May 7, 2024

Gold Retains Safe Haven Status – Fundamentals Driving Gold Higher Intensify

August 5, 2011 by 2 Comments

Is the day of reckoning finally arriving?

Financial markets are suddenly starting to take the debt crisis seriously.  The sell off in global stock markets has intensified as investors rush to sell risk assets and flee to the safety of cash.  The value of all US stocks as represented by the Wilshire 5000 lost $800 billion on Thursday’s selloff and an astounding $1.9 trillion since mid July.

Gold also dipped in Thursday’s sell off to close in New York at $1,649.80 after trading as high as $1,683.30 in morning trading.  The quick intraday reversal had many in the mainstream press proclaiming that gold was just another risk asset.

Should we be worried about the price of gold sliding into the abyss along with stocks?  The answer is no.  Gold’s modest pullback came after a run up of almost $200 since July 1st while stocks were in the midst of a severe sell off.  To see some profit taking and liquidity driven selling by gold traders on a 500 point down day in the Dow is not surprising.  The fundamental factors driving gold higher are not only still valid but have intensified as the debt crisis ultimately puts the value of all paper assets at risk.

The bullish trend in gold remains intact.  The biggest pullback in gold during the last decade occurred during the financial meltdown of 2008 when gold declined by $250 but quickly recovered thereafter.  To long term gold investors, the decline in 2008 is hardly noticeable on the long term charts.  While gold dropped by 25%, numerous other asset classes saw losses up to three times as large.

Gold - courtesy kitco.com

Gold is at the upper end of its trading channel and a pullback of $50 or $100 to the lower band of the trading channel would merely be another small correction in the long term uptrend.  If investors lose confidence that governments and central banks are no longer capable of containing the debt crisis, gold will begin a rapidly accelerated price move with $100 up days becoming routine.

The debt crisis, which has been building for decades, seems to be reaching a super critical stage.

The massive sell off in global equity markets is based on the realization that we are approaching the financial nightmare of defaulting sovereign states, a looming recession, massive debt levels, a slowing world economy, a disastrous reduction in tax receipts and declining income growth. The end of QE2 along with austerity measures and spending cuts now being discussed in Congress leaves the Federal Reserve as the last firewall against a collapse into depression.

The clumsy and uncoordinated efforts of the ECB to contain the Greek debt crisis resulted in the government imposing losses on bondholders.  The realization by investors that they will not be protected from losses on holdings of other weak sovereign debt was the trigger that set off the rush to sell risk assets and move to cash.  Financial stress in European banks is rising steadily and many are already experiencing a classic run on the bank as depositors withdraw funds and move to (ironically) dollar assets.

It may be too late for the US to attempt a move to fiscal conservatism and austerity measures.  Despite the worries about exploding government deficits, an abrupt end to government deficit spending would probably tip the US economy into a full blown depression with massive job losses and a downward spiral in wage growth.  Politicians don’t think long term – they are worried about the next election.  As unemployment grows along with declining wages and home values, the public pressure on politicians to “do something” will become intense.

The Wall Street Journal recently reported that three former top fed officials are already arguing for a third round of quantitative easing if the economy weakens.  We already have a weak economy.  Both the public and the politicians, oblivious to the dangers of unsustainable deficit spending, will demand that the government “do something.”  Once the Fed has political support, the floodgates of money printing will become wide open.  Open ended quantitative easing may produce the inflation necessary to reduce the real value of sovereign debts, but it will also decimate the purchasing value of paper money.

In the end, the government will continue to administer the same medicine to the dying patient – zero interest rates and fiscal and monetary stimulus.  The arguments will also be the same – these are temporary measures to get the economy growing and buy some time, similar to what the Japanese have been doing since 1990.  Japan has put off the day of reckoning with zero interest rates, money printing and massive fiscal stimulus – the result is a debt to GDP ratio twice that of the United States.  Wasn’t it Thomas Aquinas who said that “problems are not solved, they are survived”?

Many emerging nations experiencing high inflation (due in part to Fed money printing) are turning to gold in a big way as an alternate form of currency and to diversity reserve holdings.  The central banks of emerging nations have already bought almost 180 tonnes of gold this year, more than double the amount purchased for all of last year.

