Vince Lanci: Gold, Silver Bullion Banks Become 'Unabashedly' Bullish

Summary

In the latest 'Morning Markets and Metals' update by Vince Lancy, he discusses the bullish stance of major bullion banks and their significant increase in gold price forecasts, with a potential spike to $3,000 per ounce under certain geopolitical conditions. Vince also addresses the challenges faced by Barrick Gold in Mali, where the military regime is tightening its control over the mining sector. He highlights the broader implications for the mining industry, emphasizing the need for companies to have strong local ties, secure finances, and the ability to scale operations vertically. Additionally, Lancy touches on the current state of various markets, including stocks, oil, and cryptocurrencies, and provides insights into the potential for market manipulation and the shifting dynamics between Wall Street and Main Street. He concludes with a technical analysis of gold and silver prices, suggesting caution for investors until certain market conditions are met.

Takeaways

• 📈 Major bullion banks are showing a strong bullish sentiment towards gold, indicating a potential cultural change in the industry.
• 🏦 Citibank has updated its gold price forecasts, significantly raising them for 2024 and 2025, suggesting a 6.8% increase for 2024 and a 40% increase for 2025.
• 💼 The bank's bullish stance on gold could imply that they would need to negatively impact their larger clients first before affecting the average investor.
• 🌍 Geopolitical tensions and sanctions are affecting the mining industry, with countries like Mali seeking to exert more control over their mining sectors.
• 🛑 The situation with Barrick Gold in Mali highlights the increasing pressure on mining companies as governments seek to maximize profits from their natural resources.
• 💰 The rise of protectionism and mercantilism is leading to higher prices and increased control over natural resources, affecting mining companies' operations.
• 📉 Mining companies that are well-managed, have secure finances, and strong ties to local governments are better positioned to navigate the current geopolitical climate.
• 📈 There is a belief that silver may lead the precious metals pack when the market goes up, despite current uncertainty.
• 📉 The VIX, a measure of market volatility, is being manipulated to keep stock prices up, which could be a strategy to maintain a positive outlook before an election.
• 🌐 There is a shift happening in the global economy with services being offshored and manufacturing being onshored, impacting various industries differently.
• 📊 Technical analysis is important for understanding market trends, with key levels identified for gold and silver that can guide investor decisions.

Q & A

What is the current stance of major bullion banks regarding gold?

The major bullion banks are being unabashedly bullish on gold, indicating a cultural change within these institutions.

What is the significance of the $3,000 price target mentioned by City Bank?

The $3,000 price target mentioned by City Bank represents a potential spike in gold prices under certain geopolitical or macroeconomic conditions, as outlined in their proprietary geopolitical macro report.

How have City Bank's gold price forecasts changed for 2024 and 2025?

City Bank has upgraded its baseline gold price forecasts to a bull case scenario, with a 6.8% increase to $2,350 per ounce for 2024 and a massive 40% upward revision to $2,875 for 2025.

What is the current situation with Barrick Gold in Mali?

Barrick Gold is under increasing pressure in Mali as the country's military regime seeks to tighten its control over the mining sector, potentially aiming to seize control of Barrick's key mining complex.

How does the geopolitical landscape impact the mining industry?

Geopolitical tensions can lead to sanctions, restrictions on metal trade, and limitations on the use of monetary platforms, which can affect the mining industry significantly, especially for companies operating in volatile regions.

What is the current state of the VIX and its implication for the stock market?

The VIX has been decreasing, which can indicate lower market volatility and potentially a manipulated environment to keep stock prices up, especially in the lead-up to an election.

What are the key factors to consider when identifying good mining companies?

Good mining companies should have strong ties to local governments, an ability to scale distribution vertically, secure finances, and a grasp on technological implementations for efficient operations.

Why might banks not promote miners despite the bullish outlook on gold?

Banks may not promote miners because their focus is typically on the metal price itself rather than the operational success of mining companies.

What is the general trend in the mining industry regarding self-sufficiency?

There is a move towards self-sufficiency in the mining industry, with companies aiming to have control over mining, refining, and distribution to reduce reliance on external factors.

How does the speaker suggest investors approach the mining sector given the current market conditions?

The speaker suggests that investors should look for mining companies with strong fundamentals, secure finances, and good management, while also being aware of the broader geopolitical and market risks.

What is the potential impact of the shift towards protectionism on natural resource prices?

The shift towards protectionism can lead to higher prices for natural resources as countries look to extract more value from their resources, leading to less sharing and potentially higher costs for consumers.