What is the short-term trend for gold? Is the long-term outlook still positive? How much, if any, of the metals should be in your portfolio now? Peter Hug, global trading director, answers these questions.
The gold market has been making investors nervous this week. What is the trend now? Are we do for a reversal? Peter hug, global trading director of Keiko metals joins us today. Peter, welcome back. I only have one main question for you today and the rest will be follow-ups to our conversation. Can this trend of downward pricing continue?
Is your question. Can the trend continue? Well, it should. It, well, we spoke last week. Um, you know, I indicated that 1850 was sort of, uh, uh, sort of a line in the sand. The gold had bounced off at, uh, three times. Uh, I think I mentioned if it tests the fourth time, a fourth time, uh, on a test blind, whether it's support or resistance, usually, uh, Uh, breaches the line and, uh, you know, we had the task on Friday.
I was indicating that we, you know, you had some strength in the market. I, uh, I thought it was, uh, Uh, you know, just more window dressing coming into the weekend is traders didn't want to stay short. I thought that, uh, the selling was going to continue. It would happen Monday and it did. Uh, and, uh, you know, we, we lost the 1850 line immediately went to 1825, which was next support.
Uh, yesterday we had some, um, Uh, some support, uh, while we did have a solid support at the 1800, uh, level psychological level, again, options, a lot of options transactions at the, at the figure there. Um, so people are, are both sides of that number. Uh, and we've got the balance, uh, overnight and, uh, you know, goals up, uh, incidentally, but, uh, still up about, uh, $15 from the low yesterday and about $7 from the close.
Um, so can the trend continue? Yes. I mean, as long as there is no stimulus package, uh, which is what gold was looking for, uh, there may be, there may be still some pressure, uh, on the gold price. Uh, Uh, I'm looking for 1775, uh, sort of as my rock, bottom support line to hold. And, uh, I, again, I, I remain very constructive this market in 2021.
I know there's a lot of pain in this market for traders. Uh, that have taken the, uh, the short-term long side of this market, but for investors, uh, that, uh, you know, want to cost a dollar cost average, or, or have not been in this market and one add gold to their portfolio, I just don't think you're going to go wrong.
When you look back at this price, uh, you know, six months to a year from now, there's this bounce that we're seeing today, this $15 upward bounds. Do you think that there's enough momentum here from just today's prices? To warrant a reversal and the trend that we've seen the last couple of days? No, uh, I mean, if it got through 1825, I, I might take that back and you might see it in a slightly higher, uh, but again, you know, you've got the Thanksgiving holiday tomorrow.
Uh, you've got a half a day on the futures market. Uh, you've got a half a day on Friday and the futures market Thanksgiving generally is, uh, is celebrated, uh, Almost to a greater extent in Christmases from people taking off work. So, yeah, I, I think, uh, most, most traders, uh, are, are obviously not wanting to be there tomorrow.
Uh, they, they may trade early morning hours while London is still open. And, but most of them also take Friday off or there'll be a reduced staff. So you're going to have a normal, very thin market coming into the weekend. And generally again, I would treat today almost as the beginning of the weekend. And in that context, I think traders tend to, especially when you get a drop, like we got yesterday, uh, they'll cover some of those, uh, those positions and, uh, you know, try to balance their book, uh, closer to, uh, the more flattish side, uh, over the next four days.
And then, you know, if the trend was zooms, Uh, or changes. I, I think that'll be evident on Monday and not so much over the next three or four days. I think the next year or four days is just going to be a bit of noise and volatility in the market. Can you give us a rundown or a recap of what happened in the last couple of months, the longer term or medium term trend in the last couple of months ever since we hit $2,000, the trend has been down.
Has it been mostly institutional money rotating out of the sector? Or are people seeing 2000 as a psychological, uh, ceiling? And it's not possible to break that in the short term again, what do you think. Well, first of all, it broke over 2000 and almost got to 2100. Uh, and, uh, you know, silver was as high as $29.
