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Gold and Silver Prices
Gold prices fells on anticipation that U.S. employment data may embolden the Federal Reserve to raise interest rates this year.
“Gold fell on Friday ahead of U.S. employment data that could bolster prospects for an interest rate increase this year and the precious metal was heading for its third straight weekly slide. Traders awaited the key U.S. non-farm payrolls report due later in the day for more clues on the world's biggest economy and how it might impact the Federal Reserve's interest rate policy.” (“Gold slips ahead of U.S. jobs data, set for third weekly fall,” Reuters, 6/5/15.)
Gold finished the week down $16.70, closing at $1,173.30. Silver prices closed the week at $16.23, down $0.47.
Former Gold Bear Predicts New Gold Bull Market Will Send Prices To Record Highs
Market analyst and author Avi Gilburt, who successfully identified gold’s earlier record highs as well as its consolidation to current prices, now sees a new gold bull market where gold prices will increase almost ten times its current value.
“Suppose someone approached you in the year 2000, when the price of gold was around $250 an ounce and suggested that it would be worth almost eight times its current value within the next decade. I am sure most people would have thought that person to be less than credible making such an outrageous market call. Think about it. An asset being expected to multiply by eightfold within a decade? But as we all know now, gold went from $250 an ounce to just over $1,900 an ounce in just that amount of time.
What if I was to tell you that gold could make another such run over the next decade plus? Does it seem that outrageous now? Well, I think the math shows it can and will, with the price of gold futures surpassing $25,000…
Many are probably wondering how I came up with such an accurate target for a top to a market that was rising parabolically. My answer is that the topping target was calculated using a 200-year Elliott Wave and Fibonacci mathematics study…
“Yes, in 2015, I am seeing this correction finally completing (but at much lower levels) and starting a major bull market phase that can last the next 50 years. So, while many that have read my analysis over the last three years have viewed me as being the staunchest of bears in the metals world, I will be switching sides and moving strongly into the bull camp, especially after we see the next and final decline which will likely take place over the next half a year… Yes, my friends and fellow investors, we are now on the cusp of the next major bull market in the investing world.” (“The next great bull market: Gold $25,000,” MarketWatch, 6/4/15.)
Gold Prices to Move Higher Quickly: SeekingAlpha
Seeking Alpha commentator Gary Bourgeault explains why he now is bullish on gold and sees gold prices moving higher quickly.
“Gold is now trading at close to where it had been five years ago, as investors overall remain on the sidelines because of uncertainty surrounding the usual catalysts associated with a cyclical uptrend in the yellow metal; elements such as hints of a recession, market correction, proof of inflation, and a weak U.S. dollar, among other things…
“Federal Reserve and pricing… the amount of money created from nothing by the Federal Reserve has distorted prices… That is slowly coming to an end, which will be a major benefit for those holding gold assets…
“Higher interest rates… Whether it's the Fed or market, interest rates will eventually have to go up. The question is whether that is a guarantee of downward pressure on gold prices, as a number of investors and analysts assume. I don't think it is a certainty by any means. I draw that conclusion from my belief inflation will ultimately be a stronger factor than interest rates…
“Inflation Inflation may seem to be irrelevant at this time, but it's not going to be a major jump in prices that will be important for gold prices to rise, but rather the fact that inflation has started. Where gold could really get a boost would be if an increase in inflation catches most investors off guard. Under the current market conditions, that is not only a strong probability, but an inevitability…
“U.S. dollar strength Concerning the strength of the U.S. dollar and its impact on gold prices, we have to consider it will eventually pull back. There is no way this will continue on for a long period of time, and combined with other factors mentioned here, will become a catalyst for the price of gold when it does…
“Conclusion I'm no longer bearish on gold. We are ripe for the areas mentioned above to come together in a very positive set of catalysts for gold, and when they do happen, it's going to push the price of gold high very quickly… The fact gold remains highly in disfavor is a terrific benefit for those wanting to take a position in it. I'm in gold now, and am seriously thinking of increasing my holdings in it. I think investors need to consider doing the same before it becomes obvious to everyone. (“Tremors That Will Cause Gold Price Volcano,” SeekingAlpha, 5/29/15.)
Investors Return to Gold as “Safeguard” of Wealth: WSJ
The Wall Street Journal reported that investors are returning to gold on growing concerns about the failing U.S. economy.
“Some investors who aren’t sold on the strength of the U.S. economic recovery are taking a shine to gold. After shunning the precious metal for years in favor of bonds and stocks, which often pay a steady income, investors are returning to the gold market to safeguard their wealth….
“’Gold is still cheap relative to fixed income [assets]…gold could really pop and move,” said Nicholas Johnson, who helps manage $20 billion invested in commodities at Pacific Investment Management Co…
“’The economy will have quite a hole to climb out of,’ said Edward Meir, senior commodities strategist with brokerage INTL FCStone, referring to the first-quarter slowdown. ‘We think the Fed will raise rates once and then they’re not going to do anything for a while and that will be good for gold.’
“Other investors topping up their gold holdings cite concerns about unsustainable government debt levels after years of asset buying by central banks seeking to pump money into economies. Gold buyers predict this will boost inflation, which erodes the value of bonds and cash.
“’Gold as a flight-to-quality asset holds as much validity for us today, as it did in 2005 and 2006, when we first started buying it,” said Michael Tiedemann, who manages $9.5 billion as chief investment officer at Tiedemann Wealth Management.” (“Gold Gains Allure as U.S. Economy Stumbles,” WSJ, 6/1/15.)
Silver Prices to Rocket Higher: Krauth
Commodity analysts and Money Morning commentator Peter Krauth believes silver prices may rise over 50% by the end of this year.
“Knowing how to buy silver lets you take advantage of great silver buying opportunities – like the one we have now. Silver prices have been in the doghouse for some time. After peaking at $49 in April 2011, the precious metal has given back 66%. It’s been flagging around the current $16 range for the past seven months. But a couple of key indicators show the price of silver is both cheap and could be set to rocket higher…
“First, let’s take a look at why silver prices are headed higher. To understand the value of silver, you have to look at gold… Because silver and gold are highly correlated, one useful tool to gauge silver’s price relative to gold’s is the gold/silver ratio. We calculate this indicator by dividing the gold price by the silver price, which currently yields about 72. That means right now an ounce of gold will buy roughly 72 ounces of silver.
“Historically, that ratio has been closer to about 16. On that basis, silver is still very cheap. If we look at the gold/silver ratio since the current bull market began in 2001, it averaged closer to 55 before the 2008 financial crisis and stock market panic. As this bull market progresses, I believe the gold/silver ratio will not only return to its pre-panic average of 55, but will ultimately peak somewhere closer to 20. What does that mean right now? Well, if gold were to stay at $1,200, and the ratio returned to 55, then silver would climb by about 33% to around $22/ounce.
“However, I predict gold will climb to about $1,400 by the end of this year. So at a ratio of 55, silver would reach $25.50. That’s 55% higher than today’s $16.50. With silver prices headed higher, now’s a great time to add silver to your portfolio….” (“Numbers That Show Silver Prices Are Headed Higher,” ETF Daily News, 6/1/15.)