31 August 2015

CelticGold Market Report 31st August 2015

Gold Technical Chart - 1 Year

Gold staged a solid rally on Friday to close at $1,133.80. Since our last update two weeks ago Gold has continued to move higher as world markets become ever more volatile. This week the yellow metal saw a nice move up to $1,160 but has not been able to hold the gains. This level becomes the next key resistance area for next week. Gold needs a weekly close above $1,160 to have the rally continue. 

As everyone knows the big story this week was plunging world stock markets. The much anticipated correction in equity markets has arrived and now the big question is how far will they fall?

To put this week into proper context, the Dow Industrial Average in the US had its largest one day point decline ever, and its largest three day point decline ever. Most major averages around the world saw dramatic declines followed by big rebounds. Crude oil at one point collapsed below $40 and then rallied by almost 10% on Thursday and then rallied again by over 6% on Friday! So it looks as though volatility will reman high for the foreseeable future.

Central Banks Lose Control

There was an article in the Telegraph that summed up the state of the markets very well. The link is below: 

Link to Telegraph.co.uk article

As the article states, Central Banks are losing control. A number of things are converging at the same time, which is gong to make it very difficult for policy makers to back away from loose monetary policies. More and more investors are realizing that the Central Banks are backed into a corner right now.

Below is an article from ZeroHedge where Ray Dalio, head of the world largest hedge fund believes we could be at the end of a long term debt cycle. The key quote from the article states "We Believe That the Next Big Fed Move Will Be to Ease (Via QE) Rather Than to Tighten”. The full article is below. 

Link to Zerohedge article with Ray Dalio

Global Markets and Gold

As we stated in our last two updates, September and October are historically good months for Gold. At the same time they are historically challenging months for US equity markets. So the next two months are going to be interesting to see if the historical norm unfolds. 

It is likely that we are in the very beginning stages of a reset of the global financial markets that will unfold over many years. The recent extreme volatility is a sign of the high degree of fear and uncertainty among traders. As we head into September this uncertainty and fear will continue to produce wild moves both up and down.

Gold and Silver Investors should not get to caught up in the short term price moves. Should Gold prices move lower it will very likely be short lived. Do not lose sight of the big picture. Whether the global economy goes through some sort of sovereign debt crisis, or a credit or currency crisis, Gold and Silver will eventually rise to much higher levels.

Market Update for Silver

Silver Technical Chart - 1 Year

Silver closed Friday at $14.59 and had a challenging week. At one point this week the Gold/Silver ratio moved to 80:1, and now sits at almost 78:1. It does not seem that this wide of a ratio can exist over the long term. 

A ratio of 50:1 or less is very reasonable to expect in the coming years. Silver is currently a victim of the severe downturn in commodity prices. As the global debt crisis expands Silver’s role as a monetary metal will assert itself again.   

It still could be rough ride over the short term for Silver investors. But should Gold reach levels above $2,000 in the next few years, which is reasonable to expect, Silver could easily triple from these levels.

Author: celticgold.eu

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