Gold & Silver Rise despite Lower Expectations

A pair of supposed market-makers lowered their expectations for gold and silver prices this week, but the two metals instead rallied as profit-taking gave way to physical demand. As of 12:30pm CST gold had risen $5.80 to $1342.10 per once, and silver gained $0.01 to stand at $20.90 per ounce, according to the COMEX.

The head of Endeavor Silver, Bradford Cooke, said he is “cautiously bullish” on the metals’ values. Cooke is confident the long-term potential for gold and silver is strong but believes prices could be somewhat wishy-washy until the end of summer. Gold and silver have been uncommonly volatile during most of the last two years but historically prices tend to lay flat during the summer months before rising again starting in late July.

Investment bank Morgan Stanley also lowered its gold price expectations for 2014. “The lower price environment will pose significant challenges for gold miners given the substantial rise in costs over the past decade,” the bank said. Morgan Stanley attributed recent gold price fluctuation to massive sell-offs of ETF investments, and the firm lowered its 2014 gold price forecast 11.6% to $1,160 per ounce.

“Banks cannot accurately predict gold prices,” said analyst Kevin Dasher. “They release statements with the hopes that household investors will follow their lead and not realize that the bank itself is shorting gold. This strategy has worked in the past but with the massive amount of U.S. debt and the current administration hoping to pass a $3.9 trillion budget for the coming fiscal year many investors are ignoring banks’ recommendations and buying physical gold and silver for protection in case the dollar or the entire country collapses.”

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