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Gold and Silver Prices
A large “dump” of gold futures by an undisclosed seller sent gold prices lower on Friday.
“’A large seller on Comex just dumped $1.4 billion of gold futures onto the market,’ Ross Norman, chief executive officer at Sharps Pixley Ltd. in London told Marketwatch. “We have a peculiar world where the physical market is seeing very strong buying, but a large leveraged speculator is selling at these prices… “our Asian colleagues will continue to acquire while the West continues to divest. Who is right we shall only know in the longer term…’
“Brien Lundin, editor of Gold Newsletter, said… “No one dumps that much of a commodity that quickly to get the best price… Their intended purpose is purely to drive the price down. It’s outright manipulation that wouldn’t be allowed in any other market.’” (“Gold futures head toward a five-year low,” MarketWatch, 7/17/15.)
Gold finished the week down $28.50, closing at $1,134.30. Silver prices closed the week at $14.94, down $0.78.
Gold to $2,000? Limited Supply Says “Yes” – Profit Confidential
Research analyst Moe Zulfiqar believes that fundamental supply and demand could send gold prices to $2,000 per ounce in the next few years.
“It can’t be stressed enough; gold prices are setting up to provide big gains to investors. Just pay attention to supply and demand; you will notice how the precious metal’s market is improving fundamentally. We have been tracking what’s happening in the major gold-producing regions closely. To say the least; conditions are getting outright worse. Producers aren’t producing the yellow metal…
“Closely looking at the demand for the precious metal, we see it as the same, if not rising. To give you some perspective; for the month of June, the U.S. Mint sold 76,000 ounces of the yellow metal in American Eagle coins. This was the highest amount since January, and a month-over-month increase of over 250%... We also continue to see central banks buying more gold… They are very hungry for the yellow metal.
“As it stands, supply is shrinking in the gold market and the demand is solid. Economics 101 say this is a perfect recipe for higher prices ahead… I am looking at gold for the long-run. I continue to believe that the decline in prices over the last two years was a blessing in disguise. Going forward, I expect the yellow metal to see solid moves to the upside. I am still not ruling out gold to go to $2,000 in the next couple of years.”
(“Gold Prices Headed to $2,000? Gruesome Supply and Solid Demand Say So,” Profit Confidential, 7/16/15.)
China’s Massive Gold Reserves are “Very, Very Bullish for Gold” – Norman
China’s central bank published its gold reserves for the first time in six years, showing a 60% increase from 2009, well beyond the amount estimated by analysts.
“As of June, China’s official gold reserves were at 53.32 million ounces, or 1,658 metric tons. The last reported figure in April 2009 was 1,054 metric tons, according to [Sharp Pixley’s Ross] Norman. ’The figure published by the PBOC is roughly half the market consensus on what we had thought they had accumulated… As such, this is very, very bullish for gold.’
“He said that China has ‘clear ambitions to create a global reserve currency to challenge the hegemony of the U.S. dollar and to fill the void created by the declining holdings by central banks of the euro….’” (“Gold futures head toward a five-year low,” MarketWatch, 7/17/15.)
Echoing this view, Simona Gambarini, a commodities economist at Capital Economics in London, told the Wall Street Journal that China wants “’to have a much bigger presence at the international level and they want their currency to be considered a reserve currency… In order to do that you need to back it up with a certain amount of gold.’” (“China Discloses Its Gold Holdings,” WSJ, 7/17/15.)
Top Money Managers are Turning to Gold
MarketWatch commentator Brett Arends discussed the transformation of top money managers from gold bears to gold bulls.
“The world’s top money managers have hated gold bullion for almost as long as anyone’s been asking them. But not anymore. With China wobbling, Europe in turmoil and the price of bullion down to multi-year lows, the long-running gold skeptics running the world’s biggest investment funds have suddenly and dramatically turned on to its appeal.
“’Gold is undervalued’ at around $1,155 an ounce, say a small majority of managers, according to the latest Bank of America Merrill Lynch survey. Bulls outnumber bears by only 1 percentage point, but the improvement shows an astonishing change from the most recent past, when the gold skeptics formed a clear majority…
“[F]ans of the precious metal say it’s the oldest currency in existence and a long-standing ‘safe haven’ and ‘store of value.’ It’s also portable, fungible, anonymous and limited in quantity, implying that as the world’s central banks print more and more paper money, the value of gold … probably ought to rise in relation.
“Many moderate gold fans also argue that adding some bullion — somewhere between 5% to 10% — to a portfolio can reduce the overall volatility, as gold has frequently performed differently from other assets. That’s been true for most of the past 50 years, but past performance, as the financial disclosures always remind us, is no guarantee of future results. Gold was abandoned as official money in 1973 and it’s hard to compare valuations today with valuations then… Nonetheless, gold has certainly become cheaper and cheaper in recent years, especially in relative terms.” (“Top money managers are turning to gold — should you?” MarketWatch, 7/17/15.)
Cramer: Gold Ready to Shine
CNBC’s Jim Cramer discussed gold’s bullish prospects with Carley Garner, a technician and author of "A Trader's First Book on Commodities."
“… Garner saw good news ahead for this precious metal as well. Many investors steer clear of gold because it doesn't have much activity or pay dividends. However, Garner thinks that what is important to note about it is the fact that speculators are always long gold and rarely hold a short position. At the moment, there is a small bullish position building in gold, which tells Garner that the market could start heating up again.
"’A lot of the weakness in gold has been 100 percent due to the dollar. So, that is a big factor here,’ Garner added. Ultimately, Garner said the key level to watch for gold is the support around $1,125 to $1,120. If the price can break above $1,230, that could trigger to make the bulls happy all the way up to $1,305 or $1,400.” (“Cramer: Why copper & gold are ready to shine,” CNBC, 7/16/15.)