The SPDR Gold Trust (GLD), gold and silver, and the relative ETFs should soar this week on the pending potential government shutdown and the looming debt ceiling debacle. While the possible government shutdown is more of a nuisance than an economic catalyst, the attention it will bring to the ineptitude of Washington D.C. will raise high concern about the looming debt ceiling deadline. The issue will rightly raise question about the full faith in credit in the United States, and in turn pressure interest rates, treasury securities and equities. Intensifying concern about the U.S. dollar will serve to surge gold and silver prices and the prices of the relative ETFs, especially the widely held and followed SPDR Gold Trust.
Turning today to week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, the largest outflow was seen in the SPDR Gold Shares (GLD), which shed 2.6 million shares, or a 0.9% decrease week over week.
Rather than easing, expansionary monetary policies are actually accelerating worldwide. This is destroying the value of money; leaving GLD as the only dependable store of wealth in the long term.
Analysts in Commerzbank, Germany, see gold becoming stronger in the medium to long term as a result of extension of the ECB easing program. The same analysis report indicates that India is experiencing very high GLD demand levels.
Renowned gold analyst Julian Phillips, on Mineweb, said that many people throughout the world will run to buy gold in the long term for a number of fundamental reasons including the fact that is worth more money during bad economic times. He added that GLD is always liquid even in the bad times. It is also easily exchangeable throughout the world unlike other products.
In his analysis, Julian Phillips quotes Rand "Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values".
He concludes that he who ignores history is doomed to repeat it.
For the first time in a period of four years, many investors are actually boosting wagers on the higher commodity prices. The bullish GLD wagers actually fell by 14% to 60,126 options and futures in the close of last week. On the other hand, those of SLV fell by 77% to 632 contracts.
Bank of America Merrill Lynch analyst, Michael Widmer, says that GLD will average at $1,670 at the end of this year. He added that it is because the business is in the recovery stage that many investors are shying away from increasing their bullion holdings.
At the Comex in New York, the GLD futures for the month of June rose of 0.3%. Later on, they closed at $1,600.90 at the end of last week. Meanwhile, the holdings for exchange traded products remained stable at $2,449.84 metric tons.
When the recovery stage paves way for the boom, you can be sure that Price of GLD will go past $1,800.
There are several factors which suggest that GLD has actually found a base between the price of $1,650 and $1,690. Of course it is slightly expected to move upwards and downwards till it finds stability towards the end of the year.
According to Nichol, the price will soon hit a high of $1,700. He also says that he has perceived a high bullish trend given the downward revisions to GLD Price forecasts that have been put forward by bankers, trading houses, dealers and other precious metal trade participants.
At the beginning of the year, many experts were predicting that GLD would hit a high of $2,000. However, this view has been partially paralyzed by the high rates of inflation registered in several countries. The regular take-down in the GLD Quote is a very sinister bearish trend that appears every time gold is about to take off.
Despite this lackluster trend, many GoldETF investors in the Middle East, Asia and some parts of South America are actively purchasing gold because of the looming inflation. However, the man in the street will soon go to the bank smiling at the end of the year when the GLD Price will hit $1,700.
Many were surprised on Friday because the SLVquote closed at $28.77 per ounce. This is a decline of 0.34% from Thursday's price. Currently, silver is trading at $28.78. This price is marginally higher compared to Friday's closing price.
A closer analysis shows that the Priceof SLV may find support at $28.56 before moving to the next level of $28.35.
However, the first resistance will be found at $29.06. A persistent rise in this trend will see the next level of resistance of $29.35 attained easily. Currently, SLV is trading below its 50 hour and 20 hour averages.
Howard Marks, a legendary investor in precious metals, says that this is the best time to invest in silver. He notes that investment flows in this sector will help to offset the next 3 years' compound annual growth rate at 2.5%. This will see the SLV Quote close at $34 per ounce at the end of this year and increase to $35 in 2014.
2013 has proven to be the most unpredictable year for the prices of precious metals. King World News has consolidated the details for the trend in prices of GLD and SLV since 2005 to arrive at the possible stalling price for these two precious metals.
A trajectory indicates that GLD will hit $3,620 an ounce sooner than later. This has been developed in a series of three charts; the first one was developed in a total of 71 weeks, the second one in a total of 77 weeks and the last one in a total of 91 weeks. The first 71 weeks indicated a high of $3,000, $2,880 in the second 77 weeks and finally $3,620 in the final 91 weeks.
On the other hand, the trajectory will see the Price of SLV increase by over 400%. This is highly supported through the trend developed by major asset fund managers given the mathematical pattern studied from 2008 to date. If SLV hits a high of $50 followed by an advance of 150% suggested by the trajectory then the price will hit a record $125.