8 December 2014

CelticGold Market Report 8th December 2014

Gold Technical Chart - 1 Year

Gold was weaker on Friday after a stronger than expected November jobs report in the US. This empowered equity prices as the Dow and S&P 500 continue to march higher. In Europe the equity trade is also still in full force as markets closed much higher Friday due to anticipation that the ECB will begin a QE program sometime in January. 

Gold finished the week at about $1191 after another unpredictable trading week. The big news came on Monday when Gold and Silver prices surged higher, most likely due to the Japan credit rating downgrade by Moody’s.

One of the positive aspects of the move in Gold and Silver on Monday was that the metals were able to close near the high for the day. This suggests that maybe the shorts are becoming exhausted. This could signal that the low is in and prices may now begin to move higher. 

The fact that Gold has held up in an environment where equity prices are surging higher and crude oil is continuing to drift lower is a good sign. However, the test next week will again be for Gold to defend the $1180 level, and ideally recapture $1200.  

The Race to Zero Interest Rates

One of the more interesting stories that hit the news this week was on interest rates. Yahoo Finance ran an article about the historic lows taking place in yields right now. Below is a list of countries where the 10 year yield has hit a record low: (Source Yahoo Finance 11/28/2014) 

 

    Germany: 0.70%

    France: 0.98%

    Italy: 2.03%

    Spain: 1.86%

    Netherlands: 0.81%

    Portugal: 2.80%

    Switzerland: 0.31%

    Japan 0.41%

 This highlights the addiction that the markets have to low interest rates and how disconnected the fundamentals are from reality. Economic growth remains low in most regions of the world, and the low interest rate environment has created asset bubbles fueled by cheap money. 

As long as the stock markets remain at artificially high levels none of the market participates are going to complain. This also allows Governments to continue to borrow more and more money and go deeper into debt.

The record low yields is just one more example of how the financial markets, in our view, are living on borrowed time. It highlights the importance of owning tangible assets like Gold and Silver in a world flooded with paper assets that are backed by nothing.

Market Update for Silver 

Silver Technical Chart - 1 Year

We posted an article earlier in the week about the dramatic move Silver made on Monday soaring 17% from its intra-day low. It was a good reminder of how quickly things can change in the precious metals market. 

Although Silver gave up some of its gains throughout the week, it has been able to hold above $16.00. According to technician Jim Wyckoff, the next area of resistance for Silver comes in at $17. So we’ll see if Silver can attract new buyers here and move to the next level.

Reports continue to surface about the strong physical demand for Silver. According to goldandsilverblog.com, sales of American Eagle Silver coins total 41,547,000 through November 30th. If December sales exceed 1.1 million coins, which looks likely, than 2014 will be another record breaking year. 

In another article on srsroccoreport.com it was reported that Silver demand in India has been so strong this year that it has resulted in a significant drawdown of U.K. Silver inventories. As result India has had to turn to Russia and China because the availability  from the U.K. has not been sufficient.

In the article it is reported that imports of Silver in India are up 14% year-on-year for the January to October period and set for an annual record.( Source: SRSrocco Report 11/24/2014). It is clear the physical buyers of Silver see the value and the long term benefit of holding the metal.

Eventually, physical demand will accurately be reflected in the price of Silver.

Author: celticgold.eu

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