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Leeb: Gold to $2,000—$2,500

Release Date: 
Friday, February 14, 2014

Gold and Silver Prices

Gold and silver prices moved higher this week, with gold hitting a three month high, to close above the critical $1,300 threshold. “Gold rose to three-month highs above $1,300 an ounce on Friday and looked set to post its biggest weekly gain in six months as weak U.S. data raised fears about economic growth, hurting the dollar…Gold has gained nearly 9 percent since the beginning of the year, after a 28 percent drop in 2013 on doubts over the U.S. economic recovery and as emerging-market turmoil weighed on some equity markets. The latest boost for prices came from data on Thursday that showed U.S. retail sales fell unexpectedly in January and that more Americans filed for jobless benefits last week, the latest signs that the economy started the year on a softer footing as unseasonably cold weather took its toll.” (“Gold races above $1,300; set for best week in 6 months,” Reuters, 2/14/14)

Gold closed the week up $52.00, at $1,320.10. Silver prices were also up $1.51, closing at $21.61.

Leeb: Gold to $2,000—$2,500

Acclaimed money manager, financial author and newsletter publisher Stephen Leeb sees new record highs for gold due, in part, to growing demand in China.

“You have to be impressed that gold is trading higher and the fact that it has broken through a couple of important resistance levels…King World News was the first network reporting on the massive demand for gold coming out of China back in 2010. Now everyone is talking about it, including the mainstream media. But with Chinese demand remaining strong, this may very well be the beginning of a move in gold to price levels above $2,000, and maybe even $2,500.” (“Leeb - The Gold Market Is Setting Up For A Major Surge,” King World News, 2/11/14)

Embry: Silver Probably Will Trade Over $100

John Embry, Chief Investment Strategist at Sprott Asset Management, called for a “big move” in silver prices.

“[M]y main concern today is that the economy is really much worse than most people are prepared to admit. And this will have significant ramifications on various markets. Obviously, the one market we are particularly interested in is gold and silver. Both of them, as I said before, are considerably undervalued. They are under-owned too. I still think that the fundamentals look better than ever. And I still think there is an explosive move coming in 2014…I think the upside to the silver price will be incredible. My colleague Eric Sprott and I think that within a reasonable timeframe silver will probably trade over 100 dollars – a big move from its current price of 20 dollars an ounce.” (“Silver to 100 Dollars within ‘Reasonable Timeframe:’ John Embry,” Sprott’s Thoughts, 2/11/14)

China’s Gold Demand Will Reignite Gold Market: Barron’s

Barron’s Senior Editor Steven M. Sears discussed the effect of gold’s migration to the East on future gold prices.

“It is time to reconsider gold. Reports that buying in China rose 41% last year to a new record suggest Chinese investors are under the spell of gold, perhaps because of concerns about the stability of their own economy.”

“The trade thesis is largely predicated on an eastern retelling of a tale well-known to American investors: an economy weakened by financial sector excesses that drives citizens to buy something they think is a safe asset.

“Troubles in China are now regularly mentioned as key risks to the global economy. It is reasonable to conclude that Chinese investors might be interested in gold for the same reasons that not-so-long-ago captivated many Americans: economic weakness, inflation, debased currencies, and perhaps even civil unrest. My colleague Randy Forsyth [Barron’s columnist] notes that wealthy Chinese are trying to get their money out of the troubled domestic economy, and are increasingly investing in gold.

“Of course, a communist nation has tools at its disposal that are alien to democratic nations, but fear of the unknown is a proven motivation to buy gold. A panicked populace is not a reason mentioned by media reports of the China Gold Association, but it is reasonable to conclude Chinese citizens view gold as a store of value since powerful troubles are lurking in their real-estate and financial markets that might seriously roil the world's second-largest economy.

“The price of gold has historically been heavily influenced by India, but if China increasingly views gold as a store of value, the sheer size of China's market may reignite gold's prices and alter the historical dynamic.” (“Gold Price: Chinese Economy May Send It Higher,” Barron’s, 2/11/14)

China Is Largest Gold Consumer

According to several recent reports, China’s massive consumption in 2013 makes it the largest gold consumer in the world.

“China's gold consumption jumped 41 percent in 2013 to exceed 1,000 tonnes for the first time, an industry body said on Monday, as a sharp slide in prices attracted buyers for jewellery and bullion. The demand surge has helped China become the No. 1 gold consumer and should support prices, which took a hit last year from expectations of a tapering of commodities-friendly economic stimulus by the U.S. Federal Reserve and a drop in demand in the other major buyer India.” (“China's gold demand surges, tops 1,000 tonnes for first time,” Reuters, 2/10/14)

UBS: Gold Acting as “Portfolio Diversifier”

Private Swiss bank, UBS described gold’s role as a portfolio diversifier so far in 2014.

“Gold remains within its early-2014 range, but has been acting as a portfolio diversifier, says UBS…‘there is one clear positive amidst the frustration and one which receives scant focus: gold remains negatively correlated with risk,’ UBS says. ‘This relationship has been gold's best selling point this year. So while the metal has been a difficult trade from a tactical standpoint; strategically it’s performing well as a portfolio diversifier. Gold deserves more credit for this.’” (“UBS: Gold ‘Performing Well As A Portfolio Diversifier’,” Kitco News, 2/10/14)

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. Listen to the show below:

*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.

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