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Industry News

Our Latest Silver Price Prediction Shows Double-Digit Gains in the Next 4 Months

 

By Diane Alter Money Morning August 18 2016

Despite the metal’s 3.8% decline so far this month, our new silver price prediction shows big

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gains for the rest of 2016.

In fact, Money Morning Resource Specialist Peter Krauth sees silver prices posting double-digit returns from now through December.

Before we reveal our silver price target for 2016, here’s how the price of silver has performed recently…

How Today’s Gains Tie In to Our Silver Price Prediction for 2016

As of 12:35 p.m., the silver price today was up 0.4% and trading at $19.72 as investors continue to digest yesterday’s FOMC minutes.

The minutes showed mixed opinions regarding the next interest rate hike. Although the central bank was upbeat about the U.S. economic and labor outlook, Fed officials said a rate hike will only happen if data continues to improve. These statements assured silver investors the Fed likely won’t raise rates at its next meeting.

Another bullish factor for silver prices today is the softening U.S. dollar…

The U.S. Dollar Index (DXY) hit a seven-week low overnight. A declining dollar is bullish for the silver price since the metal is priced in dollars. When the dollar depreciates against other currencies, it makes silver cheaper for users of those foreign currencies.

While the Fed and dollar are boosting silver prices today, the metal has seen a huge rally this year. It’s surged 43% in 2016 thanks to global stock market volatility, low oil prices, and the use of negative interest rates. The Brexit vote has also stoked interest in silver as a safe haven and will continue to do so as the consequences take years to unfold.

All of these reasons are why silver is among the best-performing asset classes this year. That’s why Krauth – a 20-year veteran of the precious metals market – just released this new silver price prediction for 2016…

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Our Newest Silver Price Prediction Indicates Double-Digit Returns This Year

We see the price of silver rising 11.6% from today’s price to $22.

One reason for our bullish projection is continued interest in silver mining stocks. This year’s top 10 highest-returning non-leveraged exchange-traded funds (ETFs) are all focused on silver and gold, according to ETF Database.

While the funds differ, all invest in this year’s hottest sector – precious metal miners with a focus on silver.

The leader is the PureFunds ISE Junior Silver ETF (NYSE Arca: SILJ), which is up 258% from January to July. The iShares MSCI Global Silver Miners ETF (NYSE Arca: SLVP) took the second spot with a 179% return over the same period. The Global X Silver Miners fund (NYSE Arca: SIL) rose 175% to take the No. 3 spot.

And they still have room to run…

CIBC World Markets recently gave the silver mining sector an “Overweight” rating. The firm says that while the mining sector has logged substantial gains so far this year, the sector is still down 43% from its peak. But it’s poised for a continued rebound as the sector has recovered about 85% of its losses in the past.

Investors are also snapping up silver coins at a record pace…

The U.S. Mint reported sales of 2016 American Silver Eagle coins increased to 26.3 million in the first half of 2016. That’s up 20.5% from the same period in 2015.

Krauth said the silver price may fall to its 200-day moving average near $18. From there, his silver price prediction shows an 11.6% gain to $22 by the end of 2016.

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Industry News

Gold’s paved the way so now could be silver’s turn

By Mark Robinson 25 August 2016

Precious metal investors who have ridden the gold bull rally might want to switch some exposure to silver judging by an indicative valuation metric.

The yellow metal has risen an astonishing 26 per cent in 2016 thanks to various macroeconomic events and its rise means the gold/silver ratio the amount of silver it takes to purchase one ounce of gold now stands at 71, or 11 per cent in advance of the five-year average.PHYS01_Animated_Gif_2_MPU

When the ratio is relatively high, it is generally held that silver should be favoured; conversely, a low ratio should get gold bugs going.

The price of silver is up by just 0.35 per cent this year, but there is now some evidence to suggest the metal is being supported by a weakening dollar rate, as the metal is less expensive to foreign currency holders looking for a physical hedge as the greenback tracks lower.

Ultimately it’s a binary argument, but by the same token, just because silver appears relatively inexpensive it doesn’t necessarily follow that gold is overpriced in absolute terms. Still, if forced to go out on a limb, we would have to say that exposure to the silver price is likely to be the more profitable option at the moment.

Gold: silver ratio

Gold to Silver Ratio

That said, many believe precious metals markets are now routinely distorted due to the preponderance of paper in the market. According to some anecdotal sources, you might be expected to pay well in advance of the current spot price of $1,339 an ounce if you were buying physical gold on the streets of Shanghai or Jaipur.

The gold price is set according to thousands of daily transactions on the London bullion market and Comex exchange futures in New York, but there are some gold bugs who maintain markets on either side of the Atlantic are now awash with so many gold-backed paper contracts that physical delivery would prove all but impossible. In other words, prices are kept artificially low through bullion that simply does not exist.

