Survey: Majority Bullish on Gold Prices for Next Week

Release Date: 
Friday, November 21, 2014

Gold and Silver Prices

Gold and silver prices finished the week up on surprising economic news from China. “Gold prices rose to a three-week high on hopes that China’s first interest-rate cut in more than two years would spur demand for the precious metal…The move surprised markets, lifting gold prices to $1,207.60 an ounce, their highest level since Oct. 30…‘A cut in interest rates is always bullish for precious metals,’ said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago. Gold is traditionally seen as a store of value and a hedge against inflation, and investors often seek its perceived safety to protect their wealth from the erosive impact of falling interest rates.” (“Gold Gets Boost From China Rate Cut,” Wall Street Journal, 11/21/14.)

Gold finished the week up $13.60, closing at $1,201.50. Silver prices closed the week at $16.43, up $0.13.

Survey: Majority Bullish on Gold Prices for Next Week

A majority of participants in the Kitco News Gold Survey forecast higher gold prices next week on economic news from China and Europe. “‘What a remarkable morning for markets. On the news that China will cut interest rates and inject liquidity into their banking system and ECB's (European Central Bank) Mario Draghi is ready to apply ‘all means necessary’ to meet inflation targets, all boats rise. The S&P 500 scores yet another record intraday high, the U.S. dollar is up, Gold is up and the base metal complex is reacting constructively,’ said Richard Baker, editor, Eureka Miner Report. ‘Most importantly the yellow metal is positioned very strongly relative to silver and industrial commodities copper and oil.’” (“Gold Prices Expected To Rise Next Week – Survey Participants,” Kitco News, 11/21/14.)

European Central Bank May Purchase Gold to Boost Inflation

HSBC reported the European Central Bank (ECB) may begin investing in gold to help raise inflation in the Eurozone and bolster the sagging European economy.

“Citing a news story in The Telegraph, HSBC says the European Central Bank may consider buying gold and other assets in order to boost Eurozone inflation, according to ECB executive board member Yves Mersch…HSBC’s note added, “‘A push for the ECB to buy gold would be price supportive, in our view. While the central banks in the Eurozone have done very little selling in recent years, the possibility the ECB may turn into gold buyers would give gold a significant morale boost and reaffirm its utility in the global financial system. We will wait for further comments from ECB policymakers before making further judgment, however.’” (“Potential ECB Gold Purchases Would Be Shift In Stance – HSBC,” Kitco News, 11/18/14.)

Russia Continues to Acquire Gold

The Russian central bank continues to diversify its reserves with gold.

“With all of its income from selling oil, Russia is diversifying its reserves by buying massive amounts of gold, said William Rhind, CEO of the World Gold Trust Services. Of all the central banks that make their reserve actions public, Russia has been the ‘largest, most active’ gold accumulator, he explained. Still, Rhind said, the 'elephant in the room' is how much gold China is buying, as Beijing does not publish these figures.

“A recent report from the World Gold Council showed that many central banks, including Russia's, have beefed up their gold reserves. This investment, the report suggested, was ‘driven by a number of factors including a continued diversification away from the U.S. dollar and the backdrop of ongoing geopolitical tensions…I don't think it's moving to a de facto gold standard, it's just simply about diversification,’ he said. ‘In many ways they view it as being not too dissimilar from why anybody would own gold.’” (“Why is Putin buying gold?” CNBC, 11/18/14.)

Global Economic Weakness Causing Alarm in Washington

Despite massive quantitative easing and fiscal discipline, Japan’s economy fell into recession, potentially signaling economic woes throughout the world.

“Japan’s grand economic experiment, a combination of fiscal discipline and monetary stimulus, is collapsing. On Monday, the country unexpectedly fell into recession, a downturn that has painful implications for the rest of the world.

“Japan’s unorthodox strategy was supposed to offer a road map for other troubled economies, notably Europe. Fiscal belt-tightening and tax increases, while leaning on the central bank to pump money into the economy, was expected to help overcome a malaise. The formula, though, has failed to ignite a meaningful recovery in Japan — and has even added to its woes. Europe must now decide whether to follow Japan’s lead by injecting more money into the economy, as the region’s central bank considers a similarly aggressive bond-buying campaign known as quantitative easing. And the United States, which just ended its own six-year stimulus effort, doesn’t offer much of a cushion should other economies stumble further.”

“The problems in Europe and Japan put additional pressure on the United States and China, which face their own headwinds…The disparate issues — a weak recovery in Europe, slowing growth in China and other emerging markets, as well as Japan’s failure to sustain any sort of a turnaround — have rung alarm bells in Washington.” (“As Japan Falls Into Recession, Europe Looks to Avoid It,” New York Times, 11/17/14.)

Top Security Official: U.S. Can Be “Shut Down” by Chinese Cyber-Attack

The NSA is warning a cyber-attack by China could shut down the United States’ electric grid.

“The head of the NSA issued a blunt warning Thursday to lawmakers: China can shut down the United States. The grim forecast came from Admiral Michael Rogers, the director of the National Security Agency and commander of the U.S .Cyber Command. Rogers said he believed China along with ‘one or two’ other countries had the capability to successfully launch a cyber-attack that could shut down the electric grid in parts of the United States. Speaking to the House Intelligence Committee, the NSA director said the cyber threat was ‘so real,’ and that agreeing to an international code, a sort of ‘laws of law’ in the cyber realm is urgent. The possibility of such cyber-attacks by U.S. adversaries has been widely known, but never confirmed publicly by the nation's top cyber official.” (“NSA Director: China can damage US power grid,” Fox News, 11/20/14.)

Approach Year-End Planning with Confidence

As you prepare for end of year tax and retirement planning, consider whether your portfolio includes a recognized safe haven asset such as physical gold or silver. If not, learn how easy it is to add physical gold or silver to a self-directed IRA from Goldline, your trusted precious metals dealer for more than half a century.

Goldline has made it even easier to add gold and silver with its exclusive Express IRA® program. Goldline's Express IRA® program allows you to order your precious metals as soon as the self-directed IRA is opened. Further, your qualifying purchase of Goldline's limited production bullion coins comes with unprecedented price protection with Goldline's Price Shield℠. If the selling price of your coins decreases on the selected anniversary of your qualifying purchase, Goldline will automatically re-price the coins and make up the difference in additional exclusive bullion coins.

Plus, if you make a qualifying purchase in November, Goldline will offset your IRA fees for two full years with FREE, limited production bullion coins delivered directly to you.*

*Value of bullion coins based upon the current ask value

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. Listen to the show below:

*Federal IRA tax laws are complex and may change from year to year. Goldline believes it is appropriate to have 5%-20% of retirement portfolio allocated to precious metals. Other individuals and institutions may recommend different percentages. As with any investment, you should consult your tax advisor before making a decision regarding precious metals IRA investments.

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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.

You should review Goldine's Account Agreement along with our risk disclosure booklet, Coin Facts for Investors and Collectors to Consider ®, prior to making your purchase. Goldline has a spread or price difference between our selling price, called the "ask", and our buy-back price, called the "bid". That spread varies depending on coin or bar you acquire. Spreads on 1 oz bullion coins, 90% silver dimes and quarters, and one ounce and larger bullion bars are 13%. All other coins have a spread of 28%. There is also a 1% liquidation fee when you sell your coins back to Goldline. The market must go up enough to overcome this spread before an actual profit is achieved. Precious metals and rare coins can increase or decrease in value. Past performance does not guarantee future results. Coins are a long-term, three- to five-year, preferably five- to ten-year investment. We believe precious metals are suitable for 5% to 20% of the average investment portfolio though others may recommend a different percentage.

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