Vince Lanci: JPM Metals Target Upgrade Yen Decline Gold Seasonality | Arcadia Economics
Summary
Transcript
We remain structurally bullish on gold and silver and see the ongoing consolidation as a buying opportunity with a target of $2600 per ounce by 2025 and $34 an ounce by 2025. Welcome to the Morning Markets and Metals with Vince Lancey, where each day he brings you the precious metals in financial news to get you ready for your day. And now, here’s Vince. Good morning. I’m Vince Lancey, and in today’s Market Rundown, we’re going to look at JP Morgan’s latest update on all commodities and a quick comment on gold seasonality, which may be coming around the corner.
I’m going to go through the markets now, and I’m going to leave up this gold chart while I’m doing that because, well, yesterday I said that we’re in a range and we’re breaking out of a range of a range, and that is what happened. We went to the bottom of the range over the last two days, and now we’re bouncing hard off of it. Does that mean we’re going higher? It means you should think that there’s a buyer here, and that buyer may or may not be significant this time, but staying in this range is bullish, not bearish right now.
That’s what I can say for you. All right, so let’s go through the markets. The dollar is $105.88 down 16. 10-year yields are $433 unchanged. SP500 is $5,470 up almost two handles. The VIX is $12.68 up 14 basis points. Gold is up $19 and getting stronger, as I speak, at $23.16. Silver is $28.88 up 13, up 12, 12.5. Copper is $4.36.90, offered unchanged. WTI remains strong, $81.66 up 44. Natural gas, $2.64, a little bit of a bounce after being slammed off its highs earlier on. Crypto, Bitcoin above $61,000 now, $61,153 up $350, up $340.
Ethereum is $34.01 up $34. Grains are mixed. They’ve been getting pummeled. Soybean, $11.61 up $2. Corn, $4.13 offered unchanged and wheat up $6. Yeah, there’s some buy recommendations that came out on grains, but I don’t see any activity taking advantage of it. This market today, yesterday’s markets, in context of yesterday, these moves today are bounce back. So the dollar was stronger yesterday because the end got crushed. So the dollar is giving a little bit of its strength back. Bonds were hurt yesterday, and they’re stable today, which is not much of a bounce, by the way.
The SP500 started out weak, finished strong. Gold had a very weak day yesterday, but again, it remains in this range. Silver had a weak day as well, but nothing crazy. And copper continues to languish in kind of a hangover off of its highs. Let’s go to the markets. We did the markets. Let’s go to the… Let’s go to the topics. JP Morgan on gold, silver, and copper, and oil. We have a report from JP Morgan’s cross-asset team, and it’s dated June 26. And it gives us the most recent updates on price targets for these markets.
So that’s what we’re going to touch on today, and that’ll be included in premium as well. Front page, China’s gold reserve numbers don’t add up. This is not new news. I mean, I talked about it yesterday because it’s being drummed up again, but it’s legitimate. They have a lot more gold than people know. They just do. And now people are starting to care about that again. I think it’s significant. Anyway, I think they’re smart to pay attention to it. It’s something important. And Friday, again, is a big day for the week, the month, the quarter, and the half year.
All right, so let’s go to this. JP Morgan on commodities. Now, the JP Morgan puts out a monthly report. The JP Morgan view, it’s their cross-asset. There’s a lot of well-written content in there, mostly equities and macro, but they give the most recent time check. Where are we in every asset class? And they do that as well in commodities as well. So let’s take a look at what they have. I pulled out the commodity section. We believe the recent pullback in commodities is just that, a pullback, and we continue to see a 10% appreciation in the broader BCOM commodities index by year end, Bloomberg commodities.
Given the latest sell-off, agricultural commodities like sugar and wheat move to the top of our preferred longs. So they rotate and rebalance. Every month they take profits. They move things around a lot. Sugar and wheat move to the top of our list of preferred longs. I think I just said that. With a projected 30% and 25% return, respectively by year end, we see Brent oil at $90 by September. We remain structurally bullish on gold and silver and see the ongoing consolidation as a buying opportunity with a target of $2,600 per ounce by 2025 and $34 an ounce by 2025.
Now, they don’t mention in this report if there are any expectations of price spikes to the upside, but every other bank has done that. They’re all talking about with a chance of X, Citibank led the charge on that three months. It was actually a pretty smart way to discuss it. Anyway, those are the most recent targets by JP Morgan. They haven’t updated in a while. At least not that I’ve seen. The current levels in copper present a good re-entry point towards our 11,500 target by Q3 2025. After rallying around 12%, US Henry hub natural gas moves from the number one buy to bottom of the list for now.
So you see how they’re rotating out. They’re like, let’s buy the wheat now. Let’s sell the natural gas. And that’s certainly a good way to look at things if you’re managing a big structural market portfolio. Okay, moving to the yen. Overnight, look, the yen has been weak. And I just wanted to touch on that. The yen has been weak despite measures to strengthen it. And you know, that’s just it’s just no bueno. And it’s all governments will intervene to stop something, but they never can. They can only slow its speed. So the end is going to keep going down until it’s done going down.
