Silver but especially gold have been in steady uptrends since the bounce from the lows of just over 2 weeks ago. We’re not certain that the uptrend will continue in a straight line. What had been long term support will likely be quite a tough level to break through. i.e. support becomes resistance in technical analysis parlance. So odds are that $1800-$1850 will be a tough nut to crack. We could potentially see prices head back down to retest the lows soon (Note: operative word = could).
Could gold prices go even lower than this?
But could gold prices fall even lower? In this week’s feature article we give our thoughts on this matter along with some possible price levels to consider. Plus we look further at the whole premiums for physical versus paper price and what they could do in relation to each other. A bit of an impossible thing to predict really but hey, we don’t mind some egg on our faces.
The other article this week is also related to this topic of high demand and increasing premiums.
You’ve no doubt read plenty in the past week and a half about the tremendous rush for physical gold and silver since the price fell. We too last week wrote about how there was a disconnect between prices for physical gold and silver versus the quoted paper prices.
Since then premiums above spot price on the likes of Canadian Silver Maples have risen even further. We’ve read reports of queues outside bullion dealers across the globe and we too were the busiest we’d ever been on the days following the price plunge.
But the following article is a bit different, in that Jeff Clark of Casey Research has gotten some reports from the wholesale side of the precious metals market to see if there was much selling going on there. We’re possibly not as convinced as what Jeff Clark is but this is still a must read article.
90% Haircut Possible for Bank of Cyprus Depositors?
For all the coverage that Cyprus got, the news of a couple days ago as to just how much of a haircut the depositors at one of its failed banks may get has gone completely under the radar.
The current numbers are 37.5% turned into shares, another 22.5% held as a buffer to possibly be turned into shares (a.k.a. a haircut) and then a further 30% “temporarily” frozen. We wonder whether the temporarily frozen will become permanently frozen which would equate to a 90% loss. Ouch.
A further reminder if ever one was needed as to why not to entrust all your savings to a bank.
Fed “Steady as She Goes Matey”
The US Federal Reserve announcement overnight was that they will continue “buying bonds at a monthly pace of $85 billion, until the outlook for the labor market has improved substantially“. And they will “hold the target interest rate near zero as long as unemployment remains above 6.5 percent and the outlook for inflation doesn’t exceed 2.5 percent“. Although perhaps what alarmed some was the comment that the Fed will be ready to change the pace of purchases as “the outlook for the labor market or inflation changes.“
So effectively they said that they will hold the course and will change policy if conditions improve or deteriorate markedly.
We’ve seen some comments from those (who misguidedly in our opinion) thought the Fed will wind back their “stimulus” (aka currency debasement) late this year, that they believe this won’t happen so soon now. (Quite how they believe this can happen without causing an absolute collapse in the US economy we have yet to work out.)
Anyway it’s quite convenient we’d say, that now the gold price has dropped off markedly, the Fed can tweak its rhetoric from maybe having to ease up in the last minutes, to now be able to keep the foot on the currency creation pedal for longer. And given the current lows with little risk of sending the canary in the coalmine that is gold onto new highs.
Update on Premiums
The premiums on Canadian Silver Maple coins have increased again on what they were a week ago. American Silver Eagles also remain at high premium. Perth Mint products have seen rises in the past week for the first time. PAMP gold bar premiums over spot have increased about 1% but interestingly silver has not. Some local gold products have also increased percentage wise but not by much.
(See this week’s feature article if you need to know what exactly a “premium” is)
Local gold and silver are where you get the most metal for your buck but if you prefer the likes of the widely traded Canadian Silver Maple, todays price for 500 of them is $17585 fully insured and delivered to your door via FedEx.
1. Email: email@example.com
2. Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
3. or Online order form with indicative pricing
Have a golden week!
This Weeks Articles:
|Buy Gold NOW|
You’ve no doubt read plenty in the past week and a half about the tremendous rush for physical gold and silver since the price fell. We too last week wrote about how there was a disconnect between prices for physical gold and silver versus the quoted paper prices. Since then premiums above spot price on […]
|How Much Further Could Gold in NZD Fall?|
For buyers of gold and silver things have gotten a bit more complicated of late. In what was often already a confusing market, there’s an extra question to ask now. It’s not just what will the spot price of gold and silver do, but also what will the premium above spot that the wholesalers charge […]
The Legal stuff – Disclaimer:
We are not financial advisors, accountants or lawyers. Any information we provide is not intended as investment or financial advice. It is merely information based upon our own experiences. The information we discuss is of a general nature and should merely be used as a place to start your own research and you definitely should conduct your own due diligence. You should seek professional investment or financial advice before making any decisions.