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Gold Extends Advance on Optimism Fed Will Spur Growth
By Maria Kolesnikova and Glenys Sim
Apr 26, 2012 5:12 AM PT
Gold rose in New York after Federal Reserve Chairman Ben S. Bernanke said he’ll do more to fuel growth if necessary, weakening the dollar and boosting bullion’s appeal as a store of value.
Bernanke said the central bank is ready to add stimulus if needed even after leaving its policy unchanged yesterday and upgrading its view of the economy for 2012. Additional bond- buying is still “very much on the table,” he said. That helped stoke a rally in global stocks and drove the greenback lower. The Fed bought $2.3 trillion of debt in two rounds of so-called quantitative easing from 2008 to June 2011.
“Gold is clearly trading on the dollar,” Copenhagen-based Arne Lohmann Rasmussen, head of rates, foreign-exchange and commodity strategy at Danske Bank A/S (DANSKE), said by e-mail today. “The dollar is under pressure.”
June-delivery bullion rose 0.6 percent to $1,651.60 by 8:11 a.m. on the Comex in New York. Gold for immediate delivery increased 0.5 percent to $1,651.07 an ounce in London.
“Gold regained its footing after Bernanke said the Fed is prepared to do more for the U.S. economy,” said Lynette Tan, an investment analyst at Phillip Futures Ltd.
Bullion, which dropped as much as 1.1 percent yesterday, rose today as the dollar slid for a third day against a six- currency basket including the euro. Holdings of gold in exchange-traded products fell for a third day yesterday to 2,389.8 metric tons, the lowest level since March 23.
Platinum for July delivery, this year’s best-performing precious metal, gained 0.9 percent to $1,560.40 an ounce. Palladium for June delivery rose for the first time in four days, gaining 1.2 percent to $662.95 an ounce. Silver for July delivery advanced 1.5 percent to $30.89 an ounce, the most since April 12.
To contact the reporters on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
http://www.bloomberg.com/news/2012-04-26/gold-extends-gains-on-optimism-fed-to-do-more-to-spur-growth.html
Gold Prospecting A Hot Calif. Hobby
Updated: Sunday, 22 Apr 2012, 7:05 AM PDT
Published : Sunday, 22 Apr 2012, 7:05 AM PDT
(NewsCore) - High gold prices turned prospecting into the hottest new hobby for California's weekend warriors.
With the precious metal still selling for more than $1,600 an ounce even after a mild correction, amateurs and even a few pros are hiking mountain trails and panning streams in the Golden State, enjoying nature and, with any luck, turning a profit in the process.
"People are looking for fun that doesn't cost a whole lot of money," Central Valley Prospectors president Nancy Roberts said. "But maybe you can make some money."
Roberts has been a gold hunter for more than a quarter of a century and found plenty of the yellow stuff. She carries a one-ounce nugget in her purse and, in a pinch, sold gold she found to make ends meet.
"I've paid bills, I've paid rent, I've bought tires for my truck, I've fixed my vehicle," Roberts said. "I didn't find gold in order to pay for stuff or to sell it. I really found gold because I really had a great interest in it, and I still do."
She shares her tips and techniques with members of the Central Valley Prospectors, taking them to the San Joaquin River in the Friant area of Fresno, where they pan tributaries for flecks of gold washed down from the Sierra Nevada Mountains.
"We're just out in the beautiful country. It's the way God wanted it," according to Betty Beggs, who at age 86 is a 14-year veteran of weekend prospecting. "I love it."
The gold boom has people flocking to California's old mining ghost towns, according to the Department of Conservation Office of Mine Reclamation. But not all of the state's new wave of gold hunters are innocent amateurs.
Authorities say professionals with heavy equipment and industrial tools are going after gold, sometimes illegally. The State Mining and Geology Board fined Joseph Hardesty more than $1 million for operating what it says is an illegal operation at Big Cut Mine, in northern California. Hardesty insists he merely runs a legitimate sand and gravel extraction business, but the state claims that he is after gold and doing damage to the land.
"This is a blatant disregard for state law," according to Stephen Testa, executive director of the State Mining and Geology Board. "It's individuals mining without a permit. The adverse effect, of course, is environmental."
But for most folks who simply love the outdoors and do not mind living an age-old American dream while doing it, Roberts recommends doing it her way. And while you may never get rich hunting gold, her nugget is a constant reminder that you can do alright.
"I'm never broke if I have this in my pocket," she said.
Read more: FOX News
Read more: http://www.myfoxla.com/dpps/news/gold-prospecting-a-hot-calif-hobby-dpgonc-km-20120422_19351178#ixzz1snNKfZKN
Gold: the asset that keeps defying the pundits
Matthew Kidman
April 23, 2012
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Gold has a history of changing bed partners on a regular basis.' Photo: Phil Carrick
THERE is not an analyst on the face of the earth who can accurately value gold. As Warren Buffett likes to publicly declare, gold is not a productive asset because it does not generate any income. You cannot put bullion on an earnings ratio, generate a discounted cash flow model or calculate a return on the asset. Even though gold bugs like to say the demand for gold is strong, the reality is the supply of bullion far outstrips demand and that is going to be the case well into the future. For investors to make money out of gold the "greater fool theory" must be in place. This is when you are able to sell it at a higher price than you purchased it because you have found a greater fool than you. In other words, gold is on par with God, either you believe in it or not and it is impossible to prove or disprove its value.
That said, the indefatigable Buffett and his legion of cohorts have been the greater fools in recent years.
Gold is now in its 11th year of a tremendous bull market. The precious metal has risen about 530 per cent since its low of $300 in 2001. Even in Australian dollars it has managed to rise around 250 per cent. The current bull market followed a 21-year bear market in which bullion tumbled almost 65 per cent. Like all multi-year bull markets, gold begun its meteoric rise when the world had forgotten it existed and central banks were in the process of downsizing their stockpiles.
It steadily climbed throughout the decade, before skyrocketing in recent years after the great financial crises. Investors flocked to the precious metal as other asset classes simply crumbled. Traditionally a fear trade, gold turned into a greed trade after the GFC as the price marched higher, hypnotising old and new gold bugs.
The critical question now is whether the bull market is coming to a close? The price peaked at $US1921 an ounce in September 2011, before entering a zigzagging pattern that leaves it clinging to the $US1600 an ounce level and the technically important 200-day moving average. If the secular bull market is coming to a close this is not the conventional ending. Usually prolonged bull markets turn into bubbles where investors dive over each other to buy, before a meltdown takes place. In most circumstances the top of a bull market in any asset class creates a chart that resembles a Matterhorn-style peak, rather than a plateau. While gold has been a crowded trade in recent years, it continues to hang in there to the annoyance of so-called fundamental analysts. Most market participants rely on charting to price the precious metal, which means gold could move up to $US5000 an ounce and it would be plausible to say it is not overvalued.
Gold has a history of changing bed partners on a regular basis.
Since prices started to surge in 2008, the price has correlated perfectly with US Treasury Inflation Protected Securities (TIPS). The TIPS have rallied along with the overall government fixed interest market in the US and dragged gold along for the ride. In other words gold has been a bed partner to declining interest rates and lower inflation. This is contrary to the long-held belief that gold is a store of value and a pivotal hedge against inflation.
This relationship with US TIPS started to break down recently and since the end of 2011 gold has formed a strong correlation with the Euro. No one knows how long this will last. A look at history clearly brings you to the conclusion that no one is certain what drives the gold price, whether it be inflation, currency depreciation, liquidity or rhetoric from gold bugs.
That leaves us grasping at thin air when trying to work out where gold heads from April 2012. Hedge fund godfather George Soros said gold had reached bubble proportions a few years back. He was wrong. The commodity guru Dennis Gartman cleared the decks late last year, saying we are in the days of a dying bull market. He may be proven right but six months down the track there is no conclusive evidence.
Given the lack of fundamental financial reasons to own gold, there is only one sensible method to approach the precious metal at this stage in the cycle. All asset classes that experience these multi-year bull markets will endure a painful reversal at some stage. Look at oil in 2008. No matter how the story is dressed up, the price of an asset can climb for extended periods at elevated levels before mean reversion starts to kick in. This does not necessarily mean gold has reached that point, and looking at the charts there is a better than even chance the precious metal can surge again. What it does mean, though, is the end of the bull market is a lot closer than it was in 2001 and the downside potential is much greater than at any stage in the previous decade. In other words, the risk/reward equation is no longer in favour of the new buyer of the metal.
Missing the final 25 per cent of a bull market is better than sticking strong and watching your investment melt in the sun. For investors with a medium to long-term outlook the better risk equation sits with assets - such as equities and property - that have struggled.
Interestingly, companies that mine gold around the world have entered a much more severe downturn than the actual metal. In Australia, the share price of Newcrest Mining has fallen about 40 per cent over the past 12 months with its book value declining from about 1.5 times to almost one times. If gold bugs have to stay in the game, maybe a gold company rather than gold itself may be the safer play these days.
Former fund manager Matthew Kidman is director of WAM Capital.
http://www.brisbanetimes.com.au/business/gold-the-asset-that-keeps-defying-the-pundits-20120422-1xewc.html
A disappointing week for precious metals
Precious metals markets have been stuck in relatively narrow ranges. We do hope to gain some more inside information at next weekend`s Dubai Precious Metals Conference.
Developments in Spain and the first round of the French election have been at the forefront of the business news. The Spanish 10 year bond auction went well, with a yield of 5.74 per cent and the issue was 2.4 times oversubscribed. The Spanish bond levels will be closely monitored by the investment community as worries continue about the sustainability of the Spanish debt situation. There have been comments from French President Sarkozy, about widening the mandate of the ECB to include growth, but it has to be seen if this is still on the agenda after the French election has been decided.
Gold: $1642.00 – down $16 from last week. The Commitment of Traders Report (COTR) showed that further reductions of long and short positions have taken place. Gold traded in quite aggressively to the downside as well as to the upside last week, but always came back towards the $1640 level. Spot gold traders must have had a very difficult time in this see-saw market and option volatilities have also gone down significantly. The gold option volatilities are on their lowest level since we started our weekly report (March 2011) and it seems that there is simply no real new interest in gold at the moment. Physical trading is very slow and the uptake in India for Akshaya Tritiya has also been disappointing. Our customer base continues to buy physical gold but this has also slowed down.
Silver: $31.65 – up $0.15 from last week. Silver took its lead mostly from gold last week, and that means that the interest in silver has waned as well. Silver long positions as well as silver short positions have been reduced, according to the Commitment of Traders Report (COTR). This could be viewed as an indicator that the investment community is not interested in silver as an asset class at the moment. This is also reflected in the weaker silver option volatilities. There could be more position closures ahead as the switch into July Comex might look less attractive compared to closing out existing positions and going into wait-and-see mode.
Platinum: $1575 – down $7 from last week. The discount to gold has been slightly reduced to $65, but platinum looks much more vulnerable than palladium at the moment. A bullish signal could be that, according to the Commitment of Traders Report (COTR), long positions have been reduced and new short positions have been added. This should provide some underlying support for a potential short covering rally.
Palladium: $672 – up $32 from last week. Palladium was the big winner of last week’s proceedings. The latest COTR report shows that the investment community has added long as well as short positions. The ETF numbers have not changed significantly in weeks, and the general assumption is that palladium will fare much better than platinum in the case of a better-than-expected outlook for the automotive industry. The resilience shown has been very encouraging.
http://www.cpifinancial.net/blog/category/markets/post/13615/a-disappointing-week-for-precious-metals
Higher Prices Expected Overall Next Week For Gold, But Survey Participants Generally Split
Friday April 20, 2012 12:20 PM
Survey participants in the weekly Kitco News Gold Survey see gold prices rising next week, but bulls do not have the majority of the opinion.
In the Kitco News Gold Survey, out of 33 participants, 25 responded this week. Of those 25 participants, 11 see prices up, while six see prices down, and eight are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.
Those who see higher prices said the U.S. dollar’s action will determine where gold may go.
“With the dollar weakening versus the euro, gold should do well in the week and month ahead. I look for a $1,680 target next week and longer term, the next 4-6 weeks, $1,725 is a reasonable upside objective,” said Ken Morrison, editor and founder of online newsletter, Morrison on the Markets.
Generally a weaker dollar supports gold since the metal is denominated in dollars.
Technical analysts said $1,620 an ounce is a key chart level for gold to hold next week.
Those who see weaker prices also spoke of currency factors, suggesting that the euro may come under pressure if there are any surprises in this weekend’s French presidential elections or weaker-than-expected results regarding eurozone manufacturing data due out next week.
Several who said they were neutral on prices or saw prices holding in a sideways pattern said the lack of a strong trend in gold should continue for the time being, which means range-bound trade.
By Debbie Carlson of Kitco News; dcarlson@kitco.com
Friday's Analytical Charts for Gold, Silver and Platinum and Palladium
http://www.kitco.com/reports/template_jimw.htm
'Gold's Decade-Long Bull Run Is Dead'
April 9, 2012
Gary Tanashian
Bernanke delivered the fatal blow to gold's ten year bull market, according to Dennis Gartman. Gold has been in bear territory since the summer of 2011, when it topped out above $1,900 an ounce, with the latest post-FOMC sell-off inflicting irreparable technical damage, he says.
Well close Dennis. But let's fine tune a little: Unbridled panic-fueled momentum drove gold unsustainably higher as it took a mini blow off and very predictable correction. Gold is not broken in its secular bull market (and not necessarily even the cyclical one out of 2008) by any rational technical parameters. Not as of this writing and thus, not as of your little Forbes piece with the alarmist headline. 'Irreparable technical damage' Dennis? Where?
Technical damage could come about but here's the thing, it has not yet come about. Why the haste to make such a call good sir? And you Forbes; why pile on now when everyone from Buffett to Bernanke himself is mowing down the poor, under-armed gold bugs? If gold is so marginalized, why the big and seemingly coordinated negative ad campaign?
The time to have negative feelings was late last summer. The time to think like a capitalist is now.
UBS' Edel Tully adds that markets' no-QE-for-now realization will push gold even lower, probably down to $1,550 an ounce over the next month.
Oh my ... all the way down to 1550? While that's a little under my initial support parameter, it does not break the bull market. Next ...