How fast it goes down. We don’t know. All right. So here’s a little bit of a yen update from Deutsche Bank. Overnight in Asia, the main story has been the weakness in the Japanese yen, which closed beneath the 160 mark yesterday at 160.81 per US dollar. Higher numbers mean weaker yen. That’s how it works. That is the weakest closing level since 1986 and means it’s now weaker than its levels earlier in the year that saw the authorities intervene. 1986, that’s really significant. I mean, wow. Yesterday saw finance minister Conda say that quote, I have serious concern about the recent rapid weakening of the end and we are closely monitoring the market trends with a high sense of urgency.
He also added that we will take necessary actions against excessive movements. This morning trading, the yen has slightly strengthened to 160.39 per dollar. What does this mean? This is what happens after yield curve control. You force your long-term yields to be too low unnaturally, and then you force all the money to exit your country through the currency and the currency gets sold. This is financial repression happening, like it happened and now it’s baked in the cake and now it has to come out. So them worrying about it is, you know, a little bit late for that.
This is what inflation looks like. Now, still, their inflation is not that bad, but you know what? They’re not like us. They’re not like us. This is what happens when you financially repress markets to hide or obfuscate inflation risk. Gold seasonality returns. All right, so this is a market comment. Gold’s a little bit tired right now. Israel, right, they might start a border war on the north. Ethiopia riots. Africa, I’m sorry, that is Africa. Japan, financial problems, Bolivia, coup, new instability, and no reaction. Now, you could say that gold’s having a reaction today, but I still see it as a bounce and a range.
All right, so after mid-year, here’s some context for you. After mid-year between July and September, historically, gold has had some nice summertime moves higher. So I’m not bearish, right? But it’s a little bit of a crapshoot right now, but after September, gold and silver almost always put a top in and begin to sell off for a bit. Now, it won’t be like that this year, but there’s an overlay that’s involved in that. The buying is still in this market, but the urgency, for whatever reason, is a little muted now. It’s quite possible the correlations will return and lull people into a sleep that everything is okay when it clearly is not.
There will be an election in November, and it will most likely be contested and not over until the new year, it’s my opinion. The BRICS summit will occur before that in October, and there will be announcements regarding the use of gold and likely silver in a BRICS trading platform, Enbridge. These things are not changing. Watch for gold and silver to drop from a lack of activity right now, and a sense the Fed may not ease pre-election. But reality comes in October and November this year. It will not be repealed. That continues in premium with the report.
So there’s your market news. Japan, Nvidia holding the market up, Amazon, oh, here we go. Amazon is getting ready to sell stuff in China. So despite what China says about not being a consumer economy, it’s going to have to be. All 31 of the so-called stress tests, mind you, this is a farce. I’m not even getting into it. Morgan Stanley is pushing further into its adoption of artificial intelligence with a new assistant that is expected to take over thousands of hours of labor for the bank’s financial advisors. Parentheses, you’re fired. Close parentheses.
What they’re doing is there, instead of having, you know, when you do these, when you do video meetings, you either take notes or you have an intern take notes or someone at a lower pay level take notes. Well, that person’s gone. That person’s fired. That person is being replaced by artificial intelligence. It’s already in the Zoom platform, but they probably have their own version of it. And that’ll be a note taker and a summary writer. They’re going to, look, AI is going to destroy middle office and low to middle level employees in the service industry in finance.
This is all tied in with the economy going from service to manufacturing. Okay. Unemployment is going to go up in the industry, right? What’s manufacturing in the seventies? It’s done. You know, if you’re a financial person, if you’re purely a financial person, you have nothing else that you want to do, well, move to Singapore because that’s where the goal is. That’s where the money is. And that’s where the work will be. All right. Moving on. Data on deck today, pending with themselves, May 1%. Yesterday was new home sales in May, and they were extremely weak.
Again, giving an impetus for the Fed to possibly ease, but the markets didn’t really see it that way. So I think the markets are kind of focused on tomorrow’s PCE. And that’s it. There’s nothing really crazy to talk about. I mean, there’s a lot of crazy things going on, but there’s nothing that’s really affecting the market slot. And gold to 17, that’s really good. And it acted very well at that area. Silver is actually the riskier market right now. I’ll show you what I mean. You know, this is, this says here, I’ll go to the daily first.
Sorry. All right. This had been an area that we identified similar to, but not the same as the gold area. You know, the bind maybe my line is wrong. Maybe my line needs to be down here. You know, right there. I move lines because I don’t swear by them. But the point is that’s where the buying came in. And now that buying that used to be up here is down here. So someone is clearly averaging in to buy silver as they are averaging in to buy gold. That’s very encouraging. And it makes me not bearish, even though in markets like this, I kind of get a little bearish.
So that’s it. I’m Vince. Have a great day. Help whenever you have questions or want to place an order. Where this week’s silver special is ETEL Pretziosi Silver Kilo Bars for only $1.79 over spot. And certainly with premium still on the low side, while the price is pulled back, if you’re looking to add to your silver stack, the ETEL Pretziosi Kilo Bars are a great way to do so. And you can find out more by calling us at 833-326-4653 or emailing our Katie at milesfranklin.com. And as always, thanks for watching. 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 advisor before making any decisions. And thanks for watching. [tr:trw].
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