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Higher Gold Prices Expected

Release Date: 
Friday, September 6, 2013

Gold and Silver Prices:

Gold prices retreated modestly from last week’s close as uncertainty continued over possible military action against Syria and the Federal Reserve’s plan to taper its bond buying program. Gold ended the week at $1,389.90, down $7.70. Silver prices moved slightly higher, closing the week at $23.94, up $0.31.

Higher Gold Prices Expected Next Week

A majority of analysts and institutions surveyed by Kitco News Gold Survey expect gold prices to move higher next week. A number of those who forecast high prices point to the disappointing labor report while others believe gold will rise due to the potential Syrian conflict. “The horrible miss on the jobs number along with the July revisions are bullish,” said the owner of Phoenix Futures. “If you throw in the situation in Syria you could have a late day pop today. I would not want to go home short with embassies being evacuated.” (“Gold Survey: Survey Participants Bullish On Gold Prices For Next Week,” Forbes, 9/6/13.)

U.S. Jobs Report Signals Weak Economy

Despite a technical drop in the unemployment rate, data from the Department of Labor reveal a weak job market with dismal prospects for unemployed Americans. Although the unemployment rate fell in August, the fall is attributed to Americans who have stopped looking for work, rather than higher employment. Indeed, on a proportionate basis, fewer American are working or seeking employment now than any other time in the past 35 years.

The Labor Department also revised downward its June and July estimates by nearly 75,000 jobs. The Wall Street Journal reports that “a disproportionate share of the jobs that are being added are in low-paying sectors such as restaurants and retail. At the recent pace of hiring, the economy won't get back to prerecession levels of employment, adjusting for population growth, for more than eight years.” (Labor Recovery Leaves More Workers Behind,” WSJ, 9/6/13.)

Technical Analyst:  Gold Bull Market Resumes; New Nominal Highs Expected

Mike Paulenoff, author of, provided a technical analysis of gold prices that indicates resumption of the bull market: “The big-picture pattern in spot gold suggests strongly that a major correction within the 1999-2011 bull market transpired between the Sept. 6, 2011, high at $1921.50 and the June 24, 2013, low at $1180.04. In addition, a new bull phase, or upleg, is in its infancy that should propel spot gold to new all-time (nominal) highs in the weeks and months ahead.  With the foregoing in mind, the June-August up-move of 22% ($254) is at a bit of a crossroads as the rally has entered an important resistance zone at the intersection of the flattening 200-day exponential moving average (EMA), now at $1425, and the nearest-term resistance line at $1415.  If any forthcoming weakness in spot gold can hold above $1395-$1390, the pattern off the low will remain exceptionally powerful and promising, and will argue that the next up-move should propel prices toward a test of the major breakdown plateau at $1522-$1527, on the way to $1560-$1590.”  (“Gold looks good here, but silver looks even better,” MarketWatch, 9/4/13.)

Gold Part of “Real World” Diversified Portfolio

In a commentary for The Huffington Post, financial analyst and president of Tavakoli Structured Finance, Janet Tavakoli, explained why she owns gold. “[Gold] doesn't pose credit risk, and unlike many U.S. stocks, it has never traded at zero. It's a tangible asset at a time when there is reasonable distrust of many financial assets. There is also reasonable distrust in the managers of major banks and distrust of the representations of Central bankers and the IMF…The U.S. may soon be at war with Syria. Wars tend to drive up the prices of oil and gold. Gold has an advantage over other currencies, because it can't be printed, and although it doesn't pay interest, interest rates are relatively low at present. Rates can change fast, but for now, interest rates are below real rates of inflation.”

Ms. Tavakoli summarized why gold is an important part of a diversification strategy: “Since I live in the real world, not a world of my preferences and wishes, I diversify, and I own some gold. Gold is just one of many assets one can buy to diversify. Diversification doesn't mean you won't lose money. It just means it's unlikely you'll lose it all at once, and instead, you may do very well over time.”  (“Should Investors Own Gold?” The Huffington Post, 9/05/13.)

China May Become Largest Gold Consumer this Year

China remains on track to become the largest gold consumer. “Gold shipments to China from Hong Kong increased in July as importers took advantage of local prices that were an average 2.1 percent higher than global markets and as mainland investors bought jewelry and coins… China’s total gold consumption this year may jump by 29 percent to reach 1,000 tons, overtaking India to become the world’s largest gold consumer, according to the World Gold Council. China and India together account for more than half of the world’s gold demand, according to the council.” (“Gold Imports to China From Hong Kong Climb on Physical Demand,” Bloomberg, 9/05/13.)

U.S. Mint on Pace for Record Silver Sales

The U.S. Mint is on pace to surpass all-time record sales of silver American Eagle coins.  “Sales of American Eagle silver bullion coins by the U.S. Mint have now passed the total number of Silver Eagle silver coins sold last year…As of August 31st, sales of American Eagle silver bullion coins surpassed full-year 2012 total American Eagle silver bullion sales of 33,074,000 ounces, despite the fact the U.S. Mint suspended sales of silver coins for more than a week in January 2013 due to lack of inventory. The annual record for American Eagle silver bullion coin sales was set in 2011 at a total of 39,868,000 ounces.” (“Summer doldrums fail to slow U.S. silver bullion coin’s upward trajectory,” Mineweb, 9/05/13.)

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.

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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.

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