Latest Gold & Silver Price News
Overall, our Outlook remains unchanged! The reasons why we believe it is crucial for seasoned investors to hold gold have not only remained unchanged, but have become even more urgent. We would also like to go one step further. As governments worldwide become increasingly desperate due to their dire financial circumstances, I believe that they will resort to increasingly tyrannical means to access the wealth of their citizens. It is essential to keep at least a part of your assets far away from the banking system, which I consider to be an “extended arm” of the government.
After the release of the “In Gold we Trust” report, Incrementum Liechtenstein surpises gold bulls with a compendium of some of the most compelling charts and the most important conclusions from the report. This is a must read for gold investors!
Gold prices began this week on a slightly negative note as prices drifted back towards their lowest levels since mid-August after US payrolls data failed to provide clarity on the timing of a US Federal Reserve rate hike, and as the dollar steadied against other majors. Despite concerns about the Fed tightening, gold recorded its best month this year, gaining around, gaining about 3.4% for August for its first advance since May.
Buy gold, buy silver, and have faith that our central bankers and politicians will continue to “print” currencies, monetize debt, extend and pretend, and devalue their currencies, thereby forcing the prices for gold and silver multiples higher. Precious metals will retain their purchasing power while paper assets denominated in mini-dollars, mini-euros, and mini-pounds decline and occasionally crash.
So with all due respect to those of you who see gold as just another imminent general commodity liquidation away from $850 or lower, I think that is not exactly the way it is going to play out. We may see more sell-off coming as current conditions develop; yes, I may still be a little early; but gold still represents the ultimate store of value for liquid capital.
We are currently witnessing one of the greatest experiments in human history. History teaches us: Neither mainstream economics nor central bankers are aware of how to control the specifics of inflationary dynamics. The pitiable attempts to regulate the level of inflation like a thermostat are testament to the hubris of monetary policymakers. Waves of price inflation happen unexpectedly and in very compressed time periods. As the following chart shows, this is confirmed by numerous historical episodes.
In his weekly market review, Frank Holmes of the USFunds.com summarizes this week’s strengths, weaknesses, opportunities and threats in the gold market for gold investors. Gold closed the week at $1,123.45 down $10.10 per ounce (0.89%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, lost 6.13%. The U.S. Trade-Weighted Dollar Index lost 0.13% for the week. The S&P/TSX Venture Index was off just 0.55 percent, besting the larger capitalization stocks by a significant margin, as these stocks took most of their losses in prior periods.
If the Federal Reserve’s rate-hike cycles were indeed gold’s arch-nemesis, this zero-yielding sterile asset should have been hammered in the great majority of them. Instead gold actually rallied through 6 of the 11 modern Fed-rate-hike cycles! And at average gains seen within these exact rate-hike-cycle spans of a staggering +61.0%, gold did amazingly well. Gold often didn’t just weather rate hikes, but thrived in them!
Gold’s most recent advance ended last week when price failed to break through the sturdy resistance level around $1170. As a reminder, $1170 is where several technical indicators converged, including a bearish trend line, the 100-day moving average and the 38.2% Fibonacci retracement level of this year’s range. The fact that the rally has stalled at the relatively shallow 38.2% Fibonacci retracement level bodes ill for gold bugs as it suggests the bears are still clearly in the driving seat, which means that the path of least resistance is to the downside.
My estimation is that various forces will nudge the S&P higher and occasionally levitate it, but deflationary forces will overwhelm both markets and central banks, and global stock markets will continue their downward path. Eventually people and investors will realize that “money” is now debt owed by a government, central bank or corporation that may not be solvent. When confidence in the viability of debt based fiat currencies and confidence in the ability to repay debt diminishes, people will flock to gold investments.
Today, the European Central Bank (ECB) published its monetary policy statement, with the central bank leaving its main refinancing rate at 0.05%, its deposit rate at 0.20%. Euro gold is testing its major support at €1000 /oz. This is a make-or-break level for euro gold, with a high importance for gold in other major currencies. If euro gold will stay above €1000, the market would anticipate more monetary easing in Europe, with a positive impact on the price of gold.
If you have stocks or other financial assets that you are worried could be vulnerable, then hedge your risk. Gold is one of the very best counter-weights to financial assets you can own, because it exhibits low correlation (and often negative correlation) to stocks and bonds. When they tank, gold can surge.
Gold in U.S. dollar closed the trading session 0.5% lower today. Reuters noted today that the gold price was down “as a rebound in stocks and the dollar arrested a four-day rise, with uncertainty over the timing of a looming U.S. rate hike limiting price moves ahead of key U.S. non-farm payrolls data on Friday.”
The most interesting trend on the longer term gold chart is the deceleration of gold’s decline. Although the trend remains down, with a clear formation of lower lows, the decline is slowing. Also note that the lows have occurred in an orderly manner, not comparable to the aggressive declines of April and June of 2013. This indicates selling pressure is fading and that gold is bottoming.