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Weekly Gold & Silver Market Report – 10/10/2014

This week was positive for Gold and Silver, while the U.S. stock market suffered sharp losses after a good start on Monday. Economic data coming out of the U.S. along with the jobs report maintained positive momentum. However, economic data coming out of the Eurozone, especially Germany continued to paint a dismal picture. The declining European economy is not new information, but it was as if this week the light went on and the revelation we learned back during the Great Recession hit home…we live in an interconnected global economy. Lighting quick global communications fosters a world where geopolitical, economic and Black Swan events eventually affect everyone. No country exists in isolation. The FOMC minutes released on Wednesday showed concern, that a declining European economy could put the brakes on U.S. growth.

It is rare that the minutes of FOMC meetings reveal information that rises to the level of surprising, but Wednesday’s release can be considered no less than surprising. Despite this, there is still a great deal of debate within the Fed as to when to raise interest rates. Perhaps they will not be raised as quickly as the market has grown to expect. Gold and Silver prices shot up on the news, but surprisingly, U.S. stocks did not. Normally stocks would rise in this scenario, so why not now? Because much of the Fed concern was the rapidly deteriorating global economy and it’s potential to affect the U.S. recovery.

The Fed is not the only organization concerned about global growth. The International Monetary Fund (IMF) projections that came out on Tuesday caused stocks to slide and Gold and Silver to go up. Gold traded higher Tuesday as investors sought the safe-haven appeal of Precious Metals following a report by the IMF that cut its global growth forecasts. “Following yesterday’s rally, traders are in a wait-and-see attitude now after the IMF lowered world growth and issued some market risk warnings,” RBC Capital Markets Vice President George Gero said. With Gold recently dipping below $1,200 per ounce, physical buying demand has increased both domestically and abroad, lending support for the yellow metal this week.

To close out the week, Jim Grant, founder of Grant’s Interest Rate Observer stated that the Federal Reserve needs to return interest rates to more normal levels and free the financial markets from government sponsored price controls.  “The real value of asset prices would come in “clearer focus” if rates were not so artificially low, Grant said on CNBC’s “Squawk Box” Friday. This comes a day after the Dow Jones industrial average dropped by 334 points, something that has not happened since February. “Interest rates now are not discovered as one discovers prices in a free market. They are administered and imposed,” Grant said.

3 Mistakes of First Time Precious Metals Buyers


With financial unrest in a volatile economic climate, many have lost their trust in banks and investment firms and are looking at other options. That’s why investing in Precious Metals like Gold, Silver and Platinum is such an appealing proposition for many. However, investing in these materials is not something you want to jump into blindly. Before buying Silver online or looking into where to buy Gold bars, be aware of these three mistakes that many first time Precious Metal buyers make — and perhaps you can avoid a costly mistake.

Failing to Compare Prices, Product and Service – There are hundreds, maybe even thousands, of sources for purchasing Precious Metals online. Each offers something a little different. First, make certain you are comparing apples to apples — i.e., the same product from different sources. Then, do plenty of research to educate yourself on the price of metals. Do your research when it comes to choosing the vendor you’ll buy from. Making sure your dealing with a reputable supplier will help to ensure you’re taken care of. Last, make sure you’re getting the service you deserve. Find out how the company ranks with the Better Business Bureau, what their reviews say and what‘s being said about them on forums. At the end of the day, price may not be everything if you’re not getting the service you deserve. A test purchase is a great way to try out a company before you spend your money with them. Make a small order to test the service, price and product. Then you can move forward confident in your decision.

Buying Scrap Metals as a Sole Investment – While you may be able to sell an old ring or coins with a small amount of Precious Metal content as a way to raise a little cash, choosing generic Silver or junk Silver and other products as your main investment can make it much harder when you decide to cash out one day. Diversify your investment in Precious Metals. Buy what you like from a source you feel confident in. Look into products like Silver bars or find out where you can buy Gold coins and bullion or numismatic pieces. This will make it much easier (and more profitable) when you decide to sell.

