News Header

 

Gold Hits Three Month High; Goldman Bullish

Release Date: 
Wednesday, February 22, 2012

The price of gold hit a three month high today as bargain hunters overcame negative sentiment over uncertainty over the Greek economy and its possible impact on the wider euro zone. Gold closed at $1776.80 per ounce on the New York Spot Market, up over $15 per ounce, with silver slightly lower at $34.36 per ounce.

Fitch Ratings lowered Greece's sovereign credit rating and said the planned bond swap for private debt holders is the equivalent to a restricted default.

"Even assuming the new Greek program proceeds as planned, the Greek government crisis is far from over," said HSBC in a research note. "This deal will help creditors to be repaid, as the funds will be channeled into an escrow account to ensure that lenders are prioritized, but it will not revive economic growth any time soon." The analysts added, "with the Greek economy now in its fifth year of recession and already having contracted in the fourth quarter by 7 percent year-on-year, even the revised debt sustainability analysis looks optimistic."

Steep gains for platinum and palladium today also helped gold prices. An ongoing strike in South Africa, a top exporter of platinum, drove increased interest in the precious metal.

Goldman Sachs remained bullish on gold and raised its forecast. "We expect U.S. real interest rates to remain lower for longer given our U.S. economics team's expectation for U.S. economic growth to remain slow through 2012," the company said. "Consequently, we expect gold prices to continue to rise through 2012, reaching $1,940 an ounce in 12 months, and we continue to recommend a long gold position."

Gavin Thomas, CEO of Australian gold miner Kingsgate Consolidated, said that gold is in a long-term bull market that may last 5-10 more years. The company is also planning an expansion of its silver mining, he said. "Silver is a fantastic opportunity...I see there's a lot of upward price (for the metal), because of the lack of supply," Thomas said, adding that he believes silver prices could reach $50 per ounce over the next 24 months.

As lead and zinc mining has fallen, the supply of sliver has come under pressure because it is a mining by-product of those metals, Thomas said.  At the same time, he cites increasing medical and industrial uses for silver growing and investment interest from India and China increasing. "India and China are slowly turning to silver as a means of hoarding wealth, as gold is becoming more difficult to obtain," he said.

(Sources: "PRECIOUS-Gold eases as optimism over Greek bailout dissipates," Reuters, February 22, 2012; "'Fantastic Opportunity' in Silver: Gold Mining CEO," CNBC, February 22, 2012; "Gold backs away from recent highs," MarketWatch, February 22, 2012; "Gold at 3-month high as bargain seekers prevail," MarketWatch, February 22, 2012)

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.