September 25, 2022

March 2022 in Precious Metals, by Steven Cochran

Welcome
to
SurvivalBlog’s
Precious
Metals
Month
in
Review,
where
we
take
a
look
at
“the
month
that
was”
in
precious
metals.
Each
month,
we
cover
gold’s
performance,
and
the
factors
that
affected
gold
prices.

What
Did
Gold
Do
in
March?

Volatility
was
the
theme
for
March,
as
sanctions
against
Russia
and
disruptions
in
food
and
fuel
supplies
caused
by
the
war
rocked
global
economies.
Sanctions
imposed
on
Russia
had
the
effect
of
pressuring
the
economies
of
the
sanctioning
countries
as
well.

Western
sanctions
on
Russia
for
its
invasion
of
Ukraine
sent
safe-haven
assets
higher
early
in
the
month.
Gold
traded
over
$2,000
in
Europe
on
Monday
the
7th,
with
oil
selling
for
more
than
$130
a
barrel.

A
short
round
of
peace
talks
between
Ukraine
and
Russia
fell
through
in
mid-March,
but
not
before
gold
lost
$98
over
eight
sessions,
bottoming
out
at
$1,895
on
March
16th.

Gold
rose
to
above
$2,000
an
ounce
after
peace
talks
broke
down
and
inflation
scares
grew.
They
briefly
fell
below
$1,900
again
as
a
new
round
of
peace
talks
began,
but
recovered
as
recession
fears
climbed
at
the
end
of
the
month.

Factors
Affecting
Gold
This
Month

Heightened
market
concerns
that
the
Fed
would
be
aggressive
in
hiking
interest
rates
were
temporarily
overshadowed
as
the
economic
fallout
from
the
Ukrainian
War
took
center
stage
in
March.


UKRAINE

Russia’s
invasion
of
Ukraine
was
met
by
the
strongest
and
most
wide-ranging
series
of
economic
sanctions
seen
since
WWII.
The
combination
of
war
and
sanctions
has
resulted
not
only
in
shortages
of
oil,
natural
gas,
and
coal,
but
also
of
basic
foodstuffs.
Both
Russia
and
Ukraine
are
major
wheat
exporters.
This
will
result
in
energy
and
food
prices
rising
even
faster
than
before
the
war.

Higher
prices
for
essentials
and
the
banning
of
trade
with
Russia
will
hit
Europe
especially
hard.
Not
only
does
the
EU
rely
on
Russia
for
oil
and
natural
gas,
but
Russia
is
a
major
trading
partner.
The
US
is
largely
insulated
against
major
economic
hits
from
sanctions
on
Russia.
We
only
imported
around
4%
of
our
oil
from
Russia
before
banning
it,
and
do
much
less
trade
with
Russia
than
the
EU
does.

That
isn’t
to
say
that
there
haven’t
been
repercussions
for
US
companies.
Many
banks
and
financial
institutions
are
among
the
companies
feeling
major
pain
from
the
sanctions.
Oil
companies
are
walking
away
from
billions
of
dollars
of
investments
in
Russia,
with
no
chance
of
recovering
their
money.
Automakers
and
consumer
goods
companies
are
also
suffering
major
losses
from
closing
their
Russian
operations.


INFLATION

Already
high
prices
for
oil,
natural
gas,
coal,
industrial
metals,
and
food
only
got
worse
when
sanctions
were
levied
against
Russia
(one
of
the
reasons
Russia
didn’t
think
the
EU
would
do
it).
With
inflation
at
30-year
highs
across
most
of
the
world,
the
shortages
of
vital
goods,
especially
food,
is
going
to
make
lives
worse.

Increasingly
higher
prices
are
also
going
to
slow
down
economic
growth
in
a
world
that
was
recovering
nicely
from
the
COVID
pandemic.
Will
the
danger
of
choking
off
economic
growth
force
central
banks
to
slow
down
their
planned
rate
hikes,
or
is
spiraling
inflation
a
greater
threat?


STAGFLATION?

