Forbes: Gold to “Skyrocket”

Release Date: 
Friday, August 8, 2014

Gold and Silver Prices

Gold prices moved up this week as geopolitical tensions spurred investors to acquire gold on safe haven buying. “Gold advanced to a three-week high as unrest in the Middle East spurred demand for a haven. U.S. President Barack Obama authorized air strikes in Iraq and Russia banned agriculture imports from the U.S. and European Union in retaliation over sanctions stemming from the conflict in Ukraine. Israel said a cease-fire with Hamas forces in Gaza was violated hours before it was due to expire. ‘Pretty much a perfect storm for gold prices,’ David Govett, head of precious metals at Marex Spectron Group in London, said in a note today. ‘Resolutions seem a long way off. It is going to be all about headlines today.’” (“Gold Rises to 3-Week High as Iraq Crisis Spurs Buying,” Bloomberg, 8/8/14.)

Gold finished the week up $14.90, closing at $1,310.10.  Silver prices closed the week at $19.95, down $0.45.

Forbes: Gold to “Skyrocket”

Forbes contributor Keith Weiner discussed former Congressman Ron Paul’s warning that the government’s fiscal policies spell doom for the dollar and higher gold prices.

“This week, former Congressman Ron Paul said gold could go to infinity…Dr. Paul has put his finger on something very important. The government is abusing its credit, and borrowing itself into oblivion. If this continues, then the value of the government’s debt and currency will drop, probably quite rapidly. This means the price of gold will skyrocket.”

“Gold is the objective measure of economic value. The dollar is the exact opposite. It is designed to be bent and twisted by our monetary central planners. In a speech last year, Federal Reserve Chair Janet Yellen used the word ‘flexible’ four times in describing her policy goal of creating inflation, which is to say stretching that rubber band.”

“The fact is that the dollar has been going down for 100 years, since the creation of the Fed…Over this period, the dollar went from 1644mg to 24mg, a stunning collapse of 98.5 percent. The picture couldn’t be clearer. It makes it easy to see what Dr. Paul is saying. To frame it in different terms, Gold is not going anywhere. The dollar is simply falling. This is exactly what you would expect, given a flexible paper currency, and the siren song to abuse it for political expediency.” (“Why Did Ron Paul Say Gold Could Go To Infinity?” Forbes, 8/2/14.)

Richard Russell: Buy Gold for Your Lifetime and Your Kids

Veteran newsletter writer and publisher of the Dow Theory Letters, Richard Russell, explained why he buys and holds gold in his most recent Letter to subscribers.

“I believe gold is currently locked in a trading range of 1200 to 1400. If gold breaks out above 1400, that's fine with me, but I won't be selling my gold. Sell it for what? Sell it for the paper that I originally swapped for my gold because I didn't trust the paper (Federal Reserve notes)? I'm aware of history. History tells me that all fiat money ends worthless.

“But what if gold breaks below its trading range? Below 1200? I'll hang on to my gold. Why? Because I know that gold, unlike a stock, can't go bankrupt. And I know that gold will always be considered an item of wealth. I may even buy more gold if it slips below 1200.

“The history of mankind is war and inflation. Over the decades, gold as protected mankind from inflation. In my lifetime, gold has risen from $20 in 1925 to $1900 three years ago. Conclusion—buy gold, hold it for a lifetime, and when you're tired of looking at it—give it to your kids.” (“Dow Theory Letters—Letter 1548,” Dow Theory Letters, 8/6/14.)

Central Banks Add More Gold

The International Monetary Fund reported several central banks continue to add to their gold reserves amid growing geopolitical tensions and economic troubles.

“Given the crisis in Ukraine and deteriorating ties with the West, Russia has been aggressively accumulating gold reserves. The IMF, in its recently released International Financial Statistics report, showed that the Russian central bank has hiked its gold holdings by 16.8 tonnes …in June. Indeed, most central banks are increasing their gold reserves…”

“The global meltdown of 2008 sparked off the current race to buy gold…By the end of 2013, global central banks were estimated to hold 30,500 tonnes of gold, which is about one fifth of all the gold ever mined…The Russia-Ukraine rebellion, the Israel-Gaza war, the crisis in Iraq - central banks do not think this is the time to stop buying gold. What is also supporting the sentiment is that haven buying has boosted gold demand.” (“Central banks continuing to boost gold reserves,” Mineweb, 8/7/14.)

Survey:  Majority of Analysts Expect Higher Gold Prices Next Week

A “strong” majority of participants in the Kitco News Gold Survey forecast higher gold prices next week, as many expect geopolitical conflict to continue to support the yellow metal.

“Simmering geopolitical concerns have the majority of participants in the weekly Kitco News Gold Survey forecasting higher prices for next week...With the tensions in the Russian-Ukrainian conflict rising again this week, an end to a cease-fire between Israel and Hamas and U.S. airstrikes on militants in Iraq, most survey participants said they were expected gold to remain supported. Technical charts also appear to show rising prices…Adam Hewison, president and chief strategist with INO and MarketClub.com, is also bullish on gold, but offered another reason. ‘We are extremely bullish on gold for the next five to six weeks. (We are) looking for a move to the $1,380 to $1,400 levels. Look for (Russian President Vladimir) Putin’s theft of 1.2 billion (computer) passwords to strike fear into the online world and push gold higher,’ he suggested.” (“Strong Majority Of Gold Survey Participants See Higher Prices Next Week,” Kitco News, 8/8/14.)

India Buying Swiss Gold

According to a recent Forbes article, India is buying much of Switzerland’s current gold exports.

“Gold loving India is hoarding Swiss gold, and recently accounted for 42% of total gold and silver leaving Switzerland. According to the Swiss government, its total value of exported gold, silver and coins in the month of June stood at 3.9 billion Swiss francs ($4.3 billion), of which India accounted for 1.63 billion francs ($1.8 billion). Indian demand for gold has taken overall Swiss exports this year to 32.1 billion francs. And out of that total, gold exports alone to India hit 7.3 billion francs, or roughly 23% of the market.” (“India Snatching Up Swiss Gold, Silver,” Forbes, 8/3/14.)

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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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