Gold Added on Last Week’s Gains plus the 10 Reasons You Should Buy Gold Now

21 Jul
The 10 Reasons too Buy Gold book preview

Gold Added on Last Week’s Gains plus the 10 Reasons You Should Buy Gold Now

Gold Market Discussion

Quiet Mid-Week, But Gold Added on Last Week’s Gains

Gold provides securityWith a rally this week, gold added on last week’s gains. The week opened at $1,234 and closed at $1,253. Silver opened the week at $16.15 and closed at $16.54. Although metals were trading fairly quietly during the middle of the week due to lack of any significant, market moving events, they steadily solidified their upward moving positions. Political turmoil in Washington D.C., a falling dollar index, and a frothy stock market all stoked gold prices this week.

What this means for investors: A couple weeks ago I called the low when gold dipped to $1,210. We are seeing more and more cracks in the system that are going to support gold prices moving higher. Gold demand seems to be trending more towards safe haven demand than over inflation growth, as economic and inflation growth continue to miss targets. Investors are taking this as a sign that they should prepare to hedge against future economic risk.

European Central Bank Announcement Pushes Dollar Lower

European Central Bank in FrankfurtMario Draghi of the ECB came out unexpectedly dovish this week. The markets didn’t seem to buy his message though. The ECB decided to keep rates at 0.00 rather than raising, as recent comments from Draghi had previously indicated. The ECB and markets are afraid of monetary tightening happening too soon, and the dovish rhetoric is trying to prevent that.

The announcement caused the euro to rise against the dollar, and this sent gold up. Gold and the dollar generally move in opposition to one another, so it was to be expected that gold would get a boost.

What this means for investors: The dollar index was at a 10 month low already prior to the ECB announcement. This is prompting investors in increasing numbers towards gold. On the European side, the central banks and analysts are cautious on European economic growth still, indicating there is still overall global sluggishness. Investors are starting to lose faith in the central banks.

10 Reasons Why You Should Buy Gold RIGHT NOW

10 Reasons You Should Buy Gold Right Now

Here is a preview of our forthcoming ebook “10 Reasons You Should Buy Gold Right Now”, which is a mid-2017 update to include everything happening in the financial markets right now. Keep an eye on your inbox for the full version soon!

1. Dollar Index Lows

The dollar index is down 10% this year, and there doesn’t seem like there is much resistance to stop its further weakening.

2. Potential Stock Market Downturn Increasingly Likely

As the stock market is hitting record highs recently, investors are starting to flee stocks. Global fund managers have a 20% underweight in U.S. equity allocation, which is the lowest since the start of the financial crisis.

3. Bond Yield Curve

The bond yield curve is flattening and approaching inversion. Excessive tightening leads to an inverted curve, and historically, this has always led to recession.

4. Monetary Action by the Fed

The tightening policy that the Fed is embarking on could be disastrous for global economic recovery. In such a debt laden economy, many individuals and corporations will not be able to afford higher rates.

5. Uncertainty in Politics

We are in a highly volatile political state right now, and uncertainty around both domestic politics and global conflicts is certainly fueling gold demand.

6. Overseas Demand Hitting Highs

Overseas central banks and governments are shoring up gold reserves. The Russian and Chinese central banks have increased their buying this year, while China and India alone account for 50% of global gold demand. Additionally, Germany is repatriating its gold from the U.S at an increased rate. In addition, the Islamic financial world has finally approved gold as an investment to comply with Shariah law, opening a vast new market.

7. Sovereign Debt around the World

U.S. Federal spending is set to top $4 trillion. The deficit is increasing at a rate of $2 billion more this fiscal year than last. In addition, countries like Greece have a ratio of 179% of debt to GDP and are weighing down the Eurozone. These kinds of debt numbers are not sustainable, and eventually will have to go through a turbulent reset.

8. Demand for Alternative Currencies

Look at the demand for cryptocurrency, and more importantly, the interest in GOLD backed cryptocurrency. It shows a strong interest in independent, government-free currency. Also, with states like Arizona (among others) passing legislation that effectively renders gold and silver legal tender, it is a clear message that people are tired of the inevitable shortcomings of our fiat money system.

9. Chinese Currency Collapse

Speaking of sovereign debt, China is about to break under the weight of its debt. The speed at which it is has acquired it and the amount of money it has pumped into the system is going to cripple the world’s second largest economy, and this will have global ripple effects.

10. Selling Below Production Cost

Gold and silver are both selling below production cost right now. Precious metals are essentially “on sale”, and pared with the many other factors favoring gold right now, this will inevitably lead to a price boost down the road.

 

 

 

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 Here are some articles from the web discussing the topics in this week’s post:

Quiet Week, but Gold Added on Last Week’s Gains

Read Here

European Central Bank Announcement Pushes Dollar Lower

Read Here

10 Reasons Why You Should Buy Gold RIGHT NOW

Read Some Here…

…and here…

…and another here.

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

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