Bets Favor Gold

Gold gained $20 on Friday – rising from $1,334 to $1,355 – in the wake of a very low GDP number.  The Wall Street Journal had expected 2.6% annualized growth in the second quarter (ending June 30), but the actual number came in much lower, 1.2%.  This virtually guarantees that there will be no Federal Reserve interest rate increase in September or early November – right before the elections – giving gold a relative advantage over cash in terms of total return – capital gains plus interest income.  Right now, the betting is that there is just a 12% chance of a rate increase in September and 88% chance that rates will not change.

The “Home Storage” Precious Metals IRA Myth

The internet is full of websites promoting “Home Storage” Gold IRAs, “Self Storage” Gold IRAs, “Home Delivery” Gold IRAs, and other enticing captions that lead consumers to believe current law allows them to store gold and silver held in their IRAs at home. Unfortunately, these claims are not supported by the Internal Revenue Code.

The “Home Storage” Precious Metals IRA Myth

The internet is full of websites promoting “Home Storage” Gold IRAs, “Self Storage” Gold IRAs, “Home Delivery” Gold IRAs, and other enticing captions that lead consumers to believe current law allows them to store gold and silver held in their IRAs at home. Unfortunately, these claims are not supported by the Internal Revenue Code.

Big Banks Continue to Support Gold

Most global mega-banks are still supporting gold as part of their overall investment strategy.  In some cases, they are predicting higher prices in the range of $1,400 to $1,500.  Switzerland’s Credit Suisse sees gold reaching $1,500 by the beginning of 2017.  Credit Suisse analyst Michael Slifirski cites “macro and political uncertainty” as well as “a negative real rate environment in the U.S. and potentially abroad.”

Big Banks Continue to Support Gold

Most global mega-banks are still supporting gold as part of their overall investment strategy.  In some cases, they are predicting higher prices in the range of $1,400 to $1,500.  Switzerland’s Credit Suisse sees gold reaching $1,500 by the beginning of 2017.  Credit Suisse analyst Michael Slifirski cites “macro and political uncertainty” as well as “a negative real rate environment in the U.S. and potentially abroad.”

Some Big Banks Now See $1500 Gold

At the start of this year, very few mainstream investment banks could see gold above $1200 this year.  Most predicted a decline below $1,000.  So much for their credibility, but these trend-following big banks are now falling all over themselves predicting higher prices for gold.

Will This Become the Worst Financial Crisis of the Postwar Era?

“This is the worst period I recall since I've been in public service. There's nothing like it, including the crisis [of] October 19th, 1987, when the Dow went down by a record amount 23 percent. That, I thought, was the bottom of all potential problems. This has a corrosive effect that will not go away.”

– Former Federal Reserve Chairman Alan Greenspan, speaking on CNBC, June 25

How will This Week’s “Brexit” Vote Impact Gold?

There has been a major change of sentiment in Britain since the killing of MP Jo Cox last Thursday.  A deranged man shot and stabbed her to death, shouting “Britain First.”  He killed Cox because she favored remaining in the European Union (EU). 

The Coming British Exit (“Brexit) Vote is Also Lifting Gold

On June 23, the voters of Great Britain will decide whether or not to leave the European Union (EU), which Britain joined in the early 1970s.  With a week until the decision is due, the forces of “Leave the EU” have increased sharply over the “Remain” vote.  This has caused a collapse in the British pound in anticipation of the vote. This has also caused many Britons to exchange their weak pound sterling for gold.

Two Big European Banks Update their Bullish Gold Forecasts

The big Dutch bank ABN AMRO reiterated its $1370 year-end target for gold, which they originally set last February, after gold’s first move above $1240. Last week, they said inflation may help precious metals follow crude oil’s rapid rise back above $50 per barrel.  They are more bullish on silver, saying “We believe that silver will outperform gold, and also for gold to continue rallying in 2016 and 2017.”