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Gold eyes $1620 in 2020 on global de-dollarization theme, geopolitical risks – ANZ – Kitco NEWS

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Editor’s Note: 2020 is expected to be another year of significant uncertainty and turmoil. But the question is what asset will emerge the victor when the dust settles from the global trade war, Brexit, recession threats, negative bond yields. It’s a showdown of global proportions, so don’t miss all our exclusive coverage on how these factors could impact your 2020 investment decisions.

(Kitco News) The precious metals sector is likely to outperform other commodities for the second year in a row in 2020, according to the Australia and New Zealand Banking Group (ANZ), which is projecting for gold to rise above $1,600 next year.

“Precious metals look well positioned to outperform other sectors for the second consecutive year in 2020,” ANZ senior commodity strategist Daniel Hynes and commodity strategist Soni Kumari said in the bank’s 2020 outlook.

ANZ sees gold rising steadily throughout next year and peaking at $1,620 in December.

“Our gold model points to USD1,600/oz in 2020. Our model – based on real interest rates, USD and inflation expectations – shows gold’s value at USD1,470/oz. With a slightly weaker USD and only a tepid increase in bond yields, it forecasts gold will hit USD1,600/oz in 2020,” the strategists wrote.

Global themes of de-dollarization and geopolitical uncertainty are a few of the main drivers that will keep gold prices supported, ANZ’s outlook stated.

“Although the uncertainties related to US-China trade and Brexit peaked in 2019, we believe geopolitical and macroeconomic risks will remain elevated next year,” Hynes and Kumari said. “The ongoing theme of de-dollarization should see investor appetite for gold remain strong.”

The U.S. presidential election will be one of the risks to keep a close eye on as it directly impacts the financial markets. “With several possible outcomes, we see room for market volatility. This should set the stage for safe-haven assets to perform through 2020,” the strategists explained.

Also, the rise of populism around the world increases the case for holding gold in your portfolio, the outlook added. “The geopolitical trend toward division and populism will keep generating uncertainty, enhancing the safe-haven appeal of the sector.”

Lower interest rates environmental on a global scale also works in favor of the yellow metal next year. “A pause in Fed interest rate hikes should not diminish investor appetite … [as] steady-to-higher inflation keep[s] interest rate lower in 2020,” the strategists said.

Another part of the equation that leads to gold breaching the $1,600 an ounce level in 2020 is the weaker U.S. dollar, added ANZ.

“USD appreciation is likely to abate, with downside risks rising through 2020 … With a more stable policy setting, the USD is likely to stabilize and trade in a tight range. We expect the EUR to outperform the USD,” Hynes and Kumari wrote.

Asian gold demand will need to be closely watched as well after Indian gold imports fell 53% between July and October of this year amid record-high local prices.

“In 2020, higher investment demand will be required to clear the supply overhang left by weaker gold jewelry demand and leveling-off central bank purchases,” the strategists said.

One of the major risks to higher gold prices remains crowded investor positions, which could trigger a sell-off in 2020. “Elevated speculative positions leave risk of a price set-back,” the outlook highlighted.

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GameStop, BlackBerry, AMC stocks see trading halts as social media hype drives volatility – Global News

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Stocks of GameStop, BlackBerry and AMC Entertainment Holdings all saw trading halts on Wednesday morning amid continued volatility widely attributed to social media chatter.

The New York Stock Exchange briefly paused trading on GameStop and AMC stocks shortly before 10:15 a.m. ET, while the Investment Industry Regulatory Organization of Canada (IIROC) announced at 9:54 a.m. ET a temporary suspension of BlackBerry shares.

READ MORE: Does Bitcoin have a place in every investment portfolio?

The moves come as all three stocks have been soaring for a fourth day running, sparking calls for scrutiny of a social media-driven trading frenzy.


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The rally has also forced some hedge funds to retreat with heavy losses. Short-seller Citron, a target for some of the individual traders who have helped drive huge gains for a number of niche Wall Street stocks in the past week, said in a video post it had abandoned its bet on GameStop shares falling.

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With commentators and lawyers calling for scrutiny of the moves, Nasdaq chief Adena Friedman said exchanges and regulators needed to pay attention to the potential for “pump and dump” schemes driven by chatter on social media.

