News Header

 

McAlvany Says Gold May Rise to $2,100 in 2012

Release Date: 
Thursday, July 26, 2012

Gold prices climbed to three-week highs on Thursday after European Central Bank (ECB) President Mario Draghi said he would take whatever actions are necessary to preserve the euro.  Gold was $14.80 higher at 7:15 a.m. Pacific Time on the New York Spot Market, trading at $1,620.60 per ounce. Spot silver was $.40 higher, trading at $27.84 per ounce. (Click here for the most current spot prices.)

"Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough," Draghi said. The comments boosted the ailing euro versus the dollar. Draghi also said the euro was "irreversible" and that the common currency bloc was much stronger than many acknowledged. The comments alleviated some of the pressure on European markets that has grown with Spanish and Italian debt sending bond yields to unsustainably high levels. A bailout of either of those nations would require significant additional liquidity from the region.

HSBC analyst Jim Steel said that gold may take its next cue from second-quarter U.S. GDP data due Friday, where HSBC expects a growth rate of 1.1 percent. "If the growth rate... is nearer to 1.0 percent... the FOMC may move closer to a decision to provide even more monetary stimulus in the weeks and months ahead," Steel said in a note. "Gold has shown itself sensitive to monetary policy announcements this year and any indication of further easing would buoy gold prices."

"Yesterday's move above $1,600 an ounce was driven by more positive sentiment towards gold on the back of growing anticipation for QE (quantitative easing)," BNP Paribas analyst Anne-Laure Tremblay said.

David McAlvany, CEO of McAlvany Financial Group, believes that gold prices have been in a period of consolidation, but notes that prior breakouts to the upside following such periods have seen prices rise significantly. "This is really par for the course in terms of a consolidation, and each of the breakouts to the upside in gold following that consolidation have been to the tune of 50%, and as much as 109% in the last go around." According to McAlvany, "during these periods of consolidation, and coming out of them, you’ll generally see the old highs taken out. So $1920 was the old high. To see $2,000 or $2,100 I think is very predictable, year end 2012."

(Sources: "PRECIOUS-Gold hits 3-week high as ECB comments lift euro," Reuters, July 26, 2012; "Gold jumps more than $10 as Draghi boosts euro," MarketWatch, July 26, 2012;"Draghi sends strong signal that ECB will act," CNBC, July 26, 2012; "Gold Could Hit $2,100 By Year End," CNBC, July 24, 2012)

News Footer

 

†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.