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Fueled by continued chatter surrounding the indefinite duration of QE3 and the nearing “fiscal cliff”, gold reached fresh 2012 highs last week, nearly hitting $1,800 before settling at $1,784. Compared to closing prices from the previous Friday, all metals were up for the week, and we continue to see calls across the board for precious metals to continue their upward trends.

Precious metals on the move

Spot price of each metal at week’s end, and change over previous Friday:

  • Gold: $1,784, up 0.5%
  • Silver: $34.85, up 0.6%
  • Platinum: $1,711, up 2.6%
  • Palladium: $667, up 3.9%

In the news

Gold hits 2012 high – ECB indicates borrowing costs to remain low [link to CNBC homepage; original article has been removed]
On using economic stimulus to keep bond yields low: “[ECB President Mario] Draghi is going to make sure that the market doesn’t fall apart. For gold, that’s a positive because the move is reducing the risk of something really bad happening.” — Axel Merk, chief investment officer of Merk Funds

Bernanke promises sustained stimulus, even with further recovery
“We expect the economy to continue to grow. Our concern is not really a recession. Our concern is that growth will continue but at a pace that’s insufficient to put people back to work.” — Ben Bernanke

Fed’s Charles Evans indicates more stimulus, stokes increased inflation concerns
“People are hurrying up and buying gold as today’s comments tell us that the Fed will continue with the stimulus policies until its sees some improvement in economic conditions. The inflation worries are back.” — Frank McGhee, head dealer at Integrated Brokerage Services LLC in Chicago

Nearing “fiscal cliff” has investors running to gold
On the potential tax hikes and spending cuts: “That will mean more stimulus, and that might be another leg up for gold. In six months’ time, we might see gold flirting with $1,900 or $1,950.” — Pau Morilla-Giner, chief investment officer at London & Capital

More quotes

“When the dust settles, I wouldn’t be surprised at all if we learn that central banks have been buying gold over the last couple of weeks.” — Adrian Day, Adrian Day Asset Management

“The lion’s share of demand is coming from the investment market, you’ve got currency debasement risk continuing. You’ve got the politicians in the euro zone playing their usual games, but we are starting to see some physical demand coming back from markets like India because going into the fourth quarter you’ve got a big festival and wedding season.” — Martin Arnold, senior analyst at ETF Securities

Spotlight on silver

Casey Research: Increased use of solar power points to silver’s growth
“The growing number of industrial applications for silver represents a long-term shift in this market. Increasingly diverse usage is not only here to stay but will continue to grow, supporting the price and impacting the balance of supply and demand.”

Gold-crazy India shifting focus to silver
“People are seeing silver as a better investment bet… [it’s seen as] far more undervalued.” — Vasanth Challani, a Chennai-based dealer in gold and silver

Long-term outlook

Morgan Stanley: Gold to hit $1,853 in 2013

Deutsche Bank: Gold could top $2,200 in 2013, silver to reach $44?

Credit Suisse: Gold to exceed $2,000 by January 2013

The week ahead

Kitco News Gold Survey

  • 78.3% bullish on gold this week
  • Majority believe gold to surpass $1,800
  • Minority see short-term correction

Areas to watch this week

  • Will Spain request a bailout?
  • China’s return to markets after last week’s holiday
  • Silver to reach $36?
  • Dollar weakness/euro strength
  • Growing tensions in Middle East