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Precious metals have had a volatile trading week on good volume with most of the moves prompted by headlines that have to do with Russia. As sanctions continue to impact the Russian economy, President Putin has been backed into a corner and that could prove to have implications that lead to the threat of a military conflict. Earlier in the week, Putin was threatening to move nuclear weapons into the Ukraine which brought a very sharp but short lived rally to precious metals. Despite the Russian Central Bank raising interest rates to 17 percent in an effort to stem the collapse of the Ruble, the currency’s slide continues this morning. The result has been a precious metals market that is fueled by speculation that Russia’s central bank has either begun to sell or will sell in the near future some part of their gold reserves.
On top of this we have a crude oil market which has shown little ability to bounce off the recent lows as inventories continue to increase while demand is soft. With W.T.I. currently trading in the mid-$50.00s, many commentators are calling for a further drop of 10 percent, which could see the benchmark price trade below $50.00, and that would weigh heavily on gold and the rest of the precious metals. In the short term, look for gold to be the driving force where support can be expected in the mid-$1,180.00s while resistance should be encountered on either side of $1,215.00. Keep an eye out for the FOMC statement later today as it should add clarity to the path of interest rate hikes in 2015.
This editorial has been prepared by Roy Friedman of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not prove to be true, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept the foregoing.