The Securities and Exchange Commission (SEC) declined to comment.

READ MORE: Will the 2nd coronavirus wave wipe away Canada’s movie theatres?

Mainstream commentators have questioned the justification of moves in a number of heavily-hyped stocks in recent days, at a time when some on Wall Street are wondering if months of stellar overall gains have driven shares into bubble territory.

GameStop’s stock has surged nearly 700 per cent in the past two weeks, upping the struggling video retailer’s market value from $1.24 billion to more than $10 billion. BlackBerry is up 185 per cent and on course for its best month ever.

Along with AMC and Nokia Oyj, the two were again among the most heavily traded in pre-market deals, with Reddit discussion threads again humming with chatter about the stocks.

“These are not normal times and while the (Reddit) … thing is fascinating to watch, I can’t help but think that this is unlikely to end well for someone,” Deutsche Bank strategist Jim Reid said.


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The advent of easily access apps like Robinhood that allow ordinary Americans to make stock market trades at almost no initial cost has spurred a boom in direct investment over the past year as trillions of dollars in official stimulus drove markets higher.

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On GameStop, the retail army have pitched themselves against some of the institutional short-sellers — a traditional area for hedge funds — who promote and bet on falls in companies they judge as weak.

Overall, short-sellers in GameStop were down $5 billion on a mark-to-market, net-of-financing basis in 2021, which included $876 million of losses early Tuesday, according to analytics firm S3 Partners.

Barron’s reported late on Tuesday that the top securities regulator in Massachusetts believes trading in GameStop stock suggests there is something “systemically wrong” with the options trading around the stock.

Others say that the trades are at the end of the day up to the investors who make them.

“The SEC has investigated Robinhood before, but when you have a structure in place that allows the zero-cost trading platforms to operate – how do you stop that flow?” said Neil Campling, head of tech media and telecom research at Mirabaud Securities.

Trading in GameStop stock was halted for volatility nine times on Monday and five times on Tuesday.

— With files from Global News money reporter Erica Alini

© 2021 Reuters

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2 short sellers admit defeat, bail out at huge loss as GameStop share surge hits 1000% – CBC.ca

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In the David and Goliath saga surrounding the struggling retail chain GameStop, Goliath has fallen.

Two Goliaths, actually.

A pair of professional investment firms that placed big bets that money-losing video game retailer GameStop’s stock will crash have largely abandoned their positions. The victors: an army of smaller investors who have been rallying on Reddit and elsewhere online to support GameStop’s stock and beat back the professionals.

One of the two major investors that surrendered, Citron Research, acknowledged Wednesday in a YouTube video that it unwound the majority of its bet that GameStop stock would fall. Andrew Left, who runs Citron, said it took “a loss, 100 per cent” to do so, but that does not change his view that GameStop is a loser.

“We move on. Nothing has changed with GameStop except the stock price,” Left said. He did acknowledge that Citron is taking a fresh look at how it bets against companies, in light of the GameStop campaign.

Melvin Capital is also exiting GameStop, with manager Gabe Plotkin telling CNBC that the hedge fund was taking a significant loss. He denied rumours that the hedge fund will fail.

The size of the losses taken by Citron and Melvin are unknown.

GameStop’s stock surged as high as $380 Wednesday morning, after sitting below $18 just a few weeks ago.

GameStop’s stock has long been the target of investors betting that its stock will fall as it struggles in an industry increasingly going online. The retailer lost $1.6 billion over the last 12 quarters, and its stock fell for six straight years before rebounding in 2020.

That pushed investors to sell GameStop’s stock short.

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Essentially, these short sellers borrowed shares of GameStop and sold them in hopes of buying them back later at a lower price and pocketing the difference. GameStop is one of the most shorted stocks on Wall Street.

But its stock began rising sharply earlier this month after a co-founder of Chewy, the online retailer of pet supplies, joined the company’s board. The thought was that he could help in the company’s digital transformation.

Smaller investors pushing stock higher

At the same time, smaller investors gathering on social media have been exhorting each other to keep pushing the stock higher.

There is no overriding reason why GameStop has attracted those smaller investors, but there is a distinct component of revenge against Wall Street in communications online.

