Gold Price Rise 2015

The appalling US jobs data on Friday occurred while equity markets were closed for the Good Friday holiday. Bond markets were open and yields fell sharply as the market immediately understood that this puts Fed interest rate rises on to the back burner. They may never happen at all and the Fed could actually cut rates if the economy gets even worse than this. It does have room to cut.

The dollar fell back against the euro to almost $1.10 despite the alarming talk about a Greek default as soon as the end of next week. Gold and silver trading was closed on the Comex.

Gold prices to jump

You don’t need a PhD in rocket science to see that precious metals are going to leap up in price in response when they are out of the trap on Monday. How high is another question. But both the weaker dollar and the possibility of a default on its IMF payments by Greece on Thursday are reasons to buy bullion. 

So how will Wall Street respond on Monday? Well a slowing US economy is now confirmed. Even the arch bulls will have to concede that. The rosy jobs data has been the only thing holding the market up against the more obvious conclusion from all the other economic indicators that the economy is slowing down fast. 

Wall Street should sell off sharply. If Greece were to default on Thursday – and the end of this particular long and tortuous road is an inevitable default and it may be for the best as Warren Buffett noted last week – then the sell off would turn into a 10-15 per cent correction if not an all-out crash.

Recession coming

US equities have been moving sideways in a topping formation and from record highs are overdue for a correction. When stock markets can see the word ‘recession coming’ written in big red letters on the wall then they do fall. Stocks in companies whose profits are falling are not worth as much as they were before.

Now as gold heads in the opposite direction to the crumbling stock market others will join this trade and push prices higher and higher. Some analysts have noted that a Greek default alone would put another $200 on gold prices. Betting on the inevitable usually works.

With the US dollar in trouble at the same time as the euro just where else are investors going as a safe haven? Buying treasuries denominated in a sinking dollar? Next week will be an important inflection point for financial markets in general and precious metals in particular… silver should be the top winner!

Long Time no Post....

It seems like a long time since the last Mokarimakka post (15 Dec 14), indeed the regularity has waned a little however the markets and global economies have been a hive of activity.

What has happened around the World?, the U.S has increased its bullying tactics on Russia by increased sanctions against the state for it’s actions in the Ukraine; this amongst other factors such as the Oil price crash has almost crippled the Russian Ruble. 

This links nicely to the global Oil price crash, who’d have thought that 12 months ago Oil was trading at $100+ per barrel and at the time of writing is now trading around $60-/+ per barrel!

I do not see prices at this level for too long, this is deflationary in nature so motorists make the most of it while you can.  

Switzerland has been one of the biggest shocks of the year so far; id go as far to say that the un-pegging of the Swiss Franc to the Euro has been one of the most extreme measures taken by a Central Bank notwithstanding QE. 

The un-pegging of the Swiss Franc (CME) to the Euro saw the currency leap in value, effectively increasing domestic prices by 30%; lets be clear, this is almost unprecedented in the FOREX markets, bad news for Switzerland….

What does this have to do with Gold & Silver?

Prices so far this year are up 8.6% and 3.6% respectively, not a bad start to the year I think, how much interest did you earn in your savings account (inflation adjusted)?

More importantly, it is the invisible factors that have yet to come into play over the next 12 – 24 months:

In 2014, Germany repatriated 140 Tonnes of its gold, not much I grant you but it signalled a step change in State’s attitudes to the failing fiscal policies employed by western Central Banks.

Holland repatriated 122 Tonnes out of U.S vaults.

France’s Le Pen has demanded an audit of their 2435 Tonnes of physical inventory.

And now it gets interesting….

From 2011 – 2013 China imported over $70 Billion worth of Gold and the price didn’t move..! 

The impossible has happened.  Price manipulation, Q.E and hedge funds are taking full advantage of near 0% interest rates being offered by Central Banks effectively keeping the Equities and Futures markets afloat, this CANNOT last. 

Imagine blowing up a balloon, blowing it up to normal/safe limits means that the balloon exists in a stable environment, the pressure inside is in equilibrium with that of outside.  However when you blow it up some more (Q.E, 0% Interest rates, Oil Price collapse) the pressure grows inside and eventually the balloon explodes.  There you have the financial markets today.

Heed these words, there is and will be an increasing intensifying global scramble towards gold and away from the endless printing of currency.

Are your eyes open?

Mokarimakka

Gold & Silver 2015

Super silver

Silver as ever is the more volatile sister of gold. It’s in a tighter market. Silver is the rarer precious metal, so it does not take much buying to shift the price. Then again silver exchange traded fund holdings are up 10 per cent this year, there has been no exodus like the gold ETFs. Physical demand for silver is higher than ever.

