Los Angeles – The gold price dipped to $1,368.20 an ounce on Friday and the price of silver followed gold closing at $28.72 an ounce after a week of profit taking and asset allocation. Gold bullion prices began the week on a strong note above $1,420 an ounce after ending 2010 with a 29.7 percent gain, its strongest yearly performance since a 31 percent rise in 2007. The price of silver began the year near $31.00 an ounce, its highest level since early 1980 after a record 83 percent gain for 2010. It was silver’s strongest performance in 27 years. The gold-silver ratio (GSR), the number of ounces of silver that can be bought with an ounce of gold, began the New Year at 46.
As fund managers reallocate assets and profit taking increases during the first trading days of the New Year, investors are wondering if gold’s bull run will continue into 2011. Three of the principal drivers of the gold price in 2010 were Chairman Bernanke’s aggressive deflation-fighting policies, including a second round of quantitative easing (QE2), the European sovereign debt crisis that has spread among the weakest of the Euro zone members, and China with its increasing appetite for gold bullion. All of these conditions persist as we head into 2011.
Jim Cramer of Mad Money fame recently told viewers of his show to prepare for a move in the price of gold to above $2,000 an ounce. He cautions viewers not to miss the next move up: “after still one more astonishing performance, in keeping with the 10-year outperformance of the precious metal, it seems reasonable to think that gold can cool off for a bit.” Cramer continued by urging us to “Take advantage of the weakness if you haven’t already, as we are hardly done with the run. Why? Because the one thing we know about 2011 is that currencies are suspect. Paper is suspect. There’s too much being printed here. There’s too much that’s going to be printed in Europe. The stuff’s worth less and less. That means gold will be worth more and more.”
Cramer is correct about the printing of money. The Treasury Department reports that the national debt is about to pass $14 trillion for the first time ever and is on pace to break through the $14.294 trillion debt ceiling, signed into law by President Barack Obama, as early as February. Cramer finishes by warning us to “expect some selling as people take profits. Slowly leg in. No hurry. But please don’t miss it this time.”
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American Bullion specializes in adding gold and silver to retirement accounts. If you have a question or would like to know more about your investment options, please call American Bullion at 1-800-326-9598 to speak with a precious metals specialist.