Any price corrections in gold should be viewed as an opportunity to add to positions.  The biggest risk to investors is to be under allocated in gold. (see also Smart Money Sees Perfect Storm for Gold and Silver and Why There Is No Upside Limit For Gold).

 

Filed Under: Featured, Gold, US Debt Crisis Tagged With: , , , ,

Gold Prices Skyrocket, Stocks Plunge – Looking Like 2008 On Steroids

August 2, 2011 by Leave a Comment

As politicians celebrated the debt limit increase and congratulated themselves for “saving” the nation that they destroyed, collapsing stock markets and soaring gold prices told a different story.  The public spectacle of a dysfunctional Congress debating the debt limit exposed to the world the horrendous extent to which the US government is addicted to endless deficit spending.

Republican presidential candidate Ron Paul summed up the outcome of the debt limit fiasco best:

This deal will reportedly cut spending by only slightly over $900 billion over 10 years. But we will have a $1.6 trillion deficit after this year alone, meaning those meager cuts will do nothing to solve our unsustainable spending problem. In fact, this bill will never balance the budget. Instead, it will add untold trillions of dollars to our deficit. This also assumes the cuts are real cuts and not the same old Washington smoke and mirrors game of spending less than originally projected so you can claim the difference as a ‘cut.’

The plan also calls for the formation of a deficit commission, which will accomplish nothing outside of providing Congress and the White House with another way to abdicate responsibility. In my many years of public service, there have been commissions on everything from Social Security to energy policy, yet not one solution has been produced out of these commissions.

Ron Paul also provided an explanation of what constitutes a “spending cut” in the bizarro world of government accounting and why, in the end, spending and debts will not decrease.

No plan under serious consideration cuts spending in the way you and I think about it. Instead, the “cuts” being discussed are illusory, and are not cuts from current amounts being spent, but cuts in projected spending increases. This is akin to a family “saving” $100,000 in expenses by deciding not to buy a Lamborghini, and instead getting a fully loaded Mercedes, when really their budget dictates that they need to stick with their perfectly serviceable Honda. But this is the type of math Washington uses to mask the incriminating truth about their unrepentant plundering of the American people.

The world was finally tuning in to the reality of the desperate financial condition of the United States.  The mainstream press was predicting a plunge in gold prices and soaring stock prices after Congress agreed to increase the nation’s debt limit.  Instead, the opposite happened as markets reflected underlying economic reality.

Since mid July, the Dow Jones Industrial Average has plunged by 858 points.  Since July 1st, gold has gained $178 per ounce.  Meanwhile, the debt crisis in Europe continues to intensify with bond yields soaring in Italy and Spain.  The world economy is marching off the edge of a cliff as governments lose the ability to contain the spiraling debt crisis.  It’s starting to look like a replay of 2008 on steroids.

Gold  soared by $39.80 on the day to close in New York trading at an all time high of $1,661.10.  Silver more than paced the gain in gold, adding $1.61 to close up 4.1% at $40.95.

SPDR Gold Trust Holdings Increase, Silver ETF Holdings Decline

Holdings of the SPDR Gold Shares Trust (GLD) gained almost 37 tonnes on the week.  For the first time this year, holdings of the GLD are greater than they were at the beginning of the year.  The record holdings of the GLD occurred on June 29, 2010 when the GLD held 1,320.47 tonnes of gold.

The SPDR Gold Trust currently hold 41.2 million ounces of gold valued at $67.5 billion.  Shares of the GLD hit an all time high, closing at $161.52.

 

GLD - COURTESY YAHOO FINANCE

Holdings of the iShares Silver Trust (SLV) declined by 90.93 tonnes after an increase of 112.15 tonnes in the prior week.  Since the beginning of July, holdings of the SLV have increased by 288.28 tonnes.

The SLV currently holds 315.9 million ounces of silver valued at $12.5 billion.