Not Diversifying – As the saying goes, “don’t put all your eggs in one basket;” this holds true with investments like Precious Metals. Precious metals are a long-term investment and should be only a part of your overall investment portfolio. You want to keep some cash available for your everyday purchases and other savings. That way you can weather any potential bumps in the road and hold on to your investment until a time when it will be best served for you and your family.

While there are potential pitfalls to investing in Silver bars, Gold bullion and other types of Precious Metals, there are many other reasons why it makes sense to invest at least some of your savings in these materials. Take the time to learn about these investments and make smart decisions — you’re sure to be pleased with the outcome.

Weekly Gold & Silver Market Recap – 9/12/2014


Gold and Silver prices took a big step back this week with prices dropping from Monday’s opening prices. The loose monetary policies in Europe, China and Japan continue to de-value their currencies and conversely drive the U.S. dollar to highs we have not seen as of late. Safe-haven appeal is moving out of other currencies and into the U.S. dollar.

Safe-haven concerns fell this week as tensions in Ukraine and the Gaza Strip have eased for the moment. This did not stop the U.S. and the European Union from announcing new, harsher sanctions over Russia. For the first time, Russia’s Sberbank was targeted. These sanctions will affect oil and defense industries and further limit the access of major Russian banks to U.S. debt. The European penalties included asset freezes on leading Russian politicians and restrictions on financing for some Russian state-owned companies.

An interesting development in Scotland could have an effect on Gold prices later this month. Scotland’s voters go to the polls on September 18 to decide whether they should break away from the United Kingdom, or not. If Scotland does vote for independence, there will be a distribution of assets that will include Gold.  The U.K. owns about $12.6 billion and is the 18th largest holder of Gold (central bank holder). Scotland would also be faced with the decision as to whether or not to create their own currency.

Nothing goes up forever and investors are aware that U.S. equities have experienced a very long winning streak. When will U.S. equities lose steam and correct? Until this happens, it is likely that Gold and Silver prices will remain under pressure. Both Precious Metals and equity markets will continue to try and read the “tea leaves” and anticipate future Federal Reserve action. The ending of QE3 is a foregone conclusion, but when will the Fed raise interest rates and can they accomplish this without major disruptions? The next Federal Reserve Open Market Committee is September 16-17.


Weekly Gold & Silver Market Recap – 9/5/2014

9/5/2014 3:15:33 PM By: Brandi Brundidge


The short holiday week began with the U.S. dollar jumping to a one-year high Tuesday morning, forcing Gold down to its lowest level in 2 ½ months. Strength in the dollar and ongoing confidence among U.S. equities offset concerns about escalating tensions between Ukraine and Russia. “It’s when the dollar hits big numbers that Gold gets punished and this is clearly one of those moments,” Ross Norman, CEO of bullion broker Sharps Pixley, said. Domestic and overseas investors were closely eyeing the movement of global currencies for the week as the European Central Bank (ECB) had investors awaiting their policy meeting. Many expected ECB President Mario Draghi to ramp up the region’s current level of market liquidity with asset purchases known as quantitative easing (QE). The announcement of such measures would likely weaken the euro further, and bring the Gold price down with it, as the dollar would be strengthened by the potential inflationary result of such a program.


The Gold price moved slightly higher after Wednesday’s morning trading as the yellow metal continued to be pulled in all directions by outside factors. One of those factors, the ongoing situation between Ukraine and Russia, also affected the Palladium price. Russia is the world’s largest producer of the metal commonly used in the automobile industry, and as more sanctions are put on Russia, exports of Palladium would likely decrease. Thus, the seemingly easing tensions in that region have caused the price of the metal to fall.


The U.S. dollar began to decline Wednesday after three days of consecutive gains. Talks of a potential ceasefire between Ukraine and Russia have helped ease tensions in the region. Masafumi Takada, a New York-based director at BNP Paribas SA, said, “Headlines about a Russia-Ukraine ceasefire are definitely positive for the euro. Also, the market has been accumulating long U.S.-dollar positions lately, and there’s some position-adjustment liquidation ahead of the [European Central Bank] tomorrow and nonfarm payrolls on Friday.”


