A Forecast From One of the World’s Leading Precious Metals Analysts

By Rich Checkan

Peter Hug is an expert's expert. His solid insights on precious metals stem from decades of frontline experience. In addition to being the Director of the Precious Metals Division at Kitco, Peter is a sought-after speaker at events around the world. For over 40 years, he has been one of ASI Co-Founder Michael Checkan’s closest friends. Peter, Michael and the late Glen O. Kirsch worked together for legendary precious metals and currency trader, Deak-Perera, beginning in 1974. I am so happy to share his views on gold and silver with you.

Rich: What are the sources you use to form your spot-on opinions?

Peter: I have been trading in the precious metals markets for 40 years and rely both on fundamental and technical analysis. When you trade the markets on a daily basis, you can see the set-ups for support/resistance lines, which is my primary tool for trading spot. With that, I take the macro picture into account, which gives me a basis for trend analysis. I may be bullish (medium term) on a macro basis, but often change my short-term parameters from a trading perspective to bearish.

Rich: So what do you see coming for gold prices in the next year?

Peter: I believe the overall trend in the market remains bullish, with central banks struggling to create growth through negative interest rates and general monetary easing. The only central bank that is even suggesting higher rates is the Fed, but given the global stimulus taking place, the U.S. election and continued sub-par GDP growth, I believe the Fed will remain on hold through 2016.

Rich: What does this mean for gold buyers and sellers?

Peter: For investors, this suggests that risks to the global financial system is greater now than in 2008, and a core position is important. What I can suggest is that investors treat gold as a hedge, but in that context, a hedge needs to be adjusted from time to time. For example, if you bought gold at $800 per ounce with the attitude that it was a 10% representation of your portfolio, you need to make adjustments. If gold were to rise to $1,600 per ounce, you need to ascertain what portion of your portfolio is now represented by gold. If its higher than 10%, you need to sell to bring your hedge back to 10%. Vice-versa if you bought gold at $1,600 per ounce and now the price is $800 per ounce, it is likely your holdings are under 10%, in which case you need to buy. This strategy will keep your hedge in place and force your portfolio to buy gold at lower prices and sell on major increases.

Rich: So what should more aggressive gold investors lookout for?

Peter: For more aggressive buyers, look for cracks in the equity markets which are being propped up by the artificially low cost of money. From a technical scenario, a break above the $1,376 level should usher in a move to $1,425 per ounce and if this level is breeched, we could see a quick $150 additional upward move.

Rich: Do you think the Fed will raise interest rates?

Peter: No. I think the Fed has lost control and needs to keep putting a possible rate increase on the table. If they remove the language, they will be indicating that they are worried about the U.S. recovery. They need to keep equity markets moving higher, since it is the only vehicle generating returns.

Rich: What about the presidential election? Will that have any impact on gold prices?

Peter: It amazes me. Out of a population of 318 million, these were the best two individuals put forward as your next President. I think both candidates are good for gold. Clinton will be status quo and the Republicans won’t work with her. Therefore, no fiscal stimulus, which the Fed desperately needs, since monetary stimulus has been exhausted. Trump is such a wild card. Until/unless he presents some rational solutions, it will terrify the markets.

Rich: What about silver, platinum and palladium?

Peter: Silver will move with gold, but I do not think it will explode relative to gold until we see some signs of economic recovery. Palladium remains well bid, as expected shortages of supply will influence the market through the balance of 2017. Platinum, which has historically traded at a premium to gold, may be poised to re-take that role over the next year or two if the global economies begin to respond to central bank easing and growth resumes. Platinum was recently at a $320 discount to gold. Over the past two months, demand has picked up and currently sits at a $190 discount.

I think we can all agree, Peter’s experience shows through in his comments. And. We agree with his analysis.

Call us at 800-831-0007, or send us an email, to put his thoughts to work for you. We see now as an opportune time to purchase precious metals as your endeavor to Keep What’s Yours!