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Gold and Silver Prices
Gold fought to continue its five week winning streak as prices remained above the $1,230 mark. The yellow metal remains one of the best performing assets in 2016 as volatility remained the watchword in the financial markets.
“Gold prices are attempting to finish the week on its highs after struggling earlier this week. If gold prices finish today above $1238, then it will mark 5 weeks in a row of gains.
“Since gold is priced in US Dollars, part of these gains are fueled by US Dollar losses. As Ilya Spivak notes in the quarterly forecast, Gold has a strong inverse correlation to Fed interest rate expectations. Expectations are falling in that market participants are not pricing in another rate hike for the Fed for the remainder of 2016. This is weighing on the US Dollar and naturally propping up gold prices. However, upon closer inspection, it’s not just a weak US Dollar supporting gold prices, gold is exerting some internal strength as well.” (“Gold Prices Attempting 5 Weeks of Gains,” Daily FX, 2/19/16.)
Gold ended the week down $11.90, closing at $1,227.00. Silver prices closed at $15.42, down $0.43.
Gold Bull Market is Back; $2,000 Target – Ing
John R. Ing, President & CEO at Maison Placements Canada Inc., “Gold bullion … came back from the dead, attracting new money defying the rout in commodities. Gold held its value better than other assets. That previous haven, the dollar plunged sparking a scramble for safety, amid the demise of bullish market sentiment, the peaking of every market…, Middle East turmoil and concerns over the health of the global financial outlook. Although, this long overdue correction was well advertised, the markets now view the glass as half empty, rather than half full…
“Near term, gold is technically overbought, and a brief pullback would present another attractive buying opportunity for those who missed the boat by listening to Goldman’s economists. Following that, we expect a bull run to $1,300 per ounce and then a target to the old high, yes $2,000 per ounce. Gold will be a good thing to have.
“US slow growth and huge debt burdens ultimately raises questions about the repayment of that debt. The age old discipline of supply leaves the dollar only one way to go. Vast amounts of dollars are held everywhere. Gold will continue to rise in value as long as the United States keeps drifting towards fiscal instability. Their system is debt clogged that not even a one percent yield could coax buyers.
“Gold’s new bull market has just begun. As long as America consumes much more that it produces and owes much more than it owns, the avalanche of dollars will keep coming. What damages trust in the dollar, damages the world. Gold is an alternative to the dollar for central banks... Gold is that new/old global currency. (“Gold: It’s Baaaack!” Gold Eagle, 2/18/16.)
Silver May Rise to “Jaw Dropping” $400 per ounce – Turk
James Turk, the former head of commodities for the Abu Dhabi Investment Authority and precious metals analyst, told King World News readers that a technical analyst signals silver is preparing for a new record bull market.
“[T]he overall technical pattern being formed – which is called a ‘cup-and-handle’ – remains potentially very bullish. There are three events needed for this pattern to complete, and for silver to realize its upside potential.
“Silver first has to break above the red downtrend line, which means silver needs to break above roughly the $18 level. When it does, it will be a signal that silver has begun forming a new uptrend. Then that uptrend needs to take silver to $50, completing the handle part of this pattern. Third, silver needs to break above the horizontal neckline at $50.
“When that happens, silver will finally begin its bull market. Silver will then head toward the $400 price that can be expected if this cup-and-handle pattern follows its normal historical path…
“Based on the evidence unfolding, Eric, I expect that the next couple of years will be spectacular for silver. We had a taste of how spectacular silver can be awhile back when silver soared from $18 to $50 in the nine months ending in April 2011. But look at what silver did back in 1978 to 1980. That is what I mean by spectacular, and that is what I expect for silver once it finally completes its cup-and-handle pattern by breaking above $50.” (“Despite Today’s Pullback In The Metals, A Jaw-Dropping Target For Silver Has Been Issued,” King World News, 2/15/16.)
Top Hedge Fund Manager Warns “Helicopter Money” Coming from Central Banks
One of the world’s top hedge fund managers, Ray Dalio, warns that central banks will be forced to flood their economies with aggressive money printing to bolster their ailing economies.
“Bridgewater’s Ray Dalio has argued that central banks’ ability to invigorate economic growth has atrophied, and predicts a new era of radical monetary policy possibly involving “helicopter money”.
Central banks around the world have been attempting to revive durable economic growth and combat deflationary forces through conventional measures like interest rate cuts and unconventional policies such as quantitative easing — or bond buying — and even negative interest rates.
“But Mr Dalio, by one measure the most successful hedge fund manager of all time, argued in a note to clients that these measures have been exhausted and are increasingly ineffective… He therefore predicts that central banks will eventually have to usher in what he calls ‘monetary policy 3’ — where rate cuts were the first stage and quantitative easing the second phase — which will more directly and forcefully encourage spending.
“The Bridgewater founder says this third era of monetary policy will range from central banks directly financing government spending through electronic money-printing to what the famous economist Milton Friedman coined ‘helicopter money’ in 1969, in other words central banks disbursing cash directly to households….” (“‘Helicopter money’ on the horizon, says Ray Dalio,” Financial Times, 2/18/16.)
JP Morgan Analysts Tells Investors to Buy More Gold
Dr. Marko Kolanovic, the Global Head of Derivative and Quantitative Strategies and Senior Analyst at JP Morgan Chase & Co, Research Division, told investors they should be allocating more of their investment dollars into gold.
“In a new report, JPMorgan analyst Marko Kolanovic weighed in on the current environment for equities, gold and oil, and discussed the options that central banks have moving forward… He sees elevated volatility, deleveraging, rotation out of momentum stocks and weak market sentiment as headwinds as well…
“Kolanovic noted that JPMorgan has been advising investors to increase their exposure to gold, cash and volatility since late 2015. He believes that gold will continue to benefit from global recession concerns…
“He believes that the Federal Reserve has been too concerned with inflation in the past year and a half and has placed unnecessary pressure on emerging market economies, producing a ‘negative wealth effect’ around the world that ‘could be comparable to that of the 2008/2009 crisis.’” (“JPMorgan's Kolanovic On Stocks, Gold And Advice For The Fed,” Yahoo! Finance, 2/12/16.)