Although gold prices are down from last week’s two-year high, one investment firm sees $1,400 an ounce as just the start as the market remains in a new bull uptrend.
In a report released Tuesday, Joe Foster, gold strategist at VanEck, said that the firm is expecting gold prices to reach $1,400 an ounce in the second half of the year, adding “and we do not believe it will end there.”
Tuesday, August gold futures have seen renewed selling pressure with prices last trading at $1,336.50 an ounce, down almost 1.5% on the day.
What is the driving the next leg of the renewed secular bull market is the fact that investors are being more proactive, he said. He added that inflows into gold-backed exchange-traded products are at their highest level since 2009, when investors sought out safe-haven assets during the sub-prime credit crisis.
“Many are seeing the looming potential for another financial crisis and making a strategic allocation to bullion as a hedge against systemic risk,” he said.
Foster sees several factors in the global economy that will continue to support gold prices in the long term, including continued loosed monetary policy and low bond yields. Quoting the latest report from ratings agency Fitch, he noted that $11 trillion in sovereign debt is offering negative yields.
“Bonds no longer provide safe and steady returns. Investors may seek alternatives to help preserve their wealth,” he said.
Foster also said that weak global growth and volatile currency markets will make gold an attractive investment.
“No government wants a strong currency and Brexit has caused unwanted volatility that may bring destabilizing intervention,” he said.
Turning to the U.S., Foster said that the 2016 presidential election also promises to be positive for the yellow metal, no matter what side wins the race.
“At this time, there seems, in our view, as if there are no good outcomes in the upcoming election. A Clinton victory is likely to bring a continuation of Obama policies that have resulted in a weak economy, rising debt, weak productivity, lack of business formation, and divisive politics. A Trump victory brings uncertainty and the potential for destabilizing policies if his rhetoric on trade, immigration, and debt service are pursued,” he said in his report.
Foster also sees potential for the precious-metals mining sector, which is up more than 100% since the start of the year. He added that if gold hits $1,582 by the end of the year, a 20% rally from current levels, the mining sector could see further gains of almost 50%.
(Kitco News) – Just as gold prices hold onto gains, bullish sentiment for the metal remains intact with another big bank upping its price forecast by a whopping 10%.
On Friday, Bank of America Merrill Lynch released a report not only calling for gold prices to hit $1,500 an ounce but for silver to “overshoot” to $30.
Gold prices have come off Wednesday’s two-year high and sold off slightly following the release of Friday’s better-than-expected U.S. jobs report. August gold futures last traded down 0.88% at $1349.90 an ounce while September silver futures continue to trade above $19.50 an ounce.
“We reinforce our bullish view particularly on gold and silver, which should continue to perform well given subdued global growth and risks that this will skew the public debate towards wealth generation/ distribution, populism and migration, with all the negative consequences this may have on effective economic policy making,” the report said.
“The world has been walking from crisis to crisis and we see risks that this may not change,” the analysts added.
The BoAML analysts claimed they called gold’s bottom in February and the resulting chaos following Britain’s vote to leave the European Union reinforced their call. “As such we are upgrading next year’s gold price forecast from $1,325 per ounce to $1,475 per ounce.”
The decision by the United States Mint to strike the Centennial series of coins in gold, that is restriking the Mercury dime, the Standing Liberty quarter and the Walking Liberty half dollar, coins that first appeared 100 years ago, has sparked an interest in collecting sets of the originals the Centennial series represents. This article and the next 2 will examine each series, starting with the Mercury dime, and discuss collecting opportunities as well as rarities and “sleeper” coins.
The winged Liberty head design was intended to symbolize liberty of thought, a foreign concept in todays’ “politically correct” environment. The dime picked up the nickname “Mercury” because of the similarity in appearance to the methodical god Mercury, the winged messenger. The design was minted from 1916 through 1945, to be replaced by the Roosevelt design which paid tribute to our then recently deceased president. Although the Mercury dime was to be released in 1916, the dies were not available until later in the year, so the Philadelphia and San Francisco mints continued striking the Barber dime series until the dies were available, and in quantities that make those coins common.
