Market Experts See New Gold Market With Double Digit Gains

Release Date:  Friday, July 5, 2019
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Gold Prices Affected by Stronger Dollar

Gold prices held largely steady during this shortened trading week though a positive jobs report bolstered the dollar and raised questions about future interest rate cuts.

"Gold prices declined Friday, sending prices lower for the week, as a stronger better-than-expected rise in June U.S. jobs dulled expectations for interest-rate cuts and lifted the benchmark dollar index to a more than two-week high.

"Traders 'have used the better than expected jobs number to push gold prices lower...as expectations of a Federal Reserve interest rate cut in July have diminished somewhat," said Mark O'Byrne, research director at GoldCore... Concerns about the impact of sluggish economic growth across the globe, and a market-rattling trade dispute between the U.S. and China, have been the main drivers for haven investments, including government debt and precious metals. The Federal Reserve has cited the trade dispute and its impact on the domestic economy as a reason to consider lowering interest rates..." ("Gold prices drop, log a loss of 1% for the week," MarketWatch, 7/5/19.)

Gold ended the week at $1,399.30/oz. Silver closed at $15.07/oz.

Market Experts See New Gold Market With Double Digit Gains - TheStreet

TheStreet wrote about gold's move into a new bull market with experts seeing significant gains within the next 18 months.

"It's all systems go for gold investors. The bullion market is stirring from a multiyear slumber and looks set to enter a sustained rally, experts say. Double-digit increases within the next 18 months may be only the start of the price surge.

"'[W]e believe there is a very good chance that this marks the beginning of a new gold bull market,' says gold market veteran Joe Foster, portfolio manager for the VanEck International Investors Gold Fund (INIVX - Get Report) . Foster says the run is 'likely to last several years...'

"So when bullion market specialists turn decidedly bullish, it makes sense to sit up and listen. It isn't just Van Eck's Joe Foster who says so. Swiss Bank UBS states a similar position in a recent report: 'We have held a friendly, yet conservative view on gold for some time. A few years and several false starts later, we think the macro backdrop has now started moving more convincingly in gold's favor.' The bank now sees the potential for the price to rise as high as $1,580 by the end of next year. That's around 14% higher than its current price...

"Part of the impetus to buy gold now is the growth of negative yielding government debt in some countries such as Germany. It is no small problem; the total volume of such securities hit a record $12.5 trillion this year. Negative yields mean that investors are guaranteed to get back less money than they put in, and that is a game changer for the gold market...

"Negative interest rates are only part of the boost for gold. Continued geopolitical uncertainty around the world is making investors nervous, and they want to invest in something that they can count on, like gold... One thing we know about investors is that they hate such uncertainty. When they see many unresolved matters, then they tend to get cautious and go for safe-haven investments such as gold. That's why gold could be set for a long hot run..." ("Why the Gold Rally Is Set to Run," TheStreet, 7/1/19.)

Return of Gold Bull Market - Degussa

European dealer Degussa Goldhandel GmbH's most recent market report explains why gold's rise likely signals a new bull market for the yellow metal.

"Last week, the price of gold has climbed above the 1.400 USD/oz level, thereby giving rise to the expectation that the yellow metal has now returned to its decade-long upward trajectory. The increase in the price of gold is not only limited to US dollar; it is pretty much the same in virtually all major currencies in the world. There are quite a few reasons why the gold bull market might in-deed have returned and that the latest price action is not just a flash in the pan...

"That said, global interest rates will most likely remain very low or sink even low-er. Especially short-term interest rates can be expected to become negative in real terms -that is after inflation is subtracted from nominal interest rates. This should be quite positive for the demand and thus the price of gold. In an environment of zero or negative real interest rates, the opportunity costs for holding gold collapse, and the bet on gold becomes even more rewarding...

"Central banks' actions do not only improve the overall competitiveness of gold versus unbacked paper monies. They also raise the risk in the global economic and financial system because a monetary policy of artificially suppressed interest rates-which, in extreme cases, even leads to a policy of negative real interest rates-causes malinvestment on a grand scale. However, people don't see the problem right away as the economies expand nicely, consumption and investment increase, and new jobs are created. It is just a matter of time when things will start turning sour...

"It should be clear that things will most likely become pretty messy once the next crisis hits -and it surely will hit, as sound economic analysis suggests. That said, there is undoubtedly an obvious case for holding gold as part of the liquid means of the investor's portfolio. Monetary policy actions cannot debase the purchasing power of gold as they do with time-and savings deposits or bonds, irretrievably depriving them of their value. Furthermore, gold protects against payment defaults, thus also shields the portfolio against the consequences of a full-blown credit crisis..." ("It Looks Like A Gold Bull Market, It Feels Like A Gold Bull Market -May-be It Is A Gold Bull Market?" Degussa Market Report, 7/4/19.)