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Industry News

Buy physical gold; central banks are on its side, Jim Rickards says

CNBC

Huileng Tan |

Monday, 15 Aug 2016 | 12:05 AM ET

Gold prices have nowhere to go but up: Jim Rickards  

Gold prices can go nowhere but up as central banks around the world try their utmost to spur

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inflation, author and gold market expert Jim Rickards said Monday.

Every central bank in the world says they want inflation…they’ve come nowhere close…but that just means they are going to keep on trying; central banks cannot allow deflation because it increases the real value of debt… they are not going to rest until they get it,” The James Rickards Project director told CNBC’s “Squawk Box” on Monday.

Central banks from the European Central Bank to the Bank of Japan have pumped billions into financial markets and slashed interest rates to record lows in a bid to stimulate growth.

While inflation has so far failed to materialize to levels that policymakers want, when prices do rise, gold, which is traditionally seen as a hedge against inflation, should benefit.

Low interest rates also reduce the opportunity cost of holding gold, which doesn’t offer a yield.

Rickards, who is recommending investors to hold 10 percent of their portfolios in gold, did not give a price forecast. Prices have already gained about 26 percent year-to-date.

Spot gold prices were flat Monday morning at around $1,337 an ounce.

Gold Bars

Sam Panthaky | AFP | Getty Images

Storied investors such as Bill Gross and George Soros have advocated buying gold in recent weeks, a sign that the metal has promise, added Rickards.

So what should investors buy?

“Physical gold is very scarce; when the price really does break upwards, you’re not going to be able to get it. The time to get it is now,” he said.

ETFs and Comex futures, while good for short-term trades, will not be able to perform when gold prices skyrocket as there’s just $100 worth of paper gold for $1 of physical gold.

“When everyone wants to convert their paper to physical (gold)…there’s not going to be enough to go around,” Rickards said.

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Industry News

What’s behind the gold price rally, and will it hold?

InvestmentNews

Aug 11, 2016 @ 1:02 pm

By Jeff Benjamin

There are seemingly endless theories to explain the stunning gold-price rally this year, and most of them support more of the same for the precious metal.

Global gold demand reached 2,336 tons through the first six months of the year, led by investment demand representing a record 1,064 tons according to the World Gold Council.

That growing demand has driven the price of gold up 27% this year, marking the best first-half performance since 1980.

Juan Carlos Artigas, director of investment research at the World Gold Council, said unlike 1980, when the price spike was related to macroeconomic uncertainty, this years rally is fueled from multiple directions.

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There is still the issue of macroeconomic uncertainty, but we are also dealing with a U.S. dollar that is less strong than it has been recently, he said.

Considering that gold has come off a couple rough years while recovering from the 2011 lows, Mr. Artigas said there was some pent-up demand from investors who had been waiting for an entry point.

Investors reduced gold positions over the past three years and were looking for a reason to get back in to use gold again to hedge portfolio risk and preserve capital, he said.

Another theory behind the gold rally that continues to gain traction is unprecedented global monetary policy, including record quantitative-easing programs, interest rates at historic lows and nearly $12 trillion in negative-yielding government bonds around the world.

On that note, Jim Grant, publisher of Grants Interest Rate Observer, was quoted saying, Radical monetary policy begets more radical policy.

During a recent presentation to the New York Society of Security Analysts, Mr. Grant described the case for investing in gold as not a hedge against monetary disorder, because we have monetary disorder, but rather an investment in monetary disorder.

Mohamed El-Erian, chief economic adviser at Allianz SE, also indirectly attributed the gold rally to central bank policies.

While some may see gold as a hedge for the possibility of high inflation, the main driver of investor appetite at this stage is concern about the overvaluation of other financial assets, particularly stocks and bonds whose prices have been artificially lifted by central bank actions, he said.

Whether it is lofty stock market valuations, stingy bond yields or unorthodox monetary policy, investors are clearly chasing after the yellow metal.

According to S&P Global Market Intelligence, SPDR Gold Trust ETF (GLD) has grown to $41 billion, with $13 billion in net inflows this year through July, capturing more assets than any other ETF this year.

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And for those financial advisers really looking to juice up the gold rally, there are always the gold miners, which act as a leveraged play on the precious metal.

Talking gold with financial advisers will always bring out the naysayers who argue it is a metal that doesnt generate income. But in times like these, some advisers can feel downright smug about steady allocations to gold.

I believe a properly diversified portfolio should have an allocation to precious metals, said Scot Hanson, an adviser with EFS Advisors.