Strength in the U.S. dollar has once again marginalized the demand for bullion Thursday as the greenback climbed to its highest level since July 2013.  The yellow metal was in positive territory until news from Europe revealed plans by the European Central Bank to cut interest rates and begin an asset purchase program in an effort to stimulate the region’s lagging economy.   However, some experts are downplaying the significance of this endeavor as it relates to Precious Metals prices.  “Yes, today people are excited, but how many positive jolts can the world take from another central bank lowering interest rates before people get immune to that,” Jorge Beristain, an analyst at Deutsche Bank AG, said.


Precious Metals continue to tread water inside a relatively slim trading range since last year’s massive pullback.  Though improvement in the domestic economy and stocks have lured investors away from safe-haven investments like Gold and Silver, some experts believe an impending shortage in Gold supply could force the yellow metal higher in the near future.  With lower prices, new exploration of the metal has slowed and a general tightening of the sector has resulted in a lack of new Gold deposits.  With less money being spent to fund fewer projects, Gold is still being extracted at 1.5 times the expected depletion rate.  Supply concerns should be noted as most Precious Metals investors possess a long-term investment strategy for their Gold holdings.


A disappointingly low number of jobs were created in August, allowing the Gold price to recover Friday from some losses incurred earlier in the week. The U.S. Labor Department reported an increase of just 142,000 jobs. Many economists had expected a level near 228,000 or more. U.S. stock futures dipped on the news, pointing toward a lower open for Wall Street.


Some investors were surprised Thursday’s announcement of monetary policy easing in Europe didn’t have more of a positive effect on Gold. UBS said in a note Friday morning, “It would have to take more aggressive action from the ECB, which is likely to come alongside a sharp deterioration in eurozone growth, for Gold to benefit significantly. In this scenario, concerns on weaker growth could potentially reactivate physical demand in Europe, should the fear-trade gain traction.”


Weekly Gold & Silver Market Recap – 8/29/2014

Precious Metals endured another week of stagnation as the sluggish summer months continued to plague Gold and Silver prices.  The Gold price experienced pressure as U.S. equities rallied forcing the S&P 500 to breach 2,000 for the first time.  Gold made a single digit rebound on Thursday as reports indicated intensifying hostility between Ukraine and neighboring Russia.  Investors will continue to eye global and domestic economic news and the threat of escalating violence from geopolitical hot zones in Ukraine and the Middle East. 

The crisis in Ukraine and the conflict on the Gaza Strip have been key supports for the Gold price. Friday, another support beam was erected as the terror threat in the United Kingdom was raised to “severe”. U.K. Prime Minister David Cameron said the threat of terror from Islamic State militants is greater than at any time before and is now at its second highest “severe”. Speaking today in London, Prime Minister Cameron said that we are facing a generational struggle, which is bound to go on for decades.

Gold was trading higher on Thursday as geopolitical tension and ongoing short-covering forced a mild jump in bullion prices.  Overseas conflicts have again taken center stage as safe-haven buying was spurred when the Ukrainian president publicly announced that the Russian military invaded his country and were occupying areas along Ukraine’s eastern border.  Though Russian officials have come forth to refute this accusation, investors shied away from equities on Thursday in search of asylum in the form of Precious Metals. 

The S&P 500 crossed the 2,000 mark for the first time ever on Tuesday while the Dow hit an all-time high during morning trades. A better than expected durable goods report kicked off the stock surge. “Today’s report, while not perfect, reinforces market optimism regarding the economy, [of the data, which had orders for durable goods rising 22.6 percent last month versus a 7.5 percent estimate,]” Dan Greenhaus, chief strategist at BTIG, said in an email. Although this report was fueled by a sharp increase in demand for commercial aircraft, it raises expectations of a quicker than expected economic recovery.


Weekly Gold & Silver Market Report – 8/22/2014


Several factors were responsible for pushing Gold below $1,300 an ounce Monday, such as a stronger U.S. dollar and European and U.S. shares bouncing due to tensions easing in Ukraine. Gold has jumped nearly eight percent this year as investors have opted for the safe haven asset with concerns growing in Ukraine and the Middle East. For the first time in three weeks, hedge funds and money managers increased their bullish wagers on Gold futures and options, according to data released Friday by the Commodity Futures Trading Commission.