Over the last couple of years, gold's precipitous, and continued, rise fueled causal theories, with some investors attributing it to U.S. dollar weakness, others to a safe haven trade in the face of widespread market turmoil, an inflation hedge, or whatever they could correlate a chart with. The yellow metal, though, appears as a Humean experiment in causality, marrying no single trend.
What the #$%! are you talking about you egghead? Okay, so you razzle dazzled us with a reference to David Hume. Dial your head out of the clouds and down here to ground zero of the battle between honest systems and corrupt, media perverted ones. David Hume, are you kidding me?
Gold has fallen nearly 9% since late February, trading at $1,628.5 an ounce on Thursday in New York. Gold went on a rollercoaster ride over the last 12 months, rising to an all-time high above $1,900 last spring, then tanking about 18% to December, then rising a further 15.5% to this February.
Gold is up over 350% since I became involved in its market. Casino patrons can have thrills on the amusement park rides of 18% and 15.5%.
According to Gartman, gold's latest price action confirms the trend line has clearly been broken, indicating we've been in a bear market for 12 months, since it peaked. In Thursday's Gartman Letter, "in retrospect it does appear that gold has not been in a bull market but has indeed been in a bear market" since August 2011, when it peaked above $1,900. "Since then," he added "each new interim low has been lower and each new interim high has followed. How, we ask, had we missed that fact!"
I agree with you Dennis. But you need to define 'trend'. Is it a trend that ends the secular bull market or just a trend that defines a mini cyclical bear or as I would call it still, a downward consolidation of the unsustainable momo into the euro blow off? You know that in the hands of the mainstream financial media the definition is simply going to be "bear market" without any care about time frames and sub-definitions of bear or bull markets like cyclical, secular, etc.
The catalyst for that realization has been the Fed, specifically the latest FOMC meeting and Wednesday's minutes from that meeting. In both, markets caught a glimpse of a more optimistic Fed that, while keeping the option on the table, has seen the necessity for a further round of quantitative easing reduced by the improved economic performance. UBS' Edel Tully adds:
"The minutes painted a rather more optimistic view on growth, a more convincing take on the basis for the decline in the unemployment rate and most worryingly of all for gold, an acknowledgement by the Fed of the potential for a change in the end-2014 forward guidance."
With the Bernanke Fed guiding markets over the last couple of years, it should come as no surprise that gold prices are very sensitive to monetary policy. Record low interest rates amid a weak global economy pushed nervous investors out of both risk assets and the safety of Treasuries. A weak U.S. dollar, along with massive liquidity injections via QE, helped investors look to gold for it has always been: a store of value.
"Do not attempt to adjust the picture. We are controlling transmission. If we wish to make it louder, we will bring up the volume. If we wish to make it softer, we will tune it to a whisper. We will control the horizontal. We will control the vertical. We can roll the image, make it flutter. We can change the focus to a soft blur or sharpen it to crystal clarity ..."
No QE3 and higher interest rates before late-2014 would cause further damage to gold, as it would signal an improving economic environment where capital should once again channel into productive, and thus riskier, assets. Fed unwinding will definitely deal a deadly blow to gold bulls, so the real question investors should be asking is: are we out of the woods yet?
No QE3 and higher interest rates would cause further damage to gold if the charade on the yield curve can be maintained. Why are long term rates rising when Bernanke has expressly stated that the Fed intends to buy those bonds? For now, short term rates (don't look behind the ZIRP curtain where Fed Funds money is being given away free of interest) are rising faster than long term rates in all likelihood due to what the Fed has already stated it would do; manipulate the curve by driving up short term rates (selling short term Treasury bonds) relative to long term rates (buying long term bonds).
If the gradual pace of economic improvement in the U.S. and the relative calm of European markets persists, then the global economy might be close to the edge of those woods. Bernanke has remained cautious, noting downside risks still abound, while ECB chief Mario Draghi was blunter on Wednesday saying risks are definitely skewed to the downside. Housing markets in the U.S. remain depressed and labor markets, while healthier, are still relatively weak.
I am not a perma bear. I was noting economic improvement in February and taking email derision for it to boot. I also noted that the economic growth was caused by inflation. What I did not do was plan for the devil that eventually came out in the details as Dear Leader Bernanke did what no respectable policy maker has done before and decided to just take over the operations of the US Treasury market, which means he had the nerve to single handedly attempt to massage the unmeetable obligations of the US Government in a way that paints a picture of economic growth WITHOUT inflation. So regular market players got Goldilocks and honest money advocates got ignominy.
Among the best at illustrating the bear case is Peter Schiff of Euro Pacific Precious Metals. "Don't catch the recovery fever" he told investors in his daily newsletter, adding "the recovery is not only going to falter - it's going to evaporate like the mirage it is!"
Schiff expects substantially higher interest rates, which went untested in the recent stress tests on banks, to blow the lid off major financial institutions. Large Wall Street names like JPMorgan Chase, Citi, and Bank of America have relied on cheap money from the Fed to keep operating. Rising inflation, as a consequence of money printing and bond buying by the Fed, will force Bernanke to raise rates. From Schiff's newsletter:
In fact, higher interest rates are not only possible, but probable. The stress tests assume long-term Treasury note yields stay under 1.8%; but that figure is the current six-month low on the 10-year, which is already dragging along its historical floor. As I write, yields are already up to 2.2%. The post-war average is about 5.2% - high enough to crater today's banking system.
The stage is set for gold to continue falling in the immediate-term. Higher interest rates and an improved economic environment suggest it's time to put capital back to work. The improving outlook does face substantial threats, though, particularly the European sovereign debt crisis (which promises to flare up again), which could stoke recessionary fears. Add Schiff's predicted inflation, and you could see the yellow metal rally rise through the ashes like the Fenix. At the end of the day, it all boils down to the true strength of the economic recovery. Stay tuned.
Well, here we have Peter being Peter. Peter gets a little excited. It comes down to this ... if Bernanke is able to continue screwing with the curve, rising rates are likely to hurt gold. If he fails and the market wins out and the yield curve begins to rise again, gold should benefit from rising rates. Short of these scenarios, maybe what is on tap is that the precious metals are forecasting a hard decline across the asset spectrum (with a hard decline in yields, AKA a deflation blip) before gold again leads the way out of it into the next inflationary up cycle. Patience and a noise filter are the best tools now.
Manage risk and understand the game; Forbes, Gartman, Buffett, Roubini, Bernanke ... the whole lot of them. This is what happens at the opposite pole to the damaging momentum and greed that drove gold too far last summer and it is all part of doing business in markets that operate as if in Wonderland as opposed to any sort of rational and healthy environment that policy makers and media would have us believe actually exists.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
http://seekingalpha.com/article/485121-gold-s-decade-long-bull-run-is-dead?source=email_authors_alerts&ifp=0
Beware the tax bite of oil and gold ETFs
By Janice Revell
April 4, 2012: 8:57 AM ET
FORTUNE -- With the Federal Reserve pledging to keep interest rates ultralow and geopolitical risk running high, investors seeking inflation hedges continue to pour money into commodities such as gold and oil. And exchange-traded funds, which are highly liquid and easily accessible, are the vehicle of choice. The wildly popular SPDR Gold Trust (GLD), for instance, now holds about $70 billion in assets, making it second in size only to the SPDR S&P 500 (SPY) among ETFs.
But here's the bad news: The tax consequences of owning a commodity-based ETF can be downright nasty. Before diving in, it pays to be aware of the tax pitfalls that await you so that you can minimize the damage.
Commodity ETFs fall into two basic categories, both of which can bite you with unexpected taxes. The first are ETFs that actually hold precious metals, such as the SPDR Gold Trust. When you buy one of these ETFs "the IRS treats you as if you were actually holding the bullion yourself," says Michael Iachini, head of ETF research at Charles Schwab Investment Advisory.
That's not a good thing, because the IRS treats gold, silver, and other precious metals as "collectibles," which don't qualify for the 15% maximum tax rate on long-term capital gains. Instead, gains on precious-metal ETFs that you've held for more than one year are taxed at your ordinary income rate, up to a maximum of 28%. If you hold the ETF for less than a year, gains will be taxed at income rates up to 35%.
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The second tax trap lies within ETFs that don't actually hold the physical commodities but use futures contracts to generate their returns. These ETFs -- which include such popular offerings as United States Oil and PowerShares DB Commodity Index Tracking -- are usually structured as limited partnerships. When you sell, 60% of your profits are typically treated as long-term capital gains and taxed at the maximum 15% rate. But the remaining 40% of your gains are automatically deemed short-term -- no matter how long you actually held the ETF -- and taxed at ordinary income rates.
You'll also be on the hook to pay taxes even before you sell. Unrealized gains on these futures-based ETFs are marked-to-market annually; you receive a K-1 form each year outlining your share of those gains, on which you'll have to pay taxes to the IRS.
The easiest way to avoid these headaches is to hold your commodities ETFs inside an IRA. You'll still owe the standard tax on IRA withdrawals at retirement. But until then you can buy and sell the ETFs without triggering any taxes, says Paul Justice, director of ETF research at Morningstar.
You could also consider buying an exchange-traded note that tracks commodities indexes. The tax treatment in regular brokerage accounts is much more favorable: ETN holders owe capital gains taxes only when they sell, and long-term gains qualify for the maximum 15% rate. But you'll need to do more due diligence before you jump in. Commodity ETNs carry credit risk -- if the note's issuer goes bankrupt, you'll be treated as an unsecured creditor and could lose most of your investment. And if that happens, the tax rate won't matter much.
This story is from the April 9, 2012 issue of Fortune
http://money.cnn.com/2012/04/03/pf/funds/gold_oil_etfs_taxes.fortune/index.htm?iid=HP_Highlight
Gold Is Still 'Getting Fixed'
April 2, 2012
Gary Tanashian
There was a panicky spike in gold last summer as the herd sought refuge from the euro, which was falling apart as some of its components had a really hard time peddling their legacy of debt.
This was going to be the big one, as gold was finally going to blast off - better get aboard! You are a gold bug now and you are safe! No, unfortunately the new players were just being introduced to the overdone euphoria of the upside thrills, only to later be introduced to the bile of the inevitable downward reactions.
Out popped Gartman, Roubini and even the big, bearish guns in the person of Buffett himself. Many people were actually led to believe the bull market was ending because, well, luminaries of great legend were either bearish or outright questioning the bull market, and even the relic's standing as a monetary asset class. Perfect, gold needed a cleaning (see Gold is Getting Fixed, which was excerpted from an article of ours last September) and it not only got violent reactions in September through December, but the simple value relic continues to grind on peoples' nerves to this day. Perfect.
So where's the relic at now? Here is where it is now. it is in a Symmetrical Triangle and/or a potential Inverted Head & Shoulders that is really a Cup (no previous downtrend, so no IHS. Sorry, but I am a stickler on some things). Gold is in a battle at the moving average cluster but above the downside target we have open by a weekly chart. Also, gold remains well above the December low, a point which, if lost on the downside, would really get the luminaries smiling.
Some people call me a chartie, but that is really a linear description. I use charts all the time, and in fact they are my guide. But I am also a real money and more honest systems proponent. The chart of this monetary barometer tells me that anyone claiming the bull market is over is reading what they want to read into the situation. That is because there is no technical evidence of that.
In fact, that looks more like a bullish pattern shaping up and the target is 2050. When the pattern breaks down I'll come out here and admit how wrong I was. But not until the chart says so. Aside from the nominal price of gold and with respect to the big macro economic picture and the gold mining industry's investment case (such as it is), it is gold's price in relation to other assets that is important.
And some signals may be cropping up there. After all, gold has been getting "fixed" for months now. The unhealthy holders are gone, and players are aligned in their traditional roles.
http://static.seekingalpha.com/uploads/2012/4/2/saupload_au.png
Gold Just Took One On The Chin From The New Indian Taxes
April 2, 2012
by: David White |
Europe is not the only major commerce center that is trying to balance its budget. India is trying to balance its budget, and it is trying to keep inflation in check. Indian inflation ramped up in February to 7.57% (CPI-IW) from January's 5.32%. On top of that, the Indian Trade Deficit grew from $14.7B for January 2012 to $15.2B for February 2012. The Indian Trade Deficit has racked up $166.8B in debts from April of 2011 through February 2012 (greater than $180B+ for the Indian fiscal year). India imported 930 tons of gold for FY2011. If you use a ballpark average price of gold of $1650/oz. for the full year, this means India imported $49.1B in gold alone in 2011.
This is a non-negligible part of India's Trade Deficit. To combat this trade deficit (and to raise tax monies), India raised its import tax on gold bars and coins to 4% from 2% in India's budget plan for the coming year which starts in April 2012 (this Monday). India also levied an excise duty of 1% on jewelry. This includes sales of jewelry produced in India, not just imported jewelry. Trade groups are currently striking against these new taxes, but the taxes remain. The government has shown some willingness to discuss the new tax on all jewelry, but it has shown none to discuss the new tax on the gold bar and coin imports. A Reuter's poll of retailers, jewelers, and brokers suggests that Indian gold imports might slide by more than 30% to about 600 tons this year. This is effectively a huge 300+ tons of gold that is being dumped on the world market. Plus, keep in mind that the 2% import tax on gold bars and coins had only been in force since January 2012. I don't think the realization of the effects of these taxes has really sunk in with most investors yet. It doesn't make me want to invest in gold. All those looking for safety in gold this year might want to take another look.
Is there any chance the government will substantially change its position? It seems unlikely. The government recognizes that the gold imports are a Catch 22 situation. Indian citizens buy gold to protect themselves from the dangers of inflation. However, they buy so much gold that they end up substantially contributing to inflation through a huge addition to the Indian Trade Deficit. This could easily degenerate into a death spiral. The Indian government will want to avoid that at all costs, no matter how fervent the protests are. A roughly $180B+ yearly trade deficit for India from April 2011 through the end of March 2012 has assuredly put some steel in the government's backbone. The Indian economy does not depend on gold to grow in the same way it depends on energy.
Unfortunately this is not the only headwind gold faces. The coming EU recession will add to gold's woes. The "sell everything" attitude will likely pervade Europe if only for the short term. If the EU recession leads to another recession in the US and a hard landing in China, those headwinds will turn into a class 5 hurricane. A quick look at the five year chart of the SPDR Gold Shares ETF (GLD) shows the downtrend in gold prices from when the US recession became an almost certainty in early 2008 until just after it was confirmed as a fact in the fall of 2008.
