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Gold Supply Could Send Gold Prices Higher

Release Date: 
Friday, February 7, 2014

Gold and Silver Prices

Gold and silver prices rallied this week following a disappointing jobs report.  “Gold futures rallied on Wednesday after a weaker-than-expected U.S. employment report sparked hopes of sustained stimulus efforts from the Federal Reserve.”  (“Gold Climbs After ADP Jobs Data,” Wall Street Journal, 2/5/14)

Gold closed the week at $1,268.10, up $21.20. Silver prices closed up $0.83, at $20.10.

Gold Supply Could Send Gold Prices “Through the Roof”

Several analysts spoke to CNBC this week on the effect of diminishing gold supplies on future prices. “‘Physical gold is disappearing off the market at a terrible rate. As soon as that really starts to hit I think gold goes through the roof,’ Jim Walker, founder and CEO of Asianomics told CNBC. ‘That's one of our biggest longs for the year.’”

“‘I think we probably still have people in gold ETFs [exchange traded funds] releasing some of their gold,’ said Barry Dawes, head of resources at Paradigm Securities, a Sydney-based securities advisory business, giving a reason why gold prices have not pushed above $1,300.  ‘I can't see that lasting very much longer at all and that real supply-demand numbers for gold will push to a higher gold price,’ he added.”

“‘As long as gold holds above $1,175-80 it's good, I am positive,’ Sean Hyman, editor of the Ultimate Wealth Report told CNBC on Wednesday.  ‘With dollar weakness we should get some base building in metals and all that equity volatility can help gold,’ he said referring to a recent sell-off in global stock markets that lifted the appeal of the safe-haven asset.”  (“Gold bugs, be patient your time is coming,” CNBC, 2/5/14)

Analysts Forecast Higher Gold Prices For Following Week

Participants in Kitco’s gold price survey were bullish on next week’s gold prices. “Positive technical price charts for gold could encourage the yellow metal to move higher next week, as a majority of participants in the weekly Kitco News Gold Survey forecast higher prices.  In the Kitco News Gold Survey, out of 33 participants, 23 responded this week. Sixteen see prices up, while four see prices down and three see prices trading sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.  Last week, participants were bullish…Participants who see higher values said gold prices continue to hold in a series of lower lows, which bodes well.” (“Survey Participants Forecast Higher Gold Prices For Next Week,” Kitco News, 2/7/14)

Brecht: Gold Starts Strong in 2014


Analyst and managing editor of TraderPlanet, Kira Brecht, discussed gold’s performance during the first month of 2014 and what factors may support higher prices.

“After the punishing gold declines of 2013, are the bulls back in charge? From Dec. 31 to Jan. 31, April Comex gold futures gained 4.86% for the first month of the year. Not a bad start to 2014. The action shows the bulls have defended the gold price on a drop under the $1,200 per ounce level and that the $1,194 to $1,182 chart zone remains strong technical support….”

“The U.S. dollar has struggled. Commodities, as an asset class, are trying to rally off a weekly double bottom, and gold has been one of the top five commodity performers of January. If the U.S. dollar index remains stymied by resistance in the 81.50 area and that weekly double bottom on the commodity index chart confirms—that would be bullish news for gold and commodities.”  (“How Does Gold Stack Up To Other Commodities? Not A Bad Start To 2014,” Kitco News, 2/7/14)

Central Banks Leave  Monetary Policy Unchanged

Two key central banks decided to leave current monetary policy unchanged.   

“The Bank of England has decided to keep its benchmark interest rate at a record low 0.5 percent this month even as the British economy improves.  Policymakers also decided to keep the bank's monetary stimulus program unchanged at 375 billion pounds ( $612 billion ) during their meeting Thursday. Both moves were widely expected.”  (“Bank of England keeps rates on hold,” Kitco News, 2/6/14)

“The European Central Bank left interest rates at a record low on Thursday but put markets on alert for a possible move in March, acknowledging that emerging-market turbulence could hit the euro zone.  Risks to the currency bloc's economy remain skewed to the downside, ECB President Mario Draghi said after interest rates were held at 0.25 percent, and inflation would be low for a protracted period.”  (“ECB holds rates at record low, puts focus on March,” Reuters, 2/6/14)

Goldline’s Express IRA Program

Many Goldline clients choose to include precious metals as part of their retirement planning especially during times of economic crisis and uncertainty.* Goldline’s Express IRA allows clients to acquire precious metals on their schedule; they no longer have to wait for your self-directed IRA to be funded before getting started.

Goldline's Express IRA not only provides clients with the ability to diversify their IRA on an expedited basis, clients can also qualify for Goldline's ground-breaking Two-Way Price Guarantee Program when they acquire $10,000 or more of our exclusive bullion coins.  When an Express IRA purchase qualifies for Goldline's Two-Way Price Guarantee Program, clients are protected on short-term upside and downside market movement: they can either call to reprice their coins if the selling price falls (up to a maximum of 28 days depending on the size of the purchase) or, if the selling price of the coins increase during the qualifying period, clients can call Goldline to acquire additional coins at the original selling price.

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. Here is this week's show:

*Federal IRA tax laws are complex and may change from year to year. Goldline believes it is appropriate to have 5%-20% of retirement portfolio allocated to precious metals. Other individuals and institutions may recommend different percentages. As with any investment, you should consult your tax advisor before making a decision regarding precious metals IRA investments.

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†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.