Gold and Silver Prices
Gold prices remained bullish this week as investors remain concerned about the weak world economy and the growing trend of negative interest rates.
“Gold is back in a bull market for the first time since 2013 as concerns about global growth rise. Gold spot prices climbed to $1,272.77 an ounce on Friday, after settling at $1,264.25 on the previous day…Signs that US growth is slowing and an expectation that the Federal Reserve will delay further interest rate rises have pushed up prices of gold since the start of the year.
“Analysts said prices could climb further on fears that commercial banks may start to pass on negative rates to customers, which would see them charging people for holding their deposits. The risk that increasingly negative rates push banks to start charging customers for deposits would have a greater positive impact on gold, particularly if concerns build up that further lower rates could start to affect household savers,’ said Joni Teves, an economist at UBS…. (“Gold soars into bull market as global growth fears mount,” The Telegraph, 3/4/16.)
Gold ended the week up $37.30, closing at $1,260.10. Silver prices closed at $15.61, up $0.84.
“Golden Cross” May Indicate This Is Perfect Time To Buy Gold
The UK’s Daily Express newspaper recently explained why a technical analysis of gold prices may be signal to buy gold now.
“The key technical level occurs when the 50-day moving average surpasses the 200-day moving average - literally crossing each other on charts. The 'cross' has in the past been taken as a cue to buy among some traders and momentum-driven investors.
“Gold tends to be a 'safe haven' where investors stash their money in times of financial turmoil. In the years following the financial crisis, prices of the precious metal jumped to record highs of $1,900 an ounce, before dropping back down as the recovery kicked-in.
“In recent months prices have been climbing back up amid fears of another global crisis… Adrian Ash, head of research at BullionVault in London, said: ‘Worsening fears over negative rates and political risks like Brexit have led the return of some money managers to gold. A fast-growing number of private investors have also begun buying gold as insurance.’
“However, experts have cautioned against buying into investment fads, such as the 'golden cross'. Laith Khalaf, senior analyst at Hargreaves Lansdown, said: ‘There are some traders who swear by the patterns they see in charts on their screens but I would be wary of following these signals, particularly if you don't intend to keep an very close eye on them and use them to sell out as well.
“’The reason to hold gold in your portfolio is as a hedge against catastrophe, but it should only ever make up a small part of your portfolio, no more than five to 10 per cent….’” (“Why this 'Golden Cross' graph is PROOF it's the perfect time to buy gold...”, Express, 3/2/16.)
Gold’s Performance In 2016 Leads All Major Asset Classes - Holmes
U.S. Global Investors CEO Frank Holmes wrote that gold, already a top performer in 2016, may be poised to resume its bull market.
“This is an exciting time for gold. After another annual loss in 2015, its fourth year in a row, the precious metal has plotted a new course, one that has ferried it to the lead position among all other major asset classes in 2016.
“I already shared with you that on Friday, gold signaled a “golden cross,” a bullish indicator that occurs when the 50-day moving average crosses above the 200-day moving average. As of February 29, just a day after gold Oscar statuettes were handed out in Hollywood, gold bullion has gained close to a phenomenal 17 percent year-to-date…
“Many analysts now believe we’ve seen the final days of the gold bear market, which began after the metal touched its all-time high of $1,900 per ounce in 2011, with one analyst saying that “buying gold today may be comparable to buying stocks in April 2009.” (Between then and November 2015, the S&P 500 Index rose 145 percent.)….” (“Gold Is Crushing It So Far this Year,” Kitco, 3/2/16.)
Bearish Bank Now A Gold Bull; Gold May Rise to $1400
One of Canada’s largest banks, CIBC, recently moved from being a gold bear to a gold bull.