There are 77 coins in the normal set from 1916 to 1945, and 3 additional coins in an extended set. Coins were struck continually from 1916 with the exception of 1922 and 1932 and 1933, during the Depression when the government felt there was no need for additional dimes in circulation. All three mints, Philadelphia, Denver and San Francisco struck Mercury dimes, but not every year. Mint marks are found on the reverse of the coin near the rim at a little left of the 6 o’clock position. A circulated normal set of 77 Mercury dimes in good or better condition would cost a collector somewhere in the vicinity of $900 whereas an uncirculated set would be around $16,000 to $17,000. The key date to the series, in any grade, is the 1916-D (Denver mint) with only 264,000 coins minted verses millions for other years. A 1916-D dime in just good condition is worth around $600, but increases dramatically for each increase in grade, with coins in uncirculated condition starting at $10,000. The next 2 hardest dimes to find are the 1921 and the 1921-D with just over 1 million coins each minted.
The extended set is comprised of the 1942 and 1942-D overdates, the result of 1941 dies being repunched with a 2 punched over the 1 in the date for use in striking 1942 dimes. Coins are supposed to be dated in the year they were struck, but this rule was not always adhered to. There is no way to know how many of these overdate coins were struck because mintage figures are for the total year using all dies, but it can be safely stated there aren’t too many minted as their price starts at around $400 and goes up to over $2500 in uncirculated condition. The third coin in the extended set is the 1945-S with small and large mintmarks. Since the difference in value between the 2 coins is small and they aren’t very valuable to start with, I don’t bother with the difference.
Circulated Mercury dimes in the teens and twenties are a little harder to find in mid-grade, that is with good detail on both sides. Most have the rim on the reverse worn into the lettering due to heavy use in commerce. The dates in the thirties and forties are available with good detail on both sides.
A word about grading uncirculated Mercury dimes; All uncirculated dimes are not equal as the quality of the strike and the fewer “bag marks” on the coin increases the quality of the grade. An example is what is called “full band lines”. The bundle on the reverse of the coin, called the fasces, has 3 horizontal groups of bands holding it together, one each top, middle and bottom. If the lines between the horizontal bands are distinctly separated, they are known as “full band lines”. Certain date coins graded MS65-FSB (for “full split bands”), and they have to be graded such by a reputable grading firm such as NGC or PCGS, can command prices in the 10’s of thousands of dollars. However on the other side “of the coin,” nice uncirculated common date dimes without split bands can be bought for as little as $10.
As for the “sleeper” coins there have been some recent finds of varieties that have not been listed in all price guides, notably some double die varieties. And I found a 1944-D dime with a clearly repunched second “D” mintmark. So it pays to pay close attention to the coins in your collection.
Douglas Keefe is the president of Beachcomber Coins Inc. He and his wife, Linda, operate Beachcomber Coins and Collectibles, formerly in the Shore Mall and now at 6692 Black Horse Pike in the old Wawa building just past the former Cardiff Circle. They have satellite offices in Brigantine and Absecon. Between them they have more than 70 years of experience in the coin and precious metals business. They are members of the American Numismatic Association, the Industry Council of Tangible Assets, the Numismatic Guarantee Corporation, the Certified Coin Exchange and the Professional Coin Grading Service.
By Mike Gleason
Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason
Coming up we’ll hear part two of the recent interview Money Metals President Stefan Gleason did with Pete Fetig during the 360 Gold Summit. Stefan gives some important warnings to precious metals investors, discusses why he favors one of the precious metals over the others and also talks about some absolutely critical things to consider when selecting a precious metals dealer. Don’t miss the fantastic conclusion of Stefan’s interview, coming up after this week’s market update.
Precious metals markets cooled off a bit this week after a red hot start to the summer led to some Independence Day fireworks in the silver market. While U.S. exchanges were closed on July 4th, silver shot up in overseas trading, carrying prices briefly above $21 per ounce.
