks for watching. [tr:trw].

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