The EU recession has not yet been confirmed. We are still months away from the earliest date at which this can occur. We still do not know if the US will follow the EU into recession. We still do not know if China will have a hard landing. China's GDP growth rate has already slowed from 10.3% in 2010 to the latest forecast of 7.5% for 2012. It may slow further. As China's growth rate slows an increasing number of loans made with expectations of 10%+ growth will sour. An increasing number will have to be written off, and this does not just affect construction businesses and banks. Construction got so profitable in the last decade that a lot of businesses started up their own side businesses of construction. If their real estate investments go bad, a whole line of dominoes could fall. It is hard to even estimate how bad the situation could get.
The wildcard in this whole scenario is the SPDR Gold Shares ETF , the iShares COMEX Gold Trust (IAU), and other funds like them. If Indians, finally decide that paying a roughly 5% premium to invest in gold is too much, they may turn heavily to equities alternatives such as the GLD, which invest in gold for them. As far as I know, these are immune from the new Indian taxes on gold, as their gold is never imported to India. However, reason says that the Indian people will not change their behavior quickly or easily. Such a change in investing behavior would likely take years, if it occurs at all. I am sure the GLD and IAU ETFs may see some added interest, but that interest will be tempered near term by a likely downward trend in the price of gold.
I do not mean to say or imply by this article that the long term bull case for gold is over. However, the Indian situation should present a significant bump in the road. It is a bump that I as an investor choose to avoid. Others can make their own decisions. I would exit gold positions here, but I might return in the fall?
http://seekingalpha.com/article/471331-gold-just-took-one-on-the-chin-from-the-new-indian-taxes?source=email_authors_alerts&ifp=0
"Persistent Investment Needed" to Support Gold as Indian Duty Hike "Kills Imports"
Link
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The WHOLESALE-MARKET gold price fell beneath last week's finish on Thursday in London, nearing its second consecutive monthly fall against all major currencies bar the Japanese Yen as US Treasuries rose with the Dollar.
Italian and Spanish debt prices fell, pushing interest rates higher. Frankfurt's stock market fell for the seventh time in 9 sessions.
Brent and WTI crude oil slipped to one-week lows as France again said a joint European-US release of strategic stockpiles is likely to depress prices.
Losing 2.0% in February, the gold price in US Dollars fell today to $1657 per ounce, 7.0% beneath its start in March.
Gold hasn't dropped for more than two consecutive months since spring 2001 versus the Dollar, since autumn 2006 vs. Sterling, and since mid-2007 vs. the Euro."
Survey Participants Look For Gold Prices To Bounce Next Week
Friday March 23, 2012 12:28 PM
The largest bloc of voters in Kitco News’ weekly gold survey look for gold prices to move higher next week, although this is less than a majority since a fifth of the respondents are neutral or look for prices to be roughly flat.
In the Kitco News Gold Survey, out of 37 participants, 24 responded this week. Of those, 11 see prices up, while eight see prices down and five see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
Curiously, those looking for both higher and lower prices cited technical-chart considerations for their expectations. Several traders and analysts said they expect a bounce since they view gold as oversold technically in the short term and likely to have found some support at this week’s 10-week low.
“I was impressed with Thursday's strong ‘bounce’ off the $1,627 low,” said Ken Morrison, founder and editor of the online newsletter Morrison on the Markets, who looks for gold to reach $1,700 again. “Technically, it had two things going for it. That's the exact 62% Fibonacci retracement of the move from the end-December low to the end-February high and it occurred on high volume, evidence of seller's capitulation. We've also seen a healthy liquidation of longs in the past 2-3 weeks that should remove some of the overhead selling pressure on rallies.”
Those looking for more declines, however, say they expect a continuation of the weak technical momentum lately with gold still not able to mount a re-challenge of the $1,700 area.
By Allen Sykora of Kitco News
Analysts Look For Gold To Recapture Some Lost Technical Momentum
23 March 2012, 2:18 p.m.
By Allen Sykora
Of Kitco News
(Kitco News) - Analysts look for the momentum to shift in gold’s favor next week, particularly now that the metal gained some technical traction this week by bouncing from a chart area that is now being viewed as nearby support.
They tended to list their short-term views largely on the basis of chart analysis, since positive news on the U.S. economy lately has been construed as negative for gold by reducing the probability of further monetary easing in the Federal Reserve. Nevertheless, some said, there is always the potential for a headline to suddenly break and prompt a new safety flight into gold, such as any escalation of geopolitical tensions in the Middle East.
In the Kitco News Gold Survey, out of 37 participants, 24 responded this week. Of those, 11 see prices up, while eight see prices down and five see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
A bounce on Friday enabled gold prices to post a rise for the past week. The most-active April gold contract on the Comex division of the New York Mercantile Exchange closed Friday at $1,662.40 an ounce, up $6.60 since last Friday. May silver settled at $32.272 an ounce, down 33.2 cents for the week.
Traders will continue to monitor U.S. economic data for clues on what to expect for monetary policy from the Federal Reserve. The U.S. economic calendar next week includes consumer confidence on Tuesday, durable-goods orders Wednesday, initial jobless claims and gross domestic product Thursday, then personal income and spending, the Chicago Purchasing Managers Index and consumer sentiment on Friday.
Stronger reports, on balance, coupled with commentary from Fed policy-makers have diminished expectations for a third round of quantitative easing in the U.S., which in turn played a major role in gold’s declines so far this month. So should the data suddenly start to soften again, traders could start wondering if quantitative easing is still possible after all.
Further, some say the recent selling pressure may be due to abate.
One hedge-fund manager characterized gold as “very oversold” after a decline of 9% for the month as of the low from Thursday. He suggested the $1,627.50 bottom from the Thursday session should now act as chart support, particularly given the nearly $40 bounce from there to Friday’s session high of $1,666.30.
“I’m a little bit on the positive side for next week,” said Mike Zarembski, senior commodities analyst with optionsXpress. “I look for a potential test of the $1,700 range if we get a little bit of momentum to end the week today. I would say it would be more technical in nature. We’ll have to see how the fundamentals develop.”
Bob Haberkorn, senior commodities broker with RJO Futures, also looks for gold to rise on the basis of technicals but added that it may well gain fundamental strength as well.
“The way it bounced after yesterday’s low signals strength,” he said. In particular, new interest in the metal can be expected if it keeps advancing toward $1,690, he continued. Some traders may be afraid to “test the waters” yet after the recent decline, but may become more confident about the upside if gold approaches $1,700, he explained.
Meanwhile, there is potential for gold to draw a safe-haven bid if Middle East geopolitical tensions heat up—particularly involving Iran and its nuclear program—and any flare-up in sovereign-debt concerns in Europe and the U.S.
“There are too many things going on in the world right now that would warrant upside gold moves,” Haberkorn said, suggesting $2,000 is still possible this year. “There are too many shoes that could drop right now.”
Meanwhile, Ralph Preston, senior market analyst with Heritage West Financial, expects more chart-based weakness in the near term.
“I consider myself a long-term bull in the gold market but I am short-term bearish,” he said.
He watches Middle East events “like farmers follow the weather in the Midwest,” and he considers geopolitical concerns in the region to be a factor that could suddenly propel gold higher. He also is in the camp that still expects some type of quantitative easing from the Federal Reserve.
“But in the short term, I have to let the technicals guide my tactical decisions,” he said. “With prices being capped under $1,700 and a tight trading range for the last week, that tells me that the sell-off after Bernanke’s speech about two and one-half weeks ago shifted the momentum from a technical perspective for now. With prices capped below $1,700, I would look for a short-term move back below $1,600. If we take out this week’s low, I would look for a move down to $1,575 to $1,580.”
Technically, gold remains below most of its most closely followed moving averages.
“The area from $1,685 to $1,689 will be a real key area to get above,” said Charles Nedoss, senior market strategist with Olympus Futures. Shortly ahead of the pit close, the 200-day average for April gold stood at $1,685.10 and the 20-day average at $1,689.80. “In the next week, those are big numbers,” Nedoss said.
By Allen Sykora of Kitco News; asykora@kitco.com
http://www.kitco.com/reports/KitcoNews20120323AS.html
Professor Bernanke rails against gold standard
By Annalyn CenskyMarch 20, 2012
3:37 PM ET
Federal Reserve Chairman Ben Bernanke headed back to the classroom Tuesday, and defended the Fed against its most outspoken critic, Ron Paul.
In a lecture otherwise about Fed history and the Great Depression, Bernanke devoted four slides to discussing "problems of the gold standard."
For years, Congressman (and now presidential candidate) Ron Paul has argued to abolish the Fed and revert back to a system where U.S. dollars can be redeemed for gold.
The United States abolished the gold standard in 1933, and fully moved away from a fixed exchange rate in 1971. Bernanke defended that decision Tuesday, saying a gold standard creates an "awful big waste of resources."
"To have a gold standard, you have to go to South Africa or someplace and dig up tons of gold and move it to New York and put it in the basement of the Federal Reserve Bank of New York and that's a lot of effort and work," he said.
A student pressed him on the issue, asking him to play Devil's advocate: "Given everything that we know about monetary policy now and about the modern economy, why is there still an argument for returning to the gold standard and is it even possible?"
Bernanke didn't bite. He said that there is not enough gold for a global gold standard and that "the world has changed."
"I understand the impulse, but I think if you look at actual history, you'll see that the gold standard didn't work that well and it worked particularly poorly after World War I," he added. "There's a good bit of evidence that the gold standard was one of the main reasons that the Depression was so deep and long."
Tuesday's lecture is the first of a four-part series at George Washington University. The Fed plans to post the full videos online.
Bernanke already has a long history in academia. Before he joined the Federal Reserve's Board of Governors in 2002, he taught economics at Princeton University.
http://economy.money.cnn.com/2012/03/20/professor-bernanke-rails-on-gold-standard-6/?iid=HP_LN
A hard lesson for a treasure hunter
March 19, 2012
5:00 AM ET
Odyssey CEO Greg Stemm with a gold coin recovered from shipwreck.
FORTUNE -- Last month two C-130 transports flew a mission from Spain to Florida to retrieve the 594,000 silver coins and other artifacts that a treasure-hunting company called Odyssey Marine Exploration (OMEX) recovered from a shipwreck site off the Portuguese coast in 2007 and transported to Tampa. A U.S. federal judge ordered that the treasure -- perhaps the largest find in history and thought to be from a Spanish galleon sunk in 1804 by British warships -- be returned to Spain. That was a blow to Odyssey, which had spent $2.6 million recovering the booty. Despite the bad news, Odyssey's stock, which was hammered during the financial crisis, has climbed back this year largely on the prospect of new finds. The company will soon excavate the HMS Victory, which sank in the English Channel and could hold as much as three tons of gold coins. It will also -- with the cooperation of the U.K. government (it seems Odyssey has learned its lesson) -- forage two British ships. --Caitlin Keating
http://features.blogs.fortune.cnn.com/2012/03/19/odyssey-marine-exploration-treasure/?iid=HP_River
Comex Gold Near Steady On Consolidation; Near-Term Technical Posture Still Weak
19 March 2012, 07:59 a.m.
By Jim Wyckoff
Of Kitco News
http://www.kitco.com/
(Kitco News) - Comex gold futures prices are trading near steady in early, quieter U.S. trading Monday. The market is working to consolidate recent price action on the charts that has seen a near-term price downtrend develop on the daily bar chart. The world market place is quieter to start the new trading week, which is not bullish for the safe-haven gold market.
April gold last traded steady at $1,655.80 an ounce. Spot gold was last quoted down $4.80 an ounce at $1,655.75. May Comex silver last traded down $0.129 at $32.475 an ounce.
It’s quieter on the geopolitical front worldwide to start the new trading week. The European Union sovereign debt crisis has stabilized at least for the moment, while the U.S./Israel saber-rattling with Iran has also died down for the time being. That’s making it a bit tougher for the safe-haven gold market to mount a recovery from the recent selling pressure.
The key “outside markets” are neutral for the precious metals to start the new trading week. The U.S. dollar index and crude oil market are both trading near steady price levels. Crude oil and the dollar index will continue to be key “outside market” forces impacting the precious metals prices on a daily basis.
U.S. economic data due for release Monday includes the Chicago Midwest manufacturing index and the NAHB housing market index.
The London A.M. gold fixing was $1,654.00 versus the previous London P.M. fixing of $1,658.00.
Technically, gold futures bears still have some downside near-term technical momentum as prices are in a three-week-old downtrend on the daily bar chart. From a longer-term technical perspective, however, the overall longer-term technical posture of the market has not changed and remains bullish. The bulls’ next near-term upside price breakout objective is to produce a close above psychological resistance at $1,700.00. Bears' next near-term downside price objective is closing prices below psychological support at $1,600.00. First resistance is seen at the overnight high of $1,665.10 and then at $1,675.00. First support is seen at $1,650.00 and then at last week’s low of $1,634.70.
May silver futures prices are also in a three-week-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $34.41 an ounce. The next downside price breakout objective for the bears is closing prices below major psychological support at $30.00. First resistance is seen at the overnight high of $32.77 and then at $33.00. Next support is seen at $32.00 and then at last week’s low of $31.625.
Follow me on Twitter to immediately get the very latest market developments. If you are not on board, then you are not getting key analysis and perspective as fast or as often as you could! Follow me on Twitter to get my very timely intra-day and after-hours briefs on precious metals price action. The precious markets will remain very active. If you want market analysis fast, and in after-hours trading, then follow my up-to-the-second precious metals market perspective on Twitter. It's free, too. My account is @jimwyckoff.
By Jim Wyckoff contributing to Kitco News; jim@jimwyckoff.com
http://www.kitco.com/reports/KitcoNews20120319JW_am.html
Emerging central bank buying to boost gold
Central bank buying lifted gold last year and is likely to do so this year as more and more emerging market central banks have become first time buyers in recent years.
LONDON(BullionStreet): Central bank buying lifted gold last year and is likely to do so this year as more and more emerging market central banks have become first time buyers in recent years.
Observers said central banks across the globe collectively bought more gold than they had previously over 40 years. The buyers were not the usual central bank suspects among the old world European nations, but emerging economies.
Russia, Mexico and South Korea led the central bank gold buying in 2011 through the regular channel of the Bank for International Settlements (BIS), however it is suspected the biggest buyer in 2011 was China, which is able to cream off its own world-leading production.
http://www.bullionstreet.com/news/emerging-central-bank-buying-to-boost-gold/1354
Russia and the Philippines have also in the past acquired domestically produced gold and not appeared on the BIS radar.