Mr. Hanson uses Permanent Portfolio Fund (PRPFX) to keep his clients between 5% and 10% exposed to precious metals.

Gold should always be there, he said. You always like to have a zig and a zag in the portfolio, and gold is doing exactly what it should be doing.

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Industry News

RBC adds $200 to its gold price forecast

www.mining.com

Frik Els 15 Aug 16

RBC points to higher gold price

Gold has been treading water above the $1,340 an ounce level recently, coming off two-year highs hit earlier in August. Year to date the metal has gained almost 26% or more than $280 an ounce.

It’s been gold best first half run since 1980 when the price hit an all-time high on an inflation adjust basis. The rally has surprised many analysts and at the start of the year the vast majority of investment and institutional analysts predicted gold would dip below $1,000 during the course of the year and average below last year’s uninspiring $1,160 an ounce.

Many gold bears have now changed course and some of the big bullion banks including UBS now sees $1,400 before the end of the year, as does French bank Natixis (which predicted last year’s gold price down to the dollar).

The next gold bull market is under way, and any weakness is viewed as a buying opportunity

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Credit Suisse and BofA Merrill Lynch have it even higher at $1,500 going into 2017. Dutch bank ABN Amro, another erstwhile ultra-bearish house, revised its forecast to $1,425, adding that a Trump presidency could really see things explode.

Kitco reports Canadian investment bank RBC Capital Markets has now joined the gold bull chorus sharply revising their earlier forecasts upwards. The bank now sees gold rising to $1,500 in 2017 and 2018 compared to its previous forecast of $1,300.

RBC references the usual suspects for its more bullish outlook: “Elevated geopolitical risk in the U.K./euro zone, increasing systemic risk with increasing negative yields for government bonds and the Fed likely to pursue a more dovish monetary policy”. The Toronto-based investment bank has even better news for investors in gold mining stocks:

“We reiterate our view that investors should look to gold equities for exposure to gold, especially given the increasing free cash flow generated in the current gold price environment.

“We recommend that investors focus on operating companies with attractive margins, solid balance sheets, organic growth opportunities and a consistent operating strategy,” the analysts said. “Our technical outlook suggests that the next gold bull market is under way, and any weakness is viewed as a buying opportunity.”

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Infographics

Does Gold Win Gold – Best investments of the past decade

What are the best investments of the past decade? We wanted to compare annual returns of the major asset classes over the past 10 years and then declare the top performing asset over the entire decade. What better way to illustrate this than the asset class decathlon! Each decathlon event represents returns over each of the previous 10 years.

Best investments

Best Investments overall

Over the 10 year period, UK gold prices rose more than any of the other major assets classes. Its total cumulative was a whopping 132.91% significantly higher than the runner up – Bonds (62.27%) and third-placed shares with a reasonable 56.14% rise. This doesn’t necessarily mean that every decade will produce the same results, and macro factors will always have an influence on results. As a safe haven investment, gold is generally bought in times of unrest. It’s no surprise then that it was the best investment during the period which witnessed the invasions of Iraq and Afghanistan and the downgrading of the US Dollar after the Global credit crunch.


Learn all the insider’s tricks to successful gold invetsment. Download the FREE pdf


Best asset for consistency

Gold’s overall victory is also reflected in its consistency. Our infographic illustrates the fact that gold was the best performing asset class in four of the ten years, equalled by Shares. The remaining 2 years were won by Bonds’ performance. Gold only experienced a loss during one of the ten years, again the best of all the investment classes.

As expected, cash remained in the middle of the pack throughout the decade when interest rates remained very low. This also reflects that cash represents a low risk/low reward store of wealth. In other words, you may not get huge returns but you won’t suffer losses either.

How can this help us invest

The research demonstrates that over the length of a decade, the various asset classes each have their moment. By sticking to just one or two assets, you risk missing out on some potential significant gains. As any decent IFA will tell you, diversification is the key to protecting your portfolio from large losses, maximizing returns over the long term and providing a more predictable return.

Unless you have a crystal ball, Insider's Guide to gold and silveryou have to be incredibly lucky to pick each asset class at exactly the right time to buy low and sell high. This risky strategy tends to mix some good years with catastrophic losses. Not the best ingredients for a balanced portfolio.

What does it tell us about gold investment

The infographic and results supports our view of gold investment. Firstly, it plays an essential and unique role in anyone’s overall investment strategy. After all, if you’d invested in a mix of shares, bonds, property and cash, not only would you have missed out on gold’s huge gains, but some years may well have wiped you out.

