Gold Hits Six Year Highs. Gold to $1550

Release Date:  Saturday, July 20, 2019
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Gold Hits Six Year Highs

Gold prices continued their bull run with prices hitting a six year high this week.

"Gold futures rose on Friday, adding to a push toward fresh six-year highs, amid a backdrop of lower interest rates and monetary-policy easing that bulls deem ideal for the metal to rally... The commodity was on track for a weekly gain of 2.1% based on its July 12 close, which would represent its sharpest advance since the week ended June 21, FactSet data show...

"Commodity experts and investors also have pointed to some $13 trillion dollars in sovereign debt that have negative yields, meaning lenders parking money receive less than their original investment, have helped to burnish gold's appeal as a haven.

"Meanwhile, increasing tension in the Middle East have added to the bullish theme for precious metals. On Thursday, news of the U.S. Navy shooting down an Iranian drone always added fuel to gold's price moves; however, Iran has since denied that its drone was shot down...." ("Gold extends rise, as yellow metal's monster rally persists," MarketWatch, 7/19/19.)

Gold ended the week at $1,426.00/oz. Silver closed at $16.28/oz.

Gold to $1550 - Aslam

Writing for Forbes, award winning trader Naeem Aslam, affirmed his forecast of $1550 based upon lower interest rates and a weaker US Dollar.

"The gold price has seen some remarkable recovery recently, up nearly 11.07% year-to-date. In other words, it is up approx. 13.65% from its low of $1,266 formed back in May. However, the price is still well below the all-time high of $1,921 formed back in September 2011. In my last article, I talked about the possibility of the price of gold touching the level of 1,550 and it seems that both fundamental and technical aspects are still supporting this bull case...

"Between now and 31st July, several different Fed members are scheduled to speak, and this means that speculators are going to use this opportunity to push the gold price higher.  Also, remember Donald Trump, the US president, is also pushing for a dovish monetary policy for a while and he has set things in motion by electing the people in the Federal Reserve who will help to shape that. So, I think the long-term trend for the gold is skewed to the upside and any short-term retracements in the price could provide an opportunity to join the trend.

For traders who like technical analysis, it appears that a bull flag pattern has formed, as shown in the chart below, and given that the price is trading above all the important moving averages (50,100,200), it is highly likely that the price may continue its move to the upside. Interestingly, the projection of this pattern throws the price near the 1,550 mark which is only 7.95% appreciation in the gold price. ("Gold Price Is Likely To Appreciate By Another 7.95% Soon," Forbes, 7/18/19.)

Silver Undervalued; Could Soar to Record Highs - Zulfiqar

Research analyst Moe Zulfiqar explained that supply fundamentals indicate silver is undervalued and could rise to $50 within the next few years.

"Silver prices are one thing that investors shouldn't ignore. The gray precious metal is undervalued, and could reward immensely in 2019 and beyond.

"There has been a disparity in the silver market for few years now, and this could result in a major appreciation in silver prices. This is a bold statement, but don't be shocked to see silver soar to $50.00 an ounce within a few years. Understand this: the supply side of the silver market is struggling while the demand for the metal remains strong. This is the perfect recipe for higher prices. Mind you, this isn't just for 2019; we have been seeing the silver market reporting a deficit—more demand than supply—for the past few years...

"Dear reader, looking at the supply side, I can't help but be bullish on silver. At around $15.00 an ounce, silver looks undervalued. We are already seeing gold prices move to the upside. Silver tends to play catch-up with gold over time. So it's possible that we will see silver prices surge sooner rather than later. In the coming years, it wouldn't be shocking to see silver outperforming gold by a large margin...." ("This Is Why Silver Prices Could Surge to $50 an Ounce" Lombardi Letter, 7/15/19; emphasis added.)

Gold Set for "Explosive" Rally - Horowitz

Todd Horwitz, author and Chief Strategist for BubbaTrading.com, forecasts an explosive rally in gold.

"Everything is being set up for another big up move and the next big test will be to take out $1,450. If we can get through $1,450, I think we're on our way to $1,500...  It could get to [$1500] in a hurry. One thing we know about markets is that price drives price... Everything looks very positive ... the overall setup if we look go back to when we were a $1000; then we got to $1100, then $1200 and now we're at $1400... As long as we can hold onto these lows, and I think we'll have no problem doing so, the markets are all set to see another explosive up move...

If [the Fed] really cuts rates, it means there is are underlying problems in these markets and if there are more underlying problems in the markets, that is actually a benefit to gold.  People will be looking for ... a safe haven play, a nice hard asset and to me that would be a play going to gold...

"Silver has caught a bid and looks like it wants to go higher. And if this breakout continues, if we can clear $16, $16.20, then I think we're on our way to $17 and if we get there then I think we're on our way to $20...." ("Gold Market Set For "Explosive" Rally," Kitco, 7/18/19.)

Investors Need Gold to Prepare for Coming Paradigm Economic Shift - Dalio

Ray Dalio, co-Chief Investment Officer and co-Chairman of Bridgewater Associates, a global macro investment firm and the world's largest hedge fund, advised investors that a paradigm shift in the global economy requires investors to include gold in their portfolios.

"One of my investment principles is: Identify the paradigm you're in, examine if and how it is unsustainable, and visualize how the paradigm shift will transpire when that which is unsustainable stops.