Traders report that BIS has been an active buyer in the over the counter gold market as prices have tumbled in recent weeks. Spot gold has now fallen around 14% from its September high of $1920/oz.
Last week BIS bought 4-6 tonnes of gold and stepped up the buying as spot prices continued to fall. Traders believe BIS purchases over the past four weeks will prove to be more than double that amount.
Lower gold prices are also creating a typical response in China and India, with demand for ceremonial gold jewellery firing up once more. Throughout gold's long bull run from the early noughties Chinese and Indians have been keen buyers for their respective gift-giving seasons, but sudden surges in price leave more middle class buyers out of reach.
They jump back in again as soon as the gold price has a decent correction. Their tolerance level has ratcheted up each year as the gold price has risen along with Chinese and Indian wealth.
While emerging market central banks have become first time buyers in recent years, old world central banks have simply stopped selling. Since 1999 the Washington Agreement has allowed European central banks to offload a certain amount of gold holdings and for a decade central bank gold selling could be confidently expected. Not anymore.
http://www.bullionstreet.com/news/emerging-central-bank-buying-to-boost-gold/1354
METALS OUTLOOK: Currency Markets Likely To Influence Gold Next Week
16 March 2012, 2:24 p.m.
By Debbie Carlson
Of Kitco News
http://www.kitco.com/
(Kitco News) - Gold prices have been under pressure this week, and market watchers are torn whether or gold will sink to $1,600 an ounce next week or rise to challenge $1,700, suggesting much will depend on the action in the U.S. dollar.
Prices were lower on Friday and on the week. The most-active April gold contract on the Comex division of the New York Mercantile Exchange settled at $1,659.50 an ounce, down 3.04% on the week. May silver settled at $32.726 an ounce, down 5.21% on the week.
In the Kitco News Gold Survey, out of 32 participants, 21 responded this week. Of those 21 participants, nine see prices up, while seven see prices down, and five are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.
Gold’s weakness this week was largely on the back of the Federal Reserve’s monetary policy statement on Tuesday, said Arnie Waters, chairman of A.L. Waters Capital. “A somewhat more hawkish tone, along with the Fed’s decision to avoid discussion of launching a third round of quantitative easing, were the two primary drivers behind gold’s decline this week,” Waters said.
The metal is seeking some sort of direction as it is torn between how investors envision its role, he added. “Those that see the precious metal as a safe haven against market turmoil have seen the recent pullback, in the ongoing instability in Europe, as a buying opportunity. Beyond that, others fear a general decline in asset prices, should the debt crisis deteriorate further in Europe. The likelihood of a dollar rally in such an event would also be a drag on gold,” he said.
The dollar rallied this week, adding to gold’s pressure. Because gold is dollar-denominated, normally the metal and the greenback will move in opposite directions of each other.
Analysts at BNP Paribas said the strength in the dollar comes from thoughts U.S. economic growth is improving after strong payrolls and retail sales reports for February. The economic data has market participants “doubting whether the Fed would even maintain its commitment to zero rates through to 2014 let alone consider additional easing,” they said.
Gold was trading over $1,700 earlier this year on hopes of more quantitative easing, but has been removing that price premium as traders’ doubts of more stimulus increase.
Where the dollar goes next week will influence gold’s price direction, said Bob Haberkorn, RJ O’Brien senior market strategist. He said he thinks that the greenback might be due for a pullback after this week’s strength and that could be supportive for the metal.
“The dollar is getting a little high here. Europe is so far on the backburner,” he said, regarding the economic problems over there.
BNP Paribas suggested to watch speeches next week from Fed Chairman Ben Bernanke, New York Fed President William Dudley and Chicago Fed President Charles Evans who are “all among the more dovish camp,” for possible dollar impact. “However, unless we get a much stronger signal from the Fed that further easing may be needed, the dollar is likely to trade firmer on any further strong U.S. data – in particular labor market figures,” they said.
PHYSICAL DEMAND SLUGGISH
Several market watchers have pointed out in the past few weeks a general disinterest in physical buying of gold and that trend appears to be continuing. Analysts at Barclays Capital said it’s only when prices experience a sharp pullback does physical buying, particularly in Asia, reappear.
“Volume traded on the Shanghai Gold Exchange rose to its highest since the return of buyers in China following the Lunar New Year but still broadly remain below pre-holiday levels. Steadfast physical demand is missing, creating a vulnerable floor for gold prices,” they said.
The lack of physical interest compounded news overnight that India is increasing the tax on gold imports. Haberkorn said that information caused gold prices to start lower in the North American session Friday, which it was never able to shake for the rest of the day.
According to Bloomberg News, India’s government will tax gold bars and coins and platinum at 4%, starting April 1, up from 2% set in January. There was no change in the tax on silver. Along with China, India is one of the top two consumers of gold bullion.
Technical analysts are among those that see gold perhaps trying to probe a little more weakness next week, with $1,600 not unlikely. “The market has a little more room to go down before seeing a trend change. A test of technical support between $1,628 and $1,614 could occur early in the week leading to renewed buying interest,” said Darin Newsom, Telvent DTN senior analyst.
The recent weakness in gold is following seasonal price patterns, so it shouldn’t be completely unexpected, said Mark Leibovit, editor of VR Gold Letter. There is historical precedence for gold prices to fall from a high in February or March and then a rally to start after a summer low. For the pattern to run counter-seasonal, “we should see it in increasing upside volume and ultimately a breakout above recent highs,” he said.
By Debbie Carlson of Kitco News dcarlson@kitco.com
http://www.kitco.com/reports/KitcoNews20120316DeC.html
Comex Gold Sinks Further on FOMC Statement
J.P. Morgan News
13 March 2011, 3:36 p.m.
By Jim Wyckoff
Kitco News) -Comex April gold futures have slumped to their daily low and are trading solidly lower in late-afternoon dealings Tuesday. The gold market started to slip further in early-afternoon trading, in the aftermath of an upbeat statement from the Federal Open Market Committee that suggested there will be no fresh quantitative easing measures from the Federal Reserve coming soon. The FOMC statement said the U.S. economy is improving and implied there are no worrisome inflationary price pressures on the horizon. Gold was hit with another punch later Tuesday afternoon when the big U.S. bank J.P. Morgan announced it has passed its stress test, is giving out a dividend and is also paying back some of its government-imposed loan. This news boosted the U.S. stock market even higher and gave the market place more of a "risk on" attitude, sending safe haven assets gold and the U.S. Treasury market prices solidly lower. The U.S. dollar index rallied on the aforementioned news events Tuesday afternoon, which further pressured the precious metals.
April gold last traded down $32.80 an ounce at $1,667.00. May silver last traded down 28.3 cents an ounce at $33.13.
http://www.kitco.com/reports/KitcoNews20120313JW_update.html
March 13, 2012, 11:12 a.m. EDT
Gold erases gains ahead of Fed
By Claudia Assis and Sara Sjolin, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures on Tuesday erased earlier gains, slipping well below $1,700 an ounce as U.S. retail sales data were upbeat and investors looked ahead to the outcome of a meeting of Federal Reserve policy makers.
Gold for April delivery /quotes/zigman/660065 GCJ2 -0.58% shed $12.30, or 0.7%, to $1,687.50 an ounce on the Comex division of the New York Mercantile Exchange. It traded as high as $1,706.20 an ounce earlier.
U.S. stocks opened higher, but crude-oil futures traded lower.
“Gold is continuing to perform more like a risky asset than a safe haven, and is moving in harmony with [other] commodities,” analysts at Commerzbank said in a note to clients Tuesday.
Gold has tread water this month, and Tuesday’s Fed meeting “is likely to give little new impetus to the gold price even if the key interest rate is kept at its currently very low level,” they added.
The metal closed 0.7% lower Monday, breaking a three-session winning streak. Read more on Monday's metals session.
Attention is focused on the outcome of a meeting of the Fed’s rate-setting Federal Open Market Committee, or FOMC, with investors alert for any change, however unlikely, in the central bank’s easing stance.
The committee is scheduled to release its statement on Tuesday and recent strength in U.S. economic data has diluted expectations of further quantitative easing measures.
“If there are no announced changes to the Fed program, then the Fed statement is unlikely to have any obvious implications for the U.S. dollar,” HSBC analyst James Steel said in a research note.
“This would also mean that the FOMC meeting is likely to have little effect on gold,” Steel added.
Meanwhile, the U.S. Commerce Department said February retail sales climbed 1.1%, with growth rates for January and December revised higher. Read more about retail sales.
Earlier Tuesday, a gauge of German investor sentiment, the ZEW index, jumped sharply in March to its highest level since June 2010. The sentiment indicator rose to 22.3 from 5.4 in February, well above economists’ expectations of a 10.0 reading.
The broader metals complex traded mostly lower, with copper the exception.
Silver for May delivery /quotes/zigman/662452 SIK2 -0.20% declined 5 cents, or 0.1%, to $33.38 an ounce.
April platinum /quotes/zigman/2304887 PLJ2 -0.10% lost $1.20, or 0.1%, to $1,694.50 an ounce, while sister metal palladium for June delivery /quotes/zigman/2304937 PAM2 -0.46% fell $2.55, or 0.4%, to $701.70 an ounce.
May copper /quotes/zigman/660068 HGK2 +1.36% gained 5 cents, or 1.2%, to $3.88 a pound. Goldman Sachs lifted its three-month copper forecast 5% to $8,400 a metric ton, based on expectations of moderate U.S. economic growth and monetary easing in China.
http://www.marketwatch.com/story/gold-rises-above-1700-in-asian-trading-2012-03-13
Technical Trading: The Week Ahead - Gold Bulls On Defensive Near Term
12 March 2012, 12:19 p.m.
(Kitco News) - Mon March 12—April Comex gold futures have shifted into a short-term sideways consolidation pattern, following the late February failure just below the $1,800 per ounce level.
Looking at the market from a multi-month perspective, the yellow metal remains trapped within a large neutral intermediate term sideways range. The top of that range lies at the $1,808/$1,792 region and the lower end of that range—or major support—comes in at $1,553/$1,526.
The bulls remain on the defensive near term, in the wake of the late February rejection of the $1,800 level. The key technical support levels shorter-term are seen at $1,679.90 (the 200-day moving average) and $1,663.40. The bulls must defend that zone near term in order to prevent another downswing in market action.
If the $1,663.40 level were to fall in the next week or so, it would open the door for additional downside corrective weakness toward the $1,627 zone—that represents a 61.8% Fibonacci retracement on the late December-late February rally.
Peter Ruud, technical analyst at Informa Global Markets, said "the firm view is relatively negative. We have a sell strategy on for the short-term."
Pointing to spot gold prices, Ruud said "in general, it looks like it is consolidating. We need a daily close above $1,725 otherwise we are looking at a potential ceiling that could turn the market more bearish. If we don't get any more upside in the next few days and we don't get a close above that area, it could be in a downtrend. It does look a little bearish."
http://www.kitco.com/reports/KitcoNews_tech_trading_20120312.html
Guest Commentary: Gold & Silver Daily Outlook 03.09.2012
Mar 09, 2012 (DailyFX via COMTEX) --
Gold and silver continued their recovery and rose again yesterday. The concerns revolving the Greek debt crisis have subsided for now after investors agreed to swap nearly 85% of the Greek debt. Yesterday, ECB announced it will leave its rate unchanged at 1% and also published its financial reports for 2011. According to the report, ECB's net profit rose to EUR 728 million (in 2010 it was EUR 171 million). Finally, U.S. jobless claims rose to 362,000. These events may have been among the factors to pull up the Euro and dragging along with it gold and silver during yesterday's trading. Today there are several reports to published including: U.S. Non-farm Employment, American and Canadian Trade Balance, and Canada Employment Report.
Gold increased on Thursday by 0.88% to $1,698.7; silver much like gold increased by 0.73% to $33.83.
The chart below shows the developments of gold and silver during the last few weeks (prices are normalized to February 23rd).
U.S. Non-farm Employment Report for February
In the previous report regarding January 2012, the U.S. labor market continued to improve as the number of non-farm payroll employment expanded by 243k; the U.S unemployment rate declined to 8.5%;
The table below shows the correlation between the news of the U.S. labor report and the daily changes in gold and silver on the day of publication.
According to the ADP report, the U.S. labor rose by 216k during February 2012. If this figure will be close to the actual number to the U.S. labor report it could rally the U.S. dollar, which in turn may trade down gold and silver.
Daily Estimate
Yesterday, gold and silver rallied for the second consecutive day as many other financial markets also traded up including crude oil, American stock and "risk currencies" such as Euro and Aussie dollar. Gold traders are very bullish in recent days and thus the recent upward trend of gold might continue in the days to come. But today this rally might be interrupted.
The upcoming American reports mainly the U.S. labor report may change this recent upward trend: if the U.S. employment expanded again in February it could adversely affect gold and silver. Or at the very least curb their recent rally.
http://futures.tradingcharts.com/news/futures/Guest_Commentary__Gold___Silver_Daily_Outlook_03_09_2012_175036038.html
Phase Two - The Volatile Ride to Higher Gold
Wednesday March 07, 2012 11:08
In my January 2012, 32 page booklet called “Is Hyperinflation the US Government’s Only Way Out”*,I compared the gold rally of 1977-1980 with the current rally in Gold. I discussed the three major phases of Gold’s 1977-1980 movement (from $134.50 to $850) and the gold rally that started in 2001. In August of 2011, I said that we have entered Phase 2 of the gold rally, based upon the dramatic increase in volatility.
When did the increasing volatility start Phase 2 of the Gold rally?
Looking at trading from 2010 and 2011 it was easy to see. Between Jan 1st of 2010 and July 31st 2011 (577 days), gold traded between $1,121 and $1,628 per ounce. There were only 8 days (1.3% of the 577 Days) when the gold price increased/deceased more than $30, and 0 (zero) days with a move of $40 or more. Between August 1st and Dec 31st 2011, there were 153 days when gold traded between $1,520 and $1,920 per ounce, and there were 34 days (22% of the 153 Days) when gold increased/deceased more than $30, with 8 days when the move was over $50 (including 2 days when the gold price changed more than $100 in just 24 hours.)
What will result from Phase 2 volatility?