Last week, the World Gold Council released its Gold Demand Trends report for the second quarter of 2014 showing Gold demand has returned to its long term trend, coming off highs achieved in 2013. Marcus Grubb, World Gold Council managing director of investment strategy, commented, “In the context of an exceptional year last year where we saw record consumer buying and investor sell-offs, this quarter’s demand continues to demonstrate a return to long-term trends, illustrating the uniquely balanced nature of the Gold market. Jewelry consumers continued to digest the exceptional purchases of 2013 and investors also rebalanced, pulling back from the extremes we saw last year. Overall the Gold market is stabilizing following the extraordinary conditions we saw in 2013.” Some key report findings include:

· Jewelry continues to represent more than 50 percent of the world’s Gold demand

· Central banks have increased their Gold purchases by 28 percent

· Exchange traded fund outflows are only one tenth of second quarter 2013

· Recycling is at its lowest since 2007


Increased risk appetite weighed on Precious Metals and lifted stocks Tuesday as strong U.S. housing data influenced a temporary move away from Gold and Silver. The Gold price continued to hover around $1,300 an ounce as investors and traders alike mull over geopolitical tensions abroad and domestic economic data for signs of future market movement. Many investors awaited the outcome of the annual Federal Reserve meeting in Jackson Hole, WY, when central bankers from around the world gathered Thursday and Friday.  The event has historically ended with important policy announcements regarding the future of U.S. and world monetary policy.


The Gold price fell to a two-week low Wednesday as investors speculated whether an interest rate hike may come sooner than expected.  After the release of the minutes from the Federal Reserve’s July policy meeting, Gold came under pressure as non-interest earning assets like Precious Metals reacted negatively to the anticipation of a rate increase.  Continued improvements in the domestic economy are adding fuel to the argument that the Fed should end its stimulus program and begin raising interest rates. “The hawkish voices within the Fed have become louder,” Jerry Webman, chief economist at OppenheimerFunds Inc., said. “While the economic numbers are not very strong, they are definitely showing some strength.”


Gold and Silver prices fell sharply during trading Thursday, though the pace of decline slowed by the afternoon. The bad news for Gold is good news for stocks. The S&P 500 topped a record level Thursday morning. Expectations that the Fed will raise interest rates sooner than later as a result of good economic data are growing stronger. “The market is really in a sweet spot for U.S. stocks, fundamentals continue to be very good,” Jeff Kravetz, regional investment director at US Bank’s Private Client Reserve, said via phone.


The labor market may not be where it needs to be, but jobless claims in the U.S. fell more than forecast last week. For the week ending August 16, jobless claims fell by 14,000 to 298,000. Bloomberg’s median forecast, which surveyed 46 economists called for 303,000 jobless claims. “The job market is doing well right now, there’s no doubt about it,” Guy Berger, an economist at RBS Securities Inc. in Stamford, CT, said. “There’s a good chance we’ll get another solid month of payrolls. Lower layoffs, together with faster hiring, mean better prospects for consumer spending.”


Russia announced they added 9.4 tons of Gold valued at $400 million to its Gold reserves. This is the fourth consecutive month that Russia has expanded their Gold holdings. Russia now holds 1,104 tons, which moves them ahead of China to fifth in the world (China has not reported their Gold holdings since 2009, but Russia has moved past what was last reported). “Russia has been the largest official buyer for years,” Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt, said Thursday. “It’s a part of its long-term strategy of amassing gold reserves and diversifying its foreign exchange reserves.” According to the World Gold Council, central banks have continued to be purchasers of Gold and have been net purchasers since third quarter 2009. Central banks purchased 409 tons of Gold in 2013 and they are expected to add as much as 500 tons in 2014.


Gold and Silver prices climbed steadily Friday, largely on news coming out of Ukraine.  NATO Secretary General Anders Fogh Rasmussen said Friday there has been an alarming buildup of Russian forces near Ukraine, saying, ‘We have also seen transfers of large quantities of advanced weapons, including tanks, armored personnel carriers and artillery to separatist groups in eastern Ukraine.” He also condemned Russia’s move sending “a so-called humanitarian convoy” without acknowledgment from Ukraine or supervision of the International Committee of the Red Cross.


