Weekly Market Report 6/20/16

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

Trading the Platinum to Gold Ratio

Gold price: USD 65,000/oz in 5 years?

Gold could even go to $1,400; here’s why

George Soros making big bets on Gold

Would Brexit really be so good for Gold?

Silver acting like ’Gold on steroids’ as assets near record high

5000-year low in interest rates: bull signal for Gold

This Week’s Headlines:

Gold
What’s causing increased volatility in Gold & Silver markets?
What’s next for Gold?
Silver
Recommended investment commitment and diversification

GOLD

Last Thursday, the Gold commodity markets around the world showed a lot of trading volatility. Gold first reached a new 2016 high of $1,318.90 on Thursday, followed by a low for the week of $1,280 per ounce, then closed the day at $1,298.40 per ounce. This volatility was caused by short term profit taking on record high trading volume of over 331,781 hundred-ounce CME Gold contracts (roughly $43,000,000,000 in Gold traded - yes, that’s $43 billion!) Gold closed the week at $1,294.80 per ounce, up $23.30 per ounce for the week, up $77.30 for the month, and up $234.50 (22.12%) since the beginning of 2016.

Last Wednesday’s press conference from Federal Reserve Chairman Janet Yellen was very bullish for Gold. Chairman Yellen’s biggest surprise was the lack of any hint that the Fed is ready to raise interest rates any time soon. Prior to Yellen’s statement there was speculation that the Fed would increase interest rates in July; after Yellen’s press conference it is now pushed out to December. After the Yellen statement, Gold rallied in the U.S. and Asian markets, reaching a new 2016 high of $1,318.90 per ounce.

There is a great article on why multi-billionaire George Soros is making a big bet on Gold, click on the following link to read it: www.mintstategold.com/investor-education/cat/news/post/george-soros-making-big-bets-on-gold/.

Paper Gold investors who buy Gold under the GLD symbol (a popular ETF) are becoming increasingly aggressive. To meet the strong demand, the managers of GLD, SPDR Gold Shares, have dramatically increased their physical holdings from 642.27 metric tons of Gold on January 1, 2016 to 907.88 metric tons last week. That’s an increase of 265.61 metric tons (41%) in just 5 ½ months.

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What’s causing increased volatility in Gold & Silver markets?

To explain why volatility increases as the price of Gold and Silver moves higher, I need to identify the twelve most active precious metal players within the world’s commodity markets. They are:

Last Thursday after Janet Yellen announced that the Fed will not raise interest rates any time soon, the Gold market exploded from $1,292 to $1,318 very quickly. The initial buying came from day traders and commodity floor brokers. Then, after Gold crossed the key $1,300 resistance level, technical chart traders and commodity fund managers became aggressive, driving the price higher. When Gold reached $1,318 per ounce, many of these precious metal players decided to take short term profits as Gold approached the $1,320 per ounce resistance level. The sell-off drove the price of Gold down to $1,280 before many were encouraged to become bargain buyers. Gold quickly rallied back to $1,298 before the close of the CME commodity exchange.

As the Gold and Silver prices move higher, many of these professionals have a bullish bias, which means buying on dips and selling into major rallies as prices approach established resistance levels. This bias has changed from the past four years, when professionals had a bearish bias, which meant to make short sales into rallies and cover those short sales on dips.

In conclusion, I believe that based on Gold/Silver’s bullish fundamentals (which I’ve provided in previous Weekly Market Reports), Gold and Silver will continue to set new 2016 highs, and new all-time highs over the next few years. As the prices reach resistance and support levels, we will see increased volatility in both the futures and the physical markets.

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What’s next for Gold?

I look for Gold to consolidate its recent gains for the balance of the month, trading between $1,280 and $1,315 per ounce. This consolidation will build an excellent base for Gold’s next move to $1,400 per ounce. One factor that could change this prediction is the June 23rd vote by Britain to leave the 28-member European union (dubbed "Brexit"). A positive vote could push Europe back into a recession and cause monetary problems for the ECU, which would result in a strong rally in Gold and Silver.

Today: This morning Gold tested the $1,280 support level, reaching a low of $1,277. The support level held and the Gold price quickly rallied back to $1,288 per ounce. I believe the market will trade in a tight range awaiting news from Janet Yellen’s testimony to Congress this Wednesday and Thursday, and the Brexit vote in Great Britain also on Thursday.

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SILVER

Silver reached a high of $17.88 per ounce last Thursday, below its $18.06 per ounce 2016 high. When it reached $17.88 we saw a dramatic increase in selling volume, quickly driving the price down to $17.17 per ounce. Like Gold, Silver has its support/resistance levels, and $17 is the current support level.

Last Friday, Silver closed at $17.41 per ounce, up $0.08 for the week, and up $3.83 (26.35%) since the beginning of 2016. This is an impressive increase considering the performance of the equity markets and the interest rates available from banks and bonds.

Last week the Silver/Gold ratio increased to 74.37-to-1.

Today: Silver is showing better demand than Gold today. After reaching a low of $17.28 this morning, Silver has rallied to $17.66 on excellent Asian and European demand.

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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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