GLD and SLV Holdings (metric tonnes)

August 2-2011 Weekly Change YTD Change
GLD 1,281.75 +36.95 +1.04
SLV 9,824.93 -90.93 -1,096.64

 

 

 

 

 

 

Filed Under: Featured, Gold, Silver, Statistics, US Debt Crisis Tagged With: , , , , , , , ,

US Mint Silver Eagle Bullion Sales On Pace For Record High

August 2, 2011 by Leave a Comment

Since Congress authorized the production of American Eagle Bullion coins in 1986, it has become one of the easiest ways for investors to accumulate a physical position in precious metals.   American Eagle Bullion coins have been available in gold and silver since the program’s inception.  Platinum has been available under the Bullion coin program since 1997.

The bullion coins are priced at the current market price of gold, silver or platinum plus a dealer markup.  The US Mint does not sell the bullion coins directly to investors but instead sells the coins to a network of Authorized Purchasers who resell  the coins to the public.  Unlike commemorative or numismatic coins, the bullion coins will closely track the price of the underlying precious metal making it easy for investors to follow the value of their bullion holdings.

The American Eagle Silver bullion coin is available only in the one ounce size and is particularly attractive to small investors as a cost effective way to hedge against inflation and debasement of paper money.  The US Mint’s American Silver Eagle Bullion program has been successful from the start.  The first year’s sales of bullion Silver Eagles in 1986 was 5,096,000.

Between 1987 and 2007 sales of the Silver Eagle averaged 7.1 million coins per year.  The lowest year on record for sales was in 1996 when sales of the coin were only 3.6 million.  Since 1986, sales of the American Silver Eagle  exceeded 10 million coins only two times during 2002 and 2006.

The financial crisis of 2008 resulted in a surge of Silver Eagle sales as worries intensified over the integrity of paper money and the soundness of the financial system.   During 2008 Silver Eagle sales soared to 19,583,500 coins which was a record high.  In 2009, sales continued to explode reaching 28,766,500 coins and 2010 was another year of record sales at 34,662,500.

Year to date sales of the Silver Eagle bullion coins during 2011 has now reached 25,530,000.  Based on average monthly sales during 2011, sales for the entire year could easily reach 42 million coins, up 20% over last year.

Investors in silver have preserved their purchasing power and increased their wealth.  As previously discussed, the dip in silver prices during May was a buying opportunity and silver prices should be hitting all time highs before year end (see How Soon Will Silver Hit New Highs?).

American Silver Eagle Bullion Sales 2011

 

 

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Gold Rallies On Week – Is The World Economy At The Precipice?

July 30, 2011 by Leave a Comment

Gold continued its winning ways this week.  As measured by the closing London PM Fix Price, gold gained $26.50 to close the week at all an time high of $1,628.50.

Gold has closed higher for the past four consecutive weeks.  The rally that began at the beginning of the month has pushed gold higher by $145.50 or 9.8% since July 1st.  Investors worried about the solvency of sovereign states in Europe have now switched their focus to the United States.

The impasse over raising the US debt limit has morphed into a crisis of confidence over the ultimate value of the US dollar.  There is no clear consensus on how the debt limit negotiations in Washington  will be resolved.  The only certainty is that, regardless of how the debt limit crisis ends, confidence in the “full faith and credit” of the United States will be greatly diminished.

China and Russia, two large holders of US debt, have watched in horror as the US deliberately debases its currency value through money printing and a parabolic increase in debt.  At a time when the US needs to borrow trillions of dollars in new debt, there is likely to be a greatly diminished appetite to purchase additional US debt.

The global debt crisis and a lack of confidence in paper money has resulted in a steady increase in the price of gold.  Will gold continue to soar if global economies start collapsing or will gold be drawn into the deflationary abyss along with all other asset values?  Opinions vary but here are some good thoughts on the matter.

-John Browne of Euro Pacific Capital warns that gold could be subject to a price pullback based on the deflationary impact of a global recession or short term optimism over the US avoiding default.

–Decision Point’s Carl Swenlin wonders if gold is too much of a “sure thing” investment and ponders the fate of gold in a deflationary collapse.

