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Gold and Silver Prices
Gold and silver prices ended the week higher despite profit taking on Friday, fueled by the European Central Bank’s announcement of a massive quantitative easing program.
“Gold prices had settled above $1,300 an ounce for the first time in five months on Thursday, after the European Central Bank surprised markets with a larger-than-expected bond-buying program. The ECB will pump 60 billion euros a month into the credit market through purchases of public- and private-sector debt.
A day later, some investors sold gold to profit from the rally. As of Thursday, gold prices had gained 9.8% so far this year, making the precious metal one of the top performers among commodities.” (“Gold Pulls Lower as Traders Lock In Gains ,” WSJ, 1/23/15.)
Gold finished the week up $4.60, closing at $1,295.10. Silver prices closed the week at $18.40, up $0.06.
Mining Analyst: Gold to Reach $2,000 in 2015
John R. Ing, portfolio manager, mining analyst and investment banker with Maison Placements Canada, sees gold prices rising to $2,000 per ounce in 2015 due to safe haven demand and low supplies.
“Forget oil. If you want to know how the world economy is faring, just look at two metals: gold and copper…The price of copper — critical in manufacturing and construction — has fallen 10 per cent in 2015 as global growth stalls, while ‘safe haven’ gold has enjoyed a double-digit bounce this month as market and geopolitical volatility continues.
“’Just when everyone gave up on gold, turns out the obituaries were premature,’ says gold bug John Ing, president of Maison Placements Canada. In fact gold has amazingly emerged as the top performer of 2015, not just among metals… That is largely due to bullion’s traditional role as a fear magnet which investors tend to latch onto when everything else is rocky – and it is lately, from the tanking oil price to topsy-turvy stock markets…
This year, gold has climbed 11 per cent and is enjoying its best start to any year since 1980…. Ing, a long-time believer in the fickle yellow metal, predicts gold will finally hit $2,000 an ounce in 2015 for the first time ever. He noted most big mining companies are cutting production this year given the low price.
“’Gold markets had a humble year last year. But gold is an asset and there is a shortage of deposits. You can’t print it like currency,’ he notes.” (“Gold Shines Bright As Hottest Investment This Year,” Personal Finance, 1/23/15.)
Low Oil Prices Spur Gold Safe Haven Buying: Bloomberg
Bloomberg reports that investors are buying gold as a safe haven asset due to concerns that low oil prices may damage the economy and lead to deflation.
“Investors who saw little value in the metal last month, as plunging energy costs curbed inflation, have started buying in January even as crude continues to tumble. Bullion is off to its best start to a year since 1980….”
“The about-face reflects an investor shift in focus away from the benefits of cheap fuel to the risk of economy-damaging deflation. Oil costs are so low that gold buyers are seeking a hedge against prolonged declines in consumer prices. They’re also bracing for currency volatility from more stimulus measures as policy makers in Europe and Asia look for new ways to revive growth. While the U.S. is expanding, the World Bank says that won’t be enough to buoy economies elsewhere.”
“It’s clear that potential dislocation of what the falling oil prices may do to the market is bringing people to gold,” Quincy Krosby, a market strategist based in Newark, New Jersey, at Prudential Financial Inc., which oversees more than $1 trillion in assets, said by phone Jan. 14. “Worries about political instability because of falling oil prices and attempts to induce inflation are helping gold….” (“Gold Prices Get a Boost While Oil Spirals Downwards.” Bloomberg, 1/22/15.)
ECB’s Quantitative Easing Sends Silver Into Bull Markets
“Silver headed for a bull market in its best start to a year in more than three decades as the European Central Bank expanded economic stimulus measures, boosting demand for the metal as a store of value…
“Silver is enjoying safe-haven bids along with gold, and there is also a lot of physical buying” Frank McGhee, the head dealer at Alliance Financial LLC in Chicago, said in a telephone interview. “There is a flight to safety because of all the concerns about the economy...”
“Silver will benefit from all the stimulus measures and rate cuts being announced aggressively by the central banks,” Caroline Bain, a commodities economist at Capital Economics Ltd. in London, said in a telephone interview. “Also, the stimulus measures will at some point boost usage of the metal.” Bain said she expects silver to rise to $20 by the end of the year…” (“Speculators Looking for Havens from Slowing Growth are Piling into Silver,” Bloomberg, 01/15/15.)
Taylor: “Gold Is Money”
Financial newsletter editor Jay Taylor explained to investors why gold continues to rise despite a rise in the U.S. dollar and fall in oil prices.
“Most people have been trained by the Keynesian propagandists to think of gold as just another commodity. Gold is not a commodity. It is money! And that is why, as anxiety increases now about the global monetary system, gold is on the rise even as commodities plummet.
“The counterfeiters at the Fed want desperately to keep you thinking the safest place to put your money is their treasury and currency…But ultimately the lies and distortions caused by government intervention can no longer be hidden... While the dollar has continued to gain strength, gold has been gaining against the dollar.
“[O]one thing that does seem rather certain for now is that gold…have started a significant move higher. Gold has over the past couple of months begun a huge run up in its purchasing power of commodities. An ounce of gold has risen from about 35% of the Rogers fund to 45%. That’s a 28.5% rise in just a few months. It is even more pronounced in terms of oil. Gold now buys 25 barrels of oil compared to 12.5 in the middle of last summer.” (“If Prices Are Collapsing, Then Why Is Gold Going Up?” Kitco, 1/22/15.)
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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.