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Leeb Sees “Buying Opportunity” for Gold

Release Date: 
Friday, December 20, 2013

Gold and Silver Prices

Gold and silver prices fell sharply after the Federal Reserve announced plans to begin tapering its quantitative easing program in January.  “Gold futures marked their lowest settlement in more than three years on Thursday as the Federal Reserve’s January tapering plans and a rally in the U.S. dollar sank prices below $1,200 an ounce…Shortly after the Fed decision was announced, which followed the close of gold trading on Comex Wednesday, February gold prices climbed, then gave it all back.”  (“Gold under $1,200 for lowest close in over 3 years,” MarketWatch, 12/19/13)

Gold closed the week down $35.20, at $1,204.50. Silver prices closed at $19.52, down $0.26.

Leeb Sees “Buying Opportunity” for Gold

Financial author and wealth manager Stephen Leeb penned an article for Forbes describing why he is bullish on gold.

“I remain confident on gold’s future prospects thanks largely to China, the world’s No. 1 gold buyer…most analysts overlook China’s huge gold mining activities. The latest U.S. Geological Survey data identifies China as the world’s largest gold producer, both in terms of its 400 tons of absolute annual volume extracted and its 20% annual take from in-ground reserves. Globally, the latter amounts, by far, to the largest portion of any natural resource reserves mined anywhere.  This tells me gold will head far higher long term, whether or not it bottoms out here or first falls another 10%. I eventually expect to see the mother of all gold bull markets, alongside resumptions in bull markets for most other commodities. Alas, these moves could also mark the effective death of the dollar…

“Assuming China’s leaders have not gone nuts, they are mining gold primarily for its value as a strategic monetary metal. China’s perspective makes this sensible. If so many other commodities and minerals are growing increasingly scarce, one must plan ahead to buy them. Later, no resource-rich country will sell scarce commodities for paper. They’ll want payment via some other scarce commodity. Clearly, China foresees some form of future gold standard…Assuming the U.S. dollar will partially or totally lose reserve currency status means that gold would reemerge as a monetary metal and that the U.S. see major economic changes, including surging commodities prices, with gold on top. I see gold’s recent sharp and admittedly frightening fall as an exceptional buying opportunity and one for other less volatile commodities too.” (“Gold Gets Back To Bullish Ways With Lift From China,” Forbes, 12/18/13)

Russell:  Gold is “Timeless Wealth Asset”

Veteran investor, newsletter writer and publisher of the Dow Theory Letters, Richard Russell, told readers that gold remains an important asset in an investor’s portfolio. 

“I continue to think that gold is building a base and that somewhere ahead gold is going to surge. For now I'll sit with my bullion and cash and patiently await developments…The Chinese, who own a massive amount of US securities, have become openly worried about the US dollar. The gold that has been shaken out of weak and worried US hands, has been shipped to the East, and particularly China. China has imported a net 986 tons of gold through Hong Kong during the first 10 months of the year. China may not be so much intent on backing its currencies with gold, but in protecting itself from a potential collapse in the US dollar.

“Many people still fail to see the importance of gold. Gold is the ever present standard for wealth. Ultimately all assets are measured against gold. Sophisticated investors do not buy gold for potential profits. They buy gold the way Elizabeth Taylor collected jewelry or as some collectors amass great art; as a measure of eternal wealth. Do not think of your gold in terms of dollars. Think of your gold in terms of the number of ounces you own.

“You don’t price the home you live in every day, or with each passing week. Nor should you price your gold holdings in dollars with each passing day. Gold is a timeless wealth asset…In investing, nothing is permanent except gold. But remember, do not buy gold with the idea of making a profit. Buy gold because it is pure wealth, and may be the last man standing.”   (“Dow Theory Letters—Letter 1537,” Dow Theory Letters, 12/18/13)

Aden Sisters:  Gold’s “Next Leg Up Will Be Gangbusters”

Market analysts and publishers of The Aden Forecast, Mary Anne and Pamela Aden, discussed why gold’s bull run will be “gangbusters”.

“The gold rises in the 1980s and the 1990s were moderate but this time around feels different. The 2001 - 2011 bull market, as good as it was, it was never fully realized by all investors because other markets were also rising during a good part of that time…This is probably why gold fever never really kicked in. Investor frenzy didn’t happen and not all investors were involved.  This is one reason why we believe the next bull market leg up will be gang busters. And you’ll want to be well invested for this.” (“The Aden Forecast—December 2013,” Aden Forecast, 12/14/13)

Fed Announces “Measured” Taper

The Federal Reserve concluded its Federal Open Market Committee (FOMC) meeting on Wednesday, and released a statement saying that monthly asset purchases would be reduced beginning in January.  The Wall Street Journal’s Jon Hilsenwrath offered his analysis.

“The Fed reduced its bond purchases from $85 billion per month to $75 billion per month, something it described as a modest move. Moreover, officials said they would likely reduce the program at future meetings in ‘measured steps.’ The Fed said the move was made ‘in light of cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions.’ More reductions are expected ‘in measured steps’ at future meetings. But it depends on the economy living up to the Fed’s expectations and it is not on a preset course.”

“Fed officials have become a little more concerned about the outlook for inflation, which has been running below the Fed’s 2% objective for months…The vast majority of Fed officials doesn’t expect the central bank to begin raising short-term interest rates until 2015 and three think the Fed won’t get started until 2016. The majority thinks that rate increases in 2015 will be modest and that the benchmark fed funds rate will remain below 1% by the end of that year…The Fed is largely sticking to the forecast for 2014 that it laid out in September for a modest improvement in growth next year, continued declines in unemployment and a modest pickup in inflation.”  (“Hilsenrath’s Four Takeaways From December Fed Meeting,” Wall Street Journal, 12/18/13)

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.

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