Uh, I, I mean the psychology and the dynamics two months ago were certainly different than today. When you know, everybody is talking about, uh, you know, a vaccine with 94 95% efficacy, uh, and there was uncertainty about the election. Uh, so, you know, a lot of things that were unknown have become a little bit more crystallized now.
Uh, so that, that takes the edge, uh, somewhat off the fear factor and, uh, uh, again, You know, there's two ways to look at a gold market. I mean, you, you, you, I have investors that buy gold and then in no circumstances ever sell it, uh, uh, I don't happen to be in that camp because I'm a trader. Uh, but if you're a trader, uh, you know, and, and, and you have these mutual funds and, and, uh, you know, some of the money managers that, that jumped into gold, uh, you know, sort of when COVID started and then, you know, as the election came up, uh, You know, they've got significant profits in here.
I mean, Goldberg, you know, launched off from about a $1,400 level and got North of 2000 silver launched from about a 1380 $14 level, got to $29. I mean, there needs to be an understanding in the market that, you know, the bigger players, uh, when they don't have a reason to chase the market and they've got serious profits on the table, I'm going to take their profits.
So, you know, like to see this as a natural occurrence, Yeah, but the macro trend and the reason why gold went up here specifically because of the debt and the, um, and the injection of, of, uh, stimulus money on a global basis has certainly not changed. And I think we'll continue through 2020. One and, uh, in that context that I think you have to be medium to long, a longer term by longer term.
I'm six months out. Uh, have to be very constructive this market and, uh, see this as a buying opportunity, if you are a longer-term player, uh, not a reason to live. Okay. Yeah. Give us your longer term six month case. Yeah. Now, because you mentioned the vaccine as one of the, uh, factors. That investors are considering.
And so far in the last few weeks, we've seen vaccine news as being bearish for gold. So us, we have an actual rollout in 2021. Wouldn't that weigh down on gold prices, even more Peter. It would, but I, but I think, uh, you don't get, you know, if you're in the stock market, you're laughing. I mean, you're making money, everybody's happy, but main streets dying up there.
I mean, there are, uh, you saw the, uh, the unemployment numbers, uh, this morning, uh, the claims for their new claims went up to 800,000. I mean, there are people out there. Look at the lineups for the food banks. I mean, they're two, three miles long. Uh, I mean there are serious distress, uh, at, at sort of a middle, a middle, uh, income and, and, and below level in the U S economy.
And, uh, um, I mean, I would just hope just from humanitarian per, uh, perspective that both the Republicans and the Democrats will get together and bridge this gap. Before the vaccine can hopefully return the economy to full bore. But if you listen to the medical experts, by the time 70% of the population will be vaccinated, and that's assuming that 70% will get the vaccination.
That they want to get the vaccination we're talking mid summer, uh, you know, may June, uh, before we get to that number. So there is, there is a bridge that needs to be gapped here, uh, until this vaccine gives everybody the confidence to go back and have this economy at full bore. And that is to me, uh, going to require additional stimulus and.
No, no, the politicians might just not do it. I think that's going to really hurt the stock market, but if they do do it, I think that's constructive for gold. So if you're asking me for a six month look, I'm promising it on the fact that we will get a stimulus in January and on that basis, I see the highs, um, Taken out before, uh, before the fed has to take any action on this market, from the perspective of tightening up the economy, which is a 20, 21 event at beat a 2022 event at the earliest.
So in that context, you've got to be constructive. Yeah. What's your view on inflation that in 2021, if again, it depends on how quickly this economy can recalibrate. And, and the demand, uh, picture improves and, uh, you know, as the demand picture improves, uh, I, I think demand will outstrip supply. And I think that will create an inflationary surge in 2021.
