It seems like the fall in prices will never stop. As long as people are convinced that it will eventually go back up, we believe the prices CAN'T go up. When we start to hear people and analysts saying that gold and silver are DONE for a lifetime, then you will start to see the prices rise. As it stands now, we still believe gold goes under $1,000 and silver to $13. Keep in mind that gold and silver prices are denominated in DOLLARS. The dollar has been getting stronger and stronger, which means anything denominated in dollars will get weaker. This is the same reason why oil and gasoline prices are falling. They also are denominated in dollars.
When it comes to financial instruments, one would think that good news should have the appropriate effect, as well as bad news. So why then does gold move lower when we have Russia, Palestine and middle easts conflicts? It is our theory that much of the issues are already priced into gold and silver. Let's not forget that gold has moved from $300 to $1900 in just 8 years. That is a pretty big move in a short period of time. We are not saying it can't go higher, but it may take many years to get back to the 1900 highs. Considering prices are still high, now is still a good time to sell your gold or silver in ct.
Gold and silver have been climbing steadily for the past couple of weeks. But why?
Two main factors may be the driving force behind the rise in prices. First, OIL prices are on the rise due to the Iraqi crises. When OIL prices go higher, other commodities tend to follow. Gold and Silver seems to be following the oil prices higher. Any resolution or improvement of the IRAQ problem will lower OIL prices and gold and silver may follow.
Secondly, the EU cut interest rates. The lowering of interest rates in the European Union may bring on inflation which would also boost gold and silver prices. Currently, inflation is low, but starting to climb through out the world. In fact, England is going to be raising rates soon. On balance, we don't believe gold has much of a ceiling above $1450, and would be a seller at that price.
After missing the $1900 per ounce climb in gold, and $45 per ounce climb in silver, many sellers have been waiting for a ramp up in gold and silver to liquidate their old gold or silver jewelry. Gold went as low as $1100 and now has climbed back to almost $1400. We are warning sellers not to be greedy and take this opportunity to sell. We don't believe $1900 per ounce is coming any time soon. In fact, this ramp up to almost $1400 in gold is probably a mid-term top in the markets. We could re-trace back to $1100 per ounce in a very short period of time.
It is not a secret in the industry that the big boys are betting that gold and silver go lower. They are mostly to the short side. For those who may not understand, when a financial firm makes a "SHORT" bet, they are of the belief that the price will go lower, and thus they will make money if it does. If the price goes higher, they will lose money. You may say to yourself, well if the big boys are of the belief that gold and silver prices go lower, then I should SELL now. In most cases when everyone is leaning one way, you want to be a contrarian and go the other way. The reason is that if most of the money is invested on the short side, then much of the selling pressure has already been consumed, and as the price starts to go higher, those same shorts need to BUY in order to limit their losses or cover their gains. We are of the belief that any break below $1150 in gold will probably start us on a slide to $1000. If gold can stabilize here, then we may start a new bull run. Stay Tuned!
Many speculators were singing the death of Gold and Silver only a month ago. Gold and Silver have been able to make a nice rebound and hold the gains. The dynamic that looks pretty strong to us is that Gold and Silver went higher even as Crude Oil moved lower. Crude and precious metals have been trading in step with each other for many years now. Crude has broken under $100 and gold & silver have moved above $1350. Unlike Crude, which in our opinion there is plenty of it, Gold and Silver are scarce. As stated in prior posts $1400 will be an important level for gold to rise above and hold. This upcoming week should be interesting.
Gold and silver prices have been in the mainstream media conversation for over 5 years now. Most people never took notice (or cared) about gold and silver prices prior to the run up in prices. In CT, we have many customers who don't want to sell their gold or silver at current prices because they are waiting for prices to go back up to $1800 for Gold and $45 for Silver. What they are not understanding is that Gold and Silver are still at very high prices from a historical point of view. Gold for many years traded at $300 and Silver at $4. So it is a good time to sell gold or silver? The old saying buy low, sell high is all you need to say to yourself.
This week sure has been unnerving to gold and silver investors. As stated, in our previous post, we expected a decline around 1400 in gold. Although the decline was relatively sharp, gold and silver did stage a comeback on Friday. Our belief is that there will be a sharp move up or down when the Syrian crisis comes to a head. Whatever move happens it would be temporary and we would not consider it any indication of a new trend.
No doubt Gold and Silver prices have recovered nicely from the lows posted of the last few months. Needless to say many people took advantage of the increase in price and sold gold, silver jewelry, coins and bullion. The million dollar question is can gold get back to the highs of roughly $1900 that were posted not to long ago. I maintain that gold and silver prices will be in a tight trading range for the next year or so. Of course, if a global event such as a war happens, all bets are off! Right now, we are faced with a potential war with Syria, but gold prices seem to be stable. The other catalyst that may drive gold higher is a sudden rise in interest rates. Interest rates have been rising slowly, but the FED's announcement of a tapering of their "Quantitative Easing" programs may cause Gold and Silver prices to drop.
For now, we may have hit the short-term highs in Gold and Silver. Any break above $1450 in gold may signal the start of a new uptrend. Otherwise now may be a good time to sell gold or silver.
Many customers ask us what causes Gold and Silver to go down and up. The answer is not very simple. Gold and Silver are traded on the futures exchanges just like copper, rice and pork bellies. On any given day, gold will trade within a 2% or more range. The prices are correlated to a number of factors, and those correlations can change within a momemts time. Since the economic crisis Gold and Silver have been somewhat correlated to the dollar. As the dollar goes down, Gold and Silver (as well as the stock market) have been going up. That correlation over the past couple of months has seem to been broken. You will now notice that when Gold goes down the stock market is up and many times visa versa. Gold seems to be acting the way it did for many years prior to the financial crisis. That is not to say that this will last forever. As stated before the correlations of gold and silver can change pretty quickly.
So the million dollar question is, "will gold go higher". Nobody can say with certainty. You will notice for every expert predicting $5000 an ounce gold, there is one who is predicting $500 per ounce. I believe Gold and Silver will be in a tight range between $1000 and $1400 for the next year or so. After that, the economies around the world will dictate where it goes.