The silver market has since settled back down. As of this Friday morning recording, silver trades at $19.86 an ounce, essentially flat for the week. Gold is faring slightly better, posting a 1.0% weekly advance to trade at $1,356 per ounce.
Checking in with platinum, the catalytic metal closed at a new high for the year on Thursday at $1,094 an ounce. Platinum is down slightly Friday with prices currently coming in at $1,087, good for a 2.3% gain on the week.
The long-term outlook for precious metals remains solidly bullish, even as institutional bears try desperately to engineer a takedown. Big commercial traders are positioned heavily on the short side in the futures markets. And on Thursday, the Intercontinental Exchange clearinghouse for commodity markets raised margin requirements on gold and silver. This will force funds that hold leveraged long positions in gold and silver contracts to raise cash or liquidate some of their positions.
Futures markets overseers say that raising margin requirements is sometimes necessary to deter excess speculation after a market has experienced a big run in one direction or another. Back in 2011, interventions to increase margin requirements helped kill the gold and silver bull markets.
from http://seekingalpha.com/
(Kitco News) – The pervasive bullish sentiment towards gold continues as prices maintain solid gains and has one Wall Streeter saying the secular bull market is back in full force.
“After rallying for 12 straight years and peaking in September 2011 at around $1,900 per troy ounce, gold fell into a very lengthy bear market that I believe ended in December 2015 at $1,050,” said Peter Boockvar, the chief market analyst for the Lindsey Group, in a CNBC post Thursday.
Given current central banking policies that are pushing other fiat currencies down, he continued, gold and silver will rally further as they will be the “last currencies standing.”
“The secular bull market in both that began 15 years ago has resumed again after the 4 ½ year cyclical bear market and the behavior of central banks and what they are doing to their respective currencies is the main reason why,” he explained.
“If I am correct, a new bull market usually takes assets to levels above the previous highs and thus I believe there is a further ways to go in the years to come.”
Although gold prices have come off recent highs, the metal is still holding above $1,350 an ounce. August Comex gold futures last traded down $13.30 at $1,353.8 an ounce. Meanwhile, silver has stolen the show, hitting a two-year high earlier in the week. September silver last traded down 2.84% on the day at $19.63 an ounce.
“What looks best against money that penalizes the holder? Gold and its little but more hyperactive sibling named silver,” he said. “We are truly living in a world of monetary mayhem where modern day central banking has embarked on an experiment that is now going haywire.”
Boockvar has been bullish on gold for the last few months. In May, he said that gold can not only rally to its 2011 high of $1,900 an ounce, but also likely surpass that level.
Silver has outshined its sister metal since the U.K.’s decision to leave the European Union sparked turmoil in global equities markets, and the rally could lift the white metal to a three-year high.
Gold and silver futures recently reached their highest levels in about 2 years. On Wednesday, gold futures GCQ6, -0.40% settled at $1,367.10 an ounce, marking their highest finish since March 2014, while silver futures SIU6, -0.52% hit a 23-month high of $20.203 an ounce. Prices for both eased back a bit Thursday, with silver booking its first decline in seven sessions.
But silver prices are still set to surpass some analysts’ $21 to $22 predictions from earlier this year and talk of $25, $27, and even $32 an ounce have emerged. Those levels would take prices to their highest since at least 2013.
Like gold, silver’s climb isn’t just about Brexit, or the U.K.’s EU exit.
Read: Why gold may hit $1,500 by year’s end—and it’s not just about Brexit
Most analysts agree that the vote provided the spark for the precious-metal rally, but it isn’t the genuine impetus.
Brexit is a “symptom” of the European Central Bank’s “failure to stimulate” the EU’s economy via money printing,” said Michael Armbruster, principal and co-founder at Altavest. The bull market in gold and silver is really “all about negative real interest rates, currency market volatility and failed central-bank policy world-wide.”
FactSet
Silver has gained ground faster than gold.
“Gold and silver are beholden to no central bank and that is why they are both rallying in a new bull market,” he said.
But silver’s climb is particularly impressive.
Since the Brexit vote was held on June 23, silver futures have gained more 14%, compared with a climb of around 7.8% for gold futures.
