Investors looking for safe-haven assets are pushing gold higher on Thursday. Gold hits a 4 month high as news comes out that the Swiss National Bank abandoned the Swiss franc’s peg to the Euro currency. Gold last reported a.m. is $1259.40 up $24.40 and silver is $17.18 up 17 cents.
As the SNB news hit markets it created more anxiety on an already nervous market. Both gold and U.S. Treasuries rallied on the news. Knowing that the European Central Bank will begin a new round of quantitative easing the Swiss were prompted to take action to hedge their currency.
Oil prices are adding unwanted pressure on global markets as oil prices have fallen 57 percent since June. While working class Americans are enjoying prices at the pump major investors are scrambling as they attempt to raise prices and restore profits.
The drop in prices may have mixed impact on U.S. markets including the housing market. Goldman Sachs and Societe Generale lowered their price forecasts Monday. Goldman predicted U.S. crude will fall to $41 in 3 months and SocGen reduced its average price for this year to $51 a barrel from $65 previously. Generally the energy sector has been a safe-haven for investors but current events shows nothing is guaranteed. As the oil sector stumbles, precious metals prices may gain solid traction.
In 2014 the U.S. Mint sold 524,500 ounces of gold through their American Eagle gold bullion program. 2014 gold sales are more than twice the U.S. Mint’s sales under normal circumstances. Prior to the financial crisis we would have to go back to 1999 to find a better sales year. This shows there is still a lot of concern over declining economies and the belief that the U.S. economy will continue to stumble or grow worse.
The American gold eagle is primarily purchased by investors who cannot afford large gold bars. These investors continue purchasing both gold and silver in attempt to hedge themselves from unstable markets. Gold has remained a storehouse of real value for more than 5,000 years. Of course Wall Street nor any other paper asset including fiat currency can make this claim.
Silver demand continues to rise as 2014 saw record sales once again for the American silver eagle. Silver known as “poor man’s gold” will see record sales in 2015 as industrial and investor demand rises.
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