Over the past three months, shares of GameStop Corp., which has been buffeted by a shift in gaming technology, have spiked well over 1,000 per cent. Shares were up another 100 per cent at the opening bell Wednesday.

That has created titanic losses for major Wall Street players who have “shorted” the stock, which means they borrowed shares and sold them, hoping to buy them back at a cheaper price and pocket the difference.

As of Tuesday, the losses had already topped $5 billion in 2021, according to S3 Partners.

The phenomenon does not appear to be fading.

AMC Entertainment Holdings Inc., the theatre chain that has been ravaged by the pandemic, posted a quarterly loss this month exceeding $900 million.

It appears, however, that AMC has become the next battleground in the fight between smaller, retail investors and Wall Street.

Shares of AMC spiked 260 per cent when trading began Wednesday and #SaveAMC is trending on Twitter.

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In GameStop saga unfolding on Wall Street, 2 Goliaths fall – CTV News

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A David and Goliath saga is unfolding in financial markets over the stock price of struggling retail chain GameStop. On Wednesday, Goliath walked away from the battle.

Two Goliaths, actually.

A pair of professional investment firms that placed big bets that money-losing video game retailer GameStop’s stock will crash have essentially admitted defeat. The victor, for now at least, is a volunteer army of smaller investors who have been rallying on Reddit and elsewhere online to support GameStop’s stock and beat back the professionals.

GameStop’s stock surged as high as US$380 Wednesday morning, after sitting below $18 just a few weeks ago.

One of the two major investors that surrendered, Citron Research, acknowledged Wednesday in a YouTube video that it unwound the majority of its bet that GameStop stock would fall. Andrew Left, who runs Citron, said it took “a loss, 100%” to do so, but that does not change his view that GameStop’s stock will eventually fall sharply.

“We move on. Nothing has changed with GameStop except the stock price,” Left said. He also said he “has respect for the market,” which can temporarily run stock prices up higher than critics think they should go.

Melvin Capital is also exiting GameStop, with manager Gabe Plotkin telling CNBC that the hedge fund was taking a significant loss. He denied rumours that the hedge fund will fail.

The size of the losses taken by Citron and Melvin are unknown.

GameStop’s stock has long been the target of investors betting that its stock will fall as it struggles in an industry increasingly going online. The retailer lost $1.6 billion over the last 12 quarters, and its stock fell for six straight years before rebounding in 2020.

That pushed investors to sell GameStop’s stock short. Essentially, these short sellers borrowed shares of GameStop and sold them in hopes of buying them back later at a lower price and pocketing the difference. GameStop is one of the most shorted stocks on Wall Street.

But its stock began rising sharply earlier this month after a co-founder of Chewy, the online retailer of pet supplies, joined the company’s board. The thought is that he could help in the company’s digital transformation.

At the same time, smaller investors gathering on social media have been exhorting each other to keep pushing the stock higher. There is no overriding reason why GameStop has attracted those smaller investors, but there is a distinct component of revenge against Wall Street in communications online.

“The hedge fund owners are crying as a result of us,” one user wrote on a Reddit discussion about GameStop stock. “We have the power in this situation, not anyone else as long as we stay strong!”

Almost immediately after, another user shouted in all capital letters, “BUY AND HOLD WE WILL BE VICTORIOUS.”

The battle has created big losses for major Wall Street players who shorted the stock. As GameStop’s stock soared and some of the critics got out of their bets, they had to buy GameStop shares to do so. That can accelerate gains even more, creating a feedback loop. As of Tuesday, the losses had already topped $5 billion in 2021, according to S3 Partners.

Much of professional Wall Street remains pessimistic that GameStop’s stock can hold onto its moonshot gains.

Analysts at BofA Global Research raised their price target for GameStop on Wednesday from $1.60, all the way up to $10. It was at $362 in midday trading.

Nevertheless, the phenomenon does not appear to be fading.

AMC Entertainment Holdings Inc., the theatre chain that has been ravaged by the pandemic, posted a quarterly loss this month exceeding $900 million.

It appears, however, that AMC has become the next battleground in the fight between smaller, retail investors, and Wall Street.

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