Yesterday Gold consolidated recent gains brought on by “safe haven” buying after the major currency announcement made by Switzerland and their interest rate move last week, the fallout from the collapse in the price of oil and the seemingly fecund US dollar.
Although yesterday was Martin Luther King day in the US and most markets were closed there remained some light trade on the New York Mercantile Exchange where gold futures advanced almost $12 an ounce from Friday’s close to trade at over $1,276 an ounce – the highest since early September. Last week the metal gained more than 5% and is now trading over $90 up in 2015 as I mentioned on “The Real Money Show” on the weekend.
Silver’s move on Monday was more prominent, especially when you factor in the light trading in this market as well. The lead futures contract in the month of March rose 3.5% or $0.60 to $17.71 compared to Friday’s close and as I write this blog entry this morning Silver continues to shine currently sitting at a spot price of $17.92 and on the doorstep of $18 an ounce which it saw earlier in the morning for a very short period of time. Silver is up almost 12% in 2015 after losing 20% of its value last year.
Roughly 60-65% of silver buying is for industrial use with investment and jewellery demand making up the remainder. This move up in the price of Silver comes despite weakness in other industrial metals like copper which is trading near five-year lows after a calamitous start to 2015.
Prompted by the currency turmoil and a stock market correction, both retail and institutional investors last week were finally convinced to increase their exposure to both gold and silver.
Last week saw a the biggest jump in ETF (Exchange Traded Funds) holdings listed around the world since October 2012.
New inflows of 22 tonnes saw total holdings increase to a total of 1,621.9 tonnes. At the start of the year holdings declined to a low of 1,595.6 tonnes – levels not witnessed since April 2009.
Even before the Swiss currency surprise Marc Faber, economist, investment guru and Wall Street authority, predicted a bull run for gold based on a loss of confidence in the world’s monetary system. He stated publicly last week he was positive gold will go up substantially in 2015 by as much as 30%. He stated that his belief is that the big surprise this year will be that investor confidence in central banks will collapse. He also said that when this happens the only way to capitalize is to go long gold, silver and platinum.
Here at Guildhall we are noticing a renewed vigour in the amount of purchases occurring through both home deliveries as well as through our depository accounts. We expect that as the price moves higher the buying volume will continue to excel and eventually we expect to see the same type of buying that occurred in 2011, 2008, 2006 and 2004.
This is a cyclical market and patience has been the name of the game since the last sell off in 2011 but if 2015 is the type of year many analysts expect it to be you will be thanking yourself for adding physical gold and silver to your portfolio well in advance of that move.
Yours to the penny,
Darren V Long
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