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Thursday
Jan172019

Is The Future For Silver Shiny Or Not?

Background

The first decade of the precious metals bull market was in hindsight a wonderful opportunity to generate profits by sticking with the trend. We were able to acquire both gold and silver at what now look like very cheap prices. The producers also gave us the opportunity to generate good profits with our funds invested for relatively short time periods. However, all good things come to an end and this bull market concluded in 2011 when gold peaked at $1900/oz.

Silver suffered the very same fate even though the number of applications for it increased with new technological advances. Silver prices peaked at $50.00/Oz and today silver trades at sub $16.00/Oz, registering a fall of $34.00/Oz or a loss of 68%. The ishares Silver Trust (SLV) mirrored the fall from a peak of $47.00 in 2011 to sub $15.00 today.

The Pros and Cons of a rally in silver prices

The argument for owning silver includes, but is not limited to,

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Tuesday
Jan082019

The Precious Metals Sector To Shine As The Fed Blinks

Preamble

The Federal Reserve stuck to its guns last year and implemented rate hikes as planned. For the year ahead, they plan to hike rates two more times which would be supportive of the US Dollar, if this was a certainty. However, as always there is some doubt that they will do this, and the possibility exists that the Fed will not increase rates at all in 2019. The Head of the Federal Reserve, Jay Powell, recently told the American Economic Association that the Fed is not locked into a number of rate hikes and will be ‘listening carefully’ to the financial markets. His comments helped to steady the markets and aided a short-term bounce which may continue for awhile longer. However, the US Dollar suffered and given its inverse relationship with gold helped maintain gold prices.

Chart of the US Dollar

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Wednesday
Dec192018

The Feds Rate Hike Weakens Gold and Boosts the Dollar

Preamble

At the FOMC meeting today the Federal Reserve raised rates more or less as expected. The result was a boost for the US Dollar and a fall in precious metals prices. Once again, we have a clear demonstration that the inverse relationship between the US dollar and gold is alive and well.

The second takeaway that we have is the rhetoric regarding the Feds future plans on monetary policy. As we see it the Feds stance has softened as the number of rate hikes planned for 2019 was standing at three and this has been reduced to two.

Reading the text from the FOMC meeting the rate hike can be summed up as follows:

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 2-1/4 to 2-1/2 percent.

If we assume that the aggressive tightening of monetary policy is now entering into a more passive phase, then the dollar’s rally, in the long term, has probably come to an end. This being the case a weakening dollar will be supportive of gold prices and thus herald in a brighter future for the precious metals sector.

As gold bugs we must recognise that the worlds central bankers play important role in determining the future of the markets, currencies and the commodities sector.

It should also be noted that the Federal Reserve has changed direction albeit gently. This change we see as good for gold and our expectations of a new era for the whole of the Precious Metals sector is lot higher than it has been for the last few years.

Charts of the US Dollar, S&P500 and Gold

First up is the chart of the US Dollar which depicts the difficulty it is having breaking through the resistance at the 97 level. We can also see that the Feds rate hike helped the dollar to recover a little today.


The chart of the S&P500 depicts its sudden fall from grace in recent months suggesting that this bull run in stocks is coming to an end.

MORE......


 gold should do better now that the Feds have a more dovish stance.

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Wednesday
Nov282018

Central Bankers, The U.S. Dollar and The Inverse Relationship with Gold

Preamble

There are a myriad of factors that need to be taken into consideration before one can determine the direction of a particular market sector and therefore place a trade. Supply and demand is a popular one when considering the fundamental analysis as are the moving averages when considering technical analysis. Rightly or wrongly we consider the inverse relationship between the US Dollar and Gold to be very important and along with the words and actions of the central bankers.

On Wednesday the 28th November 2018 we saw action in the markets that clearly displayed the relationship of these three factors.

Charts of the USD and Gold

Taking a quick look at the chart of the US Dollar we can see it fell sharply on Jay Powell’s words.

 

The Gold chart shows the inverse reaction to the dollar as it bounced on the dollars demise.

