Gold & Silver Rally Continues – Breaking over Resistance

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This Week’s Headlines:

Gold
Fundamentals for a major rally in precious metals are in place
Silver
Recommended Investment Commitment and Diversification

 

GOLD

Last week, many of Gold’s indicators turned bullish and the price reacted with a $26 per ounce rally. Gold reached a high of $1,265 last Thursday, before seeing short-term selling. On Friday, Gold closed at $1,253.60, above the key $1,250 support/resistance level. In the past 30 days the Gold market has displayed excellent consolidation between $1,216 and $1,297 per ounce. I believe this activity is building a base for a move above the next long term resistance level of $1,300 per ounce.

Whether you are a supporter or critic of President Trump, you have to agree that the financial markets are behaving as if they are losing confidence in him. Last week, the U.S. equity markets were down 5%, the U.S. Dollar dropped below 97.00 (the lowest level this year), and 10-year interest rates are at 2.23% (again, near a 2017 low). The financial markets are looking forward to tax reform legislation this year, yet the more the markets lose confidence in President Trump, the greater the likelihood of that legislation not passing.

Today: Gold’s rally continues this morning, with Gold hitting $1,261 per ounce, as the U.S. Dollar continues to decline.

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Fundamentals for a major rally in precious metals are in place

 

  • A weaker dollar with the Dollar Index below 97, a 2017 low
  • 10-year Treasury interest rates are at 2.23%, near a 2017 low
  • Strong inflows into the Gold ETF’s
  • Weaker equity markets as we approach the summer months (the Trump rally is over)
  • Increasing concerns about Russia influencing the 2016 election
  • Syrian issues are not improving
  • North Korean threat is escalating
  • Healthcare is now locked in the Senate
  • A 2017 Tax Reform bill is now questionable
  • The world’s central banks continue to increase their Gold holdings
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    SILVER

    Silver is experiencing high volatility and increasing futures trading volume, as it tested both the $16 support level and the $17 resistance level during the last nine trading days. Last Friday, Silver closed at $16.80 per ounce, up $.40 for the week, and nearing the important $17 resistance level. Silver moved back above the key $17 per ounce level today. I look for a short-term period of base building above $17, then the month of June could prove to be exciting.

    As we approach June, I remember how explosive Silver behaved in June of 2016. Silver traded at $15.92 per ounce on June 1, 2016, and by July 5, 2016 Silver had reached a high of $21.23. That’s a $5.31 increase (33%) in just a little over a month.

    The Gold/Silver ratio is at an astonishing high of 74.64-to-1.

    Today: This morning Silver quickly moved above the key $17 per ounce resistance level in Asian markets, then continued the rally in the Middle Eastern, European, and U.S. commodity markets. Silver hit a high this morning of $17.18 per ounce.

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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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