Through The Storm We Reach The Shore
(Kitco News) - I feel like I emerged from the trenches, bruised, battered but still resilient – gold and silver both took a hard fall this week. We were waiting for energy to enter the space again, but this was definitely more than anyone foresaw. Gold prices fell 2.5% this week, marking the biggest weekly fall in more than a year as prices hit 1.5-year lows. Silver also felt the pain, down 4% this week — the biggest weekly loss since February.
Main Street may be more bearish than ever on the direction of gold prices in the next week, while Wall Street leans bullish, based on the weekly Kitco News gold survey. Over the years, Main Street has tended to be mostly bullish on the metal. However, retail investors have called gold to be lower in three of the last four weeks, and perhaps never by as large of a percentage as this week.
We have some great coverage for you this week. Make sure to read Allen Sykora’s report on silver miners and whether they can withstand the pain of this week. “Some primary silver producers are no doubt feeling pain these days after the sell-off in silver prices so far this year, but don’t look for major supply cutbacks any time soon,” he writes.
This week’s guests on our show seem to think that gold price’s misfortunes should not last forever; investors are seeing gold bottom out at current levels.
Gerald Celente, publisher of The Trends Journal, said that gold is currently at a bottom, with around $30 of further downside potential.
He noted that catalysts for a turnaround could be heightened geopolitical turmoil in the Middle East, such as tensions with Iran, rather than economic factors.
On Turkey, this week’s biggest geopolitical news, chaos in the country might only be mitigated by an unlikely asset: gold.
Steve Hanke, professor of applied economics at Johns Hopkins University, said that a currency board that anchors the Turkish lira to another reserve currency, like gold, is Turkey’s most promising option at stabilizing a rapidly depreciating currency.
“Under a currency board arrangement that was gold-based, the lira would trade at a fixed exchange rate to gold, be freely convertible, and it would be fully backed 100% by gold. So, the lira would literally be as as good as gold,” Hanke told Kitco News.
See you next week!