These Indicators Spell The Future Of Gold, Say Some

Month end totals will be coming in the following days for US Mint products, but there are already some clues as to how bullion demand looked in October 2014. (http://www.resourceinvestor.com/2014/10/29/silver-bullion-flying-off-the-shelf)

The US Mint has sold 59,500 American Eagle bullion one ounce gold coins in October, up 21% from 48,500 ounces in October 2013.

Silver buyers purchased 4.12 million ounces of American Silver Eagle coins so far this month, versus 4.14 million ounces in September.

Thus, nearly 68 times more silver ounces were bought than gold. These gold bullion coin sales are the highest monthly sales sicne January and are higher than the 58,000 that were sold in September.

“(Islamic State), Ebola, Putin and Ukraine… There is a litany of these things which have risen in the last year or so which have provided a negative backdrop,” Scott Spitzer of MTB said to Reuters.

At the time of writing, the gold silver ratio is 72.75, which is calculated by dividing the current gold price per troy ounce by the current silver price per troy ounce.

The gold and silver ratio during the 2008-2009 financial crisis, when the gold price fell all the way to $720 and the silver price fell to $9, leading the gold/silver ratoo to spike to 80. This is a bearish sign for metals, argue some.

With US crude falling to a two-year low this week, the ratio betweeen gold and crude oil has reached a 17-month high, its highest point since May 2013. “A sign that bullion is relatively expensive,” according to John Stephenson, CEO of Stephenson & Co. Capital Management in Toronto.

“People don’t think inflation will become an issue in the near future,” said Stephenson. “There are no fears of a crisis, so investors are not rushing to gold.”

At the current rate, one ounce of gold buys 15.47 barrels of oil as of October 22. That’s an increase from 12.52 since 2000 and 11.92 reached in June. (http://www.bloomberg.com/news/2014-10-29/gold-equals-15-barrels-of-oil-in-bearish-sign-for-bullion.html)

Ultimately, predicting the price of precious metals is a bit like gambling in Vegas. Preferably, if Bernank were to bet on the price of gold and silver, he’d prefer to do it from the comfort of a VIP booth in Las Vegas, smoking a cigar, drinking a Heineken — shaken, not stirred — and tipping an attractive, friendly server.