I believe that in Phase 2 of the current gold rally we will see the average annual gold price increase over the next 3 years, surging from the 20% average of the past ten years, to 40%. Gold will reach $4,000 per ounce by 2015 before we get to the final Phase Three, when the gold market explodes.
Phase Three will be short and explosive.
Back in 1980, Phase Three only lasted for 21 days, but increased 66% in that time span. Considering the ten year time span of Phase One, and my projection for Phase Two, I feel that Phase Three (which starts in 2015) will last for six months and drive gold up to over $6,000 per ounce. If the world’s financial leaders decide to return to a Gold Standard, or if gold bullion confiscation becomes the government’s reaction to severe inflation, my projections would escalate. Possible other government reactions that can affect my projections negatively are: limiting gold ownership, restrictions on transporting or trading, and any Gold windfall profits tax.
By Barry Stuppler
March 5th 2012
http://www.kitco.com/ind/Stuppler/20120307.html
Gold Remains in Consolidation
Thursday March 08, 2012 13:31
With Gold’s failure at $1800, it should be obvious that the market is in a protracted consolidation. This is actually similar to 2006-2007 and it is something we wrote about in a missive in early January. At the time, Gold had bottomed and had the luxury of very strong support nearby. We believed Gold would be range bound, but because it was emerging from support, it would have an upward bias. With Gold’s failure at $1800, now we can say range-bound with a downward bias.
Before we get to today, I wanted to look at the 2006-2007 consolidation once again. Note that Gold had a nice rally from point C to point D. After a more than 50 retracement, Gold rallied from point E to point F. The lows were clearly in but the consolidation continued for several more months.
A similar pattern to 2006-2007 continues to unfold. If the pattern continues then Gold should bottom at point E, which is slightly above the 300-day moving average. The same happened in early 2007.
Judging from the price action and moving averages, Gold should have very strong support at $1600-$1650.
After a rip roaring two year period in which Gold advanced from about $950 to $1900, the metal is in consolidation and digestion mode. After strong advances a market needs time to attract new buyers and new demand. Profits are taken and resistance emerges. This is why and how a consolidation develops. Then the market moves back and forth between supply and demand. Gold has been consolidating for six months. That is hardly enough to digest a 24 month move. At a minimum, we’d expect three more months of consolidation and perhaps five.
Fear not gold investor. You should appreciate these consolidations. They will make you a better investor. You will learn how to buy lows and not get excited near highs. Buying lows is exactly what you should focus on. Gold has strong support at $1600-$1650 and that is an area to accumulate. Make a short list of your favorite companies and evaluate potential high reward/risk target prices. Now is the time to focus on your favorites and get ready to buy. Not when the market is surging to new highs. If you’d be interested in professional guidance in this endeavour then we invite you to learn more about our service.
By Jordan Roy-Byrne, CMT
March 8th, 2012
Jordan@TheDailyGold.com
TheDailyGold
http://www.kitco.com/ind/Trendsman/20120308.html
Comex Gold Weakens Modestly Following U.S. Jobs Data
9 March 2011, 8:47 a.m.
By Jim Wyckoff
Of Kitco News
http://www.kitco.com/
(Kitco News) -Comex gold futures prices have backed off a bit from early slight gains in the wake of a U.S. jobs report that came in near market expectations, but was nonetheless a fairly good report for the U.S. economy's continued recovery. The U.S. dollar index moved to its session high following news that U.S. non-farm payrolls rose by 227,000 in February. Forecasts had called for a rise slightly below that level. Also, the past two months' non-farm payrolls numbers were revised upwards. The gold and silver futures markets backed off following the jobs report, as the U.S. dollar index rallied. The better employment statistics coming out of the U.S. also hint the Federal Reserve will be able to back off on its quantitative easing efforts of the past few years--which is also not bullish for the raw commodity sector. April gold last traded down $11.00 an ounce at $1,687.50.
By Jim Wyckoff of Kitco News; jwyckoff@kitco.com
http://www.kitco.com/reports/KitcoNews20120309JW_update.html
PDAC2012: Murenbeeld: Bullish Reasons Outweigh Bearish Reasons For Gold's Outlook
04 March 2012, 6:29 p.m.
By Debbie Carlson,
Global news editor, Kitco News
Toronto-(Kitco News)--Gold prices still have further room to rise as more bullish reasons than bearish reasons give the yellow metal support, said a leading Canadian economist on Sunday.
Martin Murenbeeld, chief economist for DundeeWealth, said his forecast for the average price for gold in 2012 is $1,825 an ounce, and he sees gold trading at $1,942 by the end of the year. His 2013 average price forecast is $2,145. He said, however, that price outlook makes "no allowance for geopolitics."
He spoke at the PDAC2012, the Prospectors & Developers Association of Canada's annual convention, which occurs from Sunday to Wednesday in Toronto.
There are 10 bullish reasons why gold should go up and eight bearish reasons why gold should go down, Murenbeeld said, which makes him favorable toward the yellow metal.
On the bullish side, gold is supported by the following reasons, Murenbeeld said:
- Monetary reflation as the U.S. Federal Reserve and European Central Bank print money
- a fundamentally weak dollar
- countries seeking to diversify their currency reserves
- central bank buying
- only a slight increase in mine supply
- investment demand
- the commodity price cycle remains bullish
- gold is not in a bubble and has room to rise
- inflation in the emerging markets
- and potential geopolitical conflicts send people back to gold as a safe haven.
Of all of those reasons, monetary reflation is the most important, Mureenbeeld said. It's the liquidity that is in the market from ultra-low interest rates from central banks around the world, and the stimulus programs to encourage demand that is giving support to gold and other markets. Since 2001 when the current long-term bull market started in gold, there have been seven corrections in price that were more than 10%, including when the global recession hit in 2008-09 and last year during the European worries, he said. Yet since the lows reached during the 2008-09 recession, when prices fell to the low $700 an ounce area, gold prices have rallied to more than double that level.
He also doesn't think that gold's rally is over. Since 1800, gold's shortest rally was 10 years. The current gold bull market is just 10 years old. Given the influence of the "BRIC" countries – Brazil, Russia, India and China and the debt problems of western nations, he doesn't see gold's rally ending soon.
Murenbeeld cautioned that gold has some potential drawbacks to its outlook that those who wish to buy the metal should consider. He listed eight reasons that might weigh down gold:
-The EU recession could lead to fiscal retrenchment and deflation
-China falls into a recession and commodity demand plunges
-physical demand weakens because of high prices and weak economic growth
-the U.S. dollar strengthens
-gold becomes the liquidity of the last resort for cash-strapped countries and investors
-equity markets improve
-miners stop dehedging and begin hedging again
-and monetary policy changes and real interest rates rise again.
Recessions are price-negative for gold and commodities in general. When he mentioned the chance of China falling into a recession, he said that means China having growth under 6%.
Also, he said there is talk about governments selling gold to pay down their debts, including the U.S. selling its gold reserves to do deal with their debts. "That would be the most stupid thing to do. You never sell your gold when you can print money," he said about the U.S.
"When you need to sell your gold is when no one wants whatever else you can give them," he added.
After his session, Murenbeeld was asked what might happen to gold if Israel attacked Iran. He said gold would rally, much as it did during other politically tense situations. He said there were some media reports that if Israel struck Iran and Iran closed the Strait Hormuz, that oil prices might spike to $400 a barrel. If oil prices rose to that level, then gold prices would easily go over $2,000 an ounce quickly. That's just a guess, he said. But while it sounds like a sharp gold price jump, he points out that while a $500 move for gold, from about $1,700 to about $2,200 sounds like a lot, as a percentage it is not as big as oil going to $400 from the current $110 a barrel it is currently trading at.
http://www.kitco.com/reports/Kitco_News_Extensive_Coverage_DeC_Murenbeeld.html
METALS OUTLOOK: Gold Could Rebound Again Next Week, But Must Hold Key Price Levels
2 March 2012, 1:57 p.m.
By Debbie Carlson
(Kitco News) - Gold prices could rebound again next week as the underlying fundamentals of the longer-term outlook have not changed, but market watchers said the yellow metal needs to hold important technical chart price levels to resume rising in the short-term.
Prices were lower on Friday and on the week. The most-active April gold contract on the Comex division of the New York Mercantile Exchange settled at $1,709.80 an ounce, down 3.75% on the week. March silver settled at $34.338 an ounce, down 2.43% on the week.
In the Kitco News Gold Survey, out of 32 participants, 22 responded this week. Of those 22 participants, 14 see prices up, while six see prices down, and two are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.
Despite the sharp break in prices this week, those who are bullish on the metal remain undeterred, saying the long-term fundamentals for gold haven’t changed. Those fundamentals include the ultra loose monetary policy by western central banks and concerns about fiat currency, among other reasons.
Prior to gold’s price break this week, several markets watchers were concerned the rally was on the back of speculative buying as physical purchases weren’t accompanying this year’s price rise. That changed when prices fell more than $80 on Wednesday.
Early indications are that buyers, particularly out of Asia, saw this week’s price drop as an opportunity to add to holdings. Now that the calendar says March there is hope that seasonal trends will hold true as that Chinese and Indian purchasers will return to gold, analysts said.
“It will probably take a few more days for physical demand to really come in with full force. Another test of $1,700 may well do the trick. Physical buyers can afford to be a little more patient at this stage. After all, it is still very early in the month and there is plenty of time for the seasonal trend to kick-in. That prices exhibited a sense of calm after the storm (Thursday) is a good first step,” said Edel Tully, precious metals strategist at UBS.
Bart Melek, head of commodity strategy with TD Securities, also noted strong buying interest in the break, which bodes well for gold’s outlook. “The fact that investors purchased some 350,000 ounces of ETF held gold (now 78 million+ ounces total holdings) on the worst trading day this year, certainly serves as a good omen for later in the year and helps to convince us to continue to stay bullish,” he said, adding that TDS still expects gold to trade over $2,000 later this year.
TECHNICAL CHARTS SHOW SOME DAMAGE
Not everyone is convinced that gold will rebound quickly. Market participants who use technical charts as part of their trading tools are concerned that short-term and longer-term charts are now not so bullish.
Even those analysts who see prices rising next week said gold needs to hold between $1,680 and $1,700 to attempt another move higher.
Darin Newsom, Telvent DTN senior analyst, said he’s watching the U.S. dollar index. Because gold is dollar-denominated, it normally trades inversely to the greenback, so a higher dollar can pressure gold. Newsom noted the U.S. dollar index “has rallied off support and could look to extend its gains next week. If so, April gold could break out of its consolidation phase and move toward a test of technical support at $1,614.10.”
Ira Epstein, director of the Ira Epstein division of The Linn Group, is also a bit cautious regarding gold. He pointed out a pattern of lower highs and lower lows on a monthly technical chart. “What’s clear on this chart is (the) rally from the last break low (of) $1,525 hasn’t resulted in prices taking out the past recent high. If anything, a lower high has been made at $1,790.40. Take this out and the bull move should regenerate. Until then, a trading affair is what is likely to ensue,” Epstein said.
If gold rebounds next week, the first area of resistance is at $1,743.70, which is the 18-day moving average of closing prices on the daily chart, as of Thursday’s settlement. If gold cannot push through there, then it might return to the $1,700 level, he said.
Frank Lesh, futures analyst at FuturePath Trading, said he wouldn’t be surprised if gold spends some time licking its wounds before seeking a new direction and following the foreign exchange markets.
“Gold continues to exhibit a strong correlation to the currency markets and it is no surprise that gold peaked with the euro, and sold off with it as well. Many traders were disappointed with gold when it would not trade up to and through the $1,800 level and profit taking ensued…. I expect some consolidation for now and expect prices to be range bound and sideways for next week, as is usually the case after a move of this magnitude. The currency markets will continue to be the main driver of price for gold,” Lesh said.
By Debbie Carlson of Kitco News dcarlson@kitco.com
http://www.kitco.com/reports/KitcoNews20120302DeC_outlook.html
Survey Participants See Gold Prices Rising Next Week
Friday March 02, 2012 12:17 PM
Bullish traders continue to dominate the Kitco News Gold Survey, as a majority of survey participants expect prices to rise next week.
In the Kitco News Gold Survey, out of 32 participants, 22 responded this week. Of those 22 participants, 14 see prices up, while six see prices down, and two are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.
Those who see higher prices next week remain confident the trend for gold continues to be higher, despite the sharp break in values this week.
“Worldwide economic and political factors have not changed,” said Carlos Perez-Santalla, precious metals broker, PVM Futures, who sees prices up next week.
Several also said the break in gold this week was healthy for a market that was in need of a price correction, given that values had not retreated much at all since 2012 started.
There is some caution with a few people who expect higher prices next week. Several said they want to see gold holding support at the $1,680 to $1,700 area in order to build a floor to eventually target the $1,800 level again.
Those who see weaker prices next week generally point to technical charts for that view. The break in prices has turned them short-term bearish. One participant who expects weaker prices – and was one of the few bears last week – said the fall in values was similar to the break of the uptrend support in early December that eventually took gold from $1,750 to $1,550.
Adam Hewison, president and chief strategist with INO and MarketClub.com, said all of his technical chart indicators are negative on gold. “We are looking for this market to hit $1,650 by the end of March. This would be a 61.8% Fibonacci retracement level and an important cyclic low for gold,” Hewison said.
Participants who are neutral on gold said the market is preparing for its next move and will likely be rangebound.
By Debbie Carlson of Kitco News dcarlson@kitco.com
A.M. Kitco Metals Roundup: Comex Gold Weaker Amid Bearish "Outside Markets"
02 March 2012, 7:46 a.m.
By Jim Wyckoff
(Kitco News) - Comex gold futures prices are trading modestly lower in early, quieter trading Friday morning. The market is consolidating and the bulls are trying to regain their footing following Wednesday’s big sell off. The key “outside markets” are bearish for the precious metals markets early Friday, as the U.S. dollar index is solidly slightly higher and crude oil prices are lower. April gold last traded down $7.70 at $1,714.50 an ounce. Spot gold was last quoted down $4.10 an ounce at $1,714.00. May Comex silver last traded down $0.476 at $35.185 an ounce.
Losses in gold are being somewhat pared Friday morning on reports of good physical demand for gold coming out of Asia, especially China, after this week’s big drop in price.