Weekly Gold & Silver Market Report – 8/15/2014


Precious Metals traded near even Monday as lack of news in the headlines kept price movement to a minimum.  Investors continue to eye geopolitical crises in the Middle East and Ukraine as bearish forecasts from major financial institutions in early 2014 continue to prove inaccurate.  Gold has risen 9 percent this year as tension overseas continues to boost the safe-haven appeal of the yellow metal.  Many analysts and economists are still expecting a range-bound price pattern for Gold and Silver in the short-term.  With strong economic factors suppressing a price breakout for Gold and Silver, investors await new factors that could influence significant price movement in the coming weeks and months.


After a period of varying risk in the markets, Tuesday saw Gold on the upswing as Ukraine denied access to a convoy of 280 Russian trucks, claiming to carry humanitarian aid, across its border. Ukrainian officials would prefer Russia follow international rules, which would require the convoy be led by the Red Cross. However, Ukraine is not the only geopolitical hotspot. “There’s multiple hotspots in the world that could easily spiral out of control to something much greater,” Long Leaf Trading Group chief market strategist Tim Evans said in a telephone interview. “You’ll find that investors will normally flock to safe-haven markets, like Gold, in case something really does develop much greater than what we’re seeing currently.”


The theory of secular stagnation, or a long period of slow growth, is a term that Federal Reserve watchers should expect to hear more in the coming months. First developed by Alvin Hansen during the Great Depression, there is concern that secular stagnation could cause enough diminishing investment opportunities to stunt economic growth and prevent full employment. Minneapolis Fed President Narayana Kocherlakota plans to hold a symposium on the subject this November. “I think there’s a lot of concern about how long this will last, and I think that’s certainly high on the agenda right now. At least people are entertaining that possibility now that it could drag on for longer,” said Brown University associate professor of economics Gauti Eggertsson, who, along with fellow Brown economist Neil Mehrotra, authored “A Model of Secular Stagnation,” which provides an in-depth explanation of how a long period of low growth could come about.


Gold futures received a mild boost Wednesday following disappointing U.S. retail sales data.  The weaker-than-expected retail figures reinforced the belief that the Federal Reserve will maintain low interest rates for the foreseeable future. Naeem Aslam, chief market analyst at Ava Trade, said of the sales figures, “It was an appalling number which has missed the forecast by a large number and this has faded the notion of hike in the interest rate by the Fed, at least today.”  A low interest rate environment bodes well for Precious Metals, which are also receiving support from ongoing crises in the Middle East and Ukraine.


The Gold price remained relatively unchanged Thursday, even as a rise in unemployment claims pared speculation that the Federal Reserve will lift interest rates in the near future.  “Concerns about the labor market are back,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates, said.  “Also, safe-haven bids continue to come in because of the geopolitical developments.”  Much of this year’s gains for Gold have come due to the escalation of geopolitical tension in Ukraine and the Middle East.


Gold began Friday down almost $20, well below $1,300 per ounce, while Silver looked like it might head below $19 per ounce. All the while, U.S. stocks were up nicely. By midafternoon, stocks were down triple digits and Gold and Silver rebounded sharply on news that Ukrainian artillery destroyed a significant portion of a 270 truck Russian convoy. This announcement rattled markets and sent European stocks tumbling. “Appropriate actions were undertaken and a part of it no longer exists,” Ukrainian military spokesman Andriy Lysenko told journalists. Russia has claimed that these trucks were bringing in humanitarian aid, but Ukraine officials never bought into this explanation. Last night’s attack demonstrated their resolve and only adds more uncertainty to this situation.


Economists have raised their growth targets for the third quarter, but trimmed their estimates for the balance of the year. The overall outlook for job growth and lower unemployment remains strong. In the Philadelphia Federal Reserve’s quarterly survey of 43 economists, the third quarter growth forecast went up from 2.9 percent to 3 percent, while the fourth quarter forecast went down from 3.2 percent to 3.1 percent. Overall for 2014, they lowered economic growth from 2.4 percent to 2.1 percent. Inflation is expected to remain muted with only slight increases in the forecasts.