"Over my roughly 50 years of being a global macro investor, I have observed there to be relatively long of periods (about 10 years) in which the markets and market relationships operate in a certain way (which I call "paradigms") that most people adapt to and eventually extrapolate so they become overdone, which leads to shifts to new paradigms in which the markets operate more opposite than similar to how they operated during the prior paradigm. Identifying and tactically navigating these paradigm shifts well ... and/or structuring one's portfolio so that one is largely immune to them ... is critical to one's success as an investor...

"The Coming Paradigm Shift. There's a saying in the markets that 'he who lives by the crystal ball is destined to eat ground glass.' While I'm not sure exactly when or how the paradigm shift will occur, I will share my thoughts about it. I think that it is highly likely that sometime in the next few years, 1) central banks will run out of stimulant to boost the markets and the economy when the economy is weak, and 2) there will be an enormous amount of debt and non-debt liabilities (e.g., pension and healthcare) that will increasingly be coming due and won't be able to be funded with assets. Said differently, I think that the paradigm that we are in will most likely end when a) real interest rate returns are pushed so low that investors holding the debt won't want to hold it and will start to move to something they think is better and b) simultaneously, the large need for money to fund liabilities will contribute to the "big squeeze." At that point, there won't be enough money to meet the needs for it, so there will have to be some combination of large deficits that are monetized, currency depreciations, and large tax increases, and these circumstances will likely increase the conflicts between the capitalist haves and the socialist have-nots. Most likely, during this time, holders of debt will receive very low or negative nominal and real returns in currencies that are weakening, which will de facto be a wealth tax...

"So, the big question worth pondering at this time is which investments will perform well in a reflationary environment accompanied by large liabilities coming due and with significant internal conflict between capitalists and socialists, as well as external conflicts. It is also a good time to ask what will be the next-best currency or storehold of wealth to have when most reserve currency central bankers want to devalue their currencies in a fiat currency system...

"I think ... those that will most likely do best will be those that do well when the value of money is being depreciated and domestic and international conflicts are significant, such as gold. Additionally, for reasons I will explain in the near future, most investors are underweighted in such assets, meaning that if they just wanted to have a better balanced portfolio to reduce risk, they would have more of this sort of asset. For this reason, I believe that it would be both risk-reducing and return-enhancing to consider adding gold to one's portfolio. I will soon send out an explanation of why I believe that gold is an effective portfolio diversifier."   ("Paradigm Shifts," Linkedin, 7/17/19; bolded emphasis added.)

IMF Agrees With Pres. Trump that Dollar Should be Lower

The International Monetary Fund (IMF) said this week that the U.S. dollar was overvalued by up to 12%, echoing a view of President Trump.

"President Donald Trump thinks the US dollar is too strong. The International Monetary Fund agrees with him.

"Trump has reportedly asked White House aides to explore ways to weaken the dollar, making US exports more attractive and boosting economic growth... 'China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA,' Trump tweeted earlier this month. 'We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games - as they have for many years!' ...

"The IMF provided fresh ammunition for the president in its latest External Sector Report. Its analysts determined the dollar's real effective exchange rate is between 6% and 12% too high based on its economic fundamentals... 'Whilst Trump has never been the biggest fan of multilateral institutions such as the IMF, he may very well be now!' said Stefan Koopman, senior market economist at Rabobank, in a research note. 'The report strengthens his case that the Fed should cut rates further to push the dollar down; the icing on the cake is that it labels the 'German' euro as significantly undervalued!" ("Trump's right on the money: IMF finds the US dollar is overvalued, the Euro is undervalued for Germany," BusinessInsider, 7/18/19; emphasis added.)

President Considers Two Fed Reserve Nominees Who are Positive for Gold

FxEmpire reported that President Trump is considering two appointments to the Federal Reserve whose views are positive for gold prices.

"Trump wants to nominate a goldbug to the Federal Reserve Board... Judy Shelton, Trump's fist pick, is the U.S. director of the European Bank for Reconstruction and Development. She has a doctorate in business administration from the University of Utah and she served as an economic adviser to Trump's 2016 presidential campaign. And - attention, attention - she has advocated a return to the gold standard... Shelton said in an interview that, if appointed, she would lower interest rates to 0% in one to two years ...  Gold will find it hard not to welcome that...

"Christopher Waller, Trump's second pick, is not a goldbug, actually he is quite z conventional choice... Although they have completely different background, it seems like both Trump's nominees are going to be in favor of lower interest rates. This is why President picked them...

"It's nothing but fundamentally good news for the gold prices. The Fed has already a dovish bias, which results from its asymmetric approach to monetary policy (it cuts rates aggressively when faced with crises, but hikes them only gradually thereafter). After Clarida's arrival, the Fed becomes even more dovish. And with two additional doves at the FOMC, the U.S. central bank could become colloquially known as the Dove Reserve Bank. The recent dovish turn has coincided with gold's jump above $1,400. Both Shelton and Waller have to be yet confirmed by the Senate, so they will not affect the short-term outlook for the gold prices. But they could support them in 2020. ("Two Fed Nominations Every Gold Investor Should Be Aware Of,"| FxEmpire, 7/18/19; emphasis added.)

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