Gold/Silver 2017 Rally back on track – 15 Bullish Gold Fundamentals<br />Weekly Market Report 2/6/17

By Barry Stuppler

| February 6 2017

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This Week’s Headlines:

Gold
Gold’s 15 most bullish fundamentals - updated
Silver
Recommended investment commitment and diversification

GOLD

Gold got back on track last week, closing at $1,220, up $32 per ounce, and up $70 (6%) since the beginning of the year. Gold reached a new 2017 high of $1,227 last Thursday, and continues to show excellent price support on high CME trading volume. Last week one of the many forces driving Gold higher was the weak U.S. Dollar. Surprisingly, the February 2017 rally was in the face of the Chinese markets being closed for their New Year holiday.

The Dollar weakened on most international currency exchanges, based on increasing concern about executive orders and cabinet appointments coming from the White House. Precious Metal markets react positively to uncertainty, and many professional traders feel that with Donald Trump in the White House there will be lots of uncertainty.

As I have said numerous times, I believe Gold & Silver will move a lot higher this year, but they won’t be going straight up. From January 1 to January 24, Gold moved from $1,150 to $1,220, an increase of $70.10 (6%). Then, short term profit taking hit the market and the price was driven down to $1,179 on January 27. At that point, the break consolidated and started back up again, setting a 2017 high by late last week. Any time we reach a resistance level and there is a sell-off, followed by consolidation, it will be an excellent buying opportunity.

Today: Gold opened higher this morning, reaching a new 2017 high of $1,229.90 per ounce, with active trading. Today was the first test this year of the $1,230 resistance level.

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Gold’s 15 most bullish fundamentals - updated

Physical demand for Gold and Silver investment products is at the strongest level in years. Many world mints reported record 2016 sales for bullion coins, showing sizeable increases.
Worldwide interest rates are at historic lows, with nine major countries quoting negative interest rates.
Global quantitative easing (money printing) in the U.S., China, Japan, and Europe is increasing debt at an unbelievable rate. The U.S. National Debt is approaching $20 trillion.
The World Gold Council is reporting mine production falling dramatically as the cost of production rises.
Central banks around the globe continue to trade their U.S. Dollars for Gold, thus building their Gold reserves.
Stockpiles of Gold in depositories continue to drop, filling heavy physical demand. This could soon cause a short squeeze on sellers of Gold.
Uncertainty with our new President is causing extra demand for physical Gold investment products.
Chinese investors, the world’s most aggressive Gold buyers, are switching out of equities into physical Gold and Silver. Gold buying is continuing to grow.
The U.S. Dollar has started moving lower vs. the Euro and other world currencies. This causes the price of Gold denominated in U.S. Dollar to be higher.
The financial consultants, money/fund managers, and commodity professionals that are being interviewed in the financial media have become bullish on Gold and Silver. Why? Even at today’s low prices, Gold is up 6% and Silver is up 9.65% this year.
More countries are repatriating their Gold being held at the NY Federal Reserve Bank.
U.S. M2 money supply is accelerating, doubling from 6.5 billion to 13 billion in the past 10 years. After growing at 6% for the last couple years, it has now grown to 8½% for the past year. This will lead to serious inflation and a much higher Gold and Silver price within the next 12 to 18 months.
Many precious metal professionals and analysts strongly believe that China is accumulating massive amounts of Gold in an effort to replace the U.S. Dollar (as the world’s reference currency) with the Chinese Yuan. If this happened, it would diminish the value of your U.S. Dollars. Last year, the International Monetary Fund (IMF) formally added the Chinese Renminbi to the basket of reserve currencies. If the Renminbi became the world’s reserve currency, there would be a dramatic increase in the price of Gold valued in Dollars.
In the Basel III agreement, which is being implemented by the world banking system between 2013 and 2019, Gold has been upgraded this year from a Tier III asset to a Tier I asset. This will encourage many large banks to increase their Gold holdings and make loans on Gold.
Effective December 2016, over 100 million Muslim investors will be adding Gold to their holdings. A new Sharia Gold Standard was announced at the World Islamic Banking Conference.

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SILVER

Last Friday, Silver closed at $17.48 per ounce, up $0.34 for the week and up $1.54 since January 1. Silver is up an amazing 9.65% in the past five weeks and is showing a nice bullish trend. Now firmly over the $17 per ounce support level, Silver has shown excellent consolidation recently and is now working its way to the next resistance level of $18. The global Silver trading markets are seeing far more volatility than the Gold markets.

The supply of physical Silver is expected to have a deficit of 52,200,000 ounces in 2016. This marks the fourth consecutive year in which the market has realized an annual physical shortfall. While such deficits do not necessarily influence prices in the near term, multiple years of annual deficits can begin to apply upward pressure to prices in subsequent periods.

One of the biggest stimuli for Silver is inflation, and we haven’t seen much inflation in the U.S. economy since July of 2014. Well, we are now finally seeing signs of inflation. It was just reported that in December 2016 we returned to a 2% inflation rate, and economic signs indicate we will continue to see inflation picking up in the U.S.

The Gold/Silver ratio has increased to 69.84-to-1.

Today: Silver followed Gold higher this morning, reaching $17.71 per ounce. It was announced today that the 2016 CME trading volume for Silver was up 40%.

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Recommended Investment Commitment and Diversification:

Precious Metal commitment: Minimum of 30% of investment capital

Diversification: Gold 50%, Silver 40%, Platinum & Palladium 10%

Diversification includes 50% in long term investment quality rare coins and 50% short term bullion products.

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All statements, opinions, pricing, and ideas herein are believed to be reliable, truthful and accurate to the best of the Stuppler & Company’s knowledge at this time. Stuppler & Company disclaims and is not liable for any claims or losses which may be incurred by third parties while relying on information published herein. Individuals should not look at this publication as giving finance or investment advice or information for their individual suitability. All readers are advised to independently verify all representations made herein or by its representatives for your individual suitability before making your investment or collecting decisions.

Categories: Weekly Market Report