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Gold and Silver Prices
Continued low interest rates and concerns over the economy sent gold prices higher this week. “Gold held recent gains to trade near a two-week high on Friday and was headed for its biggest weekly jump since January, after the Federal Reserve cautioned over its rate hike path and U.S. economic growth… ‘Gold (is) still getting traction from dovishly perceived FOMC statement, short-covering and fresh purchases,’ said HSBC analyst James Steel, referring to the Federal Open Market Committee… In the physical markets, Chinese buying was steady… Sustained physical buying could further support prices.” (“Gold near 2-wk high, set for biggest weekly gain since Jan,” Reuters, 3/20/15.)
Gold finished the week up $23.80, closing at $1,183.40. Silver prices closed the week at $16.83, up $1.09.
Gold May Reach $3,000: ANZ
A significant new study of the gold market published by The Australia and New Zealand Banking Group concludes the price of gold could reach record highs by 2030.
“Gold prices may more than double to as much as $3,000 an ounce by the year 2030 on the back of strong demand from Asia and global central banks, according to The Australia and New Zealand Banking Group Ltd.
“’Over the next five to ten years, the fundamentals of substantial economic growth and a constrained financial system will continue to provide support for gold,’ said ANZ’s Warren Hogan and Victor Thianpiriya, according to an excerpt of a research note posted on Barron’s.
“’Emerging market central banks will need to hold a larger stock of physical gold in their vaults, to shore up confidence in the newly floating exchange rates,” they said. At the same time, “advanced economy central banks will likely maintain existing gold holdings, implying continued net buying from the official sector over the years ahead.’
“ANZ forecasts gold at $2,400 an ounce for 2030. Under an even more bullish scenario for the yellow metal, prices could rise to as high as $3,000 an ounce by 2030. Prices are likely to rise ‘gradually, eventually breaking through the $2,000 an ounce level within the next decade,’ Hogan and Thianpiriya said.” (“China demand may help lift gold prices to $3,000 by 2030,” MarketWatch, 3/18/15.)
Gold May Top $2000 – Capital Economics
Julian Jessop, head of commodities research at Capital Economics, a leading independent economic research company, believes a break-up of the eurozone could send gold prices above $2,000 per ounce.
“’Contrary to some expectations that gold prices are more likely to fall, Capital Economics on Friday said they might actually top $2,000 an ounce. “Many of the latest headlines have focused on the negative implications of the surge in the dollar,’ said Julian Jessop, head of commodities research at Capital Economics. But ‘this misses the rather bigger point that the gold price has held up remarkably well given the extent of the dollar’s move… This resilience is arguably encouraging for the precious metal’s prospects when the focus returns to more supportive factors…’”
“Gold has also had a strong relationship with the yields on U.S. government bonds so far this year… … all the other factors that might influence the price, ‘including support from the cost structure of the mining industry, the prospect of a rebound in demand from the key markets of China and India, and the scope for a revival in safe-haven flows in the event that one or more countries exit the euro,’ said Jessop.
“So far, the probability assigned to a euro break up remains well below the peak seen in mid-2012, when gold traded above $1,700. ‘If the eurozone does actually break apart, we would not be surprised to see the gold price top $2,000….’” (“Gold still has a shot at $2,000 an ounce,” MarketWatch, 3/13/15.)
Dollar Crash Will Send Gold to “Stratosphere”
Investment newsletter Arabianmoney advised readers this week that an ultimate dollar crash will send gold prices to the “stratosphere.”
“A strong dollar means a low gold price, or does it? Gold is actually one of the world’s best performing currencies this year, off just a couple of per cent compared with double-digits for the euro.
“Dollar crash coming?
“That said if the dollar crashed then gold prices would undoubtedly surge as the only credible rival safe haven currency, except perhaps the Swiss franc. Where the gold skeptics have the argument wrong is their belief in the almighty dollar.
“As former Federal Reserve chairman Alan Greenspan said recently the US economy is ‘extraordinarily weak’ (click here). How then can it continue to support an extraordinarily strong currency? Is it not living a lie?...
“Go for gold
The smart money is quietly shifting to gold now. For gold would be the major beneficiary of dollar weakness as the only currency in the world without a central bank printing like crazy behind it.
“Given the relatively tight precious metals market gold and silver prices would soar into the stratosphere…We’ve seen a strong dollar before major financial crises many times before and this time may be no different. When that crisis happens it will be time to ditch the greenback for the one currency you can trust!” (“How the gold price will defy the skeptics and stage a huge comeback,” Arabianmoney, 3/15/15.)
Dollar Shock May Cause “Colossal” Financial Event
An article from Business Insider warns that, based upon research from Bank of America Merrill Lynch, a “colossal" financial event may be imminent.
“The dollar is set for its strongest quarterly strengthening since 1992, according to Bank of America, a good sign that a rate hike is around the corner… In the past, significant dollar gains against other currencies have pretty much happened only during periods of extreme financial or geopolitical distress.
The last four large dollar shocks in the past 45 years have been symptoms of huge financial events: the collapse of Lehman, Britain's panicky ejection from the European Exchange Rate Mechanism (ERM) in 1992, the first Gulf War, and Paul Volcker's shock rate hikes in the early 1980s.
Today's surge is already considerably larger than the one that surrounded Lehman's collapse, although the economic conditions are very different…
“The conditions in global markets right now are a historical anomaly. Rates around the world have been cut 558 times since the collapse of Lehman, according to BAML. So even a small, steady series of interest rate hikes by the US Federal Reserve is a colossal change in the global financial system — one that's sending the dollar through the roof.” (“The surging dollar is a signal that a colossal financial event is just around the corner,” Business Insider, 3/13/15.)
Aden Sisters: Government Debt May Lead to Economic Collapse
In a Q&A on deflation and gold, noted analysts and publishers of the Aden Forecast, Mary Anne and Pamela Aden, warn our economic foundation is “on thin ice.”
“Q. What are the chances of another economic crisis?
“A. … But the global economic foundation is not healthy. The biggest problem is debt and we believe it’s passed the tipping point. That is, it’s become a real drag on the global economies.In 2007, for instance, world debt was $142 trillion. In 2014, it had soared to $199. That’s a 40% increase in seven years.
So nothing has really changed since the last big recession. In fact, it’s gotten worse… debt is much bigger than the world economy can handle. Many feel this will lead to another crisis or a collapse, and it’s indeed a possibility. Remember, during the last crisis in 2007-08 the world was taken to the brink…
“Low interest rates are bullish for gold because gold is then not competing with the currencies. … Gold, as the ultimate currency, is only second to the U.S. dollar in terms of major currency strength. But the soaring fast paced dollar rise is now causing turmoil in the currency market…
“[A]t some point coming up pretty quick, the dollar rise will be stemmed, either by intervention or exhaustion. And when that happens, a dollar decline will give gold a boost. To think that gold did not hit new lows near $1143 already during the dollar rise, shows its underlying, subtle strength.” (“Debt, Deflation, The Dollar & Gold,” Kitco, 3/18/15.)
American Advisor Week In Review
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: Is it possible that a short term bottom is in?. Listen to the show below and get your weekly updates: