Saturday, October 8, 2016

Both foreign buyers and bank analysts see recent price declines in gold a fantastic buying opportunity

With gold prices falling below $1300 per ounce for the first time since July this week, many mainstream analysts who hate the monetary metal jumped on the bandwagon to say the Gold Bull Run was over, and to expect prices to decline much more than where they closed out the week.  However, this analysis is not proving itself out in the physical market where buyers of both gold and silver are using this pullback as a great buying opportunity.

In fact, several gold and silver businesses saw single day sales of several million dollars, with the U.S. Mint selling at least 1.4 million coins to dealers this week alone.

How fast things can change in the PHYSICAL markets when paper prices are smashed.
Gold Eagles, Gold Maples, Krugerrands, Phils, and even private mint 1 oz gold bars are now ALL on 1-2 week delays at the wholesale level in the US after this week’s massive rush to physical. 
Same Story In Silver: 
Wholesale premiums jumped .30 – .50 on 90% Junk Silver Coins this week, with similar increases passed on at the retail level. - Silver Doctors
Reports on tremendous buying of physical gold this week were not limited to bullion dealers as analysts from both Goldman Sachs and Merrill Lynch agreed that the recent pullback of nearly $100 will quickly be filled by foreign buyers in both China and India, as well as those who continue to see financial conditions deteriorate.
Investors should use the recent drop in gold prices as a buying opportunity, as increased volatility in the market ahead of a potential Fed interest rate hike could lead investors to seek refuge in the precious metal, according to Francisco Blanch, head of global commodities and derivatives research at Bank of America Merrill Lynch. 
"Gold is really thriving on uncertainty, and frankly, on the end of the U.S. [rate] cycle whenever that happens," said Blanch. 
The commodities expert believes that once the U.S. central bank decides to raise interest rates, potentially causing equities to sell off and the dollar to rally, investors will see gold prices stabilize and eventually trend higher. - CNBC
As you can see from the chart below, immediately following the 2008 financial crisis gold prices fell from over $1000 per ounce down to $740, only to begin their next leg up to over $1900.


Don't let the pullbacks in gold be a deterrent to sell, as the long term trends of a gold bull market, as well as financial instability, have not changed in a week's time.  And instead look at this pullback as a buying opportunity, just as it was in 2009 before the central banks began their six year programs of zero interest rates and quantitative easing.

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