Gold Is A Steal And Insurance Best Bought Before You Need It - Norman

Release Date: 
Friday, April 14, 2017

Growing war fears and President Trump’s announcement that he favors a weak U.S. dollar sent gold prices above $1285 this week. To date, gold prices have gained an impressive 12% for the year.

“Gold stayed on track for its strongest week since June on Friday, with prices close to the previous days’ five-month peak, as concerns over North Korea and the Middle East hit the dollar and sent investors scurrying for the safety of bullion… ‘The further deterioration in the U.S. relationship with Russia and North Korea this week has supported the prices of precious metals," Capital Economics said in a weekly note. ‘A weaker dollar, in light of President Trump's comments about the risk to the U.S. economy from a rise in the dollar, has also helped to boost the price of gold.’” (“Gold heads for best week since June on Korea, MidEast jitters,” Reuters, 4/14/17.)

Gold ended the shortened trading week up $34.00, closing at $1288.80. Silver prices closed at $18.62, up $0.56.

Gold Is A “Steal” And Insurance Best Bought Before You Think You Need It – Norman
Precious metals analyst Ross Norman wrote that gold is approaching a key technical level that may signal similar to gold’s record bull run in 2011.

“Gold is poised to crack the critically important $1291 level which is a trendline going to back to the all time high on September 22nd 2011 when gold hit $1922 an ounce.
Conclusively breaching this trendline is to say we are very much back in a bull run. With $1291 breached there would only be the minor inconvenience of the psychologically important $1300 level - more of a speed bump than a real resistance level - before gold is able to move move higher largely unfettered …

“2017 looks likely to achieve well north of the run rate of 11% and Sharps Pixley has forecasted an average for the year at $1310 ... a 15% gain ... and we may well have under-estimated the potential …

“Looking at the chart below it is clear that gold is still only roughly where it would have been WITHOUT the economic crisis. The bull run between 2000 and 2008 was based upon sound supply/demand fundamentals - and of course costs have risen commensurately ... in short, at current levels and bearing in mind the outlook for inflation and certainty of ongoing geopolitical uncertainty, the current gold price is an absolute steal ! … Like most forms of insurance ... it is best bought well before you think you need it ... and that time just might be coming now.” (“ROSS NORMAN : Gold Poised - $1291 Is A Game Changer,” Sharps Pixley, 4/14/17.)

Traders, Analysts Most Bullish On Gold Since 2015
With gold up twelve percent for the year, a Bloomberg survey of analysts and traders found the group was the most positive about gold prices since December 2015.

“Gold investors are getting behind this rally. Prices have climbed back to the highest level since November on growing worries about everything from North Korean nuclear tests to faster inflation and French election results. In 2017, bullion has risen about 12 percent.

“In a Bloomberg survey this week, traders and analysts were the most positive on gold since December 2015. Another bullish sign, prices have climbed above the 200-day moving average and Britain’s Royal Mint said bullion purchases jumped 20 percent in the first quarter …

“’The animal spirits were asleep, but they’re waking up again,’ Mark O’Byrne, a director at broker GoldCore Ltd. in Dublin, said by phone. ‘We have all these latent threats that have been around for a while, Trump, European elections, Brexit, and they’re all just becoming a little more acute…’ The Credit Suisse Fear Barometer neared an all-time high this week, a warning sign as the list of economic and political concerns grows….” (“Gold Rally Gets Feverish as Trader Survey Flashes Extreme Level,” Bloomberg, 4/13/17.)

Fear Index Jumps On Geopolitical Concerns - CNBC
CNBC reported that the CBOE Volatility Index, which is considered the best measure of fear in the market, rose more than 2 percent, reflecting investor concern about geopolitical risk.

“The CBOE Volatility Index (.VIX), considered the best gauge of fear in the market, closed above its 200-day moving average for the first time since the election this week. The indicator jumped more than 2 percent Thursday afternoon at one point to a fresh high for the year … The recent spike in fear comes just as geopolitical risk heats up. The Pentagon said Thursday U.S. military forces dropped the largest non-nuclear bomb in Afghanistan, the first time the so-called mother of all bombs has ever been used in combat …

“A key factor for the renewed fear was concern about geopolitical events such as tensions with North Korea, the conflict in Syria, or the French elections. The geopolitical risk has been known for some time, but ‘now it's creating a critical mass, said Dan Veru, chief investment officer at Palisade Capital Management. ‘The market's being forced to recognize the impact [from] global disruption….’” (“Wall Street's fear gauge breaking out as geopolitical jitters mount into long weekend,” CNBC, 4/13/17.)

Gold To $1350 – Streible
Phil Streible, chief market strategist for Chicago-based RJO Futures, sees gold rising to $1350 per ounce as investors acquire the safe haven asset.

“'I think we can see a green shootout all the way to $1,350, and we can easily breakthrough $1,300 now,' explained Phil Streible, chief market strategist for Chicago-based RJO Futures … While past safe-haven bids for gold tend to have been short-lived, Streible said this time around, it 'feels different.' 'It is much more complicated than just a few missiles being fired,' said Streible. The Dow was down 100 points on Tuesday as investors sought safe-haven assets as political and security tensions rose over North Korea, the Middle East and the looming French election.” (“Gold Shoots Higher, Can "Easily" Breakthrough $1,300 – Strategist,” TheStreet, 4/11/17.)

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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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