Weekly Market Report 9/19/16
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Gold
Silver
Recommended investment commitment and diversification
Last week, Gold closed at $1,310.20 per ounce, down $24.30 per ounce for the week, but still up $249 for the year. Trading volume has picked up since Labor Day, though trading focus is still on the Federal Reserve update on the direction of interest rates, which is coming this Wednesday. Based on strong Asian buying recently, I expect to see the Gold price trade higher on Monday’s open. However, with trader’s concerns about a Fed September rate increase, Gold could test its $1,300 per ounce support level before Wednesday’s announcement.
As we approach what I feel will be the start of the 2016 Fall/Winter rally, let’s recap Gold’s trading in 2016. From January 1st to August 2nd of this year, Gold increased $312.60 per ounce (29.5%), from $1,060 to $1,372.60. From August 2nd to September 16th, Gold traded between $1,309 and $1,370 per ounce, consolidating its 29.5% increase. During the past 1 ½ months, Gold has built an excellent base for its next leg higher in 2016, and I continue to think that Gold will reach $1,500 per ounce by December.
On Wednesday, I believe the Federal Reserve will announce that there will be no increase in interest rates until December. After that Fed announcement, Gold should quickly move up $10 to $15 per ounce.
Today: This morning Gold opened higher due to a weaker U.S. Dollar. There are still concerns that the Fed (which is meeting on Tuesday and Wednesday) is expected to give a clear signal of future interest rate increases to come, possibly in December.
Last week the Silver market saw a bull/bear war around the key $19 per ounce level. The bears won the war last week as Silver could not close above the $19 level by Friday. Silver closed at $18.86 per ounce on Friday, down $0.51 for the week, but still up $5.08 for the year. However, the bull/bear battle isn’t over. Asian and European bargain buyers are aggressively buying Silver under $19 per ounce, and a major move higher in Gold after the Fed announcement will definitely drive the Silver price higher.
Considering the 40% increase in the Silver price since the beginning of the year, I believe the summer price consolidation is very healthy for the long term. Once Silver firmly moves above the key $20 long term resistance level, I expect to see it quickly reach its July 5, 2016 high of $21.23 per ounce before the end of October.
Last week, the Silver/Gold ratio increased to 69.46-to-1.
Today: Silver rallied sharply this morning on fresh bargain buying in Asia and a weaker U.S. Dollar. Silver needs to remain above the important $19 per ounce level to stay short term bullish.
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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