Authors See Gold and Silver Prices Rising to New Records

Release Date: 
Friday, June 13, 2014

Gold and Silver Prices

Gold and silver prices moved higher this week on weaker than expected U.S. economic data and on safe haven buying as Iran sends troops to support the Iraqi government in the growing civil war. “Gold futures headed for the second straight weekly gain as escalating violence in Iraq boosted demand for the precious metal as a haven. Silver headed for the longest rally in almost four months. Crude oil jumped to an eight-month high year on concern that a civil war looms in Iraq, OPEC’s second-biggest producer…‘We are seeing some flight to safety because of the Iraq issue,’…a vice president and precious-metals strategist at RBC Capital Markets in New York, said in a telephone interview.” (“Gold Set for Weekly Gain on Haven Demand Amid Iraq Tumult,” Bloomberg, 6/13/14.)

Gold finished the week up $23.60, closing at $1,276.90. Silver prices closed at $19.77, up $0.66.

Authors See Gold and Silver Prices Rising to New Records

James Turk, the former head of commodities for the Abu Dhabi Investment Authority, and John Rubino, author and financial analyst, have authored a new book warning of the collapse of world currencies.

In “The Money Bubble: What to Do Before it Pops,” the authors “predict that silver will return to ‘something close to its historical ratio to gold” and pass US$500 an ounce ‘when gold makes its epic run from $1,300 to $10,000-plus’…Where the authors see gold prices going through the roof is when the central banks have to create a new monetary system. Over history this sort of shake-up has happened far more often than you might think, about every 40 years. We are well overdue for a new system. Gold would be needed as a linchpin of international finance with no counterparty risk and universal acceptance as money.” (“Predicted rise in gold price may yet have silver lining,” The National, 6/13/14.)

CMC Markets: Euro May Lift Gold Prices Above $1500

According to analysts at UK-based CMC Markets, gold prices may be more influenced by the euro than the dollar.

“Colin Cieszynski, market analyst at CMC Markets, said in a research report released Tuesday that in the last few months he has noticed gold’s primary influence has shifted to the euro from the U.S. dollar.”

“‘Before the eurozone was created if Greece had a problem it was considered only their problem. Now because of the currency and the growth of the European Union, a problem in Greece causes concerns for investors in Germany and France,’ he said. ‘Europeans also see gold as an important store of wealth, more than North Americans, so if they become nervous they are more likely to buy gold to protect themselves.’ Since 2010, during the height of the European financial crisis, gold acted as a safe-haven asset against geopolitical and financial instability. However, Cieszynski added the ECB’s shift in monetary policy could cause the yellow metal to revert back to its traditional function as a hedge against inflation.”

“‘If gold continues to follow its recent trend of tracking the size of the ECB balance sheet, it could potentially stage a 56% retracement of its losses over the last few years in the coming months. A 50% to 62% retracement…suggests the $1,555 to $1,640 zone could potentially be probed.’” (“Gold At A Turning Point After ECB's Unprecedented Action - CMC Markets,” Kitco News, 6/10/14.)

Steve Forbes Calls For Return to Gold Standard

In his newly released book, Money—How the Destruction of the Dollar Threatens the Global Economy-and What We Can Do About It, famed publisher Steve Forbes shared his thoughts why the United States will only return to a sound monetary policy by adopting a gold standard.

Recognizing the political opposition to a gold standard, Mr. Forbes and his co-author recommend that individuals include gold in their personal portfolios. “When we say gold, we’re talking about gold coins or bars. You should not own gold as an investment but rather as an insurance policy. When governments misbehave and undermine the integrity of your money, the real value of your traditional investments and savings vehicles will be eroded. But you can take comfort in the fact that your gold will move up in nominal value.” (“Money—How the Destruction of the Dollar Threatens the Global Economy-and What We Can Do About It,” McGraw Hill Publishing, 6/03/14.)

Economic Recovery May Be Overstated: CNBC

CNBC finance editor, Jeff Cox wrote this week that the current U.S. economic recovery is far less robust and far more shaky than the Federal Reserve predicted.

“As if the Federal Reserve doesn't have enough to worry about, now it has to contend with the very likely notion that its expectations for growth are considerably too optimistic. Once again, reality has set up an uncomfortable roadblock in front of expectations, the consequences being that consensus hopes for comparatively robust economic growth in the U.S. and abroad simply outpaced what's happening on the ground. If nothing else, there's simple math: The Fed's most recent projections, issued in March, show gross domestic product growing at a 2.8 percent to 3 percent clip. But after a -1 percent growth rate in the first quarter, the rest of the year would have to rebound sharply—something north of 4 percent—to reach that target.”

“Most prominently, even as many economic indicators rise, the housing recovery appears on shaky ground. Recent indicators also show a sharp rise in the U.S. trade deficit. Finally, global growth, particularly in emerging markets, continues to struggle despite expectations that 2014 would be the year that things started to return to normal after five years of mediocre post-financial crisis growth.” (“Most economists say the Fed is wrong about growth,” CNBC, 6/11/14.)

Goldline’s Express IRA℠ Program

Many Goldline clients choose to include precious metals as part of their retirement planning especially during times of economic crisis and uncertainty.* Goldline’s Express IRA℠ allows clients to acquire precious metals on their schedule; they no longer have to wait for your self-directed IRA to be funded before getting started.

Goldline's Express IRA℠ not only provides clients with the ability to diversify their IRA on an expedited basis, clients can also qualify for Goldline's ground-breaking Two-Way Price Guarantee Program℠ when they acquire $10,000 or more of our exclusive bullion coins. When an Express IRA purchase qualifies for Goldline's Two-Way Price Guarantee Program℠ clients are protected on short-term upside and downside market movement: they can either call to reprice their coins if the selling price falls (up to a maximum of 28 days depending on the size of the purchase) or, if the selling price of the coins increase during the qualifying period, clients can call Goldline to acquire additional coins at the original selling price.

Goldline provides a wrap-up of the week's precious metals news along with important commentary on the American Advisor Week in Review audio program. Listen to the show below:

*Federal IRA tax laws are complex and may change from year to year. Goldline believes it is appropriate to have 5%-20% of retirement portfolio allocated to precious metals. Other individuals and institutions may recommend different percentages. As with any investment, you should consult your tax advisor before making a decision regarding precious metals IRA investments.

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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