It’s that wonderful time of year, where the spring sunshine just begins to show its face and the first bulbs are pushing through the soil. Dependent on where you live, it’s either been a cold or a very grey wet winter. So, it’s the perfect time to focus on our monthly round up of the shiny golden metal to lift our spirits!
It’s been a few months since I have come across such an abundance chorus of voices this week talking about how Gold is set for a break out.
As we all know, the price – not necessarily the value – of Gold (and Silver) have been stuck in a channel since the price was pushed lower in 2013. For many of our clients, the wisdom of buying to invest long-term has been born out in the reality of patient practice. These two charts from Kitco show us that channel clearly…
For the remainder of this piece I will refer to Gold, but from the charts above it is plain to see that Silver has been roughly tracking the same projection. So, do consider equally investing in the cheaper sister metal to Gold as you read. If you’d specifically like to know more about Silver as an investment metal and how it also differs from Gold, please enjoy several articles in our Bullion Academy or simply call one of the Bleyer team for an informal chat.
All Eyes on ‘Merika!
The world is reacting as I write to Trump’s State of the Union address. The BBC are just running a fascinating short piece on four different views of the address; each view falling in line with the expectations of how that person would react based on their political background; “President Trump’s first State of the Union speech left some in the room applauding and others seething in silence.” This illustrates how central perception is to interpretation – and also how difficult it is to interpret a politician’s language accurately. Isn’t that the definition of a politician?
But, whether the rest of the world likes it or not, our economies react strongly to what goes on over the pond. For Gold, however, this could be an advantage, and reactions and threats to Trump’s Presidency even more so.
“A weak US dollar, a possible war between the US and North Korea or the impeachment of Donald Trump could result in one of the longest-ever rallies for gold” – precious metals expert Jim Rickards
He came out in a major interview two days ago on Gold stating that: “This is gold’s breakout year. We are in the third bull market of my lifetime – and we have a very long way to run.” (RT, 29 January 2018) The title of this piece is eye-catching to say the least: “Gold price could smash$10,000 on crashing dollar & other factors – Jim Rickards”
Many of our readers will already be very aware that Rickards is an avid Gold bug and author of The Death of Money, Currency Wars and The New Case for Gold. But what makes his statement eye-catching for those of us who have followed his commentaries is he hasn’t come out with such a bullish statement for Gold for several months.
A Timely Reminder: Bitcoin vs. what Gold does, and does not
There were several jokes over Bleyer’s delightful Christmas dinner last month about the frequency of staff conversations regarding Bitcoin. My teenage son also talked about little else during December and earlier this month. Then the crash began. Last night cyrpto prices slumped further by the late night news that “on Tuesday night Facebook announced it would ban adverts promoting cryptocurrencies and US authorities launched a probe into a large online exchange” (The Telegraph, 31 January 2018). For an online driven investment, heralded perhaps more so by the younger investor, this restriction struck an arrow at a central bull’s-eye of dwindling investor confidence.
After the euphoria and crash of the Bitcoin phenomena through December and January, Rickards finished by presenting us Gold bugs with a timely reminder to keep our heads:
“All gold does is it preserves your purchasing power. But, if gold is $5,000, then oil is probably $400, and everything is double or triple, you’re not really ahead of the game,” Rickards said.
I’m in no way saying crypto currencies don’t have legs for the future. But when tempted to invest in any commodity, currency or stock – as many may have been over this last month of January – the get rich quick mindset historically can prove a tricky one to navigate without thorough prior knowledge.
On the other hand, Physical Gold and Silver provide a long-term balance to this flavour of investing, in that Bleyer always recommends investing and holding long, with funds not necessarily needed at a set time in the future, to allow for a flexible investment exit strategy, dependent on price not need.
Volume of Physical Gold Sold
Going back to the line I inserted at the beginning: “As we all know, the price – not necessarily the value – of Gold and Silver have been stuck in a channel since the price was attacked in 2013.” What does that mean? It means the price is set by the paper trades in Gold (ETFs) but not the actual sales of physical Gold coins. So, this month, let’s look at the facts beneath the headlines once again for a much more accurate insight into what Gold is really up to.
Three very important signals are occurring:
1. Physical Demand for Gold Coins is at a low not seen since just before the 2008 crash: The sale of gold coins (typically bought by smaller investors) hit a low not seen since just before the 2008 financial crash. Why is this important? Because it shows a “complacency” to own the physical metal due to the smoke and mirrors “success” of the stock markets. This clearly presents both a buying opportunity and the obvious question of what happened after the last time small investor complacency was this low?! The Stock Market collapsed and the Gold price rose sky high! Here’s that statement in visual form to make it really clear:
2. In addition, the Central Banks have continued investing in Physical Gold since their holdings “bottomed” in 2007: “Global central banks have been buying gold at an accelerated pace for the past 10 years. Based on their recent activity, there is no reason to believe they will stop. Their continued accumulation is a source of support for the gold price.” (GoldSilver.com)
3. The bull market in stocks may or may not continue in 2018, but no trend lasts forever: And given how far the stock market has come, it’s only prudent to be wary of its bubbly valuation (GoldSilver.com)
Another giant in the arena of owning Physical Gold, Peter Schiff, also came out publically yesterday in an interview with Kitco News in strong agreement of the above factual pattern, this time linking the bubble to a previous huge stock market crash:
“Peter touched on the excessive optimism in the market, a theme he’s been hammering on in his podcast. Peter said people haven’t been this optimistic since right before the ’87 stock market crash.” These financial experts have said these words before, but not for a while, and not all in one week. Timing is as key as content in life, on many occasions. What does Schiff conclude this week?
“It’s rare to have this much optimism [in the stock market], but there are more problems now than there’s probably ever been, yet everybody is overlooking that. So, at some point, people are going to rush into gold, and the problem is there’s no one that’s going to rush out. So the price, I think, is just going to soar. I think you’re going to see 50 or 100 dollar moves per day up in the price of gold, once we break out.”
Some months, the round-up is of geo-political events that should affect the price of gold far more than they do. This month, it seems many eyes are seeing the same signs within the Gold market and conversely within the stock market. It is worth paying attention. Start researching for yourselves. Enjoy previous blogs. Ring a member of the team for an overview of the variety of products and prices you could buy, then take your time until you are ready. But – as Schiff states – be ready.
And to end on a thumping solid review of what’s been going on in the price of Gold over the last month, let’s see what often accurate Money Morning states this month:
“Gold prices have risen 5% in the last six weeks. Money Morning Resource Specialist Peter Krauth says this recent rise is the beginning of a breakout for the precious metal, one that has massive profit potential for the individual investor.”
Peter’s enthusiasm has given us our gold price prediction for 2018. According to Peter, gains of nearly 300% are on the table. “I think we’ll see $1,400 this year and, eventually, $5,000 before this bull run is over,” he says.” I haven’t got the space to examine the facts on which he bases his view so do click on the Money Morning link above for your own further research. But I hope this month’s update shakes any remaining winter slumber off our minds and is a call to action and research in owning your own Physical Gold (and Silver).
Call one of the Bleyer Team to find out more or to place your order. Or browse the website and complete your order online, whichever is more convenient. 01769 618618 or firstname.lastname@example.org