The
yield
spread
between
the
5-year
Treasury
and
30-year
Treasury
notes
inverted
for
the
first
time
since
2006
late
this
month.
This
is
a
traditional
signal
of
an
impending
recession.
The
more
important
spread
between
the
2-year
and
10-year
notes
briefly
inverted
on
the
29th,
while
the
5-30
spread
remained
inverted
through
the
end
of
March.

Companies
abandoning
billions
of
dollars
in
investments
in
Russia
is
going
to
crush
performance
for
months,
and
drag
down
growth
even
more
than
was
expected
as
recently
as
February.

COVID
is
getting
one
last
swing
at
cutting
economic
growth,
as
China’s
lockdown
of
Shanghai
is
causing
“parts
pain”
for
US
manufacturers,
especially
automakers
who
were
just
starting
to
get
over
a
microchip
shortage.

At
the
same
time
these
recessionary
pressures
are
building,
inflation
in
the
US
and
across
the
world
continue
to
rise
from
30-year
highs.

Central
Banks

The
Fed
is
aware
of
the
stagflation
tightrope
it’s
being
forced
to
walk.
It
bumped
its
inflation
forecast
for
2022
to
4.1%
from
2.7%,
and
reduced
its
estimate
of
2022
GDP
from
4%
to
2.8%.
This
forecast
was
issued
in
the
shadow
of
wholesale
price
inflation
in
the
US
being
reported
at
10%.

More
Fed
officials
are
getting
on
board
with
aggressive
rate
hikes
now,
to
choke
off
high
inflation
while
growth
in
the
US
economy
is
still
positive.
No
one
wants
a
repeat
of
the
Volcker
years,
where
the
Fed
was
forced
to
double
interest
rates
from
10%
to
20%
in
two
years
to
tame
runaway
inflation
from
the
LBJ
and
Nixon
years.

This
is
being
reflected
by
numerous
Fed
officials
backing
a
policy
of
hiking
rates
aggressively
now
to
stop
inflation
before
it
gets
too
high.
Better
some
pain
now
rather
than
a
huge
amount
of
pain
later.

Cleveland
Fed
President
Loretta
Mester
stated
this
month
that
higher
oil
prices
risk
pushing
inflation
higher
for
longer,
meaning
that
interest
rates
may
need
to
move

above

long-run
neutral
to
get
inflation
under
control.

Former
dove
St.
Louis
Fed
president
James
Bullard
is
calling
for
the
Fed
to
hike
interest
rates
to
3%
by
the
end
of
the
year.
That
would
take
four
50
bp
hikes
and
two
25
bp
hikes
by
the
end
of
the
year.
Bullard
maintains
that
the
danger
of
runaway
inflation
is
greater
than
pushing
the
US
economy
into
recession.
He
also
says
that
balance
sheet
reduction
should
have
started
this
month.

Saying
that
“inflation
is
raging,”
Fed
governor
Chris
Waller
believes
that
the
Fed
will
need
to
hike
interest
rates
by
50
bp
at
least
once
this
year.
He
said
he
only
voted
for
a
25
bp
hike
this
month
because
of
the
uncertainty
of
the
effect
of
the
war
in
Ukraine
on
the
US
economy.
He
also
urged
balance
sheet
reduction,
saying
it
needs
to
start
in
June
at
the
latest.

The
ECB
is
going
to
have
a
far
more
difficult
time
than
the
Fed
re:
energy
cost-driven
inflation.
The
month
wrapped
up
with
economists
across
Europe
chastising
the
ECB
for
not
raising
rates
yet,
warning
that
extreme
rate
hikes
will
be
necessary
later
if
they
don’t
hike
rates
now.
(This
is
the
reason
the
Fed
is
so
hawkish
on
interest
rates.)
S&P
Global
Economics
forecasts
the
ECB
to
start
hiking
rates
by
25bp
per
quarter
in
December,
aiming
for
1.5%
by
the
middle
of
2024.

The
Bank
of
England
raised
interest
rates
25
basis
points
this
month,
for
the
third
hike
in
a
row.
Inflation
in
the
UK
is
still
running
at
30-year
highs.
The
BoE
expects
inflation
to
hit
8%
by
mid-year.
Inflation
in
March
jumped
from
5.5%
to
6.2%.

