Gold and Silver testing important support levels

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

Why the Price of Gold By 2020 Will Blow Your Socks Right Off

Goldman Sachs: Physical Gold Is the “True Hedge of Last Resort”

Merrill Lynch Keeps $1,400 Target Even as Gold Eases on Profit-Taking

The Surprising Rationale Behind a Million-Dollar Bet on Silver

Why Do Coins of the Same Grade Have Different Prices?

This Week’s Headlines:

Gold
Silver
Recommended investment commitment and diversification

GOLD

Last week Gold traded between $1,316 and $1,340 per ounce, as it continued to build a base after recent gains, taking it above the important $1,300 level. Gold closed last Friday at $1,321, up $3 from the start of September, and up $173 (15%) since the beginning of the year. A stronger U.S. Dollar and a small increase in U.S. interest rates caused the Gold rally to stagnate last week. If the U.S. Dollar continues to move higher this week, Gold could test the $1,300 major support level.

On September 12th, Bank of America’s Merrill Lynch research division stated, “We believe the yellow metal is on track to hit our $1,400/ounce target in the coming months.” Merrill Lynch commented that further weakness in the U.S. Dollar will help Gold continue its recent uptrend. Plus, their research shows, “Non-commercial futures positions have pushed higher and z-score suggests that Gold is not overbought. Keeping in mind our price model, which estimates fair value Gold quotations on U.S. real rates, USD [U.S. dollar], volatility and oil prices, we note that support for the yellow metal has increased.” A link to the full article is shown at the top of this report.

Today: This morning the U.S. Dollar continues its recent move higher and interest rates have ticked higher, causing the world’s equity markets to move higher and Gold to move lower. Gold has hit a low of $1,306 per ounce, and a possible test of the important $1,300 support level is on the horizon.

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SILVER

Unlike September’s first trading week, this past week Silver couldn’t close above the important $18 per ounce resistance level. Last week, Silver closed all five trading days in a 20-cent high/low range, between $17.85 and $17.65 per ounce. Last Friday, Silver closed at $17.65, down $0.42 for the week. I would call last week’s Gold/Silver trading a consolidation week and expect to see a resumption of the rally this week.

The Gold/Silver ratio has increased to 74.87-to-1.

Today: Silver followed Gold lower this morning, reaching a low of $17.05 per ounce. Silver is being more negatively affected by the increase in the U.S. Dollar than Gold when you compare the percentage changed of the two metals.

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Recommended Investment Commitment and Diversification:

Precious Metal commitment: Minimum of 30% 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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