CelticGold Market Report 9th November 2014
Gold staged a nice rally on Friday and closed at $1177, up about $37 dollars for the day. After a very difficult two weeks of trading it was good to see a rebound and a solid trading day for Gold. Many analysts have been citing that Golds recent problem has been the strength in the US Dollar.
While it is true that the US Dollar has been strong against other currencies, the fact is that the US economy is struggling just like most of the other major economies of the world. The rise in the Dollar is not due to any fundamental strength in the US economy. This why it is unlikely to be a sustained market trend.
Take a Long Term View
Now that Gold has been unable to hold the triple bottom of $1180 it is prompting Gold technicians to speculate on where the bottom is. While the charts do look bearish right now, that does not necessarily mean that prices are headed lower. Technical analysis is only one tool that is used to predict price movements.
As we have learned over the last year, very few experts and analysts who study markets for a living have been accurate in their forecasts. This is why it is essential in our view to keep a long term view of the precious metals.
Even if Gold trades lower in the coming months it does not alter the fact that much of the world is saddled by huge debt, stock markets built on printed money and a global banking system that is unstable. In this type of environment Gold is the ultimate currency to own and hold over the long term.
The Relationship Between Gold and Systemic Risk
The article that we would like to highlight this week is from Casey Research where they answer some questions that came in from their readers and investors. One of the good points that they emphasize is that Gold is usually strong in periods of systemic risk.
Which again brings us to the irrelevance of whether Gold prices trade lower in the coming weeks and months. The global economy faces increased systemic risks that cannot be printed over indefinitely. Almost all paper assets will not fair well should inflation or deflation become a major problem. This is why we at CelticGold own Silver and Gold.
Market Update for Silver
Silver also had a good day on Friday closing at $15.78 up about 2% for the day. Earlier in the week we posted an article to the CelticGold website about the strong physical demand that came into the market as a result of the price decline.
Silver demand was particularly strong in both Germany and the US. However, just as we mentioned in the Gold update, it is not easy to identify whether the bottom is in for Silver or whether lower prices are still yet to come. At this level, demand suggests that investors feel there is more upside potential than downside risk in the Silver market right now.
Peak Prosperity conducted an interview with Silver analyst Ted Butler on what has been happening in the market recently. Although the interview is about 45 minutes long, if you are a Silver investor it provides a good overview of many aspects of the Silver market.
A couple of the more interesting things Mr. Butler points out is that at $16 dollars and below many mining companies will struggle to stay in business. He also talks about how powerful the forces in the futures market are in dictating price movements and how the model is not sustainable because of physical Silver demand.
The link to the interview is below.
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