Global Equity Market Volatility Drives Gold Investments

GOLD

Gold’s rally continues, as it reached $1,300 per ounce in early Friday morning Asian trading. This was Gold’s first attempt to break a major resistance level. The Gold rally was aborted when U.S. Markets opened and the following major news was released:

1) The number of jobs created was stronger than expected.

2) A dovish statement was released on the economy and interest rates by the Federal Reserve Chairman.

3) Trade talks with China will be starting up again next week.

All three of these issues caused the DJIA to move up almost 800 points, on optimism that 2019 will be a great year.

Gold closed last Friday at $1,283, up $5 since the beginning of the year and on a bullish track. With the 10-Year interest rate dropping to 2.56% and the U.S. Dollar Index falling to 95.45, the short-term direction for Gold is higher. I also find the long-term picture for precious metals to be equally as bullish. Please read the following articles - Gold - A Perfect Storm For 2019 and The Arrival Of The Credit Crisis, to better understand my bullish feelings.

It’s that time of year when I make my 2019 year-end precious metal predictions. Before I do that, lets look at what happened in 2018.

Metal Price or Index Level

Price/Level 1/1/2018

Price/Level 1/1/2019

% Change

Gold (US$)

$1,306

$1,278

-2.10%

Silver (US$)

$17.06

$15.43

-9.60%

Platinum US$

$947

$794

-16.20%

Dow Jones Industrial

24,824

23,327

-6.00%

S&P 500

2,696

2,507

-7.00%

NASDAQ

7,007

6,635

-5.30%

Nikkei

23,506

20,015

-14.90%

Shanghai Index

3,412

2,506

-26.55%

DAX

12,871

10,559

-18.00%

FTSE 100

7,648

6,728

-12.00%

Bitcoin

$13,445

$3,717

-72.40%

As you can see, many of the most popular investment vehicles were lower in 2018. However, the Gold price did the best, dropping only 2.10%. Gold demand from the world’s largest Central Banks and major Hedge Funds continues to grow. Volatility in the global equity markets is driving more and more investors into Gold as the world’s most popular safe haven investment. Gold mine production continues to decline for the fifth year in a row. United States investors aren’t yet actively purchasing Gold. The strongest demand continues to come from Asia, the Middle-East and Europe. Based on these facts and many others, including a potential credit crisis, I believe we will see the price of Gold reach $1,480 by year-end, a 16% increase for 2019. At 11am PT today, Gold is up $2.95 per ounce, trading at $1,288.95 on excellent volume.

SILVER

Silver reached a high of $15.96 per ounce on Friday, before the above listed news items were released. Silver closed last week at $15.69 per ounce, up $0.26 since the beginning of the year. The Silver-to-Gold ratio has dropped to the 81.45-to-1 level. Over the past few weeks, Silver has broken above the key $15 per ounce resistance level, and started a long-awaited rally. I believe the bulk of Silver’s 2019 rally will come in the second half of the year, when price and wedge inflation numbers start increasing. Those inflation numbers and a higher Gold price should take Silver to $17 per ounce by year-end 2019. The Silver price has a possibility of exploding in the latter half of next year. If that appears to be happening, I’ll send out a recommendation to quickly do a Gold to Silver swap. At 11am PT today, Silver is down $0.03 per ounce, trading at $15.69 on good volume.

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