Top Stories This Week: What to Buy During Gold’s Dip, Breaking Down Basel III

The gold price stayed securely below the US$1,800 per ounce mark this week, trading in a range of about US$1,770 to US$1,795. It was around US$1,778 at the time of this writing on Friday (June 25).

The yellow metal dropped below US$1,800 after last week’s US Federal Reserve meeting, where among other things, the central bank signaled that there could be two rate hikes in 2023.

I heard this week from Gareth Soloway of InTheMoneyStocks.com, who said he sees gold’s decline as a buying opportunity — he’s picked up assets such as the VanEck Vectors Gold Miners ETF (ARCA:GDX), the SPDR Gold Trust (ARCA:GLD) and major mining company Newmont (TSX:NGT,NYSE:NEM).

“I’m positioning for higher gold prices down the line. I look at this dip as a buying opportunity. I think it was kind of a flush out for the weaker hands for gold” — Gareth Soloway, InTheMoneyStocks.com

Gareth has a price target of US$2,100 for gold by the end of 2021, and in the next two to three years he sees a level of US$2,860 based on historical price activity.

I also spoke this week about another aspect of the gold market with Stuart Englert, author of books including “Rigged: Exposing the Largest Financial Fraud in History.”

Stuart took the time to lay out some of the basics of Basel III, a set of banking standards introduced after the 2007/2008 financial crisis. He explained that there’s a rule change coming up for European banks on June 28 that could affect the gold space, as well as others elsewhere in the future.

The topic is complex, and Stuart said that market watchers are split between what they think Basel III could mean for the gold price — some expect a much higher price based on the idea that the rules (if followed) could end manipulation and raise physical demand; others are less sure.

“If Basel III is fully implemented and adhered to, more banks should want to hold physical gold as an asset as opposed to selling, leasing, swapping or trading the unallocated metal or paper derivatives that are now used to manipulate the gold price” — Stuart Englert, author and journalist

With Basel III in mind, we asked our Twitter followers this week if they think it will have a positive, neutral or negative impact on the gold price. By the time the poll closed, respondents were fairly evenly split between positive and neutral, with just 13 percent expecting a negative effect.

In a comment posted on Twitter, Chris Marchese of GoldSeek suggested that compliance is unlikely. “Central banks are a cartelization device for commercial banks. The government/Central bank’s don’t want PM prices rising so why would commercial banks comply? Who will check and ensure they are in compliance? Another government agency?” he questioned.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

We’re going to wrap up this week with battery metals, where INN’s Priscila Barrera continues to explore North America’s efforts to improve its position in the electric vehicle (EV) race.

Looking specifically at EV megafactories, it’s interesting to note that although the US is home to Elon Musk’s Tesla (NASDAQ:TSLA), North America is lagging behind China and Europe.

Benchmark Mineral Intelligence is tracking 211 lithium-ion battery megafactories, but only 12 are in the US, while 156 are in China and 22 are in Europe.

Efforts from the Biden administration are expected to be key in propelling the US forward. The government has proposed an investment of US$174 billion in EVs, and called for more megafactories to be built. However, research firm Roskill still expects only 16 megafactories to be built in the US by 2030.

“Personally, I am positive that the US can catch up with Europe if regulation, investment and the industry work together effectively” — Kevin Shang, Roskill

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

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