The U.S. dollar index is trading solidly higher Friday morning, on more short covering after prices hit a fresh 3.5-month low Wednesday. The stronger greenback Friday is a bearish outside market force for the precious metals. Meantime, Nymex crude oil futures prices are trading lower, which is a negative factor for gold and silver. The U.S. dollar index and crude oil will remain two important outside market forces that will have a daily impact on the precious metals markets.
It’s fairly quiet Friday so far on the European Union sovereign debt crisis front. The big European Central Bank refinancing operation on Wednesday is feeding a more positive attitude in the market place late this week. Still, the overall EU debt crisis remains a major underlying bullish factor for safe-haven gold, and the problem is not going to just go away any time soon.
U.S. economic data due for release Friday is light and includes the ISM New York business index.
The London A.M. gold fixing was $1,714.50 versus the previous London P.M. fixing of $1,714.00.
Technically, April gold futures prices are consolidating Wednesday’s big downdraft. The gold market bulls have faded and need to show fresh power soon to avoid more near-term chart damage. The bulls’ next upside price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,792.70. Bears' next near-term downside price objective is closing prices below solid chart support at this week’s low of $1,688.40. First resistance is seen at Thursday’s high of $1,727.30 and then at $1,740.00. First support is seen at $1,700.00 and then at $1,688.40.
From an important longer-term technical perspective, the gold market bulls can take solace from the fact the 11-year-old price uptrend in the yellow metal remains fully in place, and Wednesday’s sharp sell-off, by itself, is so far insignificant from a longer-term technical perspective. And if the market price history of the past 11 years repeats itself, which technical odds suggest will be the case, this dip in gold prices will eventually prove to be a bargain-hunting buying opportunity. From a longer-term technical perspective, the path of least resistance for gold prices remains up, and will remain up until the longer-term price downtrend is broken. It would take a move in nearby Comex gold futures below the $1,500.00 level to begin to inflict significant longer-term chart damage to just begin to suggest the longer-term uptrend is ending.
May silver futures bulls have also faded a bit this week, but no serious chart damage has occurred. Prices are still in a two-month-old uptrend on the daily bar chart. Silver bulls did step up and show fresh power Thursday. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $37.58 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the February low of $32.715. First resistance is seen at the overnight high of $35.56 and then at $36.00. Next support is seen at Thursday’s low of $34.455 and then at $34.00.
By Jim Wyckoff of Kitco News; jwyckoff@kitco.com
http://www.kitco.com/reports/KitcoNews20120302JW_am.html
Why I still like gold: Jim Cramer
(From Starboy at Goldbugs)
Attempts to pin the metal's Wednesday collapse on Fed Chairman Ben Bernanke are far-fetched.
Nevertheless, I believe the chart took gold down, and the chatter on the decline always proceeds to assume that, at last, gold is finished as an investment. Gold bugs were already reeling from the annual assault on gold from Warren Buffett, who seems to have been wrong on gold for the last decade, and yet still remains someone who has the last word on it. It was yet one more element of weirdness that helped define the trading action.
Put it all together, and I find nothing sufficient to drive the decline in gold, other than sell stops from an ugly triple-top. In this wacko market, that may be all that's really driving the precious metal.
I remain bullish on gold because:
1.Central bankers are still printing money.
2.Rates are still so low that you can finance gold purchases for next to nothing.
3.We have seen no increase in supply, courtesy the difficulty of finding the stuff.
4.China, and the Chinese people, are huge buyers.
5.The Israel-Iran missile crisis.
Despite the endless attempts to pigeonhole gold as being wedded to the dollar, gold remains wedded only to itself and to its own supply and demand. Still, the fact that gold has gone up for 11 straight years, in strong dollar moments and weak dollar moments, means nothing to the gold bears who pontificate genuine gibberish on gold's every percentage move.
Full article link:
http://money.msn.com/top-stocks/post.aspx?post=917c04c0-9d18-4c9f-882d-ef4737f95608
Starboy
Did Ben Bernanke kill the gold rally?
By Paul R. La Monica
March 1, 2012: 12:46 PM ET
Gold and silver plunged Wednesday during Ben Bernanke's congressional testimony. But they bounced back Thursday and are stll up sharply year-to-date.
NEW YORK (CNNMoney) -- Just call it the gold cold.
The yellow metal plunged 4% Wednesday after investors interpreted comments from Federal Reserve chairman Ben Bernanke at his semi-annual hearing before the House as a sign that the Fed would not be launching a third round of quantitative easing, or QE3.
Silver and other precious metals were crushed too. Generally, investors view more quantitative easing by the Fed, i.e. the purchase of long-term bonds in order to keep rates low, as bullish for commodities.
That's because QE and its offspring QE2 and Operation Twist -- swapping short-term bonds for long-term ones -- essentially amount to the Fed printing money. That reduces the value of the dollar, boosts the price of assets traded in it (like oil) and raises inflation fears. All that is music to the ears of a gold bug.
So the lack of any strong QE3 hints from Bernanke must be terrible news for gold, right? Wrong. Like many common viruses, the gold cold looks like it may merely be one of the 24-hour variety.
Gold and other commodities bounced back Thursday. And several investing experts think that Wednesday's sell-off is likely a short-term blip.
"A rogue wave of risk aversion roiled the precious metals markets Wednesday. It was an extraordinary move for gold and silver, a textbook pullback," said Richard Ross, global technical strategist with Auerbach Grayson, a brokerage firm in New York "But gold still looks strong."
In fact, the drop in gold Wednesday shouldn't be that big of a surprise since gold prices had run up more than 10% so far this year before Bernanke's testimony.
"What the rebound on Thursday shows you is that investors used the dip as an excuse to get back in to gold. The move didn't seem to do any psychological damage," Ross said.
Madeline Schnapp, director of macroeconomic research for TrimTabs, a research firm based in Sausalito, Calif., agreed. She called Wednesday's metal meltdown an "overreaction."
Betting on $2,000 gold
Schnapp said that even though Bernanke didn't explicitly endorse the idea of QE3, the market still is anticipating some form of additional Fed stimulus later this year. After all, Operation Twist ends in June.
Plus, Bernanke didn't talk about the economy being in great shape. That's why the Fed has pledged to keep a key short-term rate near zero until the end of 2014. All signs still appear to point to the Fed remaining in an easing mode for a long time. That's good for gold.
"The market loves liquidity. It feeds on it. If there are any hints the punchbowl will be removed, that will be bad," Schnapp said. "But the market is expecting some further forms of easing and the gold market is anticipating an ongoing decline in the dollar."
Jeff Sica, president and chief investment officer of SICA Wealth Management in Morristown, N.J., said that he thinks Bernanke is in a bind. Just because Bernanke didn't send QE3 smoke signals doesn't mean that there still won't eventually be more easing.
Why the stock market rally won't last
The Fed chairman likely needs to talk down the possibility of QE3 because he doesn't want already high commodity prices to shoot even higher.
"The moment you mention printing money, commodity prices shoot up. So Bernanke will wait until things get ugly again before talking more about QE3," Sica said.
However, Sica is convinced that Bernanke is ready to pull the QE3 trigger later this year -- especially if economic growth and the recent recovery in the job market begin to cool again.
That's why he said he bought more precious metals Wednesday even as prices were falling. He purchased the ETFS Physical Swiss Gold Shares (SGOL), ETFS Physical Silver Shares (SIVR), ETFS Physical Palladium Shares (PALL) and ETFS Physical Platinum Shares (PPLT) exchange traded funds.
"Bernanke has only one card up his sleeve. If high oil prices undermine the economic recovery, he will play that card -- despite the fact that more quantitative easing could lead to even higher commodity prices," Sica said.
http://money.cnn.com/2012/03/01/markets/thebuzz/index.htm?iid=HP_LN
Reported massive 31 tonne sell order triggered gold and silver price collapse
Does the crash in gold and silver prices, reportedly due to a single huge 31 tonne gold sell order, create a window of opportunity for precious metals investors?
Author: Ross Norman
Posted: Thursday , 01 Mar 2012
A reported 31 tonne sell order on the CME rocked gold which saw prices collapse from a high of $1790 in London hours to $1703 during NY trading, followed by a further dip to the low of $1687 in out of hours electronic trading. A fall of over 6% which erased roughly half of the gains since the beginning of the year.
Much has been placed on the testimony by Fed Head Bernanke but other markets saw less impact leading to suggestions that it simply provided an excuse for a particular "non US" fund to bail and take profits in dramatic fashion. It may be possible that the seller had hoped the 1,000 lot sell order would trigger stops and thereby exaggerate the move lower, allowing the buying to potentially come back in at a much lower price. Like the price, there is much speculation on their motive.
Ordinarily if a seller wanted to get the best price for his metal he would seek to finesse the selling over time, hunting out liquidity (finding people who are the other side of his sell order) and thereby ensure he gets the best possible profit. This seller was clearly simply out for effect.
Either way, market watchers enviously wishing to get into gold at an attractive level cannot complain that windows of opportunity do not present themselves from time to time. The long term gold story remains unchanged and that is to say :
• it is largely unreadable and volatile in the very short term, driven as it is by fast-moving news, political actions, policy decisions and economic events that are almost impossible to predict. In this environment, short term speculation is frankly a bit of a mugs game.
• however, it remains very positive for longer term investors (particularly pension funds) with very positive fundamentals (the market is supply constrained and demand remains robust) and the broad macroeconomic issues remain unchanged. Couple this with shifting pro-gold Central Bank attitudes plus producers manifestly opposed to hedging (and thereby crushing the bull run) and you have a compelling case for buying and holding gold. Best of all, new ways of accessing to gold with a multitude of products over a wide range of jurisdictions is likely to continue to fuel investment demand.
The tone of our reports might suggest (as one reader did) that we are permabulls - we are not and we will be first to let you know when our position changes... probably some time after 2015.
Gold is currently trading at $1720 - so a bounce of 2% so far. We would expect gold to perform a 50% retracement to $1738 within the next few days to confirm the short term bullish outlook. Failure to do so may well lead to consolidation at these lower levels pending a new direction being confirmed. Reaching $1738 and the speed that it does so will give us all a very clear indication of just how much buying interest really does underpin this market.
http://www.mineweb.co.za/mineweb/view/mineweb/en/page103855?oid=146427&sn=Detail&pid=102055
A Green Light For Gold
Ben Bernanke and the ECB give the go-ahead for a new bull run in gold
Since the beginning of this year, I’ve been warning investors that gold won’t take off on a sustained rally until we get two things:
1) Normalcy in the markets -- no more scary headlines warning of impending economic doom. These days, when investors think the global financial system is about to come crashing down, they run to cash (i.e., the U.S. dollar). Worse yet, speculators sell their long gold positions to raise cash.
I’ve been saying for months that, until things calm down enough for investors to buy gold for reasons of greed (or long-term protection) rather than outright fear, we won’t see a consistent uptrend for the metal and the mining shares.
2) A consensus on monetary reflation. The market at large needs to understand that the U.S. and Europe are facing massive money printing over the next few years. The mountainous debts that have been piled up can only be dealt with by dramatically expanding the supplies of dollars and euros. There is simply no alternative.
With these two prerequisites achieved, investors will understand that far higher prices are in store for gold, silver and other commodities, along with the associated equities.
The good news: It seems like these pieces are falling into place. The European Central Bank seems determined to provide whatever level of liquidity needed to keep the eurozone afloat. And in Fed Chairman Ben Bernanke’s recent Congressional testimony, he steadfastly maintained his resolve for loose-money policies through 2014, despite improving employment numbers since the last Fed meeting.
In addition, the Bank of England recently boosted its quantitative easing plan to 325 billion pounds, while the ECB also agreed to take on more risk via looser collateral requirements for its liquidity programs.
It all adds up to more money, and lots of it, dumped onto the world’s markets. While central bankers acknowledge some inflationary risk, they also realize that there is simply no alternative, and these loose-money policies will also have the salutary effect of lifting equity and real estate prices.
These central bankers probably also agree with my contention that, at least initially, this broad-scale monetary reflation in the West won’t have too much of an impact on retail price inflation. The price-depressing effects of low-price imports from the developing world (think Wal-Mart) will serve to dampen prices for consumers.
But these policies will provide rocket fuel to the commodity markets, particularly the metals. And, if we can avoid financial crises, this bull run will also lift the mining shares.
It’s already beginning to happen, and I think it’s very likely that this spring will see a very nice run in the metals.
By Brien Lundin
http://www.kitco.com/ind/Lundin/lundin_feb282012.html
Analysts Remain Mostly Upbeat About Gold's Prospects Despite Wednesday Sell-off
01 March 2012, 10:08 a.m.
By Allen Sykora
(Kitco News) - Analysts are retaining a generally upbeat tone on gold’s longer-term prospects, citing a continued low interest-rate environment in developed nations and generally referring to Wednesday’s sharp retreat as a “correction” rather than the start of something more ominous.
In fact, some say the rally since the start of the year had been fueled in large part by short-term speculative buying. And now that some of these speculators exited positions Wednesday, there is more ammunition on the sidelines to help gold rise again.
However, some also said, much may hinge on whether physical buyers in the Far East—who previously had been described as quiet for much of the new year—use the pullback as a buying opportunity.
Gold for April delivery got up to around $1,792 an ounce each of the last two days on the Comex division of the New York Mercantile Exchange, and the market was watching to see if it could breach psychological and chart resistance around $1,800 and just above. But then came seemingly innocuous congressional testimony on the U.S. economy from Federal Reserve Chairman Ben Bernanke Wednesday. Numerous pundits blamed the sell-off on the fact he did not hint at any further quantitative easing, when many had been expecting more such hints. Other commodity and equity markets also fell and Treasury yields rose.
“The positive take was that the Fed sees steady improvement in the data and that further stimulus may not be necessary,” said A.L. Waters Capital in its daily report to clients. “Still, it seemed that investors were a little bit shaken to think that the U.S. economy could, perceivably, be taken off life-support and left to stand on its own.”
Some, however, say gold’s sell-off may have been exaggerated as sell stops were triggered and many speculators who had bought on the rally in recent weeks started exiting en masse to either capture profits while they had them or else avoid losses.
“Yesterday’s price development makes it quite clear that the previous rise in prices had been driven mainly by speculation,” said a research note from Commerzbank. Analysts added: “We do not regard the price slump as sustainable and anticipate that the upswing will recommence soon.”