-A Citigroup analyst speculates that gold could quickly reach $5,000 based on a “worst case scenario for Euro sovereign debt and USA fiscal problems”.

Confidence is vital in a fiat money based world.  The ongoing global debt crisis may be the trigger that ultimately destroys faith in paper currencies.

Precious Metals Prices 7/29/11
PM Fix Since Last Recap
Gold $1,628.50 +$26.50 +1.65%
Silver $39.63 -$0.04 -0.10%
Platinum $1,779.00 -$14.00 -0.78%
Palladium $824.00 +$17.00 +2.11%

Silver and platinum were essentially unchanged on the week after posting strong advances since the beginning of July.  Palladium advanced by $17 or over 2% on the week and is up $74 since July 1st.

Filed Under: Featured, Gold, palladium, Platinum, Silver, US Debt Crisis, Weekly Recap Tagged With: , , , , ,

SPDR Gold Trust Hits All Time High, Silver ETF Holdings Increase

July 28, 2011 by 2 Comments

Holdings of the iShares Silver Trust (SLV) gained 112.15 tonnes on the week after increasing by 169.76 tonnes in the previous week.  Although SLV holdings have declined by 1,005.71 tonnes since the beginning of the year, holdings of the silver trust have increased markedly in July as silver prices surged.

Since July 1st, holdings of the iShares Silver Trust have increased by 379.21 tonnes.  Holding of the SLV hit an all time high on April 25th when the Trust held 11,390.06 tonnes of silver.

As measured by the London PM Fix Price, silver has gained $6.96 since July 1st, rising from $33.85 to $40.81.  Silver is up 33.1% since the beginning of the year when it stood at $30.67.  The SLV, after correcting in early May, has broken out of its trading range in the mid 30’s and has been steadily advancing.

Investors looking to past history for clues on the future price move in silver are looking at two entirely different worlds.  The parabolic move and subsequent collapse of silver prices in the 1980’s was driven by specific events which quickly reversed.  After breaking out of a decades long base, silver will not be a replay of the 1980’s but instead is in a long term super cycle which will ultimately result in much higher prices (see For Silver, This Time Is Different).

 

SLV - COURTESY YAHOO FINANCE

The SLV currently holds 318.8 million ounces of silver valued at $13.0 billion.  Over the past year the SLV has increased by 86%.  Over the past three years the SLV has had an annual rate of return of 25.1%.

GLD and SLV Holdings (metric tonnes)

July 27-2011 Weekly Change YTD Change
GLD 1,244.80 -1.21 -35.91
SLV 9,915.86 +112.15 -1,005.71

Holdings of the SPDR Gold Shares Trust (GLD) dipped slightly on the week by 1.21 tonnes after increasing by 20.60 tonnes in the previous week.

Gold has been in a steady uptrend during July.  As measured by the closing London PM Fix Price, gold has gained 9.6% or $142 since July lst.  Gold started the year at $1388.50.

Since the beginning of the month, the GLD has gained 39.0 tonnes.  The GLD currently holds 1,244.80 tonnes of gold valued at $65.0 billion.

The GLD hit new all time highs this week as the advance in gold prices continued.

 

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As World’s Most Predicted Financial Crisis Approaches Precious Metals Move Higher

July 23, 2011 by Leave a Comment

Precious metals gained across the board for the third week in a row.  Silver and palladium were the top performers this week with each advancing almost 4%.

July has seen an explosive move in the precious metals group as worries intensify about the twin debt crises in Europe and the U.S.  In both cases, governments and central banks are avoiding the tough choices that must be made when debt levels reach unsustainable amounts.  Common sense dictates that over leveraged borrowers with insufficient income to service debt must eventually default, or gradually reduce the debt through a combination of austerity measures and income growth.

Common sense, however, is a trait sorely lacking in politicians.  Nor does preaching austerity to your constituents enhance the odds of being re-elected.  The preferred solution, which has been employed since the 1980’s, is to add more debt and let the future take care of itself.  What’s different this time is the growing realization that at some point the compounding of debt becomes unsustainable, enslaving future generations and inhibiting economic growth.