Gold Prices Indicate "Dark Things" are Ahead - Norman

Ross Norman, CEO of Sharps Pixley and award-winning gold forecaster, warned investors that gold prices are signaling dark economic times ahead.

"Love it or hate it ... you just cannot ignore gold ... it is after all a 'bellwether'... Gold is currently suggesting that dark things may be afoot on the economic front.

"After six years of relatively tame 'sheepish' price performance, gold has suddenly become a turbocharged ram on a motorbike, without a helmet. It is rushing headlong with little regard for technical resistance levels, with price action to make even Bitcoiners blush...

"The reality is that the confluence of investor and speculative activity in June saw the market bust the all-important $1360 level which had held rigid since 2014. It was the mother of all levels. Having effortlessly taken that out, gold strode purposefully through other levels including the $1400 psychological level with rank disregard...

"Was it the indication of the policy reversal by the Fed, was it declining economic indicators such as the PMI's, was it a correction in the US dollar ... was it over $12 trillion in negatively yielding government bonds ... was it Italy... or Iran - actually it does not matter. The reality is that the whole economic structure is currently looking vulnerable and that is about all you need to know in order to buy gold. Who cares what the first domino to fall looks like..." ("Gold Price Action Suggest Epic Events Close By, Sharps Pixley, 7/3/19; emphasis added.)

Gold Breakout is Epochal - Maund

Technical analyst Clive Maund reviewed gold's current price rise and concluded that the breakout is both genuine and an indicator of an "epochal" gold market.

"Technical analyst Clive Maund charts the reasons why the recent gold breakout is genuine. It has been a truly glorious month for gold, and the purpose of this update is to point out firstly that the gold breakout of the past week was genuine and secondly that any short-term reaction back as far as $1,380 or even $1,370 will not negate the breakout—instead it should be seized upon as an opportunity to build positions across the sector...

"[W]e can see the impressive breakout run-up of recent days, which has taken gold to a flag target that it has reached in an extremely overbought state. This means it is entitled to take a rest here, and that is what it is doing... We should not be surprised, therefore, to see it react back in the near term, to perhaps $1,380 or even $1,370, which will have folks doubting that the gold breakout is genuine. But it is genuine, as made clear by the strong volume on the breakout, so we will use any such reaction as a buying opportunity...

"[A] major and probably epochal breakout is occurring here, so gold is perfectly entitled to accelerate away to the upside, and is thus not expected to tarry for long. So any near-term weakness may be bought aggressively...

"Fundamentally, gold has everything going for it here. Central banks are buying it hand-over-fist, major powers that have been bullied and threatened by the U.S., like China and Russia, are buying it hand-over-fist, in readiness for burying the dollar. The Fed and other central banks have painted themselves into a corner, where the only thing they can think of doing is printing money like crazy to try to stop the system from imploding. The world faces the grim prospect of massive unprecedented quantitative easing (state counterfeiting), negative interest rates, and the outright plunder of bank accounts, called bail-ins (theft), and they may even resort to thieving from retirement funds. Perhaps we can preempt them a bit here by thinking up a euphemism for it. What about PERG (Pensioners Expedite Rescue of Government)? It is a perfect storm that could cause gold to skyrocket..." ("Gold Price Epochal Breakout Will Not Be Negated by a Correction," Market Oracle, 7/4/19.)

Chines People Moving from Stocks, Banks to Gold - Epoch Times

Epoch Times reported Chines citizens, fearful of an economic slowdown, are moving their money into physical gold.
"Chinese people are starting to feel the pressure of economic slowdown. As China's yuan continues to devalue, and several small and medium-sized banks have filed for bankruptcy recently, many Chinese choose to buy gold or take their money out of the bank, to protect their assets...

" The trade tensions between the United States and China have seriously affected China's economy. In particular, after President Trump announced to increase the tariffs on $200 billion worth of Chinese goods from 10 percent to 25 percent on May 5, the yuan has depreciated by about 2.5 percent so far...    Ming Chu-cheng, a political science professor at National Taiwan University who specializes in Chinese politics, predicted on his Youtube channel that if the Chinese yuan ever drops below 7 yuan per dollar, it will trigger a confidence crisis of the Chinese economy... 'Eventually China will become the second Venezuela,' Ming said...

"Chinese people seek to preserve their wealth by buying gold as the Chinese currency continues to depreciate in value. According to a June 24 report from Chinese news portal Sina, the manager at Gold Hangzhou's flagship store revealed that the sale of gold increased significantly since May. The store is seeing more and more big transactions recently. ... Zhang Li, a resident of Wuhan, told Radio Free Asia that the recent news about Baotou Commercial bank being taken over by China's Central Bank due to insolvency has made many people worry about the money they keep in bank accounts..." ("Chinese People Are Buying Gold, Taking Money Out of Banks and Stock Market," Epoch Times, 7/3/19; emphasis added.)

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