A frenzy ahead for precious metals?
With the summer's lows behind them, gold and silver are poised for new highs.
There are some telltale signs that the latest rise in gold could turn into a whopping surge. Gold's rise since the summer is now matching the similar time period in prior bull markets when the surging really began.
Gold rises strongly when real interest rates are negative. That is, when rates are lower than the rate of inflation. With a couple of exceptions, real interest rates have been negative since the early 2000s. And this has helped fuel a strong rise in gold since then.
The Fed's latest actions guarantee the conditions for gold will stay bullish in the years ahead. The Fed’' going to keep interest rates super low and inflation will pick up.
It's already happening and this alone will keep real interest rates negative, making gold more attractive than anything we've seen so far.
Gold and silver are up nicely since the summer lows. Silver and gold shares are up well over 30%. Gold is up about 16%, nearing the $1,800 level, while hitting another record high in euro terms in recent weeks.
When you consider that the current bull market has risen 660% compared to the 1970s bull of 2,300%, you could see what we mean. The frenzy has yet to begin.
An intermediate rise is underway as gold jumped up to the $1800 level and, while currently resisting, it's strong above the $1,680 level and very strong above $1,730.
If $1,800 is clearly surpassed, gold could shoot up to the record-high level above $1,900. And if the bull market is as strong as it seems, gold could reach new record highs above $2,000 to $2,400 and then continue in a strong leg upward.
Silver has been on the bargain table, especially during the weak summer months. It has quickly jumped up, but still has much further to go.
Silver is very strong above $32 and once it closes clearly above $37, it will have the potential to shoot upward and test the highs.
There are many wild cards brewing in the world today and any one of them could trigger a strong leg up. Be ready. This is why we've been strongly recommending that investors accumulate positions in gold and silver, especially during weakness.
We recommend having metals positions in coins or bars. We also recommend exchange-traded funds, which are an easy way to buy gold and silver: SPDR Gold Shares (GLD), iShares Comex Gold (IAU) and iShares Silver Trust (SLV).
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