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Gold and Silver Prices
Gold prices were choppy this week, ultimately ending lower as the Federal Reserve once again signaled its plan to raise interest rates before the end of the year.
“The price of gold steadied on Friday as a retreat in the dollar helped it snap two days of losses, but prices remained near three-week lows after the U.S. Federal Reserve indicated that it might still raise interest rates this year. The price was also on track for its biggest weekly drop in nine weeks, down 1.4 percent, after the Fed indicated after its two-day policy meeting this week that a December rate rise is still a possibility.
“Rising interest rates tend to weigh on gold because they lift the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.” (“Gold price near three-week low, set for biggest weekly drop in nine,” Reuters, 10/30/15.)
Gold finished the week down $23.00, closing at $1,142.00. Silver prices closed the week at $15.56, down $0.35.
Major US Company Stockpiling Fractional Gold, Silver Coins and Food for Next Financial Crisis
The CEO of Overstock.com, a company with more than 1.5B in annual revenue, told attendees of the United Precious Metals Association that its company has stockpiled fractional gold in anticipation of the next financial crisis.
“One of America’s largest companies is taking a controversial stance on employee benefits. In a move that is sure to draw criticism from the mainstream press, Jonathan Johnson, chairman of online retail giant Overstock.com (OSTK), publicly stated that the company has stockpiled gold and food in preparation of a U.S. financial crisis.
“Johnson recently told an audience at the United Precious Metals Association: ‘We are not big fans of Wall Street and we don't trust them. We foresaw the financial crisis, we fought against the financial crisis that happened in 2008; we don't trust the banks still and we foresee that with QE3, and QE4 and QE n that at some point there is going to be another significant financial crisis.’
“’So what do we do as a business so that we would be prepared when that happens? One thing that we do that is fairly unique: we have about $10 million in gold, mostly the small button-sized coins, that we keep outside of the banking system. We expect that when there is a financial crisis there will be a banking holiday. I don't know if it will be two days, or two weeks, or two months. We have $10 million in gold and silver in denominations small enough that we can use for payroll. We want to be able to keep our employees paid, safe, and our site up and running during a financial crisis.’” (“One Of America’s Largest Companies Is Stockpiling Food & Gold For The Next Financial Crisis,” Gold-Eagle, 10/30/15.)
Desperate Central Bank Policies Require Investors to Diversify with Gold - Pento
Investment advisory firm Pento Portfolio Strategies warned investors that reckless Federal Reserve policies will lead to economic chaos. As such, the firm advises investors to add gold to their portfolios.
“The Fed just can’t seem to grasp why its newly minted $3.5 trillion since 2008 hasn’t filtered through the economy. But this is simply because debt-disabled consumers were never allowed to deleverage and markets were never allowed to fully clear.
“But the Fed isn’t one to let the truth get in the way of its Keynesian story. And why should it? Financial crisis is the mother’s milk of increased central bank power… The quest of governments to produce perpetually rising asset prices is creating inexorably rising public and private debt levels. The inability to generate inflation and growth targets from the ‘conventional’ channels of interest rate manipulation and the piling up of excess reserves are leading central banks to come up with more desperate measures.
“We can see more clearly where Keynesian central bankers are headed by listening to NY Times columnist Paul Krugman’s suggestions for Japan to escape its third recession since 2012. He recently avowed that Japan needs much more aggressive fiscal and monetary stimulus to escape its ‘liquidity trap’ and ‘too-low’ rate of inflation. However, his spurious argument overlooks that the Bank of Japan is already printing 80 trillion yen each year, its Federal Debt is spiraling north of 250% of GDP, and the annual deficits are currently 8% of GDP….
“Unfortunately, Krugman and his merry band of arrogant Keynesian haters of free markets represent the conscious of global governments and central bankers. What they indeed are creating is a perfect recipe for massive money supply growth and economic chaos. Therefore, if these strategies are followed, it will inevitably lead to a worldwide inflationary depression. And this is why having a gold allocation in your portfolio is becoming increasingly more necessary.” (“Fed Headed into Inflation Overdrive,” Pento Portfolio Strategies, 10/23/15.)
Gold and Silver Bear Market Over – Time to Start Buying: Korelin Economics Report
Mining and precious metals analysts Alex Korelin and Corey Fleck discussed the end of the gold and silver bear market in their radio program for the Korelin Economics Report.
“The character of the metals market has changed. It’s no longer acting like a bear market where it was producing bear market rallies but more like a bull market that was crawling the wall of worry and that’s what we continue to see here… I think you’ve had every confirmation that you can get that the bear market is over in the metals… Nobody is going to be positioned for this third daily cycle to go what is likely to be much further and much higher than anybody is expecting right now…
“I continue to think the bear market in gold and silver is over and we’re at the very beginning stages of the third phase of this bull market so it’s not too late to start buying them here….” (“The Bottom Is In For Gold And Silver,” Korelin Economics Report, 10/28/15.)
Gold and Silver to Rally in 2016: Capital Economics
Simona Gambarini, commodities economist for the U.K.-based Capital Economics, told investors in a research note that gold and silver prices are expected to see significant gains in 2016.
“As both gold and silver prices fall back post-FOMC, one research analyst remains optimistic on the metals, particularly silver, which she says will outshine gold next year. ‘Overall, we expect the silver price to end the year around $16.50 per ounce,” said Simona Gambarini, commodities economist for U.K.-based Capital Economics, in a research note Thursday. ‘However, production cuts across the industrial and precious metals industries, coupled with a pick-up in industrial production in the key silver consumers, should see the silver price rally to $20 per ounce by end-2016.’
“Gambarini explained that the forecast is dependent on the firm’s positive view on gold, which she expects to rally to $1,400 an ounce next year… According to Gambarini, there are three factors that will “rescue” prices of key industrial commodities in the coming months, including silver. Supply constraints, a resurgence of demand, and a positive shift in investor sentiment should all work in silver’s favor moving forward, she explained.” (“Silver To Outshine Gold, But Both Metals To Rise in 2016 - Capital Economics,” Kitco News, 10/29/15.)