Los Angeles – Gold bullion prices inched down just 40 cents to close the week at $1,494.50 an ounce while gold continued to consolidate. Silver slipped 0.65 percent or $0.23 to end the week at $35.37 an ounce, as the gold-silver ratio rose to 42.25 and silver underperformed gold for the week.
Precious metals got a boost last week when Hal Lehr, Deutsche Bank’s managing director for cross-commodity trading, said in an interview on Monday, “I’m bullish on gold despite its current levels, it could reach $2,000 an ounce in the next eight months.” Mary Ann Bartels, head of market analysis at Bank of America/Merrill Lynch, said on Wednesday that “[Silver] is still in an uptrend, despite the sharp sell-off” and predicted that silver will reach $50 an ounce by the end of this year.
Online real estate firm Zillow reported last week that today’s housing prices are falling faster than at any time since 2008. The report goes on to say that average home prices are down 8 percent from a year ago and are falling precipitously at a rate of about 1 percent per month. The rapid decline in prices has increased the number of properties now underwater to a high of over 28 percent in the first quarter of 2011.
Due to the weak housing market, the Federal Reserve may be forced to relent and extend its easy money policy to include a QE3. If the Fed allows rates to increase, the upward pressure that will be exerted on mortgage rates could halt whatever demand remains for housing.
A recent Bloomberg poll showed that a majority of global investors believe within 5 years the Chinese Yuan will be convertible into other major currencies. “If we get to the stage that the Yuan is convertible and there’s a liquid government bond market available to invest in, it would mean that the Chinese Yuan becomes a possible viable alternative to the dollar,” said Mansoor Mohi-uddin, chief currency strategist at UBS AG. “The euro hasn’t been able to fulfill that.”
Bank of Mexico governor Agustin Carstens said on Wednesday that Mexico’s central bank wasn’t dumping the U.S. dollar as its reserve currency, but it realizes the value of holding gold as a portion of its reserves. During the first quarter of 2011, the central bank purchased more than $4 billion (93.3 tons) of gold bullion, bringing its total holdings to just over 100 metric tons.
Steve Forbes predicted a return to the gold standard in the U.S. within five years. Forbes feels that a return to the gold standard would curtail much of the excessive fiscal spending that is so prevalent in the capital and would prevent the Fed from printing excessive amounts of money. “What seems astonishing today could become conventional wisdom in a short period of time,” says Forbes, according to the website HumanEvents.com.
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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.