Gold Bull Market Has Legs; $1700 Gold In 2017 - Dart

Release Date: 
Friday, September 9, 2016

Gold prices fell on Friday on concerns the Federal Reserve may raise interest rates.  Despite the fall, gold is on track to end the week in positive territory.

“Gold slipped for a third day on Friday as hawkish comments on U.S. interest rates from a top Federal Reserve official helped lift the dollar to a session peak, and as buyers continued to cash in on this week's price rally.  The metal stayed on track for a second successive weekly gain after U.S. data fueled talk that the Fed will hold off raising rates at its September policy meeting…

“Soft jobs and services data this week have dented expectations that ultra-low interest rates, a key support for non-yielding gold, will rise this year. Markets remain uncertain
on the outlook for rates, however, with Fed officials recently taking a more hawkish tone.   ‘We have no clear signal from the Fed,’ ABN Amro analyst Georgette Boele said. ‘On the one hand you have weaker data, and (gold) is supported a bit, but then the market gets distracted and it goes in the opposite direction….’” (“Gold slips after Fed comments boost dollar,” Reuters, 9/9/16.)

Gold ended the week up $3.00, closing at $1,328.80. Silver prices closed at $19.13, down $0.39.

Gold Bull Market Has Legs; $1700 Gold In 2017 - Dart
In a detailed technical analysis of the U.S. Dollar index and gold prices, financial blogger Taylor Dart concluded the gold bull market continues to “legs” and prices may increase to $1600 in 2017. 

“It's been a strong start to the week for gold as the yellow metal once again bounced off support to close at $1,354 / oz yesterday. After looking like it had been left for dead last week, gold GLD found its footing after a weak jobs report which left some doubts about the plausibility of a September rate hike. While many investors in the gold space are focusing mainly on the price of gold, I believe there's another chart worth keeping an eye on that could change the landscape for this gold bull market. This chart is that of the U.S. dollar USDU, and I believe further weakness in the currency could give fresh legs to this gold bull market…

“Looking at the charts the U.S. dollar looks like it is on the precipice of another breakdown. If this breakdown comes to fruition, we should see the price of gold move into an accelerated up-trend with the potential to see $1,700 / oz in 2017…

“The fact that gold continues to trend above all of its key moving averages is great news for gold investors going forward. I believe we should see this uptrend continue through 2016 and into 2017 as long as gold stays above $1,210 / oz. Based on the trendline and slope of the 200-day moving average, I would not be surprised to see $1,450 / oz by the end of this year and over $1,600 / oz by sometime next year. Having said that, this is all conditional on gold holding support at the $1,210 / oz level. If we continue to see weakness in the U.S. Dollar Index and can take out the 93 level on the downside, this bull market for gold should accelerate very quickly….” (“Gold Bulls Rejoice: U.S. Dollar Trend Change Underway,” Seeking Alpha, 9/8/16.)

Fed Bluffing On Interest Rate Hike – Grant
Jim Grant, publisher of the financial newsletter Grant's Interest Rate Observer, believes the Federal Reserve has missed its chance to raise interest rates and advised investors to bet on gold.

“The Fed is bluffing, and no matter what happens with interest rates, it might be best for investors to stick with gold, this according to one widely known Fed critic and Wall Street pundit. ‘I think that [the Federal Reserve] missed their mark. They should have raised rates by now,’ Jim Grant, publisher of popular newsletter Grant's Interest Rate Observer, told Kitco News.

“And, as markets continue to be stuck in what appears to be monetary-policy limbo, Grant says he thinks ‘the solution for investors lies in gold…’

“Despite the seeming relationship between gold prices and tightening expectations, Grant argued that the yellow metal will not be driven by the Fed's next policy move. Instead, ‘it's the revelation that we're walking -- or running -- down the wrong path, and that we must regroup and formulate a monetary policy that's based upon a lasting standard of value.’

“Current central bank policies will either ‘end in tears’ or ‘laughter,’ he continues, depending on how investors position themselves; and, according to Grant, gold is the safest bet. ‘I think a bet on gold, to me, is actually an investment in monetary disorder. It's not a hedge against it, because we have monetary disorder,’ he said…” (“How to Play the Fed's Rate Hike Bluff -- Jim Grant,” TheStreet, 9/7/16.)

Implosion Of U.S. Public Debt Will Explode Gold And Silver Prices - SRSrocco
Publishers of the SRSrocco Report wrote that the unsustainable public will ultimately send gold and silver prices significantly higher.

“The US financial system is in serious trouble - and this one chart confirms it.  Investors who understand the negative consequences of this chart would be buying physical gold and silver hand over fist.  Unfortunately, Americans have been put to sleep by the Mainstream media as they continue to report that “business as usual forever and everything will be okay.”

“However, the opposite is the case as the US economy and the financial system continue to disintegrate under the forces of massive debt, zero interest rates and a collapsing energy industry.  This is not a situation that will continue for many years or decades.  This will likely collapse much sooner than most Americans realize.

“This chart taken from the Political Calculations blog, reveals the exponential increase in U.S. debt as well as GDP – Gross Domestic Product.  Most individuals have seen charts of U.S. debt going back decades or even to the 1930’s.  However, this chart goes back all the way until 1791. You will notice as the debt increased at an exponential fashion, so did US GDP.  Which means our GDP growth is really fictitious or based on the leveraging of debt… The US debt has increased $10 trillion faster than the doubling exponential function.  This is off that charts…

“The Value Of Gold & Silver Will Explode As U.S. Public Debt Implodes. The reason investors need to be holding onto LOTS of physical gold and silver is due to the coming implosion of US public debt.  While many analysts and individuals think it would be prudent for the system to have a Debt Jubilee or to allow the U.S. Banking Industry to go under, this would be a fatal blow to the U.S. Empire…

“Regardless, investors need to own a good percentage of their wealth in physical gold and silver to protect themselves when the market finally crashes… Because there is very little in the way of physical gold and silver to go around, their values will skyrocket as investors seek to PROTECT WEALTH.” (“This One Chart Should Drive Investors Into Buying Gold And Silver,” Gold-Eagle, 9/7/16)   NOTE: Goldline believes investors should invest no more than 5% to 20% of their investment portfolio into gold.

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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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