Gold / Silver prices holding above support levels

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This Week’s Headlines:

Gold
Silver
Recommended investment commitment and diversification

 

GOLD

Last week, Gold had an amazing week, closing within a $10 high/low range all five days. Gold closed Friday at $1,268 per ounce, down $8.50. Considering what was happening in the other financial markets this was definitely consolidation of the Gold price.

The U.S. Dollar, interest rates, and equity markets all increased dramatically last week. The U.S. Dollar Index increased a sizable 1.3% in just five trading days. The 10-year Treasury bond increased from 2.35% to 2.46%, up 11 basis points during the same week. Plus, the NASDAQ Index of U.S. Stocks rallied over 1% by the weekend. All three of these factors are negative for Gold, but, amazingly, Gold didn’t test the $1,250 per ounce support level.

I commented numerous times last week in my Daily Blog that trading volume was unusually high. In addition, the trading volume increased when the Gold price got near the support levels. This tells me there is at least one very active major player in the world’s bullion markets. Russia, Turkey, and Kazakhstan central banks have been very active buying Gold this year. Plus, Chinese and Indian buyers are always looking for a bargain.

A key issue that has been helping the U.S. Dollar, interest rates, and equity markets is the high potential of tax reform legislation passing Congress this year. Today, special counsel Mueller’s investigation resulting in the arrest of two people from the Trump 2016 Presidential campaign could cause a negative effect on the Dollar and equity markets. Stay tuned.

Today: Gold opened higher this morning on a softer U.S. Dollar and a small decline in interest rates. Two Ex-Trump Campaign officials, Paul Manafort and Rick Gates, surrendered to the Justice Department today after being indicted in special counsel Mueller’s investigation. This signals a dramatic new phase of Mueller’s wide-ranging investigation. This investigation could directly affect Republican support for any tax reform legislation this year. If it appears that the tax reform bill isn’t going to receive enough support for passage, precious metals should rally.

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SILVER

Silver didn’t hold up as well as Gold last week, dropping $0.33 for the week, closing at $16.73 per ounce. Silver fell below the key $17 per ounce support/resistance level on Tuesday and didn’t look back. Silver reached a low of $16.60 per ounce last Friday before finding bargain buying. Silver needs to move back above the $17 per ounce resistance level to regain a short-term bullish sentiment from floor and professional traders.

The Gold/Silver ratio has increased to 75.92-to-1.

Today: After reaching a low of $16.66 this morning, Silver is up a couple of cents this morning with average trading volume. Silver rallied in late trading, reaching a high of $16.90, but $17 is still a firm resistance level.

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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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