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Higher Gold Prices Expected Next Week

Release Date: 
Friday, December 27, 2013

Gold and Silver Prices

Gold prices moved above $1200 during the abbreviated trading week due to a weaker dollar. “The Bloomberg U.S. Dollar Index dropped as much as 0.6 percent against a basket of currencies and the euro jumped to a two-year high against the greenback after European Central Bank Governing Council member Jens Weidmann said keeping interest rates low may endanger political reforms. ‘It’s a currency story… The strong euro has kept sellers in gold on the sidelines.’” (“Gold Heads for Longest Rally in Four Months as Dollar Slumps,” Bloomberg, 12/27/13.)

Gold closed the week up $10.30, at $1214.80. Silver prices also ended the week in positive territory, closing at $19.52, up $0.66.

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. “’The year-end long liquidation seems to have ended and mild short covering has taken over since the recent low on Dec. 19 as open interest declined 5% over the past four days,’ said Ken Morrison, founder and editor of an online newsletter, Morrison on the Markets. ‘I expect a bit more short covering can carry gold a little higher into downtrend resistance at $1,230 in the week ahead.’”  (“Gold Survey: Survey Participants Look For Higher Gold Prices Next Week,” Forbes, 12/27/13.)

Traders: Risk-Reward Favors Gold

Two prominent traders, Alan Knuckman of Trading Advantage and George Gero of RBC Wealth Management told Bloomberg TV that gold’s consolidation in 2013 provides a buying opportunity for investors. When asked where the technical support for gold was, Mr. Knuckman responded, “I really love it here… from a risk-reward, I’m loving it here… [gold] has fallen so far out of favor, I think there’s a big opportunity here.” 

Mr. Gero shared this bullish view. “I agree with what I just heard and I think there is going to be great opportunity going forward next year to discuss the dismal year gold had and the possibility of a golden rebound.”

Mr. Knuckman added, “Gold is now an asset class that people participate in… People still want to have money in different asset classes to be positioned as a hedge as well… The number of speculators who are short is usually a very positive contrarian sign… selling now is a good risk-reward… There’s not a whole lot of downside in my opinion.” Mr. Gero agreed: “I agree with him… my theme over the past few weeks is that there’s too many bears in the woods.” (“Too Many Bears in the Woods for Gold: Gero,” Bloomberg TV, 12/26/13.)

World Mints Report Unprecedented Sales of Silver Coins in 2013

Lower silver prices helped drive the sale of silvers to unprecedented levels for three of the largest government mints. “The U.S. Mint, Royal Canadian Mint and the Perth Mint all reported extremely high sales of their silver coins. Keith Weiner, president of the Gold Standard Institute and chief executive officer of Monetary Metals, said the banking crisis in Cyprus earlier in the year highlighted the fragility of the banking system. A lot of people ended buying other assets to preserve their wealth and because of its lower price to gold, silver has always been a popular alternative as another currency, he added. Although the crisis has abated since March, Weiner said there is still a strong distrust of the global banking system, which is why consumers and investors are buying on price drops. “If you hold a silver coin you aren’t a creditor to the banking system,” he said. “You are holding a real piece of money.” (“World Mints Sees Unprecedented Demand For Silver Coins In 2013,” Kitco, 12/16/13.)

Majority of Americans Believe Economy is in Bad Shape

According to a CNNORC poll, “Nearly 70% said the economy is generally in poor shape, and only 32% rated it good. Two-thirds of respondents said most of the economic news they've heard recently was bad news... And just over half expected the economy to remain in poor shape a year from now… Thirty-six percent said they were cutting back spending on food or medicine, up from 31% in late 2008, the year the housing market collapsed.” (“Many Americans feel economy isn't improving,” CNN Money, 12/27/13.)

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 a 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. Click here to listen.

*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.

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