Gold/Silver testing support level – Great buying opportunity

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Links to recent informative articles on precious metals and rare coins:

Turkey Repatriates all Gold from the US in Attempt to Ditch the Dollar

Gold 2048: The next 30 years for gold

China Gold Demand Off to Hot Start

What Is the Optimal Silver Allocation in Your Portfolio

Net Gold Purchases by Central Banks Surged 42% in Q1 This Year

Turkish Gold Imports Triple as The Central Bank Diversifies Out of Dollars

 

This Week’s Headlines:

Gold
Gold repatriation is becoming popular with the World’s Central Banks
Silver
Recommended investment commitment and diversification

 

GOLD

Last Tuesday, Gold dropped $28 per ounce to below $1,290, breaking the important $1,300 resistance level. Breaking the $1,300 level was a severe blow to the short-term outlook for the Gold price. From last Tuesday’s opening to Friday’s closing, Gold traded between $1,283 to $1,295 per ounce. Gold closed on Friday at $1,290.10 per ounce, down $29 for the week, and more importantly, down $16 since the beginning of 2018.

Many of the world’s largest central banks continue to take advantage of the lower Gold price by making sizeable purchases. In April, the Russian central bank added another 600,000 ounces (or 18.66 tonnes) to its Gold reserve total. This brings the overall figure, as will be reported to the IMF (Russia is one of the few countries reporting its Gold reserve changes on a month by month basis), to around 1,909.5 tonnes - the world’s fifth largest reported national holdings and now some 67 tonnes higher than China’s reported holdings.

As the U.S. Dollar continues to move higher with the Dollar Index now over 93.50 (highest since 2011) and the 10-Year Treasury bill moves above 3.10%, Gold remains under $1,300 per ounce for the past four trading days. Last week, hedge fund managers and other large speculators were influenced more by a rising U.S. Dollar and higher interest rates, than by mounting geopolitical risks, a potential trade war between Washington and Beijing, and ongoing US-North Korea tensions.

Based on recent trading, I think we could see Gold hit the $1,280 support level next week. If that happens, I look for a final clean out when major central banks will purchase hundreds of tonnes of Gold, which would drive the price back above the $1,300 level quickly.

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Gold repatriation is becoming popular with the World’s Central Banks

Venezuela, Germany, Austria, and the Netherlands prudently repatriated a substantial portion (if not all) of their physical Gold held at the NY Fed or other western central banks in recent years. Now, in April, Turkey announced that it too has decided to repatriate its Gold stored in the US Federal Reserve and deliver it to the Istanbul Stock Exchange. These countries prefer holding Gold rather than U.S. Dollars for their nations reserves.

Read more about Turkey’s Gold repatriation here:
Turkey Repatriates all Gold from the US in Attempt to Ditch the Dollar

Today: The U.S. Dollar Index was approaching the 94 level this morning, driving Gold down to a low of $1,282 per ounce. In the early afternoon interest rates sold off and Gold rallied $8, reaching a high of $1,290.

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SILVER

Silver closed Friday at $16.40, down $0.28 per ounce for the week, and down $0.61 from the beginning of 2018. After reaching a low of $16.12 on Wednesday, Silver bounced back to close up $0.28 from last week’s low. As long as Gold stays below $1,300, Silver will remain on the defensive. Like Gold, we are seeing sizeable accumulation of physical Silver by major financial institutions worldwide.

The Silver/Gold ratio moved lower last week to 78.47-to-1 on Friday.

Today: Silver sold off to a low of $16.23 when Gold sold off earlier this morning. Silver then rallied back to above $16.50 per ounce on excellent demand.

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Recommended Investment Commitment and Diversification:

Precious Metal commitment: Minimum of 40% of investment capital

Diversification:  Gold 55%, Silver 35%, Platinum & Palladium 10%

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

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