I mean, that's what I'm expecting. And especially if we add more stimulus in early 20, 21, uh, to the bridge, the gap for the vaccine that I think also could, you could make an argument as constructive for the metals. Uh, through, uh, through the first half of next year, long-term we're medium term outlook, that's bullish for gold and a, the short-term weakness and prices that we've been seeing.
How would you be positioning yourself right now? Who am I and which made her an investor? Uh, let's run through both. Uh, you know, they're both equally as a trader. I have a trader I've gotten a little loyalty, uh, to this market. I mean, I, I, I get up in the morning at eight o'clock. I can be bullish as heck.
And then by 10 o'clock there's a reason that I'm going to be bearish. So, you know, any trader that says I'm bullish and Gold's going to go to $2,500 an ounce that makes no sense. Don't call yourself a trader you're a long-term investor. Now, if you're an investor, uh, I've always. Believed that a balanced portfolio is the smartest way to go.
And part of that balanced portfolio should hold hard assets. Now, whether that's gold, whether that's real estate, whether that's, uh, oil, uh, you need a component of your portfolio in precious metals. Uh, in my opinion, uh, Just as a, as, as a balanced perspective. Uh, and in that context, uh, you know, given the uncertainties that we're going to be looking at in 2021, we don't know what the side effects are on the vaccines, whether Americans are generally globally, uh, whether we will get a 70%, uh, um, acceptance rate of the vaccine, uh, to create the herd immunity that the medical experts are talking about.
And there's, there's just so much garbage in the world. I mean, China's going to be an issue. Russia's going to be an issue, uh, the U S dollars, uh, likely going to weaken in 2021. So you take all of that in the country context. Uh, it just logically made sense to hold a portion of your portfolio on precious metals.
And when you have that as your portfolio, then you recalibrate your portfolio every three or six months. Um, it again, if you wanted a 10% weighting and gold, just to give you a very sort of example, that everybody uses and let's assume that gold was at a thousand dollars and you bought 10% of your portfolio in gold, and let's assume that gold goes to $2,000 an ounce.
Well, at $2,000 an ounce, assuming the other 90% of your portfolio is sort of consistent. It hasn't done much. I would argue that your 10% now is probably 20%. Now you need to liquidate 10% of your gold to bring your weighting back down to 10%. Vice versa. If you bought gold at 2100 and now goals at 1800, it's not likely that you have 10% weighting in gold anymore.
Maybe you've only got 7% weighting in gold. In that context, you buy 3% to get your waiting back up to 10%. And if you do that, you'll tend to, from a portfolio perspective, you'll be liquidating your asset into strength, and you'll be buying your asset into weakness, always maintaining your balanced portfolio of 10%.
And I think of investors do that over the long-term. I think there'll be very happy with their purchase metals component. Okay. Uh, finally, Peter, let's talk about the physical market now offline. You're telling me things are returning to pre COVID normal. Can you elaborate on that? Yeah. There are some.
Product specific issues. Uh, platinum is still, uh, from a physical perspective, uh, somewhat sh uh, difficult to get, especially a sovereign points. Uh, we are expecting some more, uh, platinum maple leaves to come out. Uh, first week in December, uh, the British Royal elements announced that they're launching their platinum RHYTTAC wine.
I believe that's due first or second week in January. Uh, no news out of the U S meant on platinum, uh, Eagles. Uh, but again, generally they, they, they sort of surface somewhere between January and February. So platinum claims, um, are still problematic. Platinum bars are in rental ready supply, uh, on the golden silver front, uh, product except fractional coins.
But the Canadian mint is going to be producing fractional a maple Leafs. First week in December. So there should be some fractional, uh, gold coins coming onto the market within the next 10 days to two weeks, excuse me. But all of the one out coins and or bars in the gold and silver category are right now readily available at premiums that fairly closely resembled pre COVID premiums on the retail level.
Peter, thanks for the update today and happy Thanksgiving to you. Yeah, happy Thanksgiving to everybody. And thank you for watching. Enjoy the long weekend. I'm David Lynn. .