 More.........

 

Thursday
Oct182018

Dollar Libor Jumps To Fresh 10 Year High, Adding To Funding Headwinds



It may be the bete noir of the credit market, but despite the gradual phase out of the infamous manipulated benchmark, Libor remains the reference rate for trillions in floating rate debt instruments,

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Thursday
Oct112018

The S&P500 Fall and Its Effect On The Precious Metals Sector

Preamble

Market sectors are interlinked and what boosts one particular sector can put downward pressure on other sectors. We have seen the recent action by the Fed in raising rates and the boosting effect that they have on the US Dollar. A strengthening dollar has an inverse effect on gold and silver and the associated precious metals producers and so gold bugs have suffered accordingly.

The action in the financial markets of the last few days has seen a correction from historic highs as investors decided to take profits and place their investment funds elsewhere. During Thursday’s trading session on the NYSE the DOW Jones was down 545 points, following an earlier fall of some 800 points. The S&P500 also fell in a similar fashion and both indices closed below their respective 200day moving averages.

It should also be noted that the dollar also lost ground despite the recent rate hikes and the stated intention of the Fed to continue with the policy of rate ‘normalization.’ Both of these factors helped gold and silver prices to recover and this in turn saw investors taking a tad more interest in the associated mining companies. The biggest gold producer on the planet, Barrick Gold Corp (ABX) gained 9.39% in Thursdays trading session. In stock market parlance it is unusual for an elephant to sprint but on this occasion, Barrick proved to be the exception to the rule.

The Chart of the S&P500

 

 

The above chart of the SPX clearly depicts.......

MORE....

 

Last week was a really interesting week for gold - was it a minor jump or the start of a new rally?

If you would like to know which stocks we are buying and selling please join us atStock Trader our premium investment service.

Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

If you are new to investment in the precious metals sector then you can subscribe of our FREE newsletters regarding gold stockssilver stocks and uranium stocks, just click on the links and enter your email address and we will email you our articles along with other interesting posts.

Please remember to check your spam folder once you have subscribed to ensure that our verification email has not gone astray and you are getting our emails.

 

 

 


 

Winners of the GoldDrivers Stock Picking Competition 2007 

 

 

 Follow us on TWITTER @goldprices

 

 


Monday
Sep242018

Randgold And Barrick To Merge In $18BN Deal, Creating World's Largest Gold Miner

As gold prices cling stubbornly to the lowest levels in a year as US stocks continue their record-breaking tear, two of the world's biggest gold miners are sensing an opportunity. As the Financial Times reports, Canada’s Barrick Gold (the world's largest miner) is preparing to merge with Randgold Resources (its UK-listed rival) in an all-share deal that will create the world's biggest gold miner, with an $18 billion valuation and a dominant mining position in Africa.

Click to read more ...

Wednesday
Sep122018

A Mini Bounce in the Gold Bugs Index HUI

The inverse correlation between gold and the dollar was alive and well today as the dollar dropped below the critical level of 95 and gold bounced up to $1210/Oz.

Click to read more ...

Tuesday
Sep112018

Multi-Billionaire Hugo Salinas Price – I’ve Seen Many Terrible Financial Collapses In My 86 Years But What Is Coming Will Be Very Nasty

Hugo Salinas Price

As trading continues during Fed week, today Multi-billionaire Hugo Salinas Price warned he’s seen many terrible financial collapses in his 86 years but what is coming will be very nasty.

After 86 Years On This Earth, This Is What I Learned

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Thursday
Sep062018

Gold Mining Stocks Still in Weak Hands (Part Three)

Preamble

On days like this I feel like a script writer for a soap opera:

“Previously on Desperate Investors………..” you get my drift as we recently wrote:

This is a capitulation of sorts, but it may not be final at this point. The selling of this sector creates more selling as the stops are hit on the way down. Investors lose heart and decide to end the pain and make no mistake this is painful

There is blood in the streets but I’m not sure that this particular bloodbath is over just yet.

Click to read more ...