News Header

 

$2,000 Gold; $100 Silver – Sprott Portfolio Manager

Release Date: 
Friday, September 27, 2013

Gold and Silver Prices:

Gold and silver prices were fairly range bound amid mixed U.S. economic data although gold ended the week in positive territory as Washington nears a government shutdown. “Concerns about a stalemate in Washington have triggered huge rises in precious metals in the past. Gold reached a record $1,923.70 on Sept. 6, 2011, as investors flocked to the metal because of concerns about raising the debt ceiling.” (“Gold prices rise on concern about Washington budget stalemate,” LA Times, 9/25/13.) Gold received further support after Chicago Federal Reserve president Charles Evans said Fed may not begin tapering until 2014 due to the sluggish economy. (“Gold Pops Following Fresh ‘Fed Speak’,” Forbes, 9/27/13.)  Gold gained $10.06, closing at $1,337.20. Silver prices ended the week down just $0.02, closing at $21.88.

$2,000 Gold; $100 Silver – Sprott Senior Portfolio Manager

Charles Oliver, senior portfolio manager with Sprott Asset Management, sees gold and silver prices moving to new record highs. “We've seen some positive signs in the market this summer. It looks as if gold has been in the bottoming phase for some time. Valuations are incredibly cheap. There's been continued debasement of currencies, which has been a driver all along. There's talk of cutting back on quantitative easing, yet the government continues to print aggressive amounts of money…Fundamentally, everything looks very good for gold. The pullback in the gold price, from the high of $1,921/ounce ($1,921/oz) to $1,180/oz, is reminiscent of 1974 to 1976. During that time, there was a big pullback of almost 50% in the gold market followed by a rise from $100/oz in 1976 to $850/oz in 1980…

“I firmly believe gold will be beyond $2,000. The only question is when. There have been some predictions within the Sprott organization that gold could go beyond $2,000 within the next 12 months. There are real reasons behind why that could happen.”

As to silver prices, “[o]ver the next five years, I expect the silver price will outperform the gold price. During the last 2,000 years, the silver/gold ratio was at 16:1 about 90% of the time. That means that if gold is $1,600/oz, which isn't far away, the silver price would likely be $100/oz. The current silver price would have to increase more than fourfold to get to that historic norm.” (“Sprott’s Charles Oliver Sees the Shine Returning to Metals,” The Gold Report, 9/23/13)

Analysts: Debt Ceiling Debate To Drive Gold Prices

UBS analysts Dominic Schnider and Giovanni Staunovo projected, "[t]he latest euphoria in gold could continue in the coming days as speculative investors liquidate their short positions in futures and options further…A test of the upper bound of our three-month trading range of $1,425 cannot be ruled out, especially with the Chinese market returning this Monday from a long weekend and the U.S. debt-ceiling debate coming into focus."

“Gold bull Andrew Su, CEO of Compass Global Markets in Sydney – who has an end-month target of $1,450 for gold and an end-year target of $1,580 – said continued uncertainty over the U.S. economic outlook and looming budget battles in the U.S. would drive safe haven inflows into gold. ‘The elephant in the room is the U.S. debt ceiling…The fact the Fed has delayed the tapering of stimulus is a double edged sword. It is in effect recognition by the FOMC that all is not well with the U.S. economy.’”

Sean Hyman, Editor of Moneynews at Ultimate Wealth Report forecasted, “We'll have the debt ceiling issues coming to a head again soon and so it's probably safer for the Fed to keep things as they are now between now and the December meeting…I expect gold to hit $1,500-$1,570 in the coming months." (“Gold bulls undeterred as stimulus—led rally fades,” CNBC, 9/23/13.)

New WGC Chair on Gold Market

The World Gold Council’s new chairman, Randall Oliphant, spoke with Kitco News this week about support for gold prices.  “Investors and hedge funds will move in and out of different markets but to know that there is a real customer there for the product makes me feel very comfortable…We saw unprecedented coin sales in the United States…There are groups of people in the U.S. who just feel better having gold in their portfolio and we need to continue to build on that…A lot of people still have scars from 2008 and those with longer-term orientation learned that being too much into anyone thing - that over exposure - can be painful and I think that has made people rethink their portfolio.”

Oliphant “expects to see central banks around the globe continue to buy gold as a way to diversify their currency reserves. He pointed out that central banks bought the most gold in history in 2012.” (“Demand For Physical Gold Could Last Decades—New WGC Chairman,” Kitco News, 9/25/13)

Call for Return to Gold Standard

Financial journalist and founding editor of the New York Sun, Seth Lipsky, delivered a keynote speech at the 2013 Denver Gold Forum, calling “on the U.S. to return to some kind of gold standard, and urged those attending the Gold Forum not to be shy about entering the political fray.”

“I tend to look at it through the prism of the United States Constitution and the founding fathers of the republic…I often talk about the fact that Constitution gave Congress the power to coin money and regulate the value thereof in the same sentence in which it also gives Congress the power to fix the standards of weights and measurements…The idea that the dollar today would be worth only a 1/1,300 of an ounce of gold would have ‘shocked’ the founding fathers.”

Regarding the looming debt ceiling debate, Lipsky said, “You’re going to hear in the coming weeks a lot about the question – should America default on its debt because of the debt ceiling?...But there are those of us who believe that America has already defaulted on its debt. When the dollar plunges over the course of two generations from 1/35 of an ounce of gold to 1/1,300 of gold, I’d call that a default.” (“Denver Gold Forum Keynote Speaker Calls For ‘Honest Money’ Based On Gold,” Kitco News, 9/23/13)

Central Banks Continue to Add Gold

Several central banks added to their gold reserves in August with Turkey topping the “list of countries that bought more bullion, according to the International Monetary Fund, showing that gold's appeal remains intact despite falling prices.  Russia, which has the world's seventh largest reserves of gold, increased its holdings last month by the biggest amount since December…Ukraine, Azerbaijan and Kazakhstan were the other countries that added to their gold reserves by more than 2 tonnes each last month.” (“Turkey tops central banks’ gold buying in Aug-IMF,” Reuters, 9/25/13)

Two-Way Price Guarantee Program

For a limited time, Goldline has expanded its industry leading Price Guarantee Program to provide its clients with both upside and downside protection, with a qualifying purchase of Goldline's exclusive, limited production gold and silver coins.

If the selling price of your coins fall, you can reprice your coins at the new lower price. For example, if you purchase $1,400 of gold and the price of gold decreases to $1,300 during the qualifying time period, you may contact Goldline to reprice your original order at the lower $1,300 price. 

If the selling price of your coins increase, you can purchase additional coins at the original lower price.  For example, if you purchase gold at $1,300 per ounce and the price of gold increases to $1,400 during the qualifying time period, you may place a second order at the original $1,300 price. 

Conditions and limits apply so call Goldline now to learn more about this special offer.

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. Click here to listen.

News Footer

 

†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.

To receive free information package on gold and precious metals investing, call Goldline at 1-800-963-9798.