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Gold and Silver Prices
Gold and silver prices ended the week down due to higher U.S. treasury yields, a stronger dollar and a better than expected jobs report.
The gold market was also keeping an eye on China's move this week to cut the reserve requirement for banks in an effort to fight off an economic slowdown and Greece, where increased uncertainty has supported prices.
The negative pulls for gold are the elevated speculative positions, hawkish Fed and stronger dollar, while the lowering of the reserve requirements in China, negative yields in most European countries and uncertainty in Greece lend support,’ Saxo Bank senior manager Ole Hansen said.” (“Gold dips 2 pct after U.S. jobs data; set for weekly fall,” Reuters, 2/6/15.)
Gold finished the week down $49.80, closing at $1,234.30. Silver prices closed the week at $16.79, down $0.54.
Gold May Hit $3,000: Dr. Stoxx
Trader and market analyst Thomas Carr (aka Dr. Stoxx), wrote that Bank of America’s forecast of $3,000 gold was likely correct, albeit somewhat premature.
“BofA's technical analyst, Stephen Suttmeier, went even further, making the case for gold at $3000. He pointed out a clearly demarcated uptrend channel that was the sure sign of a new "secular bull rally" in gold and that price, in his words, "would reach the $3000 area by early 2014."
“But what if BofA didn't get the call wrong, just the timing of it?
There are several new developments since the BofA call that could certainly push gold higher, if not to 3000, then at least to test the 1800 - 1900 resistance area. These include but are not limited to the following:
“1. The U.S. dollar is severely overextended, and as recent shake-ups in Europe demonstrate, currency trends are always vulnerable to political realities.
“2. A report out last week from the IMF reveals that Russia has been buying up gold to stockpile against the falling ruble, sanctions and low oil prices. So too several other former Soviet block countries...
“3. China's supply of gold at these low prices may soon dry up as the Eurozone faces its ongoing financial crisis. It will either raise prices or hoard supply. Either way, gold rallies…
“4. Since the Western central banks got into the business of manipulating the price of gold -- largely through all kinds of fancy derivatives -- in order to keep their currencies afloat, the world has seen a growing disconnect between the spot price of gold and the fundamental value of the metal. In the free market, these variances from mean-value always find a way of reverting to a fairer valuation.
“5. Low oil prices have made it possible for miners to continue in operation despite low gold prices. Once oil bottoms and rebounds, they're going to see production levels go a lot lower as a number of the smaller players go out of business…
“7. Lastly, there is an old saying that "when governments do things right, avoid gold. But when they mess up, buy it…" (Yahoo Finance, “7 Reasons Gold Could Hit $3000,” 2/2/15.)
Economic Uncertainty, Store of Value Drives Investors to Gold: WSJ.
The Wall Street Journal wrote that investors are acquiring gold as a traditional store of value during these uncertain economic times.
“Gold’s run-up so far this year has put it among the best-performing assets globally. But it is fear, not glitter, that is behind the yellow metal’s appeal for investors.
As market jitters persist, thanks mainly to renewed economic uncertainty in the eurozone following the recent Greek elections, gold’s traditional role as a store of value in times of turbulence, rather than physical demand for the metal, has been more prominent...”
“With Greece once again causing macroeconomic concern, and volatility high in … foreign exchange markets—particularly following the Swiss National Bank ’s decision to remove the cap on the franc’s exchange rate against the euro last month—gold is likely to continue to trade more as a currency rather than just a commodity, analysts say. “ (WSJ, “Gold, Dollar Buck Trend to Shine Together,” 2/4/15.)
Gold Prices Expected to Rise Due to China Demand
Gold prices are expected to rise as Chinese acquire gold in anticipation of the Chinese New Year.
“The Chinese New Year: TD Securities said in a report released today that gold prices are up in China. That trend is expected to remain in place ahead of the Chinese New Year, which begins Feb. 19. Gold is frequently given as a gift during the festivities. "We could very well see $1,300 gold in the coming weeks," Steve Scacalossi of TD Securities, wrote in the report.” (Money Morning, “Gold Price Today Sees Modest Gains – Higher Move on the Horizon,” 2/4/15.)
China Suspected in Massive Anthem Hack
Experts suspect that China may be responsible for the cyberattack against Anthem resulting in the theft of highly sensitive information from more than 80 million Anthem members.
“Hackers gained access to the private data of 80 million former and current members and employees of Anthem in one of the largest medical-related cyber-intrusions in history. Authorities said the breach, which was discovered late last month and disclosed this week, did not involve private health records or credit card numbers but did expose Social Security numbers, income data, birthdays, and street and e-mail addresses.
“Investigators suspect Chinese hackers may be responsible for the breach, according to a person briefed on some aspects of the probe. There are also some indications that other health-care companies may have been targeted, said the individual, who spoke on the condition of anonymity to discuss the ongoing investigation.” (Washington Post, “China suspected in major hacking of health insurer,” 2/5/15.)
Goldline’s Express IRA® Program
Many Goldline clients choose to include precious metals as part of their retirement planning especially during times of economic crisis and uncertainty.* Goldline’s Express IRA® allows clients to acquire precious metals on their schedule; they no longer have to wait for your self-directed IRA to be funded before getting started.
Goldline's Express IRA® not only provides clients with the ability to diversify their IRA on an expedited basis, clients can also qualify for Goldline's ground-breaking Two-Way Price Guarantee Program℠ when they acquire $10,000 or more of our exclusive bullion coins. When an Express IRA® purchase qualifies for Goldline's Two-Way Price Guarantee Program℠ clients are protected on short-term upside and downside market movement: they can either call to reprice their coins if the selling price falls (up to a maximum of 28 days depending on the size of the purchase) or, if the selling price of the coins increase during the qualifying period, clients can call Goldline to acquire additional coins at the original selling price.
Goldline provides a wrap-up of the week's precious metals news along with important commentary on the American Advisor Week in Review audio program. Listen to the show below: