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Gold and Silver Prices
Gold prices tumbled this week after an unexpectedly strong labor report which renewed expectations the Federal Reserve will raised interest rates before the end of 2015.
“Gold prices tumbled on Friday after the U.S. labor market posted its strongest pace of jobs creation this year in October, magnifying investor expectations for higher interest rates from the Federal Reserve. ‘Where did all these jobs come from in one month? It’s very hard to look at this report and think that the Fed doesn’t move forward on it, and for the metal markets it’s not bullish,’ said Ira Epstein, a broker with Linn & Associates in Chicago.” (“Gold Slumps To Nearly Three-Month Low on Robust Jobs Report,” WSJ, 11/6/15.)
Gold finished the week down $52.10, closing at $1,089.90. Silver prices closed the week at $14.77, down $0.79.
Fed Leading Investors to “Immense Financial Destruction” – Embry
In an interview with King World News, John Embry, Senior Investment Strategist at Sprott Asset Management, warned investors that the Federal Reserve was misleading the public on the health of the economy. He further urged investors to acquire physical gold and silver while they’re still available.
“On Wednesday, the Fed’s tone was allegedly hawkish as they signaled a possible December rate increase… A more interesting and honest assessment of things may have come from John Williams, the San Francisco Fed President. He told Reuters that low, neutral interest rates may be a warning sign of possible changes in the U.S. economy, which the central bank does not fully understand. I thought that was a rather interesting statement but I also thought it was a bit disingenuous.
“I believe that the Fed understands perfectly well what the problem is — infinitely too much unsustainable debt that can only be kept afloat by a zero-based interest rate policy and whatever amount of liquidity is required. But the Fed can’t admit this publicly. So you have misleading statements being made about raising rates, accompanied by bogus data about the state of the economy…
“Now this is all going to end very badly, and all those suffering from cognitive dissonance and ignoring the obvious warning signs are going to suffer grievously as a result. My only advice is to own hard assets at this point... Gold and silver have gotten cheaper in the past week, but their physical availability is dwindling, and investors would be well-advised to get what physical metal they can while it’s still available.” (“The Unsuspecting Public Is Being Led Into Immense Financial Destruction,” King World News, 11/5/15.)
Buy Gold For Three Key Reasons – Brecht
Kira Brecht, managing editor of TraderPlanet, identified three key reasons why investors should be acquiring gold at current prices.
“For long-term gold investors, easy central bank monetary policy is only one of a myriad reasons to buy and own the metal. Let's take a look.
“Gold is a portfolio diversifier. No matter if you think the dollar will eventually become worthless due to global central bank machinations or if you simply are looking to balance out an investment portfolio –gold can help. Generally, gold is not correlated to the equity market—and for long-term investors non-correlated assets are key. When one market rallies, other markets sell-off. . Cycles peak and shift. It is the natural order of markets…
“Gold is an inflation hedge. Right now, there's not a whiff of inflation in sight according to government data. However, if you talk to the man on the street everyday prices for key staples seem to keep rising for many consumers… Inflation rises and falls, interest rates rise and fall. Everything moves in cycles. Eventually inflation could return and gold is a traditional hedge. When is the best time to buy insurance? When it's cheap. Gold is well off its all-time highs above $1,900 an ounce.
“Gold can help protect your purchasing power. The U.S. dollar index has rallied impressively since the summer of 2014… Again, currency markets move in cycles. In large part, currency rates are driven by underlying growth and interest rates differentials. A currency's price level is in some ways a "grade" by global markets on a country's structural, fiscal and economic policies. The dollar gets a lot of headwind and support from simply being the reserve currency of the world. If the U.S. dollar were to lose that coveted position in the world marketplace, the rug would be pulled out quickly from dollar support… Bottom line: At some point, underlying economic, fiscal, and structural factors will drive the dollar again. If the dollar declines, gold is a hard asset and can help preserve your purchasing power.
“As short-term traders push gold higher and lower focusing on every Fed statement and speech, long-term investors can keep their eye on the ball with longer-term investment goals in mind. There are many more reasons to buy gold than simply easy Fed policy.” (“Easy Money Isn't The Only Reason To Buy And Own Gold,” Kitco, 11/6/15.)
Silver “Underpriced and Retains Value” - Christenson
Gary Christenson, the owner and writer for the contrarian investment site “Deviant Investor,” explains why investors should own physical silver in a fiat currency world.
“The discipline of silver is real, like the metal. It has value now and will have value regardless of what Presidents or Fed Chairpersons promise regarding such nonsense as: ‘Quantitative Easing…’
“There is discipline in silver metal but very little in fiat paper currencies. The price of silver will rise as currencies devalue because silver is real, necessary for 1000’s of industrial uses, and because an increasing number of investors understand that silver is underpriced and retains value…
“Further, our debt based monetary system requires ever increasing debt, inflation, and expansion… The continued devaluation of all fiat currencies is a given, based on debt, government spending and central bank policies. Hence silver and gold prices will rise substantially in upcoming years, partially because people want and need it, and mostly because fiat paper currencies are devaluing every day.” (“The Discipline of Silver,” 11/5/15.)
Economist Marc Farber Added to His Gold Holdings
“Marc Faber, Swiss economist, forecaster, renowned investor and the original Dr. Doom, may need a new nickname. In an interview on CNBC’s ‘Trading Nation,’ the Gloom, Boom & Doom Report editor revealed he may not be as bearish as some may think and that he is actually a ‘great optimist…’
“Faber admits that he is bearish on the global economy. “I’m most gloomy about the prospects of the global economy, but it doesn’t mean that markets will go down,” he told CNBC. But on the other hand, he says “you have the mad professors at central banks around the world who think that because of a weakening economy they have to do more [quantitative easing]…’
“’The only thing I’ve really done recently is I added to my gold position about two months ago… But other than that, I’ve done very little because I believe that in this extreme volatility where markets suddenly drop 10… it’s a very difficult environment to make a lot of money unless you take huge risks.’
“The shrewd investment adviser is staunch advocate of owning physical gold bullion which he describes as being a way to become ‘your own central bank.’” (“’Great Optimist’ Faber Says “I Added To My Gold Position,” Gold-Eagle, 11/4/15.)