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Gold and Silver Prices
Gold prices reached a three month high this week before minor profit taking on Friday as investors predicted the Fed would defer any interest rate hike due to the weak economy.
“Gold fell from three-month highs on Friday as the dollar firmed, but stayed on track for its biggest weekly gain since mid-January as a spate of soft economic data dented expectations for an imminent rise in U.S. interest rates…Recent data has supported market expectations that the economy is not strong enough for the Fed to start raising record-low rates from June…’The weaker U.S. macro data over the past couple of weeks has pushed back expectations for an earlier rate hike, and now I think the market is increasingly thinking that if it's going to be this year, it will be the back end of the year.’” (“Gold edges off three-month high as dollar firms,” Reuters, 5/15/15.)
Gold finished the week up $36.00, closing at $1,224.50. Silver prices closed the week at $17.60, up $1.10.
Gold Prices Could Rise Well Above $2500 by 2020: SilverSeek Silverseek offered a technical analysis of several economic scenarios which may ultimately lead to gold prices reaching record levels.
MORE OF THE SAME SCENARIO:
CHICKENS COME HOME TO ROOST SCENARIO:
HYPERINFLATIONARY SCENARIO for 2020:
CONCLUSIONS REGARDING ALL SCENARIOS:
WGC: Central Banks Continue to Diversify with Gold
The World Gold Council released its quarterly “Gold Demand Trends” this week. Among its findings, the WGC noted that central banks continued to be net buyers of gold for the 17th consecutive quarter.
“Stability and continuity are synonymous with central banks, and these proved to be the defining themes in the first quarter. Central banks and other official institutions continued their buying momentum... The primary driver of this accumulation of gold reserves continues to be diversification. Many central banks remain exposed to a small number of key reserve currencies and look to gold as a hedge against volatile currency movements.” (“Gold Demand Trends First Quarter 2015,” WGC, 5/14/15.)
Fed Has Emergency Plans for Government Default Reuters reported the Federal Reserve designed extensive plans to handle a government default on its $18 trillion debt which remains in effect. The Federal Reserve drew up extensive plans for handling a U.S. debt default that included scheduling deferred payments and lending cash to investors, according to a lawmaker who cited Fed documents…
The plans continue to be relevant to investors because debt ceiling debates have become a perennial danger from Washington. The Treasury is currently scraping up against an $18.1 trillion borrowing cap, and the Congressional Budget Office estimates the government could struggle to pay bills by October or November if Congress and the White House do not agree to lift the cap.
“Debt defaults in other countries have triggered financial crises… [U.S. Congressman] Hensarling said the documents also showed that the Treasury had the ability to pick which obligations it can pay, which would allow it to favor bond investors over its many other obligations. The Treasury has maintained that picking which bills to pay would be experimental and dangerous….Analysts and officials warned that missing payments could lead to economic calamity, and details have only slowly emerged over how financial officials braced for the unthinkable.” (“Fed said to have emergency plan to intervene if U.S. defaulted on debt,” Reuters, 5/11/15.)
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: Tune in as Joe Battaglia delivers his final American Advisor.