UBS precious-metals strategist Edel Tully pointed out that Bernanke’s remarks were not all that different than at his Jan. 25 press conference. She listed three factors for the extent of Wednesday’s retreat: “$1,800 was proving to be too much of a hurdle and a certain staleness had entered the market; positioning had increased very swiftly in recent weeks; and physical demand has been non-existent of late.”
The net length of the large non-commercial accounts, generally referred to as the funds, had increased to 201,637 as of Feb. 21, according to the most recent Commodity Futures Trading Commission report, an increase of 48% since Jan. 3.
Much will hinge on whether physical demand picks up, particularly after this week’s decline, analysts said. Such buyers often wait for prices to stabilize after a sharp correction before jumping back in, Tully said.
“We expect prices below $1,700 to attract decent interest from this sector,” she said. “Any signal pointing to a floor being near should offer some comfort to nervous investors. If physical buyers shy away, gold will be at risk of further losses.”
George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures, looks for gold to stabilize, although he also said it could take some time to absorb the selling that came into the market. He pointed out that some central banks are still looking to gold for their foreign reserves.
Roughly 1 ½ hours into Thursday’s Comex pit session, April gold was basically steady--down just a dime to $1,711.20 an ounce.
“Yesterday’s selling still has to be absorbed,” Gero said. “After that, I think it will be back to basics. I think it was a major correction and we’re staying in an uptrend as long as we don’t break this $1,700 area….”
Analysts So Far Considering Decline Only A ‘Correction’
Afshin Nabavi, head of trading at MKS Finance, described himself as not giving up on gold. Should support hold around $1,700 to $1,675, this would provide a buying opportunity, he said.
“I think this is a very healthy correction,” he said. “A lot of people were waiting on the sidelines hoping for a move like that (so they could buy again).”
Mike Zarembski, senior commodities analyst with optionsXpress, said he was encouraged by the price action in the early going Thursday, with an absence of heavy follow-through selling so far. Much of Wednesday’s sell-off was technical in nature, he said, with the triggering of protective sell stops, which are pre-placed orders triggered when certain chart points are hit.
“Is this the start of the end of the gold upward trend? I tend to doubt it….I don’t think anything has changed economically,” Zarembski said. “The global economy is flooded with funds. I think the market may have over-reacted to Chairman Bernanke’s testimony yesterday, fearing that the easing policies are done for now. I don’t think he really said that at all. It (more easing) may not happen in the next weeks or months, but I don’t think the Fed is completely ready to throw in the towel on further easing, should the economy start to falter.”
Zarembski pointed out gold has been moving mostly straight up since the start of the year without a meaningful correction. “Unfortunately, it all happened in one day,” he said. “But I think it was just a correction that will probably end up restoring some health to the bull market.”
After Wednesday’s decline, Barclays Capital said it is retaining its forecast for gold to average $1,700 in the first quarter and $1,875 for the full year.
Gold still faces some near-term hurdles, such as bouts of dollar strength, broad risk reduction and profit-taking, Barclays said. However, Barclays said the pullback is a “healthy correction and, in our view, the broader macro back drop remains gold-favorable given the negative interest rate environment, longer-term inflationary concerns and lingering sovereign-debt uncertainties.”
Wednesday’s steep price decline was “difficult to stomach” for bulls, said UBS’ Tully. “But it doesn't change our core positive view on gold. What could test that view is whether markets start to really price in the possibility of the Fed raising rates before the current 2014 window. Wednesday's testimony from Bernanke didn't move that needle. But for gold, it is one of the potentially severe downside threats.”
Otherwise, she said, expansion in the balance sheets of the Bank of Japan, European Central Bank, Federal Reserve and Bank of England is a reason to remain bullish on gold, as well as the pick-up in inflation expectations, rising energy prices, an underlying good physical-demand story and currency debasement. “We don't think those factors have changed in the last 24 hours, and positioning now is certainly much cleaner after yesterday's washout.”
By Allen Sykora of Kitco News; asykora@kitco.com
http://www.kitco.com/reports/KitcoNews20120301AS_gold.html
Guest Commentary: Gold & Silver Outlook for March 2012
Feb 29, 2012 (DailyFX via COMTEX) --
Will gold and silver prices reignite their rally from January and trade up during March 2012? Let's analyze the metals market for February and provide a short outlook for gold and silver for March 2012. Following the sharp gains for gold and silver during January when gold price rose by 11% and silver by 19.15%, the situation in February was much different. Gold increased by only 2.07% from the end of January; silver has added 6.49% to its value. What were the events and decisions that may have affected the direction of gold and silver during February? Part of it might have to do with the recent decision of the EU leaders to approve the bailout package for Greece. Will gold and silver prices reignite their rally from January and trade up during March 2012? Let's analyze the metals market for February and provide a short outlook for gold and silver for March 2012.
Gold and silver started February with little changes; this no-trend, however soon turned into sharp gains.
Let's divide February into two parts: the table below divides the month to two with the breaking point at February 17th; during the first part of February, gold declined by 0.8% and silver rose by only 0.1%. During the second part of February, silver rose by 6.4% and gold by 2.9%.
During the first part of February, the USD slightly depreciated against the Euro, CAD and AUD; the last two currencies are usually strongly correlated with metals; during the second part of February, the USD sharply depreciated mainly against the Euro; this shift might partly explain the sharp increase of gold and silver during the second part of the month.
The next chart presents the shifts in the ratio of gold to silver during February; the ratio didn't change much during the month until the last few days of the month when the ratio plummeted. The ratio decreased as silver has outperformed gold. In the last week of February the ratio declined to nearly the 50 mark - lowest mark since October 2011.
Here are several factors that may have contributed to gold and silver to trade up during February:
The decision of EU ministers of finance to approve the next bailout package to Greece (see below for more on this subject); Following said decision, the Euro sharply appreciated against the U.S. Dollar mainly during the penultimate week of February; The U.S. federal deficit grew by 27 billion during January 2012; this expansion slightly raised the uncertainty level in the market; The rise in U.S long term securities yields during most of the month;
Outlook March 2012
Here are several factors to consider that may affect the direction of gold and silver:
In the February report, the U.S labor added 243k jobs to the labor force. This report has had a negative correlation with gold and silver prices via the U.S dollar.
The upcoming testimony of Bernanke on March 1st and even more importantly the FOMC meeting which is set to March 13th could shake up the precious metals market. If there will be another announcement of monetary easing such as QE3, it could promptly and positively affect gold and silver. But I speculate there won't be a big announcement of QE3.
In conclusion, I speculate gold and silver will continue to trade up at a similar slow pace during March as they did during most of February; there might be large gains to gold and silver if the Federal Reserve will hint of another QE plan (but I doubt that). On the other hand, as the month will progress, I also speculate gold and silver might trade down if the concerns regarding the European debt crisis will reignite. If the U.S. will continue to show signs of recovery it could also negatively affect the direction of precious metals prices. Finally, if the major "risk currencies" will rise as they did during February (mainly the Euro) this could also pressure up precious metals.
http://futures.tradingcharts.com/news/futures/Guest_Commentary__Gold___Silver_Outlook_for_March_2012_174379575.html
Market Nuggets: FuturePath's Lesh: Gold Sags After Bernanke Remarks, End-Of-Month Profit-Taking
29 February 2012, 9:53 a.m.
Kitco News) - Comex gold futures fell sharply from multi-month highs on the combination of profit-taking and congressional testimony by Federal Reserve Chairman Ben Bernanke, says Frank Lesh, broker and futures analyst with FuturePath Trading. Bernanke's remarks seem to have been construed by some market participants as meaning less chance of another round of quantitative easing, Lesh says. The Fed chairman says the Fed will be watching future data closely due to “somewhat different signals” lately from the labor market. Lesh also links some of gold’s weakness to end-of-month profit-taking that may have occurred regardless of the Fed chairman’s remarks. “We’ve had a nice run (higher) in equities, gold and crude,” Lesh says. Also, he says, some disappointed long liquidation might be occurring since April gold got just above $1,792 an ounce both Tuesday and Wednesday but was not able to sustain its upward momentum, putting in a double-top for now. As of 10:43 a.m. EST, April gold was $16.90, or 0.9% lower at $1,771.50 an ounce.
By Allen Sykora of Kitco News; asykora@kitco.com
http://www.kitco.com/reports/KitcoNewsMarketNuggets20120229.html
A.M. Kitco Metals Roundup: Comex Gold Firmer Amid Weaker U.S. Dollar, Bullish Technical Posture
28 February 2012, 7:59 a.m.
By Jim Wyckoff
(Kitco News) - Comex April gold futures prices are modestly higher in early U.S. trading Tuesday. The weaker U.S. dollar index is a supportive daily “outside market” factor for gold Tuesday. The technical postures for gold and silver remain overall bullish, which continues to invite trader and investor demand. April gold last traded up $5.70 at $1,780.60 an ounce. Spot gold was last quoted up $11.00 an ounce at $1,769.50. March Comex silver last traded up $0.326 at $35.85 an ounce.
The U.S. dollar index is trading weaker Tuesday morning. The dollar index bears have downside technical momentum on their side and that is a near-term bullish factor for gold and silver. Meantime, Nymex crude oil futures prices are trading near steady, but not far below the 9.5-month high hit last week. The recent rally in crude oil prices is also a bullish factor for the precious metals.
On the European Union sovereign debt crisis front, the Standard & Poors ratings agency overnight said Greece is in a default status in its ratings. That move was not surprising. There was a decent Italian bond auction Tuesday. Traders are awaiting another European Central Bank liquidity infusion on Wednesday to see how it is received by the market place. This entire EU situation is a major underlying bullish factor for safe-haven gold.
U.S. economic data due for release Tuesday includes the Goldman Sachs and Johnson Redbook weekly retail sales reports, durable goods orders, the S&P/Case-Shiller home price index, consumer confidence index and the Richmond Fed business survey.
The London A.M. gold fixing was $1,774.75 versus the previous London P.M. fixing of $1,772.00.
Technically, April gold futures bulls still have some upside near-term technical momentum and have the solid overall near-term technical advantage. Prices could close at a very bullish monthly high close on Wednesday. Bulls' next upside technical breakout objective is to produce a close above solid technical resistance at the November high of $1,808.00. Bears' next near-term downside price objective is closing prices below solid technical support at the February low of $1,706.70. First resistance is seen at last week’s high of $1,789.50 and then at $1,800.00. First support is seen at the overnight low of $1,767.00 and then at this week’s low of $1,762.60.
March silver futures prices hit a fresh five-month high overnight and bulls have the solid overall near-term technical advantage and have fresh upside near-term technical momentum. Prices are in a two-month-old uptrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $37.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $34.00. First resistance is seen at $36.50 and then at $37.00. Next support is seen at $35.50 and then at the overnight low of $35.315.
By Jim Wyckoff of Kitco News; jwyckoff@kitco.com
http://www.kitco.com/reports/KitcoNews20120228JW_am.html
Gold Stocks at the End of Wall of Worry Stage
By Jordan Roy-Byrne, CMT
Feb 24 2012 10:12AM
Over the past few months we’ve analyzed gold stocks from a historical perspective. We’ve compared this bull market to the past bull market as well as historical bull markets in equities. We’ve found that nothing is out of the ordinary. Gold stocks are not being manipulated. In fact, this bull market is actually ahead of the bull market in the 1960s and 1970s. They are following a typical bull market which evolves in three stages: the stealth phase, the wall of worry phase then the bubble or public phase. The wall of worry stage entails many twists and turns and marginal new highs along the way. Profits continue to rise but valuations drop as investors remember the first major correction of the bull market.
Gold Stocks have quietly rebuilt momentum. GDX reversed its breakdown in January and has steadily climbed back. One thing of note, the daily RSI has not pierced 70 since May 2010. Momentum has subdued for almost two years while the gold stocks have not had a rip roaring breakout to new highs since early 2006!
Though GDX is trading above its 2008 levels, it has never pulled away from or sustained a breakout through that level of 55. We are essentially looking at a multi-month consolidation but a potential breakout from a multi-year base. Should GDX rally back to 66 it would setup a potential cup and handle pattern which would project to 82. By the time the market breaks 66 it should have some serious momentum behind it and of the character that we haven’t seen since early 2006.
We believe there are a variety of driving forces (aside from the obvious) for a continued advance and break to new highs. First, the stock market is nearing long term resistance. It could fail at resistance coinciding with precious metals challenging new highs. Second, the combination of low valuations and a move in Gold to new highs would be very explosive. The market would realize that earnings are growing rapidly yet valuations are near a floor. Third, the large gold producers are increasing their dividends. According to Bloomberg:
Agnico and Kinross said Feb. 15 they will increase their payouts to investors. Barrick, Goldcorp and AngloGold have also announced dividend increases in the past year. Newmont Gold, the second-biggest gold miner by sales, said yesterday it’s more than doubling its quarterly dividend, 10 months after announcing it would link payments to the gold price.
Increased dividends will attract more mainstream investors who can achieve income, inflation protection and exposure to a bull market. However, the real gains will be in juniors who can grow their production or juniors which outline significant discoveries. That is what we cover in The Daily Gold Premium.
Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com
http://www.kitco.com/ind/Trendsman/feb242012.html
Gold Prices Expected To Rise Next Week; $1,800/Oz Possible Target – Survey Participants
Friday February 24, 2012 12:09 PM
Most participants in the weekly Kitco News Gold Survey are expecting gold prices to rise next week, with $1,800 an ounce a possible upside target.
In the Kitco News Gold Survey, out of 32 participants, 24 responded this week. Of those 24 participants, 19 see prices up, while three see prices down, and two are neutral on prices. Market participants include bullion dealers, investment banks, futures traders, money managers and technical chart analysts.
Many of the survey participants cite the heightened saber-rattling between Iran and the Western nations as their reason to see gold prices rise.
“Increasing tensions with Iran could send both oil and gold much higher and copper lower. Given present trends, $135 per barrel Brent crude is compatible with $120 per barrel WTI (West Texas Intermediate) crude, $2,000+ per ounce gold and $40+ per ounce silver,” said Richard Baker, editor of the Eureka Miner.
Others suggested technical chart reasons, that the recent upward momentum will continue to lift gold.
Those who see weaker or are neutral both said that gold might struggle in its attempt to recapture the $1,800 level which tempers their outlook.
