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Read Why McEwen Says: “Gold is Very Cheap”

Release Date: 
Friday, December 13, 2013

Gold and Silver Prices

Gold and silver prices experienced choppy trading ahead of next week’s Federal Reserve Open Market Committee (FOMC) meeting. “Gold recovered modestly on Friday…Wholesale price numbers released on Friday showed a third month of decline, reducing inflation concerns and potentially prolonging the Federal Reserve’s quantitative easing program.  ‘If you believe the government that inflation is non-existent, that should be enough to take the Fed tapering talk off the table for good next week,’ Peter Hug, the global trading director of Kitco Metals Inc. in Montreal, said in an e-mailed report.”  (“Gold Climbs as U.S. Wholesale Prices Curb Tapering Bets,” Bloomberg, 12/13/13)

Gold closed the week at $1,239.70, up $8.00. Silver prices rose modestly to $19.78, up $0.14.

McEwen: Gold is “Very Cheap”

Rob McEwen, Chairman and Chief Owner of McEwen Mining, discussed gold’s current prices and outlook in an interview with Bull Market Thinking. 

“The next run in this market is going to be [driven by] gold moving higher…You look at the broad market right now…on a relative basis, gold is very cheap. So I think some investors will be looking at relative value situations and saying, ‘Maybe I should have some gold in my portfolio now.’  It’s off quite a bit from its highs, and I still believe our monetary base is being debased and one needs to protect their capital…[so for that reason] I don’t think there’s much more on the downside in gold…” (“Rob McEwen: “Our [Currency] Is Being Debased, And One Needs To Protect Their Capital”,” Bull Market Thinking, 12/11/13)

Analysts: We See Upside for Gold

The Wall Street Journal interviewed money managers and analysts for their views regarding commodities in 2014. While views were mixed on gold’s future, two analysts offered bullish views for the yellow metal.

Bradley George, Head of Commodities & Resources at Investec, said, “Our view is that this is almost already priced into the market and there is potentially some upside. This is because we don’t think the withdrawal of quantitative easing will be smooth. We have a new governor at the U.S. Federal Reserve and the approach will be data dependent. So we see some upside to gold with demand from emerging markets continuing, especially at the level of $1,300 per troy ounce.”

John Hummel, president and chief investment officer at AIS Group, sees resumption of the bull market and new record highs:  “The basic reasons why gold has gone up in the last decade are still very much in place and we’ll see new all-time highs in this bull market next year.” (“Tapering Key for Gold: Commodities in 2014,” Wall Street Journal, 12/10/13)

Russell:  Gold “Ultimate Safe Store of Value”

Veteran investor, newsletter writer and publisher of the Dow Theory Letters, Richard Russell, told his readers.  “Gold will be the ultimate safe store of value. Gold has two great qualities. It has a long, pristine history, and it is outside the current system.  It is notable that China is hedging against its huge hoard of US securities with gold.” (“Richard’s Remarks,” Dow Theory Letters, 12/12/13)

Tapering May Be Baked Into Market Prices

“Gold and other markets appear to have become increasingly accustomed to the idea of an imminent Federal Reserve tapering of quantitative easing, as reflected in ongoing gains in risk assets, says Alex Thorndike, senior trader for precious metals and foreign exchange with MKS Capital. Gains are taking place even in the aftermath of recent comments by Fed officials, including St. Louis Fed President James Bullard and Dallas Fed President Richard Fisher, which on balance seemingly supported the view of beginning tapering sooner rather than later, Thorndike says.”  (“MKS Capital: Markets Increasingly Factoring In Fed Tapering,” Kitco News, 12/10/13)

Cyprus Central Bank – Gold Necessary to Preserve Independence

The Cyprus central bank announced Friday that it has no plans to sell its gold reserves.  “Cyprus has no plan to sell gold reserves to fund its 10 billion euro ($13.75 billion) bailout, officials at the central bank said on Friday.  Cyprus's government in April undertook to look into selling its gold reserves to raise 400 million euros to help finance part of its EU-IMF bailout…Central bank officials said the gold reserves, valued at 441 million euros on its balance sheet, were important to safeguard the institution's independence.” (“Cyprus central bank has no plan to sell gold reserves-sources,” Reuters, 12/13/13)

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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