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Precious Metals Review

Market information and news is critical for precious metal investing. However, many investors have limited time to sort through the massive amounts of market data and gold, silver and platinum news. The Monex Precious Metals Review consolidates the week's activities in a concise snapshot of the precious metal markets.

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PRECIOUS METALS REVIEW - FEBRUARY 5, 2016

In the precious metals markets this week . . .  

GOLD:
Monex spot gold prices opened the week at $1,122 . . . traded as high as $1,163 on Friday and as low as $1,120 on Monday . . . and the Monex AM settlement price on Friday was $1,158, up $36 for the week.  Gold support is now anticipated at $1,131, then $1,107, and then $1,078 . . . with resistance anticipated at $1,159, then $1,183, and then $1,209.

SILVER:
Monex spot silver prices opened the week at $14.29 . . . traded as high as $14.98 on Friday and as low as $14.23 on Monday . . . and the Monex AM settlement price on Friday was $14.77, up $.48 for the week.  Silver support is now anticipated at $14.64, then $14.38, and then $14.07 . . . and resistance anticipated at $14.88, then $15.12, and then $15.50.

PLATINUM:
Monex spot platinum prices opened the week at $869 . . . traded as high as $910 on Friday and as low as $854 on Tuesday . . . and the Monex AM settlement price on Friday was $905, up $36 for the week.  Platinum support is now anticipated at $889, then $855, and then $827 . . . and resistance anticipated at $906, then $919, and then $944.

PALLADIUM:
Monex spot palladium prices opened the week at $502 . . . traded as high as $519 on Thursday and as low as $491 on Tuesday . . . and the Monex AM settlement price on Friday was $502, unchanged for the week.  Palladium support is now anticipated at $497, then $470, and then $448 . . . and resistance anticipated at $513, then $528, and then $549.

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QUOTES OF THE WEEK:

From a news report in Investor's Business Daily on February 1st:

''For most commodity investors, January was one more bad month in a years-long bear market.  Gold was an exception.

Gold futures rallied 5.3% in January, their best gain in a year.''

''Turmoil in Chinese financial markets, plunging oil prices and signs of softening U.S. growth left investors reeling in January, boosting demand for traditional safe-haven assets like gold.

Likewise, rising bets that the Federal Reserve will hold off on further interest-rate increases added to the appeal of bullion.  While losses deepened in other metals, gold outperformed . . . ''

'' 'Interest-rate jitters going forward are what brought gold up,' James Cordier, the founder of Optionsellers. com in Tampa, Fla., said in a telephone interview.  'With stock markets crashing all over the world and the U.S. economy growing slowly, nothing is pointing to more rate hikes, and that's why gold is rallying.' ''

. . . and from a posting on the Reuters website on February 2nd:

''Try as it might, the Indian government appears to be unable to curb the country's love for gold.

Its latest attempt -- a rule forcing buyers of high-value jewellery to disclose their tax code -- has boosted unofficial trading in the world's second-biggest gold consumer, industry experts say, rather than promote transparency and dent demand.

If the rule does fail, gold inflows will continue unabated in India, flying in the face of Prime Minister Narendra Modi's efforts to curb costly imports and stop the metal from being used to hide billions of dollars of undeclared 'black money.'

India made it mandatory for customers to disclose their tax code, or Permanent Account Number (PAN), for purchases above 200,000 Indian rupees ($2,948.44) from Jan. 1.

This was done to track larger deals and deter the hundreds of millions of Indians outside the tax net from buying gold to keep their wealth out of sight of the authorities.''

. . . and from Alex Rosenberg, in a posting on the CNBC website on February 3rd:

''It is typically argued that rising inflation is necessary for gold prices to rise.  The general idea is that gold is priced in U.S. dollars, and as each dollar becomes less valuable, it takes more of them to buy the same amount of gold.  It is along these lines that gold's dramatic drop over the past few years have been pinned on ultra-low inflation and a strengthening U.S. dollar, particularly after much gold was bought amid the belief that inflation was set to soar as the dollar collapsed.

The idea that inflation is a necessary condition for higher gold prices may explain why gold sellers like Peter Schiff continue to make Rube-Goldberg-ian arguments for why inflation will rise, even as they simultaneously and somewhat contradictorily argue that the U.S. economy is in a recession (contradictory because most people would not pay higher prices for the same goods in a worse economy, which is why inflation and economic growth generally rise together).

However, there's another tantalizing possibility for gold bugs: Perhaps ultra-low inflation could actually send gold prices higher, through the mechanism of negative central bank policy rates.

In a continuing battle to combat long-stagnant inflation and economic growth, the Bank of Japan has cut interest rates to negative 0.1 percent.  This follows similar moves by Denmark, Sweden and Switzerland.

According to currency strategist Boris Schlossberg of BK Asset Management, 'Negative interest rates have provided a fundamental reason to own gold.  Just think about it: If you own gold and it stays stationary for a period, that's going to beat cash in Japan or Switzerland.'

The basic idea is that gold and cash compete for a similar pool of investors' money.  If the central banks implicitly or explicitly causes cash to yield negative returns, then gold will look better in comparison.''

. . . and from Peter Coyne, writing in The Daily Reckoning newsletter, published by Agora Financial, LLC, on February 4th:

''Despite trillions in QE, we never got the full recovery we expected.  Now we're coming full circle.  'U.S. CEOs Unleash Recession Fears in Earnings Calls,' reports Reuters.

If those recession fears become reality -- something our own Jim Rickards says is likely -- expect the Fed to reverse course and perhaps even impose 'negative nominal interest rates.' ''

'' 'There will be a political uprising if the Fed institutes a negative interest rate policy (NIRP),' explained David [Stockman].  It isn't hard to see why . . .

Under today's system, a negative interest rate is a simple and absurd idea: You pay the bank to hold your money.''

'' 'The madness of NIRP,' explains David, 'is probably no longer containable since it already infects the eurozone, Sweden, Switzerland, Denmark, Japan -- and, soon, South Korea.

'The world's being choked by the $225 trillion credit bubble that's deflating.  It was created by the Fed and global central banks over the last two decades.'

Desperate times call for desperate measures.  'Now they are going to make matters worse by doubling-down on a failed experiment in crank economics.  They've already driven nearly $6 trillion of sovereign debt below the zero bound.  Even a decade ago, every student of Economics 101 knew that is a recipe for calamity.

'Just a few dozen monetary apparatchiks in the world's major central banks and their shills in the world's financial casinos are driving the system straight toward the monetary abyss . . . '

If you're a boomer who's worked and saved your whole life, you're being led to the slaughter.''

Last update: Feb 05, 2016 12:38:23 PM

This is not a recommendation to buy or sell.