Most of the world leaders have acknowledged that the Ukraine crisis will cause “hyperinflation” this year. Central bank will reduce the number of interest rate hikes this year to tide over slower growth. Gold and silver are a buy-on dips strategy in the current global situation. I have my doubts over US economic data releases this week having a sustained impact on global financial markets. I expect a reduction in the global growth forecast for this calendar year.
Death and destruction in Ukraine will dictate the fate of gold prices. The more and quicker death and destruction is in Ukraine the quicker gold will rise and vice-versa. Do not mind my language but this is the sad reality. War is never a solution to long-lasting peace. But sometimes war is necessary to live peacefully. NATO has a history of creating an India-Pakistan-type neighbor to continue to sell its arms. Just remember that the jihadist nation of Pakistan is a creation of NATO. I have close relatives living near the Pakistan Border in Punjab in India. I understand the fragile Indo-Pak situation better than most. NATO is a poison that destroys peace wherever it goes. Russia is trying to prevent the Pakistanization of its border with Ukraine.
The division of Korea into North Korea and South Korea is a creation of NATO as well. NATO has a history of creating unnecessary wars be it Iraq, Vietnam, Libya, Syria and the list is endless. The difference now is that the Ukraine war will mark the last phase of the US dollar story. Its impact will be long-lasting like (i) Nations will make efforts to reduce their dependence on “swift banking system”. The message is simple you go anti-NATO and they will stop you from using the swift global bank settlement system. (ii) Nations will not increase their investment in US dollar assets and US treasuries. (iii) Protectionism will increase rapidly. The list is endless.
Gold or any instrument backed by gold will be the means of trade settlement between most nations. Gold’s long term rise is more about changing the global political situation than anything else.
US ECONOMIC DATA RELEASES THIS WEEK
- 28nd February (Monday): Chicago PMI
- 1st March (Tuesday): ISM Manufacturing (feb)
- 2nd March(Wednesday): February ADP jobs and Fed Beige Book
- 3rd March (Thursday): Durable Goods, Factory Orders and ISM Non-Manufacturing.
- 4th March (Friday): Non-Farm Payrolls (February)
Federal Reserve Chairman’s testimony to US Congress on 2nd March and 3rd March.
I will be closely watching the comments by the Federal Reserve chairman on an interest rate hike in March and the rest of the year. A direct view on interest rate hike will make the Federal Reserve meeting on 16th March useless. I expect US February jobs numbers to come in on the higher side of street expectation.
Higher crude oil price and higher commodity prices have a lagging effect on the economy. US economy and the world economy will show very high growth in the months of March to June only to start slowing from July. My logic is ever-rising cost of living will cause a global savings evaporation by June. From July people/masses will be spending only on survival expenses.
COMEX SILVER MAY 2022 (current market price $2437.00)
- Weekly Support: #$2165.70, $2213.20, $2269.40, $2301.50, $2338.20 and $2353.70
- Weekly Resistances: $2446.00, $2497.50, $2529.90, $2560.20, $2596.20 and $2717.20
- Fifty-day moving average: $2318.50.
- Two hundred day moving average: $2433.50
- Bullish View: Silver can rise to $2717.20 this week as long as it trades over $2318.50.
- Use a buy-on dips strategy with a stop loss below $2318.00 and a price target over $2600.
- Bearish trend or silver will crash in case it does not break $2540.90 this week.
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