November silver Eagle sales from the US Mint totaled 3,426,000 ounces, 49 per cent more than the previous year and that sets 2014 up for another record year for silver coin sales. Indian silver imports for 2014 will also be at record levels.

What could sustain a precious metals rally this time and force a break out to the upside from the sideways trading range? Simply a flight to safety as other asset markets breakdown. Whether you look at bonds or equities they have a definite sense of virtigo at these levels.

Yesterday investors dumped stocks as the Chinese authorities took steps to tighten lending. Meanwhile fears about Greece finally leaving the euro and defaulting on its debts resurfaced after Athens announced it would hold its presidential election two months ahead of schedule. Greek stocks plunged an eyewatering 13 per cent.

Prices going up

Gold and silver are cheap by comparison to stocks and bonds. The fear of higher interest rates to come is over done. The global economy can’t take it. More money printing is on the way to sustain low interest rates. They are already negative in the eurozone making gold a positive hold there by default.

There is also a disconnect between the paper futures market for the precious metals and the underlying physical shortage that can only be made good one day in the future by radically higher prices. Recent figures showing further withdrawals of physical metal from the futures exchanges suggest that day of reckoning is coming.

The best asset class to buy for the year ahead may be the one most neglected in the previous year. That said precious metals could still have one last dive into the abyss in a global financial crisis and give the naysaying chartists their moment of glory. This would not last for long as we saw in the 2008-9 crash before gold headed back up to $1,923 an ounce in 2011.

Why Gold & Silver price will Rise!

For some time now I have been shouting from the rooftops, the many benefits of holding physical Gold & Silver.

What has and is most frustrating is when despite perceived economic and political activity, the prices of all precious metals is FALLING! How can this be so?

In short, its market manipulation (see previous posts for details); I offer my rationale for my continued up-beat assessment of holding physical metal asset classes:

The recovery that not only the US government but the UK government espouse is nothing more than vote fishing.  Do you think it is politically sensible for a party that wants to remain in power, to tell the public that after 5 years of austerity that the plan is not working despite the inflated currency programs (QE)?.

If the economy was really recovering, then the government would waste no time in raising interest rates to boost government income…. It has not done this despite, unemployment targets being achieved, and despite the stability in our domestic banks after recent success of European Stress Tests.  Still interest rates remain at an all time low of 0.5%.

The US government is proudly announcing an end to its QE program…HELLO! It has just printed over $1.5 Trillion from nowhere, and their economy has still not grown!  The US, UK and European econmies are addicted to cheap money, in the same way an alcoholic is addicted to alcohol.  Corporations are using cheap money to stay afloat and the mere indication that interest rates will rise triggers huge sell offs of stock thus de-valuing the stock market… why? Because those large investors (Hedge Fund Managers, Banks, etc) don’t want to hold their wealth in an asset that is beind devalued.

It is only at this point, when those ‘heavy weight investors’ move their investments from the stock market into Commodities (Gold, Silver, Oil…) will prices rise, but this will mean that the stock markets are falling, therefore the economy will reverse into another recession.

This is not good for governments that want to get re-ellected, so they keep the stock market afloat by ‘Printing’ currency into existence.

This cannot and will not last forever. 

In an earlier post, I told you the basic principles of supply and demand (PLEASE RE-READ TO UNDERSTAND THE GRAVITY OF THIS NEXT PART).

http://www.arabianmoney.net/gold-silver/2014/11/06/us-mint-stops-selling-silver-coins-because-it-cant-cope-with-a-huge-surge-in-demand/

In this article posted 6 Nov 14, informs us that the U.S Mint has stopped selling Silver Coins because it cant DELIVER on the demand for Silver Coins, read the article. 

The LAWS of supply and demand require the price to rise and yet it does not, but it will.

The missing piece of the jigsaw is for the US Dollar to collapse, and there are many forces at work in Russia and China, and recently Switzerland (public vote to mandate that the countries wealth has to store 20% in physical Gold!). When this happens (when is the Trillion Dollar Question), precous metal will be astronomically expensive, because its value will be readjusted to meet the inflated price of the US dollar.

Extract from the link above

We saw that last in April 2011 when what is selling today for $15 and change was almost $50 an ounce. Silver will go higher on its next bounce and that can’t be far away. Something just has to blow-up in the paper market for silver before long.

What if those paper holders all wanted delivery in the precious metal, or even a handful of them? Silver stocks are running low in the futures exchanges as well as the mints. Holding physical silver never made more sense. Watch what happens when a market that has been suppressed for 34 years rebalances…

When??? Certainly by the end of the decade; bide your time and you will be rewarded, alternatively you can keep all of your wealth in banks, hedge funds receive 0.5% interest (inflation adjusted) and be happy with that!.

Mokarimakka.