The
Bank
of
Canada
raised
rates
again
to
fight
runaway
inflation,
vowing
to
“act
forcefully”
with
“unwavering
commitment”
on
bringing
inflation
back
to
2%,
including
selling
down
balance
sheet
“quantitative
tightening”
if
necessary.
The
statement
is
fueling
speculation
of
a
50bp
rate
hike
at
the
next
meeting
in
April.

The
Russian
central
bank
kept
interest
rates
at
20%,
after
doubling
them
to
fight
the
meltdown
of
the
ruble.
The
ruble
hit
an
all-time
low
of
158
to
the
dollar
in
early
March.
In
the
accompanying
statement,
the
bank
said
that
it
did
not
expect
interest
rates
to
return
to
its
target
4%
for
the
next
two
years.

Central
Bank
Gold
Purchases

This
month’s
World
Gold
Council
central
bank
gold
report
covers
January
2022.
Turkey
was
the
big
buyer
to
start
the
new
year,
adding
10.4
tons
of
gold
to
reserves.
Argentina
bought
7
tons
of
gold
to
replace
the
7
tons
they
sold
in
December.
Similarly,
Russia
sold
the
3.1
tons
of
gold
they
purchased
in
December.

The
ECB
purchased
a
half-ton
of
gold
in
its
fifth
consecutive
month
of
minor
gold
purchases.
Ireland
bought
a
half-ton
of
gold
as
well,
continuing
an
announced
policy
of
adding
small
amounts
of
gold
to
its
central
bank
reserves
on
a
monthly
basis.
India
bought
1.3
tons
of
gold
to
preserve
a
buying
streak
that
stretches
back
to
last
May,
though
this
was
by
far
the
smallest
purchase
during
that
time.
Kazakhstan
was
the
big
seller
among
central
banks
this
month,
dumping
17.1
tons
of
gold
on
the
market.
Mongolia
was
also
a
seller,
with
outflows
of
1.3
tons.
Other
sellers
were
Uzbekistan
(-1.2
tons)
and
surprisingly,
Poland
(-2.2
tons).
The
Polish
government
previously
announced
a
policy
of
increasing
central
bank
gold
reserves.

Gold
ETFs

Globally,
gold
ETFs
saw
35.3
tons
of
inflows
in
February
($2.1
billion),
concentrated
in
the
US
and
Europe.
This
represented
a
1%
increase
in
assets
under
management
for
the
world
as
a
whole.

North
American
gold
ETFs
had
inflow
of
21.3
tons
for
the
month,
which
was
matched
by
an
increase
in
European
gold
ETF
holdings
of
21.4
tons.
Asian
gold
ETFs
saw
outflows
of
7.4
tons.
The
Asian
outflows
were
concentrated
in
China,
as
holders
took
profits
on
the
price
surge
in
gold.

On
The
Retail
Front

The
silver
shortage
continues
to
strangle
production
of
the
American
Silver
Eagle
at
the
US
Mint.
Only
a
little
more
than
one
million
ASEs
were
sold
in
March.
Bullion
shortages
in
gold
don’t
seem
as
bad,
as
135,000
ounces
of
American
Gold
Eagles
and
53,500
ounces
of
American
Gold
Buffalo
coins
were
sold.
The
global
silver
shortage
is
pushing
premiums
on
investment
silver
products
higher.
This
is
due
to
higher
prices
being
charged
at
refiners,
as
well
as
retailers
being
forced
to
offer
higher
prices
to
sellers
on
the
secondary
market.

Patrick
Heller
at

Numismatic
News

explains
why
the
U.S.
Mint
can’t
source
enough
silver
to
make
enough
American
Silver
Eagles
to
meet
demand.
The
Mint
is
restricted
by
law
to
not
pay
more
than
the
London
Fix
price
for
that
day.
Since
silver
prices
have
been
trending
higher,
the
spot
price
is
often
higher
than
the
London
Silver
Fix
price,
locking
the
Mint
out
of
the
silver
market.
It’s
gotten
so
bad
that
the
Mint
has
canceled
plans
for
striking
2022
Morgan
and
Peace
silver
dollars.


Steven
Cochran
of

Gainesville
Coins

Original Source