The widely discussed study by Rogoff and Reinhart definitively documents that when public sector debt to GDP approaches the 90% level, economic growth slows dramatically – (see This Time Is Different: Eight Centuries of Financial Folly).  Since most of the developed world economies are already at or above the 90% debt to GDP ratio, the prognosis for future economic growth to gradually reduce debt levels becomes a tenuous prospect.

Despite the obvious risks of a growing debt burden, a significant number of the Washington elite insist that the debt limit be raised by another $2.5 trillion which would represent a doubling of the national debt in a little over five years.

Raising the debt limit, which became a routine ritual in past years, has suddenly morphed into a potential default situation as a growing number of responsible political leaders refuse to rubber stamp another massive increase in public borrowing.  As debt limit negotiations broke down today, the odds of a potential default by the United States became a distinct possibility.

Will a temporary default become a seismic event?  Who knows, but if gold had advanced by one dollar per ounce for each time I’ve seen an article predicting financial Armageddon, if the debt limit was not raised, gold would be well over $4,000 per ounce.   If the U.S. does “default”, it will not be the end of the world.  In the best case scenario, a brush with default may convince more members of our EZ spending Congress to come around to the financial common sense of men such as Ron Paul.

http://youtu.be/sEP8cQF-QC4

Summary of Ron Paul’s comments to Congress:

  • Countries that are as indebted as the U.S. always default.
  • The real increase in the debt this year, counting entitlements, is $5 trillion.
  • In the past 3 years, the dollar has been devalued by 50% against gold.
  • Default will be through inflation.

Gold advanced by $15 on the week and is up $119 since July 1st.  Silver advanced by $1.50 on the week and has gained $5.82 since July 1st.

Platinum and palladium both advanced on the week by $33 and $30 respectively.  Platinum has gained $85 and palladium $57 since the first of the month.

Precious Metals Prices
PM Fix Since Last Recap
Gold $1,602.00 +$15.00 +0.95%
Silver $39.67 +$1.50 +3.93%
Platinum $1,793.00 +$33.00 +1.88%
Palladium $807.00 +$30.00 +3.86%
Filed Under: Featured, Gold, palladium, Platinum, Silver, US Debt Crisis, Weekly Recap Tagged With: , , , , , ,

Gold and Silver ETF Holdings Increase As Precious Metals Rally

July 21, 2011 by Leave a Comment

Holdings of the SPDR  Gold Shares Trust (GLD) gained 20.60 tonnes on the week after increasing by 19.60 tonnes in the previous week.

Gold has been in a steady uptrend during July as the debt crises in Europe and the United States continue to expand.  As measured by the London PM Fix Price, gold has gained $103 since July lst.  Gold has gained $197.50 per ounce since the first of the year when the price was $1,388.50.

Since July lst, total gold holdings of the GLD have increased by 40.21 tonnes and the value of the trust has increased by $6 billion to $63.5 billion.  At July 20, the Gold Trust held 40.1 million ounces of gold bullion, up from 38.8 million ounces on the lst of July.

Shares of the GLD hit an all time high this week along with the price of gold.

 

GLD - COURTESY YAHOO FINANCE

The iShares Silver Trust (SLV) increased its holdings by 169.76 on the week after a gain of 101.55 tonnes in the previous week.   Silver holdings of the trust since the beginning of the year have declined by 1,178.86 tonnes when the Trust held 10,921.57 tonnes.  The record holdings of the SLV occurred on April 25th when the Trust held 11,390.06 tonnes.

Silver has surged in price along with gold since the beginning of July.  Based on the closing London PM Fix Price, silver has increased from $33.85 on July 1st to $38.59 at the July 20th close, for a gain of $4.74 or 14.0%.

