9 November 2015

CelticGold Market Report 9th November 2015

Gold - Technical Chart 1 Year

Gold prices were sharply lower on Friday closing at $1,087.70. It had already been a challenging two weeks for Gold and the catalyst for Friday’s decline was a better than expected US jobs report that saw US payrolls jump by 271,000 in October.

Many analysts are now expecting that US Federal Reserve will hike rates next month for the first time in a decade. This sent Gold below $1,100 an ounce for the first time since early August.

December is going to be an interesting month as the Fed considers a rate hike, while the European Central Bank and Bank of Japan consider additional stimulus. The turmoil in the currency markets is just getting started!

As we look forward to the next few weeks it is possible that Gold will re-test the July lows of around $1,073. The next key area of support sits at about $1,080. Some analysts have been calling for Gold to fall to new lows before the yellow metal begins to rally again.

New Lows Possible for Gold?

The charts point to lower Gold prices over the next week, however, the problems in the global financial system are becoming bigger. Should Gold fall to new lows it will very likely only be for a short period of time. 

As we wrote in an article on the CelticGold website recently the Central Banks are caught between a rock and hard place. The only tools they have left are more quantitative easing and negative rates.

Even if the Fed raises rates by one-quarter-percent in December it is going to be almost impossible for interest rates to be normalized because of the debt in the system. Higher rates will cause a crisis, and keeping rates near zero will also cause a crisis.

Many currencies are going to get severely devalued. As we have sad before, history is on the side of Gold investors. There will soon come a time when Gold is again recognized as one of the best ways to preserve value and savings.

Comex Gold Inventories Hit Record Low

One of the news stories that caught our attention this week was an article in ZeroHedge about Comex Gold inventories. According to ZeroHedge, this past week the total registered Gold at the Comex dropped to a record low. 

The article reports that there are now 293 ounces of paper Gold for every ounce of Physical. The Comex inventory of Gold is now below 5 tons. (Source: ZeroHedge 2015 November 4th)

What this means is that the majority of those who own paper Gold through the Comex will not be able to take delivery of the physical metal. This is yet another crisis that is brewing in the Gold market. 

When the price of Gold begins to rise again, the supply and demand fundamentals will come back into play. This is when you’ll be glad that you own the physical metal instead of paper Gold.  

Market Update for Silver

Silver - Technical Chart 1 Year

Silver started the week at just above $15.50 and closed Friday at $14.74. So needless to say It was a difficult week for Silver. Just as we said with Gold, Silver prices could fall to new lows for the year before rallying again.

Many in the investing community look at Silver differently than they do Gold. Although both are precious metals, as CelticGold readers know, Silver also plays a strong role as an industrial metal.

Safe haven status has mostly been given to Gold. But Silver’s history as money goes back even further than Gold. For those who own Silver or are interested in investing in the white metal, we have posted a link at the end of the update to an article by Alasdair Macleod, that explains Silver’s history as money. 

One of the comments Mr. Macleod makes about Silver that is not widely known is that “silver historically fulfilled the role as the people’s money ever since coins were invented, with gold being preferred only for larger transactions”.

Silver can be viewed as a safe haven, however because Silver is a small market and is also an industrial commodity the price fluctuations can be dramatic. Should Gold reach new highs in the coming years which is likely in our view, than its natural to expect that Silver will too.

As the disruptions to the financial system become more severe, Silver will very likely begin to act as a safe haven by preserving value and savings just like Gold. The link to the article is below.


Author: celticgold.eu

Older Currency Markets: The Next Battleground? Newer What Quantitative Easing Has Done for the Global Economy