Gold & silver still strong in 2016.

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Gold and Silver Prices

 

Gold prices were lower on Friday due to profit taking despite a recent report that the U.S. economy grew at a lower rate than projected. Nonetheless, gold remains on track for its best monthly gain since 2008.

 

“Gold is heading for the best monthly gain in four years as concerns over global economic growth spur demand for haven assets. Those same worries explain why silver and other precious metals aren’t faring as well… Gold has been the beneficiary as financial-market turmoil, declining crude oil prices and signs of a weakening Chinese economy vex investors, boosting speculation that the Federal Reserve will be slow to raise US interest rates further.

 

At the same time, the prospect of a slump in manufacturing demand has reduced the appeal of silver, which gets about of its half of demand from industrial fabrication… ‘Gold certainly has done extremely well with uncertainty around the world and with the idea that interest rates won’t be rising. Until global growth comes up, the gold-silver ratio will continue to widen.’”

 

U.S. Recession Could Send Gold to $2000 – Walker

 

During a discussion with three forecasters regarding China’s currency, economist Jim Walker warned of a new U.S. recession and a return to record gold prices.

 

“Asianomics Group Ltd.’s Jim Walker, who predicted the yuan’s four-year advance would end a month before the currency peaked in January 2014, is forecasting a U.S. recession and says 10-year Treasury yields will plunge to all-time lows. Raoul Pal, publisher of the Global Macro Investor report and a yuan bear since 2012, says European bank shares will tumble by half. John Mauldin of Millennium Wave Advisors, who has argued since 2011 that the Chinese currency should weaken, sees the risk of heightened geopolitical instability in the Middle East as lower crude prices strain the budgets of oil-rich countries.

 

“While all three forecasters see scope for further declines in the yuan, they’re also emphasizing risks outside the Chinese economy as the outlook for world growth dims and commodities trade near the lowest levels in more than 15 years. Their bearish stance has gained traction in global markets this year, with share prices from New York to Riyadh and Sydney sliding as investors shifted into gold and sovereign bonds…

 

“When he looks beyond the Middle Kingdom, Walker says a contraction in the American economy will send 10-year Treasury yields to 0.5 percent by the second quarter of 2017, from 1.74 percent on Friday. He predicts gold will surge more than 60 percent to $2,000 an ounce this year as investors flock to haven assets.

 

“’It’s not looking good for the U.S.,’ he said in an interview in Hong Kong.

 

Walker’s predictions, like his yuan call in December 2013, are out of step with the consensus. The median forecasters tracked by Bloomberg see U.S. growth of more than 2 percent this year, while they project gold will end the year at $1,115 an ounce and yields on 10-year Treasuries will rise to 2.74 percent by the middle of next year. (“China's Yuan Bears Predict More Trouble Ahead,” Bloomberg, 2/21/16.)