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Gold and Silver Prices
Gold prices ended the week higher as it hovered near the $1100 price level. Prices were buoyed by yet another weak jobs report.
“Gold prices rose on Friday, shaking off earlier losses after traders judged the recent U.S. jobs report was unlikely to lead the Federal Reserve to raise interest rates multiple times… The report, while in-line and pointing to a likely near-term increase in rates, isn’t robust enough to suggest the Federal Reserve will embark on a typical tightening cycle of successive rate increases, said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago. ‘The Fed is not even close to doing multiple rate increases at this point…and while gold’s been pretty beat up, it’s priced the minimal increase in at the current levels,’ Mr. Haberkorn said.” (“Gold Ends Higher as Traders Weigh Jobs Data, Fed Decision,” WSJ, 8/7/15.)
Gold Remains in Bull Market; Above $2,000 by 2018 – Incrementum AG
Asset and wealth manager Incrementum AG issued its 2015 edition of “In Gold We Trust,” which explains why gold remains in a bull market despite recent downturns and the factors which will lead to new record prices.
“After the barely averted implosion of the financial system in autumn of 2008, we are now in the seventh year of world-wide central bank experimentation. We have all become guinea pigs of an unprecedented attempt at re-inflation, the outcome of which remains uncertain...Widespread, chronic over-indebtedness is ratcheting up the pressure on monetary authorities to break the deflationary trend and finally generate rising price inflation rates. Gold has always been the best hedge against excessive inflationary efforts.”
“We are convinced that we are now close to a decisive fork in the road: the disinflationary trend will (have to) be broken. Rising price inflation rates are possible both in conjunction with a revival in economic activity and in a stagflationary environment. In both cases, inflation-sensitive investments including gold…will benefit…
“From a technical perspective, the picture is not unequivocal. The downtrend hasn't been broken yet. However, pronounced negative sentiment indicates resignation among gold bulls. We believe a final sell-off is possible. During such a sell-off, the support at USD 1,140 could be tested. A reversal following such a test would be a reliable indication of a primary trend change in the gold market.
“Based on the big picture’ analysis that is packed into this report, we see no reason for a change of course: In gold we (still) trust. We are firmly convinced that gold remains in a secular bull market that is close to making a comeback. We expect to see a final trend acceleration at the end of the cycle. We thus decided to set a time horizon of three years – June 2018 – for our long-term price target of USD 2,300 to be reached. (“In Gold We Trust 2015,” Incrementum AG, 6/25/15 [emphasis omitted].)
Gold On Sale – Frank Holmes
Frank Holmes, CEO of U.S. Global Investors, penned a commentary for Forbes discussing why “rational investors” are buying physical gold.
“With so much gloom and doom in the media surrounding gold right now, you might wonder why coin sales are soaring at multiyear highs. The reason is pretty simple: Gold is on sale.
“From Crisis to Opportunity
Take a look at the chart, which shows that the bearish trend is obvious And yet many investors are still buying. In an interview this week with Money Metals Exchange and in talking to Bart Kitner, founder of Kitco, both conversations confirmed that smart investors are enthusiastically buying gold during this downdraft in prices.
“Rational Investors Know a Deal When They See One, and Feel One
With so much gloom and doom in the media surrounding gold right now, you might wonder why coin sales are soaring at multiyear highs. The reason is pretty simple: Gold is on sale. High net worth individuals and other savvy investors realize that even now, as herds of people are rushing for the exit, owning gold is one of the best ways to manage systemic risk…
“Ray Dalio, founder of Bridgewater Associates, said it best: ‘If you don’t own gold, you know neither history nor economics.’ … I’ve written that bad news is good news because when governments accelerate monetary policy, this can be a good opportunity for investors to add to their gold exposure.
“I’m not the only one who takes this position. Besides the investors gobbling up American Gold Eagles, central banks around the world continue to buy, hold and repatriate bullion. The U.S. Federal Reserve maintains its 8,133 tonnes, the most of any central bank. Germany, the Netherlands and other countries have brought home mounds of the yellow metal in the last 12 months. China has increased its reserves 60 percent in the last six years. And Texas is in the early stages of establishing its own gold depository, the first state to do so. If there were no faith left in the metal, why would banks even bother with it?” (“Gold On Sale, Says The Rational Investor,” Forbes, 8/3/15.)
Silver To Return to Record Highs In Next 3-5 Years: Gilburt
Market analyst and author Avi Gilburt, who successfully identified gold’s earlier record highs as well as its consolidation to current prices, told investors that his technical analysis signals silver’s return to record highs.
“I don't know of many charts out there that a bullish investor since 2011 would look at with more disgust than the silver chart. It has been an exceptionally painful experience for those bullishly inclined since 2011…
“As we now know, silver traded down toward that 14 region, and we are not yet done with the correction, but in our opinion, we are likely within months of the final low.
“The question then becomes what are we looking for once silver does bottom? Well, many of you may have read my analysis on mining stocks targeting 15,000 in the HUI within 50 years. My expectation for silver is no less ‘outrageous.’ Based upon the same methodology we used to identify the tops and bottoms in gold, it is suggesting that silver will be heading toward the $1000 an ounce region within the next 50 years.
“The shorter-term pattern suggests that we will be heading up back toward the 40-50 region within the next three to five years, and within the next 15 years, I am expecting silver to be able to increase by 10-15 times the price at which it will soon bottom. This means I would expect silver to exceed the $100 mark within the next decade or so.
“So, while many may view these types of projections as only being able to benefit their children or grandchildren due to the longer-term time frame, silver is still presenting itself as a high-probability bottom within the near term, and likely heading back to the prior all-time highs within the next five years.” (“Forget about whether $100 silver is possible – how about $1,000? MarketWatch, 8/1/15.)