(Kitco News)-There is no doubt that the gold market is in a long-term bull market, but it is important to remember that nothing goes up in a straight line, and there will be periods of volatility.
Analysts have been warning investors for the last couple of weeks, as prices broke solidly above $2,800, that the gold market was looking a little overbought. So, it’s not surprising that we are finally starting to see some profit-taking, as gold prices have rallied more than 11% so far this year.
Silver, on the other hand, is much more frustrating to trade. Despite its bullish fundamentals, it has not seen the same gains as gold. Silver is also more unpredictable, as it is twice as volatile as gold. We saw this volatility in action on Friday. Overnight, silver broke above initial resistance at $33 and rallied all the way to $34 an ounce. Unfortunately, the move attracted some major selling pressure, and silver is now ending the session down more than 4% from its highs, trading at $32.67 an ounce.
Although silver’s selloff is disappointing, many analysts recommend that investors look beyond the short-term volatility and remain focused on the long-term picture. A growing chorus of analysts are extremely bullish on silver as demand continues to outweigh supply.
Many analysts expect silver to eventually outperform gold, but investors will have to be patient. Right now, gold is the in-demand safe-haven asset as investors try to protect themselves from geopolitical turmoil and economic uncertainty.
For many investors and analysts, it’s only a matter of time before gold prices reach $3,000 an ounce; however, that could prove to be a minor level in a much bigger rally. This week, Bank of America highlighted what it would take to get prices to $3,500, and it’s not impossible.
In his latest research note, BoA Commodity Analyst Michael Widmer said that a 10% increase in investor demand would push gold prices to $3,500. It’s not inconceivable for investment demand to hit or even surpass that objective, as ETF demand is just starting to pick up and remains well below levels seen during gold’s last run to record highs in 2020.
Investors are also continuing to get help from China. Last Friday, Chinese authorities launched a pilot project that would allow 10 insurance companies, including the country’s two biggest, to put up to 1% of their assets in gold. According to Bank of America, Chinese insurance companies could buy up to $28 billion in gold, equaling about 300 tonnes, which would represent about 6.5% of annual physical demand.
And let’s not forget that President Donald Trump’s unpredictability will prompt central banks to continue adding gold to their official reserves. It’s difficult to be bearish on gold and silver when there is solid long-term demand providing significant support in the marketplace.
That’s it for this week. Have a great weekend!
At Last, a Company With Integrity in the Gold IRA Industry
For several years, I’ve been vetting out precious metals companies in search of the best. I believe in gold and silver but it’s hard to find integrity in the Gold IRA industry. The vast majority operate with shady tactics and gigantic spreads that take advantage of Americans who simply want to protect their life’s savings.
I’ve found a handful that I like and I’ve worked with some of them. By no means would I “unrecommend” them because, again, I vetted them out and found them to be above the fold. Unfortunately, it isn’t hard to be better than the rest when the rest are so darn awful.
After years of searching, I finally found a company that truly operates with integrity. Augusta Precious Metals has three important attributes that set them far above the competition:
- Non-Commissioned Sales Team: I cannot stress how important and unique this is. With just about every other company in the Gold IRA industry, the sales teams make commission from every account they open. This means they steer their clients toward the gold and silver products with the highest commission. With Augusta Precious Metals, the team is solely focused on putting the best gold and silver for their clients into their IRA. They get paid to serve the best interests of the Gold IRA client, NOT their own commission pay.
- Incredibly Low Fees: Most Americans would be shocked if they knew the spread other Gold IRA companies charge. Augusta charges just 5% versus up to 45% elsewhere.
- No Pressure, No Gimmicks: There’s an understanding among most in the Gold IRA industry that fear and pressure is the way to go. Augusta Precious Metals takes a sober approach when working with clients because they hold integrity in the highest possible regard. This is why they don’t offer gimmicks like “free” or “bonus” silver. It’s also why they do not apply pressure tactics to get quick sales. Their educational and transparent approach to doing business is exceedingly rare in the Gold IRA industry.
Remember how Glen Beck was ridiculed about gold going to $800?