The SLV Trust currently holds 315.2 million ounces of silver valued at $12.2 billion.  As of July 20th, the net asset value of the Trust was $37.61 according to the Trust’s website.  The price of the SLV closed on July 20th at $39.12 or a 4% premium to the Trust’s net asset value.  The current premium of the SLV to the Trust’s net asset value is higher than usual, reflecting investor demand for the SLV.  The all time high premium on the SLV to the underlying net assets of the Trust occurred on April 27, 2011 at 6.3%.

iShares Premium/Discount - courtesy us.ishares.com

Precious metals have advanced strongly after suggestions by the Federal Reserve that it might initiate another round of quantitative easing if economic conditions continue to deteriorate.  Meanwhile, the debt crisis in Europe continues to expand with many believing that the only “solution” is to imitate the U.S. Central Bank and print money.

GLD and SLV Holdings (metric tonnes)

July 20-2011 Weekly Change YTD Change
GLD 1,246.01 +20.60 -34.70
SLV 9,803.71 +169.76 -1,117.86

 

Filed Under: Featured, Gold, Silver, Statistics Tagged With: , , , , ,

Gold and Silver Rocket Higher As Bernanke Oils Up The Printing Presses

July 15, 2011 by 1 Comment

The precious metals group continued higher this week, with standout performances by gold and silver.

As politicians continue to engage in reprehensible scare tactics in order to increase the debt limit by another $2.5 trillion, it has become increasing clear that the policies of more debt and dollar debasement will continue.  In an interview today, Ron Paul said that he expects “nothing will change” and that the U.S. is already defaulting on the debt via the devaluation of the dollar.

Gold and silver, which had already been strongly advancing in the prior week, soared after Fed Chairman Bernanke spoke before Congress on Wednesday.   Mere days after the end of QE2, Bernanke said that he stands ready to rescue the American economy with more accommodative monetary measures.   Although the exact mechanism by which future monetary easing  will be deployed remains to be seen, the end result will be the further debasement of the U.S. dollar.

As measured by the London PM Fix Price, gold hit new highs, soaring by $45.50 on the week, putting its two week gain at $104.00 per ounce.  Gold prices continued higher in New York trading with gold closing at $1,594.30, up another $7.30.

Gold has become the currency of last resort as it becomes clear that money printing is the only option left to prevent massive sovereign debt defaults by world governments.   Accordingly, there is really no upside limit for gold and silver prices.   Legendary trader Jim Sinclair told King World News that the stage has been set for gold to move up to $12,000 per ounce.

Silver has been the standout performer in the precious metals group.  After basing in the mid 30’s range after the May correction, silver has exploded upwards.

 

Silver - courtesy kitco.com

After rallying by over 7% last week, silver tacked on another 5% this week.  As measured by the closing London PM Fix Price of $38.17, silver has advanced by $4.32 or 12.8% over the past two weeks.   After the close in London, silver continued to gain in New York trading, closing at $39.37.

Silver is in a long term super cycle advance backed by fundamentals that guarantee higher prices. The accelerating exodus from paper money will quickly push silver prices to new highs – see For Silver , This Time Is Different.

Precious Metals Prices
PM Fix Since Last Recap
Gold $1,587.00 +$45.50 +2.95%
Silver $38.17 +$1.89 +5.21%
Platinum $1,760.00 +$20.00 +1.15%
Palladium $777.00 +$1.00 +0.13%

Platinum advanced by $20 on the week after a $32 dollar advance in the previous week.  Palladium ended essentially unchanged on the week after an advance of $26 last week.

Filed Under: Featured, Gold, palladium, Platinum, Silver, Weekly Recap Tagged With: , , , , ,

Gold and Silver ETF Holdings Increase As Precious Metals Explode Higher

July 13, 2011 by Leave a Comment

The iShares Silver Trust (SLV) showed a gain in holdings of 101.55 tonnes on the week after declining by a modest 48.21 tonnes in the previous week.  A decline from record holdings of 11,390.06 tonnes on April 25th paralleled the sell off in the silver market that occurred in early May.  Since mid June, holding of the SLV have stabilized in the range of 9,500 to 9,600 tonnes.

Silver has surged in price since the lst of July when silver closed at $33.85.  Today’s closing New York price of $38.33 gives silver a gain of $4.48 or 13.2% through July 13th.  The price of silver surged today after Fed Chairman Bernanke, mere days after the end of QE2, announced that he was ready to “come to the rescue” of the American financial system again with another round of quantitative easing.   Bernanke’s continued policy of dollar debasement may not do much to revive the economy, but it is certain to send gold and silver prices to all time highs.