“Silver typically tracks gold prices, with bells on,” said Adrian Ash, head of research at BullionVault, in a recent email. “For every 1% move in gold over the last 40 years, silver has averaged [a move of] 1.75% both up and down.”
Outsize moves
A big part of the reason for silver’s outsize moves is well-known: silver’s traded on a much smaller volume than gold, so it’s much more volatile and moves tend to be exaggerated.
Open interest for the most-active gold futures contract on Comex Wednesday was around 441,000, while silver’s stood at about 156,000.
“Historically, silver tends to trade with 2 or 3 times the volatility of gold, partly because it trades with much less volume day to day,” said Tyler Richey, co-editor of The 7:00’s Report.
He pointed out that after gold prices broke higher in late 2009, it “rallied just shy of 100% to the all-time highs reached in 2011, while over the same time frame, silver rallied more than 200%.”
But also, unlike gold, silver is widely used in industrial capacities and “therefore can both trade alongside gold in scenarios like the ‘risk-on/risk-off’ price action that we are experiencing right now, or with other industrials like copper HGU6, -0.07% in times of high physical demand,” Richey said.
Still, Richey said silver’s “precious, safe-haven qualities trump its industrial uses in the long run so in the turbulent wake of the Brexit vote, silver should continue to outperform with gold, while strictly industrial metals like copper underperform.”
Supply and demand
And with prices for gold on the rise, investors are looking for a cheaper alternative.
“Silver is the poor man’s [gold] and the average Chinese man in the street is still relatively poor,” said Christopher Ecclestone, a mining strategist at investment bank and research firm Hallgarten & Co.
World Silver Survey 2016
Demand in China has been particularly strong, analysts said. On Monday, the most actively traded silver futures contract hit its 6% daily maximum at the open, The Wall Street Journal reported.
“The Chinese silver futures market is heating up quite a bit,” said Sean Brodrick, a resource specialist for the Oxford Club, suggesting that part of the reason for that may be due to the slide in the Chinese yuan.
Central-bank buying of silver could heat up too.
Andrew Chanin, chief executive officer of PureFunds, which runs the PureFunds ISE Junior Silver exchange-traded fund SILJ, -4.84% pointed out that central banks have very few silver on their balance sheets, while many more have gold. “This could potentially be a positioning strategy thinking that central banks being underweight silver may almost force them into the position of needing to buy silver,” he said.
Silver supply having been relatively flat for the last several years and any increase in investment demand has the ability to put silver “in risk of a shortage,” said Chanin.
Gold and silver’s relationship has changed as well and as it eventually moves back in line with the historical norm, prices for silver may rise even more.
The gold-to-silver ratio currently stands at about 1 to 67. In other words, a single ounce of gold is worth about 67 ounces of silver. The ratio can serve as an indicator to determine when to buy or sell the precious metals.
The ratio has averaged about 45, said Matthew Tuttle, chief investment officer at Tuttle Wealth Management LLC. “If we look at $1,400 gold, which is my current target, we can see silver get to $28-$32 as the ratio moves toward the 45 area.”
That is “most likely” to occur in mid-November after the U.S. presidential election, he said. “Historically, these [high] ratios occur around market panics. After the election some of the uncertainty should come down.”
Price points
Many other analysts still see further gains for silver, at least to end of the year.
Now that silver has hit his previous forecast of $20 by the end of the year, the Oxford Club’s Brodrick raised his target on silver to $25.50.
“We’ll see how quickly we get there,” he said. But “a correction would be welcome at this point.”
The 7:00’s Report’s Richey said a pullback to between $17 to $18 an ounce wouldn’t be surprising and would actually “offer a favorable entry point for long positions.”
His long-term upside target is toward “key resistance” at $27.50 an ounce.
Still, some analysts urged caution.
“Silver is now overpriced,” said Hallgarten & Co.’s Ecclestone. “I was bullish on it but not this bullish.”
Ecclestone said he expects prices to end the year at less than $18 an ounce, but prices “may touch $25 on hysteria and the buyers at that level will lose their shirts.”