Of course, analysis of other decades may show a different overall winner of investment returns, with gold performing far less favourably. But, this only goes to demonstrate the need for a balanced investment strategy. Gold plays a unique role because it tends to perform particularly well during times of political and economic turmoil. Crucially, the other asset classes all seem to do their best during stable times. But if an event causes disruption, whether it’s an economic downturn, an act of terrorism, banking crisis, currency devaluation or war, then all these assets fall in value together. Leaving the investor with a major headache. By owning some gold as part of an overall strategy, your wealth is protected from this volatility. Rather than taking risks, owning gold actually reduced the overall risk and volatility of your portfolio.

Other considerations

If you have a large appetite for risk, it’s possible

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you’ll be attracted to ‘get rich quick’ offers. Timing has to be perfect with these and you have to get lucky. Generally, you can lose all your money, but in the same respect, you can also double or triple your money in a very short period of time.

Gold should always be viewed as a medium to long term investment. The infographic supports this. While it performed impressively, it did fall significantly in 2013 after offering almost no return in 2012. It may not make you rich overnight, but investing in gold is a prudent investment, which can offer some balance with riskier short term opportunities.

Another important takeaway from this research is that gold beat the rate of inflation on eight of the ten years analysed. The best of any of the major asset classes. This supports the notion of gold investment as a store of wealth. It maintains your purchasing power over time and protects from the erosive qualities of inflation.

The final bonus which makes gold the best investment of the past decade is its possible tax efficiency.

Not only did it rise in value more than any other major investment, but it also did it tax efficiently. Tax free gold coins for example are VAT-exempt and Capital Gains Tax free. Outside of an ISA or Pension, the other investments struggle to be as tax efficient. And who wants to share their gains with the Treasury!?

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Blog

Three savings account alternatives to beat poor interest rates

Money in a savings account is returning next to nothing. As has been anticipated for many months, the Bank of England has finally announced its decision to cut interest rates from 0.5% to 0.25%, a record low and the first cut since 2009. The UK economy is said to be contracting at its fastest rate since the financial crisis and the interest rate cuts form part of a raft of measures to try and boost it.

That’s as may be, but it certainly doesn’t give savers much incentive to tie up their money in a savings account. You may understandably be pretty put out that you’ve had to suffer historically low interest rates for over three years, whilst rates on ISAs and fixed term bonds have also been slashed. With fixed-term bond rates having fallen to an all time low, you’ll have to lock your money away for five years or more, if you want to earn anything at all over inflation.


Want the best savings returns? Read our 7 step gold savings cheat sheet.


Insider's Guide to gold and silver

Firstly, gold!

Of course, we would offer this as an option you might say, but just look at the numbers. Gold is performing exceptionally well, with the year to date gold price having grown at 40.85% at time of writing.

It consistently demonstrates itself as a sound and safe alternative to cash, which has outperformed shares over the last few years. It  will also help to ensure that your savings are not eroded through a combination of inflation and poor interest rates.

Although you won’t receive income from holding gold, the aim is to outstrip inflation through capital appreciation. One way of doing this can be through one-off purchases of either physical gold bars or gold coins. In contrast to the possible risks of electronic gold like mining shares funds – this is just solid gold as a means to proactively protect your wealth and beat bank account returns. What’s more, gold coins are tax free.

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A savings account made of gold

At a time when many financial institutions have been withdrawing their ‘best buy’ savings accounts without anything to replace them, a gold savings account can offer a very attractive alternative.

You might think you’d need thousands of pounds of liquid assets to get started in investing in gold but that‘s far from the case. Buying gold is relevant to all of us, regardless of wealth, and can just replace the amount you regularly save in the bank. There are regular gold savings options, which start at £250 per month, with no maximum. This enables you to drip feed funds on a regular basis to build up your nest egg steadily. If the scheme purchases UK gold coins, then any appreciation is tax free, making it comparable to an ISA.

And thirdly, how about a SIPP?

A well managed SIPP has the potential to outperform cash investments, but it doesn’t need to leave the safety of cash behind entirely. Cash can still be part of your portfolio and the proportions adjusted in line with your risk profile as your circumstances change, such as approaching retirement, for example. Of course, you can also hold gold bullion as part of a SIPP, which can be a worthwhile option to consider, for those wishing to add balance to their pension.

Or consider all three…  

As an overall recommendation, we would always emphasise that expert advice can help you to better structure your investments and provide a balanced portfolio rather than relying on standard cash ISAs or default bank portfolios. Professional advice can be expensive but if it comes up with some recommendations that bring you greater returns on your cash, you may find it more than pays for itself. Depending on your particular situation, the best solution may well be to consider two or three of the options discussed, providing further diversification.

So don’t despair with record low interest rates and assume the only option is to squirrel your cash away in a savings account. There are other opportunities out there and some of those are golden…

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