Gold investors had experienced a volatile few weeks at the time this article was published, with prices moving through a range exceeding $100. After recently reaching nearly $1,390 per ounce, gold dropped sharply following reports that Chinese economy is slowing and that the People’s Bank of China did not intend to print additional money to support growth and expansion. The article described this as a reversal for China’s central bank, whose monetary expansion from $900 million to more than $4 trillion over several prior years made the Federal Reserve’s expansion appear modest by comparison. Gold reached an intraday low of $1,270 the day before publication, then rebounded and closed above $1,290 per ounce.
The original article acknowledged that short-term gold-price forecasting was difficult, while expressing the view that prices could continue trending higher if geopolitical risks in Eastern Europe, especially Ukraine, remained. Crimea’s annexation by Russia had occurred relatively peacefully and without bloodshed, but rhetoric between Russia and Western nations had intensified, alongside a military buildup near Ukraine’s border. At the time of publication, strongly phrased warnings from the United States had not changed the situation, and neither side appeared ready to retreat.
The original article stated that economic sanctions imposed or threatened by Western nations appeared to make Russia more defiant. Russia had responded by threatening to trade oil for other currencies and commodities. If that effort succeeded, the article speculated it could gain momentum and possibly weaken the dollar’s role as the world’s currency. Many precious-metals commentators believed that result would quickly reduce the dollar’s value against other currencies and support precious-metals prices. The article also cautioned that such a development could likely send gasoline prices above $4.00 per gallon in a short period.
Atlanta Gold & Coin expressed hope that the Ukraine situation would be resolved by cooler heads. Still, the original article expected gold and silver to benefit as perceived safe havens while tensions continued. It further speculated that, if the most severe outcome occurred and war followed, gold and silver could rise dramatically in a parabolic move similar to what had occurred in 2011.
At the time of original publication, the article described the following: Beyond those concerns, the article identified other factors it believed could support gold and silver prices. It said demand for gold in Eastern markets showed no apparent slowdown, citing the United States’ record level of exports to Hong Kong in January, strong recent attendance at a coin show in Singapore, and continuing gold smuggling into India to avoid what the article characterized as oppressive import taxes. It also recounted that one Indian businessman had gone so far as to swallow nearly a pound of gold bars in order to bring gold into the country.
At the time of original publication, the article described the following: Although the global economy appeared weak at publication, the article argued that the case for gold and silver remained strong and could cause those assets to outperform more traditional investments. It anticipated that higher prices might draw investors from the sidelines into the gold and silver markets, further strengthening demand. Unless the Federal Reserve made an unexpected and abrupt monetary-policy change, the article expected gold to remain above $1,300 per ounce for the foreseeable future.
