CelticGold Market Report 27th October 2014
Market Update for Gold
After touching $1185 a few weeks ago Gold rebounded up near the $1250 resistance level and was not able to push through. As of Friday Gold settled at $1231 and faced some headwinds this past week with a rebound in US and European equities.
Market volatility has returned to most financial assets as big swings have occurred in commodities, stocks, bonds and currencies. This makes forecasting the next move in Gold and Silver all the more challenging.
It will be important for Gold to hold the $1200 level should any weakness come into the market. On the upside the next area of resistance is to recapture the high of the last week or so near $1250 and hold this level.
As we have written over the last few weeks the big story continues to be the slowdown in the global economy. Much has been written recently about the slowdown and the possible response from the Central Banks.
One of the better article’s appeared in the Telegraph by Ambrose Evans-Pritchard. -> Link to article
Approximately 6 years after the financial crisis markets are still unable to function properly without some sort of stimulus. The article highlights the challenge of attempting to grow a global economy that is swimming in a mass of debt. If this slowdown is the start of something more pronounced it will not be easily turned around.
Many investors are now speculating that central bank intervention in the global economy will continue for a considerably longer period than expected. The news in the coming weeks will all be about the response to the slowing global economy from central banks and how investors will react.
Gold should benefit from the uncertainty in the market right now. However, over the long term with central banks permanently involved in the economy the likely outcome will be much higher inflation and/or some type of currency crisis.
Gold continues to be the best wealth preservation asset both short and long term. If your interested in buying Gold and Silver right now the best way in our view is to allocate your purchase over several months. This way you’ll average out your purchase price in an environment of high volatility.
Market Update for Silver
Since our last update Silver has been able to climb above $17 as safe haven demand came into the market after the stock sell off a week ago. When looking at the technicals, according to Jim Wyckoff, the next major upside resistance in Silver comes in at $17.82 and the next big support level is $16.64.
Silver is in a battle of acting both as a safe haven and an industrial metal. With the overall commodity complex still trending lower, the challenge for Silver will be to attract safe haven buyers in an environment of falling commodity prices.
We have written in the past about the role of the futures market in the precious metals complex. Below is a good article from Ted Butler who outlines the disconnect happening right now between supply and demand and the pricing in the futures market.
As someone who studies the market he outlines why he believes that the futures market may soon come under scrutiny. Silver could be the biggest winner should this process unwind itself. The link to the full article is below.
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