Crucial week for short-term Gold/Silver prices

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India Continues to Play a Significant Role in the Global Silver Market

Commodities King Gartman Says Gold Soon Reach $1,400 As Drums of War Grow Louder

Russian Gold Reserves Grow Again in August

This Week’s Headlines:

Gold
Silver
Recommended investment commitment and diversification

GOLD

Last week, precious metal prices were negatively affected by the lobbying of Congress and the President for the first tax reform legislation in the past 31 years. While the GOP leadership was talking about it in D.C., the President gave a talk to the National Association of Manufacturers, providing an outline of the tax reform legislation.

The key component of this proposed legislation is the possibility that $3 trillion dollars, being held overseas, would be repatriated by American corporations. This news strengthened the U.S. Dollar and interest rates last week. The U.S. Dollar increased 2% during the week, while Gold decreased 1% over the same period. Gold closed the week at $1,281 per ounce, down $12 per ounce on normal volume.

Why is the possibility of U.S. multinational firms repatriating trillions of dollars bullish for the U.S. Currency? The proposed tax reform legislation allows overseas corporate profits to no longer be subject to U.S. taxes, just to the taxes of the government where the money was made.

This tax reform legislation has over 25 major changes to the current tax code, and the final version that will be presented by Congress and the White House could take months. One of the problems is that much of that negotiation is highly likely to be done behind closed doors by major special interest groups and legislators.

With Gold trading right on its important $1,280 per ounce support level, this week is crucial to the short-term direction of the Gold price. While I think the price will end this week above $1,280 per ounce, we could see $1,270 before major bargain buying appears.

Today: This morning, as the U.S. Dollar continues its recent rally, Gold is trading from a low of $1,271 per ounce to a high of $1,276, as it appears to be bottoming out.

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SILVER

Silver closed last Friday at $16.64 per ounce, down $0.30 for the week and the lowest price since August 15. The direction of the Silver price last week pretty much mirrored Gold’s decline. The important support level for Silver right now is $16.50 per ounce, and we should see a test of that level this week.

The Gold/Silver ratio has increased to 77.04-to-1.

Today: Silver hit a low of $16.52 per ounce in early morning Asian trading. After reaching this morning’s low, Silver quickly bounced back to $16.62 per ounce.

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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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