“A former bearish bank is now jumping on the gold bandwagon, saying that it makes sense to own gold in an environment of growing market uncertainty and rising volatility. ‘Our ratio analysis between gold and other commodity baskets (CCI), as well as the S&P 500 index, exhibits a well-defined relative outperformance picture, particularly in [Canadian dollar] terms,” wrote Sid Mokhtari and Roman Lutsiv, market analysts at CIBC, in a recent report… ‘“Calling a trend-shift is a difficult task, but it would be reasonable to suggest that charts have changed and so have our assumptions – technical objectives on the upside reside closer to 1300-1338-1400 levels…”
“Aside from being one of the best performing commodities this year, the analysts noted that gold has also been one of the best performing currencies, thanks to increased global market volatility, which they are not expecting will diminish any time soon. Despite gold’s run since the start of the year, the analysts said that the best may still be yet to come with gold demand being the strongest from late summer to late fall. However, they also highlighted that the next quarter could be challenging for the market as returns are historically lower between March and July, picking up in August to November. (“Another Bear Becomes Bull, CIBC Sees Potential For Gold To Hit $1,400,” Kitco, 4/3/16.)
US Heading Towards New Great Depression
Gold and silver technical analyst Hubert Mooman warned the continued devaluation of the U.S. dollar may lead to a new Great Depression.
“Gold is currently trading in excess of $1200 an ounce. This is well above the 1980 all-time high. However, this is an incomplete representation of what gold is trading at relative to US dollars. When you look at the gold price relative to US currency in existence, then it is at its lowest value it has ever been. This is an example of how paper assets are completely out of tune with tangible (real assets)…
“When the US monetary base gets too big relative to the gold price (& US gold reserves), then market forces seek to correct the situation. This has happened a number of times over the last 100 years, but on two occasions, it was so critical, that the situation actually overcorrected. This was during the 30s and the 70s…
“Currently, the gold backing of the US monetary base is at all-time lows, and it appears that we have reached a point similar to that of 1933 and 1970… This period seems to be more like the 30s than the 70s because debt levels relative to GDP are excessively high. Deteriorating economic conditions, with high relative debt levels and an inability to extend credit further are the worse conditions for banks to operate under. These were the main reasons for the banking crisis of 1933. This will be the main reasons for the coming (already happening) banking crisis…
“There is a strong fractal analysis signal that the worst economic (and political) years are straight ahead, and this agrees with the expectation above. I believe the coming period will be far worse than the Great Depression… I believe we will have similar events in the immediate future: Gold and silver revaluation (probably mainly in the open market) – this will mainly be in the form of currency devaluation; Major government (especially the USA) and corporate bankruptcies/defaults; Increase in wars (all kinds of wars); Banking collapse; And much more.... (“Gold And The US Monetary Base Signals The Greatest Depression,” Gold Eagle, 3/1/16.)
The Global Economic Reset Has Begun – Vermeulen
Market technical analyst Chris Vermeulen explained that crushing debt will result in a reset of the global economy.
“The major global economies have had a staggering debt of $199 trillion as of Q2 of 2014. The most recent figures will be closer to $230 trillion because, after 2014, the ECB, Japan and China have all resorted to ‘massive monetary easing’ programs while the US debt continues to escalate, with every passing second. The total debt, as a percentage of GDP, stood at 286%; the latest numbers will prove to be much worse…
“All forms of madness must eventually come to an end, and the current economic madness has started with the decline of both base metals and crude oil prices. The Central Banks are not able to prop growth or inflation. I have referred to the world economies resetting in the past as ‘The Global Reset’ and it is currently underway…
“This time, the recovery will take much longer than ‘The Great Recession’ did. These massive Central Bank debts can only be cleared with an extended period of ‘deleveraging’ which will result in an extremely painful outcome. As always, the wealthy will both thrive and survive. It is the working classes and the impoverished who will incur the hardships due to job losses and rising prices of essential commodities. There are a number of experts who have conferred with my opinions and who also believe that all of this will end very badly….” (“The World Economy Is Resetting - Are You Prepared?” Gold Eagle, 3/2/16.)