Thursday, December 17, 2015

"More Gloom & Doom For Gold & Silver In 2016 – Deutsche Bank Outlook"

We've been looking for $875 since 2012 and frankly, the delay is cutting into annualized returns. 
On the plus side, the extended nature of the decline has allowed producers to adapt such that a couple weeks ago Newmont said their all-in costs are now under $1000/oz., insuring that supply keeps coming out.

Additionally as we noted in the intro to that post:
Any strengthening of the buck and we test all the congestion around $1000 from 2008-2009...
Here's the two week hourly chart, we're right at the multi-year lows hit on Dec.3:

$1051.20 down $25.60.

From Kitco:
Thursday December 17, 2015 09:15 
(Kitco News) - Although they expect commodity prices to recover in the coming year, analysts at Deutsche Bank see an unfavorable backdrop for precious metals in 2016.
In the German bank’s 2016 outlook, analysts expect the commodity negative cycle to come to an end. 
“[M]ost commodities are now trading below long-term real average prices. This has prompted many investors to question whether commodities remain a valid asset class. Our response: ‘we may be in the sin bin, but we are not out of the game,’” they said in the report released Wednesday. 
Although it is too early to call a bottom, the analysts said they “think 2016 will bring a flurry of corporate activity including bankruptcies, raising of equity capital, asset sales and M&A, all signs that the commodity cycle is getting closer to finding a floor.” 
However, they do not share the same positive sentiment towards precious metals as they expect gold and silver prices to move lower on the back of stronger equities and a rising interest-rate environment in the U.S. 
“Our view on the pace of normalization in the Federal Reserve policy rate implies that market expectations need to move closer to the FOMC dot plot. This directional adjustment has clearly been negative for precious metals in recent months, and we fully expect that it will continue to be the case next year,” they noted. 
According to the analysts, further rate hikes in the U.S. will help drive gold prices to $980 an ounce by the fourth quarter of 2016....MORE