Report: Gold Prices to Increase Over $200 in Three Months

With a strong performance in 2019 nearly in the rear view window, a pair of analysts predict even more in 2020. Here’s why they believe gold will surge.

gold price

In his latest piece, Forbes contributor Simon Constable looked at some of the reasons why analysts are calling for gold’s price to jump to $1,700 as early as March. A recent report by Wolfe Research examined the up-and-down price patterns of various financial assets, noting that gold’s pattern is signaling a 15% move up over the next couple of months based on previous performance.

John Roque and Rob Ginsburg, the report’s authors, have analyzed the gold market’s technical chart and found a persistent pattern dating back to 2015. Since then, there have been seven instances where gold has taken a sideways turn on the chart for a prolonged period of time after a price spike. Roque and Ginsburg explained that these instances of sideways price movement, such as the one seen over the last couple of months, serve to form a new and considerably higher base for the metal. As historical precedent shows, each of these sideways turns is followed by a conspicuous price gain averaging at 15% over the next 75 days with a median gain of 14% over the next 83 days.

Although Constable notes that the average percentage means that the amount gained over the next three months could vary, the analysts are certain that we are seeing an eighth such pattern forming and are forecasting gold prices to jump to $1,679 by February. As the pair explains, the pattern on the chart started forming when gold climbed to $1,546 in September and then fell to $1,455 in November, which began creating a base that will lead to the predicted breakout.

However, the analysts see far more in store for gold than just a 15% percent jump over the next three months. The Wolfe report echoes the opinion of various analysts who are stating that gold is currently enjoying an unprecedented amount of momentum. While the report mostly focuses on technical movement, analysts have repeatedly said that gold is being supported by an immense amount of tailwinds, including a deteriorating global economy, a slew of geopolitical risks and the looming threat of a supply glut in the not-too-distant future.

Regardless of whether gold meets the $1,679 mark by February or trends a bit lower, Roque and Ginsburg have few doubts that the current cycle of price gains stands on much stronger footing than previous ones. Therefore, no matter how much gold gains in the short-term, the pair expects the cycle to culminate in gold surpassing its all-time high of $1,900, last seen during the financial crisis of 2011.

Here’s Why You Should View Gold as Being “On Sale” Right Now

With the price of gold down in the past few years, one market watcher argues that current conditions present a perfect opportunity to buy some of the metal. Find out why here.

While many are rushing for the exit as the price of gold declines, some folk are making a different play: They’re buying. Why’s that? Writing for Forbes, Frank Holmes argues that they know gold is a safe bet in the long run – perhaps the safest – and see gold’s current status as ‘on sale’.

Recent sales of physical gold fully support with this, having already reached multiyear records and still on the rise. In contrast to the gold futures derivatives market, American Gold Eagle sales reached 161,500 ounces in July – the highest since April of 2013. Individual Americans aren’t the only ones still having faith in gold – the Fed maintains its 8,133 ton reserve, European countries are repatriating gold and Texas is in the process of creating its own bullion depository.

So what is beating the price of gold down? Holmes notes that conspiracy theories often abound when gold plummets. Price manipulation might not be such a stretch this time around, given some odd recent events. Last week’s five-ton sale on the Shanghai Gold Exchange (SGE) caused gold to experience a mini ‘flash crash’ for the first time in 18 months. The so-called bear raid was thought to have been caused in China, but later information pointed towards New York as the culprit.

Yet another conspiracy theory focuses on the relatively mild interest in gold as a safe-haven asset during the Greek crisis. This has led some to speculate that European central banks possibly sold gold down, likely making the crisis seem less severe in order to dissuade people from turning to the yellow metal for protection.

Regardless of the veracity of these claims, Holmes says that gold’s long-term status remains untouched thanks to two key demand drivers: What he calls the “Love Trade” and the “Fear Trade”. The Love Trade refers to gold purchases for weddings, anniversaries and cultural events; these intensify in the wake of upcoming holidays, especially ones in Asia, such as Diwali and the Chinese New Year. The Fear Trade stems from available money supply and real interest rates turning negative, a scenario seen beneficial for the metal – current positive real interest rates have been acting as a headwind for gold.

But can gold benefit with a looming interest rates hike? Regarding the hike, Holmes says: “With a struggling global economy and commodity deflation odds favor rates will not rise soon in America, and gold will revert back to the mean.”

For all the latest on physical precious metals and financial news, be sure to check out our blog.

U.S. Economic Anxiety Rises As Big Name Retail Chains Continue to Close Massive Quantities of Stores

All over the U.S., retailers big and small are closing dozens – or even hundreds – of their stores. Why is this happening and, more importantly, what does it mean for the future of the country’s economy?

Michael Snyder, the man behind the Economic Collapse Blog, is not the only one who thinks this is a sign of sinister things to come. Middle class families have long been the main driving force behind the economy, thanks to the ‘spending money’ they could put aside from their incomes. But now, as the middle class is being “systematically destroyed”, as Snyder puts it, consumer spending just isn’t there anymore.

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Photo Credit: ronaldhennessy via Compfight cc

Large and well-known retailers like Abercrombie & Fitch and Barnes & Noble will have closed hundreds of stores by the end of 2015. Sure, part of that could be attributed to the rise of online retailing, but that’s far from the real culprit behind struggling sales: lack of money to spend.

A troubling statistic sheds light on why people suddenly have less – if any – money to spare. An analysis performed by Enterprise Community Partners revealed that one out of four American citizens now spends half of his or her income on rent. With the rest being spent on things like groceries and gas, it’s not hard to see why little is left for discretionary spending.

This situation sounds bad enough, but Snyder believes the worst is yet to come. He quotes Thad Beversdorf’s belief that consumer spending is showing “the initial signs of a severe pull back” to strike an unpleasant point: the current trajectory of our economy is eerily reminiscent of the build-up to the collapse of 2007/2008.

Snyder concludes by wondering: if thousands of stores are being closed already, what will things look like when an economic crisis truly hits the U.S.? “Once it does, the business environment in this country is going to change dramatically, and a few years from now America is going to look far different than it does right now,” he warns.

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