Those who look for prices to pull back do not expect a sharp break, but more of a correction in values. “The gold market has steadily been going up without there being a correction… and the lack of physical flow will probably send gold down; it will be a good opportunity for the market hunters to buy gold before it goes up again,” said Afshin Nabavi, head of trading at trading house MKS Finance.
Finally, many survey participants said if the tough talk between Iran and the West starts to cool, gold will inevitably retrace this current rally.
By Debbie Carlson of Kitco News dcarlson@kitco.com
http://www.kitco.com/kgs/goldsurvey_february24.2012.html
Friday's Analytical Charts for Gold
http://www.kitco.com/reports/template_jimw.htm
How to unlock the value of gold holdings in Indian households?
MUMBAI (Commodity Online): Indian households have the largest gold holdings estimated at 25,000 to 30,000 tons. But is there a way out to unlock the value of the unaccounted treasure in Indian households?
Prithviraj Kothari, Director of Riddi Siddhi Bullions Ltd (RSBL) said that he expects the Union Budget 2012-12 to come out with an effective way to gain revenue by exporting the huge treasure. The Government can introduce a scheme whereby a minimum tax is imposed on such holdings which would increase the tax income and put the idle gold to effective use.
Another option is a voluntary disclosure scheme (VDS) which can enable the household gold and silver to be brought to the market, Mr Kothari added in a pre-budget note to Commodity Online.
India Government recently raised the import duty of gold from Rs 300 per 10 grams to 2% of value of the commodity to discourage imports. India’s gold import bill has risen from US$ 4.1 bn per in 2001-02 to $33.8 bn in 2010-11. The Prime Minister's Economic Advisory Council has estimated India's gold import bill to be $58bn in 2011-12 but expected to fall in 2012-13 on higher prices.
“Gold Deposit Schemes are offered by banks in which investors deposit gold for a period of certain years earning a fixed rate of interest. The depository scheme that the banks and mutual funds (MFs) are providing should also be allowed for corporates working for bullion industry. It will help to increase the gold reserves and in turn benefit the customers willing to deposit their idle gold,” Prithviraj Kothari said in a pre
Regarding the excise duty of 1% levied on branded Gold/Silver coins and small bars, Prithviraj Kothari said he expected the government to provide clarity on the definition of “branded goods”. Excise duty increase will hit the common man who is the biggest investor in these types of products. The products will be more expensive and in turn reduce his/her savings, he added.
http://www.commodityonline.com/news/how-to-unlock-the-value-of-gold-holdings-in-indian-households-46237-3-46238.html
P.M. Kitco Metals Roundup: Comex Gold Pushes Still Higher, At 3-Month High
23 February 2012, 2:22 p.m.
By Jim Wycko
Comex April gold futures prices ended the U.S. day session with solid gains Thursday, on good follow-through buying from Wednesday’s push higher. Prices Thursday hit a fresh three-month high of $1,789.50. Gold is being boosted this week by fresh safe-haven investment demand and on fresh upside near-term technical momentum. The key “outside markets” were also in a bullish daily posture for the precious metals Thursday, as the U.S. dollar index was lower and crude oil prices were solidly higher. April gold last traded up $15.00 at $1,786.30 an ounce. Spot gold was last quoted up $8.80 an ounce at $1,785.00. March Comex silver last traded up $1.296 at $35.55 an ounce.
The gold market is seeing fresh support from the present stare-down between allies Israel and the U.S, and Iran. The recent news Iran has halted oil shipments to some European countries, to pre-empt an EU ban on Iranian oil imports, has been met with increasing focus in the media on the potential for Israel or U.S. military action against Iran. The rising tensions between Israel and the West, and Iran, are and likely will remain a major bullish fundamental factor for the safe-haven gold market.
The Mid-East tensions have pushed the European Union sovereign debt crisis to the back burner this week. Strong German Ifo survey results Thursday lifted the Euro currency. However, the German data was muted by news the European Commission expects EU, as a whole, to slip back into economic recession this year.
The U.S. dollar index was lower Thursday, which was a positive for the precious metals. Trading in the dollar index has turned choppy and trendless just recently. Meantime, Nymex crude oil futures prices traded solidly higher and hit a fresh 9.5-month high on Thursday. The recent rally in crude oil prices is also a major bullish factor for the precious metals. Crude oil and the U.S. dollar index will remain the two key “outside markets” that will generally have at least some daily influence on gold and silver price moves.
The London P.M. gold fixing was $1,777.00 versus the previous P.M. fixing of $1,752.00.
Technically, April gold futures prices closed nearer the session high again Thursday. The bulls this week have gained strong upside near-term technical momentum. Gold bulls have the solid overall near-term technical advantage. Bulls' next upside technical breakout objective is to produce a close above strong technical resistance at the November high of $1,808.00. Bears' next near-term downside price objective is closing prices below solid technical support at the February low of $1,706.70. First resistance is seen at Thursday’s high of $1,789.50 and then at $1,800.00. First support is seen at Thursday’s low of $1,773.30 and then at $1,765.90. Wyckoff's Market Rating: 8.0.
http://www.kitco.com/reports/KitcoNews20120223JW_PM.html
Goldline agrees to pay refunds to ex-customers.
2/23/2012
Santa Monica, California, precious metals dealer, Goldline International Inc. one of the nation's largest gold retailers, as resolved a criminal prosecution by agreeing to refund as much as $4.5 million to former customers.
Goldline agreed to an injunction that requires the company to "change its unfair sales practices" and to disclose price markups in recorded telephone conversations with customers.
The Santa Monica city attorney filed a 19 count criminal complaint in November against Goldline, accusing the company of running a "bait and switch" operation in which customers seeking to invest in gold bullion were instead sold gold coins that were marked up more than 50%. Six current and former employees were also charged.
Goldline has used radio talk show host Glenn Beck as a pitchman.
The agreement calls for a third party to monitor the injunction and make sure the company is disclosing the markups, through undercover buys, recorded telephone calls, and meeting with employees.
stuart.pfeifer@latimes,com
Gold Miners Losing Capital to ETFs By Liezel Hill
Feb 23, 2012 1:42 AM PT
Feb. 16 (Bloomberg) -- Aaron Regent, chief executive officer of Barrick Gold Corp., talks about the outlook for the gold industry and production strategy. Barrick speaks on Bloomberg Television’s “InBusiness With Margaret Brennan.” (Source: Bloomberg)
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Barrick Gold Corp. (ABX) and Goldcorp Inc. (G), the world’s largest producers of the metal, are poised to outperform bullion after gold-mining companies fell to their cheapest in at least a decade, executives said.
[/b]Gold producers are heading for an “inflection point” triggering a rally, Barrick Chief Executive Officer Aaron Regent said in an interview. They have been punished as investors decided the shares should no longer trade as a proxy for physical gold, he said.
The growing popularity of gold-backed exchange traded funds, or ETFs, which include the $73.3 billion SPDR Gold Trust, probably have taken away some of the capital that previously was invested in companies such as Toronto-based Barrick, Regent said. Investors have shunned gold producers choosing instead to hold physical metal and ETFs after gold prices advanced in 11 successive years and touched a record in September.
The NYSE Arca Gold BUGS Index (HUI), which includes Barrick and 16 of its competitors, has advanced 53 percent in the past five years while spot gold traded in London has more than doubled. The index trades at about 17 times earnings, compared with an average of 65 over the past 10 years. The ratio fell to a decade low of 15 on Jan. 20.
“There will be a point where the multiples just converge with every other company,” Regent said Feb. 16 at Bloomberg News’s Toronto bureau. “Then you will start to see potentially increased leverage in the share price versus a gold price move.”
‘Investors Puzzled’
Holdings (.GLDTONS) of physical gold via ETFs have more than tripled in the last five years to 2,390 metric tons, an amount valued at about $137 billion, according to data compiled by Bloomberg. While such funds seek to track the price of gold, shareholders of gold producers may suffer the effects of mining accidents, cost overruns or asset writedowns.
Gold ETFs have “been a huge hoover of capital and competition for the gold companies,” Peter Miller, BMO Capital Markets’ head of equity capital markets in Canada, said in a Feb. 17 telephone interview. “It’s easy just to park yourself with an ETF versus taking on the capex creep and the operational risk of some of these development plays.”
Paulson & Co., the $23 billion hedge fund founded by John Paulson, said in its year-end letter that “investors remain puzzled” by gold stocks’ underperformance relative to gold. One likely explanation is concern that gold prices may decline, said Paulson, which is bullish on the metal.
Currency-Devaluation Play
Quantitative easing in the U.S. and other countries will lead to inflation, spurring more demand for gold as a hedge, the fund said in the letter, which was obtained by Bloomberg News. New York-based Paulson invests in the SPDR Gold Trust (GLD) as well as mining companies. The fund owned 12 percent of South Africa’s AngloGold Ashanti Ltd. (ANG) as of May 30 and 8.3 percent of Vancouver-based NovaGold Resources Inc. (NG) at Dec. 31, according to data compiled by Bloomberg.
Gold for immediate delivery gained 0.2 percent to $1,780.07 an ounce by 9:40 a.m. in London. It’s up 14 percent this year and reached a record $1,921.15 on Sept. 6.
While declining to give a specific estimate, Regent said he expects gold prices will surpass last year’s record.
“If fiat currencies continue to be devalued and gold just holds its value, on a relative basis it’s going to go up,” he said.
Rising Costs
Another reason for producers’ underperformance is that they’re valued by analysts and investors who assume a long-term gold price of about $1,300 an ounce, he said. Gold will average $1,798 in 2012 and $1,975 in 2013, according to the average of analysts’ estimates compiled by Bloomberg.
“There’s quite a significant gap between how the world’s traders see the gold price and how equity analysts, with their conservative forecasts, are looking at it,” Tye Burt, CEO of Kinross Gold Corp. (K), Canada’s third-largest producer, said in a Feb. 15 interview.
While investors are concerned that rising production costs in the industry will squeeze profit margins, gold-mining equities will “ultimately outperform, given the leverage in gold producers relative to the gold price,” Burt said.
Barrick, Kinross and Canada’s Goldcorp all forecast mining costs will increase in 2012 as labor, raw-material and equipment expenses keep rising. Another factor boosting costs is producers’ extraction of lower-grade ore that wouldn’t have been profitable when gold was cheaper, Regent said.
Dividend Increases
Gold producers’ valuations will be helped by higher dividend yields, said Sean Boyd, CEO of Toronto-based Agnico- Eagle Mines Ltd.
“We really need to attract a broader range of investors,” Boyd said in a Feb. 16 interview. “I think the industry can capture those investors if it shows discipline around capital spending and paying a bigger dividend yield.”
Agnico and Kinross said Feb. 15 they will increase their payouts to investors. Barrick, Goldcorp and AngloGold have also announced dividend increases in the past year. Newmont Mining Corp. (NEM), the second-biggest gold miner by sales, said yesterday it’s more than doubling its quarterly dividend, 10 months after announcing it would link payments to the gold price.
Such payouts are becoming increasingly important for gold miners, Donald Coxe, a Bank of Montreal strategy adviser, said in a Feb. 21 interview.
Premium Eroded
“While they’re waiting for the market to recognize the intrinsic value of these wonderful corporations, why don’t you pay them some money?” he said.
Still, even if gold producers outperform the metal, they may never fully recapture their old valuations, said David Christensen, CEO of ASA Ltd. in San Mateo, California, which manages $600 million.
“The ‘traditional’ premium has probably flown the coup,” Christensen said by e-mail. “There are just too many alternatives to buying gold shares today, such as ETF products, that have eroded the premium multiples.”
Barrick said Feb. 16 its fourth-quarter net income was little changed at $959 million. Sales advanced 26 percent to $3.79 billion, outpacing its so-called total cash costs, which rose 15 percent to $505 an ounce. Gold, which has gained for 11 straight years, averaged $1,687 an ounce in the fourth-quarter in New York, 23 percent more than a year earlier.
Goldcorp, the world’s second-largest producer by market value, has seen its cash flow more than double in the last three years, CEO Chuck Jeannes said in a Feb. 15 interview. The shares have risen 23 percent in the same period.
“That I don’t think is a sustainable trend,” Jeannes said. “At some point we become so inexpensive on a cash flow per share multiple that it makes no sense for buyers not to acquire the stock.”
To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net
http://www.bloomberg.com/news/2012-02-23/barrick-s-regent-says-gold-miners-losing-capital-to-etfs.html
Price rally triggers gold scrap sales; India quiet
Reuters – 7 hours ago.. ...
By Rujun Shen
SINGAPORE (Reuters) - Rallying gold prices triggered a wave of scrap sales in Asia's physical gold market, as traders took advantage of three-month high prices, while buying from top two consumers India and China remained muted.
Spot gold hit a three-month high of $1,781.40 an ounce on Wednesday, rising for a third day in a row on factors including agreement on Greece's bailout and hopes on further monetary easing.
"It's all about scrap business," said a Singapore-based dealer, adding that Indonesia has been selling while China was quiet.
"Chinese banks are stuck with more than sufficient physical stocks and we don't see any buying," he added. China does not allow exports of gold.
Thailand witnessed a mix of buying and selling. A five-month high bhat boosted the purchasing power of Thailand-based traders earlier in the week, while higher prices prompted selling to lock in profits.
In Singapore, gold bar premiums stood in the range of 70 cents to $1 an ounce, dealers said.
Physical dealers attributed the recent rally to rising investment interest, which offset the lukewarm demand on the physical bullion market.
"At this price level, most buying is from funds and investors, and there is very little buying on the physical side," said a Hong Kong-based dealer.
Dealers quoted gold bar premiums in Hong Kong in a range of 80 cents to $1.50 above London prices, steady from last week.
China's gold demand has eased since the Lunar New Year celebrations last month, while multi-week high gold prices dampened interest in India, the world's top gold consumer.
Easing inflation and a revival in stock markets could dent gold imports by India, pushing shipments down by about 35 percent in value terms in 2012/13, a government panel said on Wednesday.
In Japan, scrap sales also increased on the rising prices, causing the discount on gold bars to widen to as much as $1 an ounce below London prices.
WEEK AHEAD
Eyes will be on the injection of three-year low-rate funding by the European Central Bank on Feb 29, in a second long-term refinancing operation (LTRO) allotment.
Expectations of further monetary easing by central banks around the world could boost gold's appeal.
(Reporting by Rujun Shen; Editing by Richard Pullin)
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