Links to recent informative articles on precious metals and rare coins:
Last week was one of the best weeks we have seen this year. The Gold price moved from Wednesday's low of $1,196 to Friday's close of $1,230 per ounce. The $34 increase in just two trading days was a spectacular test of the key $1,200 support level. Why did this support level hold, even though Gold hit a low of $1,196? It's because Gold never closed below $1,200 per ounce.
Gold's rally started on Wednesday after the Federal Reserve raised interest rates by ¼%, which was followed by a Yellen press conference. At that press conference, Chairman Yellen made it clear that the four rate hikes the market was concerned about were not yet definitive. After that news, the U.S. Dollar weakened, treasury bonds dropped, Gold increased $12, and Silver rallied $0.40.
Precious metals continued to move higher on Friday, with Gold closing the week at $1,230 per ounce. After last week's $30+ gain in the price of Gold, it is good to see some price consolidation. This consolidation will allow Gold to build a base for the next leg up, back to the important $1,250 per ounce resistance level.
I would like to call your attention to two very exciting articles. The first is about states passing legislation to make Gold/Silver free of income tax. The second is about China's massive Gold holdings and the reasons behind it. Both have direct links in the articles section above.
Today: This morning Gold has traded in a very narrow trading range from $1,229 to $1,236 per ounce. I consider this as bullish base building trading, in light of last week's $30 rally.
The chart below shows the Gold price from 12/31/2000 to 12/31/2016. This chart clearly shows that Gold was in an uptrend between 2000 and 2012. During that time, the price of Gold moved from $274 to $1,674 year-end to year-end. By 2002, Gold buyers felt confident that Gold was in a bull cycle. At that point, investors were buying Gold on any sell-off of 1-2%, or when it broke above its resistance levels. Investors had confidence in the long-term reasons for believing that the only direction for the Gold price to go was higher. (See last week's WMR "Gold's 15 most bullish fundamentals" ).
Then, between late 2012 and 2016, that investor strategy started to change as the Gold price declined, dropping from $1,674 to a $1,060 low on Dec. 31, 2015. Investors became concerned that the price was in a short-term bear trend, and buying on 1-2% dips or at support levels wasn't the right strategy. Gold investors preferred to wait, hoping for a lower price. What they forgot were two things: the long-term direction from 2000 to 2016 was still up 419%, and the buying power of the U.S. Dollar was continuing to erode.
I believe Gold's price corrections ended on Dec. 31, 2015, and that 2016 was a base building consolidation year. 2016, and so far in 2017, trading and demand have confirmed the belief that we have seen a turnaround.
I now feel confident that just as in 2002, the bullish fundamentals are in place. Therefore, I am advising our clients that they should buy Gold/Silver at their current levels, or when they decline 1-2% and hit a major support level and refuse to close below it.
|Gold price from 2000 to 2016|
Last week, Silver hit a low of $16.83 per ounce, but rallied with Gold on Thursday and Friday, closing the week up $0.49 per ounce at $17.41. Even with the recent volatility, Silver is still up $1.47 (9.24%) since the start of 2017. Silver needs a little time to consolidate its recent recovery and last week's rally, then move back to the $18 per ounce resistance level.
The Gold/Silver ratio has decreased to 70.65-to-1.
Today: This morning Silver traded above and below the $17.40 per ounce level. Today’s trading shows excellent consolidation after last week’s $0.60 increase.
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