The SLV Trust now holds 309.7 million ounces of silver valued at $11.4 billion dollars.  The all time high in the value of silver holdings by the Trust occurred on April 28th at $17.3 billion.

After basing in the $35 range since early May, the SLV looks ready to begin challenging its all time high. The SLV closed today at $37.23 up $2.03.

 

SLV - COURTESY YAHOO FINANCE

GLD and SLV Holdings (metric tonnes)

July 13-2011 Weekly Change YTD Change
GLD 1,225.41 +19.60 -55.30
SLV 9,633.95 +101.55 -1,287.62

Holdings of the SPDR Gold Shares Trust (GLD) gained 19.60 tonnes last week after small drops in the previous two weeks.  The price of gold has retained virtually all of its price gains this year even as sell offs hit stocks, commodities and other precious metals.  Gold opened the year at $1,388.50 and has steady increased in value.

As it became clear that the deficit talks in Washington would resolve nothing and with easy Ben Bernanke ready to put the printing presses into overdrive, the price of gold soared to all time highs.  The continuing debt crisis in Europe will only get worse, eventually forcing the European Central Bank to engage in its own money printing operations on a massive scale.

As measured by the London PM Fix Price, gold opened the month at $1483.00 and closed in New York trading today at $1,583.60 for a gain of $100.60 or 6.8%.  In later trading in Asian markets, gold continued to soar, climbing another $6.10.  James Turk, a highly respected analyst with a superb track record is forecasting a gold price of between $5,000 and $8,000 before 2015.  Given the pace at which debt trapped countries are tipping over, I suspect that those price targets may be reached much sooner.

The GLD currently holds 39.4 million ounces of gold valued at $62.2 billion.

 

Gold - Courtesy stockcharts.com

 

 

 

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Precious Metals Advance Strongly On Week

July 9, 2011 by Leave a Comment

Precious metals roared back this week after consolidating in the previous week.

Gold gained $58.50 on the week closing at $1,541.50.  As measured by the London PM Fix Price, gold reached a closing high this year of $1,552.50 on June 22nd and has stubbornly refused to decline.  Gold’s technical position looks excellent and a breakout above June’s high should set the stage for the next major advance.

Meanwhile, depending on how you look at it, the comedy or tragedy unfolding in Europe continues as insolvent nations line up for handouts.  The credit rating agencies are falling over each other in a race to downgrade the debt of country after country, adding Portugal’s debt this week to the status of junk paper.  Quite a difference from how they bestowed  A+ credit ratings on every piece of toxic mortgage paper produced by the banks prior to the financial crisis.

As Europe keeps center stage on the debt crisis, attention has been diverted from some other looming train wrecks, including Japan, the world’s third largest economy.   From a debt standpoint, Japan is in solid first place for the highest ratio of debt to GDP of almost 250%.  Can Europe forestall a debt crisis by piling up even more debt like the Japanese?  Who knows, the story is still unfolding, but the one certainty is that not only Europe, but the entire world is moving inexorably to a major financial crisis as debt burdens reach the level where massive defaults become the only option.

Investors in gold, meanwhile, can take comfort in the fact that gold has no credit risk.

Silver rebounded strongly this week, closing at $36.28, up over 7% on the week.  Prior to this week’s rally, silver had declined for three consecutive weeks, dropping by $4.10 per ounce.

Platinum rally strongly, climbing $32 to $1,740, after a $12 advance in the previous week.

Palladium jumped $26 or 3.5% on the week to $776, continuing last week’s rally of $11.

 

Precious Metals Prices
PM Fix Since Last Recap
Gold $1,541.50 +58.50 +3.94%
Silver $36.28 +2.43 +7.18%
Platinum $1,740.00 +32.00 +1.87%
Palladium $776.00 +26.00 +3.47%

 

 

 

 

Filed Under: Featured, Gold, palladium, Platinum, Silver, Weekly Recap Tagged With: , , , ,