One of the more relevant aspects of Basel III for our portfolios is its treatment of gold as an asset class note Eric Sprott.. Documents posted by the Bank of International Settlements (which houses the Basel Committee) and the United States FDIC have both referenced gold as a "zero percent risk-weighted item" in their proposed frameworks. ...
What the Basel III proposals do confirm is the regulators' desire for banks to improve their liquidity position by holding a larger amount of "high-quality," liquid assets in order to improve their overall solvency in the event of another crisis. ...
If the Basel Committee decides to grant gold a favourable liquidity profile under its proposed Basel III framework, it will open the door for gold to compete with cash and government bonds on bank balance sheets -- and provide banks with an asset that actually has the chance to appreciate. Given that US Treasury bonds pay little to no yield today, if offered the choice between the "liquidity trifecta" of cash, government bonds or gold to meet Basel III liquidity requirements, why wouldn't a bank choose gold? ...
If banks all bought gold as the non-Western central banks have, it is likely that they would all profit while simultaneously improving their liquidity ratios. If they all acted in concert, gold could become the salvation of the banking system. (Highly unlikely... but just a thought).
Friday, November 30, 2012
Gold will break $2,000 next year, Commerzbank says
Though gold futures have yet to recover from their $26/oz drop earlier this week, prices will continue to trend higher next year, partly from demand by exchange-traded funds, analysts with Commerzbank said Friday. ...
"The reason why the price is not climbing more sharply is that there is currently greater demand for cyclical metals," Commerzbank analysts said in a report, referring to base metals and precious metals with industrial applications, like palladium.
But physical inflows into gold exchange traded funds in recent days have been substantial, Commerzbank analysts said. ... "We are confident that the gold price will continue to climb in 2013."
In a separate report released Thursday, Commerzbank analysts also pointed loose monetary policies being pursued by major central banks and geopolitical risks as additional drivers of gold prices.
"We are confident that the gold price will achieve, and indeed exceed at least temporarily, the $2,000/oz mark next year," they said.
"The reason why the price is not climbing more sharply is that there is currently greater demand for cyclical metals," Commerzbank analysts said in a report, referring to base metals and precious metals with industrial applications, like palladium.
But physical inflows into gold exchange traded funds in recent days have been substantial, Commerzbank analysts said. ... "We are confident that the gold price will continue to climb in 2013."
In a separate report released Thursday, Commerzbank analysts also pointed loose monetary policies being pursued by major central banks and geopolitical risks as additional drivers of gold prices.
"We are confident that the gold price will achieve, and indeed exceed at least temporarily, the $2,000/oz mark next year," they said.
More information can be found online at http://www.goldbullionadvisors.com
Tuesday, November 27, 2012
Gold eventually will top $7,000, fund manager predicts
"I'm relatively confident [gold] will start to pick up in 2013 says Socrates exec. Charles Drace. Going longer, I see the economic situation getting worse because of the massive debt and government's inability to deal with it.
"Bullion banks won't be able to short it as it starts to climb, central banks will be buying it, inflation and all those barriers will come away because the debt has climbed and we haven't done anything about the economic situations that make it worse. We've borrowed more money to feed into it. In Greece, Spain and America we're making the debt worse; that would argue for gold as a safety. Then we have the other dynamics, [central banks] are printing trillions of dollars around the world to push the currency down. The IMF and BRIC (Brazil, Russia, India and China) countries have been talking about having some kind of a tradable currency to replace the U.S. dollar because the U.S. government with all their printing will devalue their dollar and that will hurt all the exporting countries because they're all priced in dollars. The discussion is around having 15-25% of this new trading currency in gold. The best way to think about it is as a trade-weighted asset. When I said a few years ago $5,000-an-ounce gold, now I'm thinking closer to $7,500 an ounce because things have got worse and these new dynamics will bode well for gold prices."
In a separate interview, Drace was asked: "Do you still think we'll hit the highs of $5,000?"
"I'm absolutely certain of it. In fact I think it'll be closer to $7,500 but I'd put the expectation for that price out a bit further. One of the dynamics of gold bullion as a safety investment is extreme problems in the economy. If you look at the long-term cycles, we're due to have a depression. We have everything we need to have one. We have the massive debt, imploding financial and economic worlds, we have governments who are totally without any clue about what to do about it (if they could, which I don't they can). I think the debt has gone too far for that. They're printing money and holding off the day of reckoning. You can see this so clearly in Spain in particular. And we see it in Greece and America. Figures out last week from America say as a percentage of GDP America has more debt than Greece. Governments will push out the depression as long as they can, but the further you push it out, the bigger the problem will become, the bigger the problem, the higher gold prices."
"Bullion banks won't be able to short it as it starts to climb, central banks will be buying it, inflation and all those barriers will come away because the debt has climbed and we haven't done anything about the economic situations that make it worse. We've borrowed more money to feed into it. In Greece, Spain and America we're making the debt worse; that would argue for gold as a safety. Then we have the other dynamics, [central banks] are printing trillions of dollars around the world to push the currency down. The IMF and BRIC (Brazil, Russia, India and China) countries have been talking about having some kind of a tradable currency to replace the U.S. dollar because the U.S. government with all their printing will devalue their dollar and that will hurt all the exporting countries because they're all priced in dollars. The discussion is around having 15-25% of this new trading currency in gold. The best way to think about it is as a trade-weighted asset. When I said a few years ago $5,000-an-ounce gold, now I'm thinking closer to $7,500 an ounce because things have got worse and these new dynamics will bode well for gold prices."
In a separate interview, Drace was asked: "Do you still think we'll hit the highs of $5,000?"
"I'm absolutely certain of it. In fact I think it'll be closer to $7,500 but I'd put the expectation for that price out a bit further. One of the dynamics of gold bullion as a safety investment is extreme problems in the economy. If you look at the long-term cycles, we're due to have a depression. We have everything we need to have one. We have the massive debt, imploding financial and economic worlds, we have governments who are totally without any clue about what to do about it (if they could, which I don't they can). I think the debt has gone too far for that. They're printing money and holding off the day of reckoning. You can see this so clearly in Spain in particular. And we see it in Greece and America. Figures out last week from America say as a percentage of GDP America has more debt than Greece. Governments will push out the depression as long as they can, but the further you push it out, the bigger the problem will become, the bigger the problem, the higher gold prices."
More information can be found online at http://www.goldbullionadvisors.com
Wednesday, November 21, 2012
"Gold will ultimately eclipse $5,000," Peter Schiff predicts on CNBC
"I don't know if it's two years, three years, it's hard to put a timetable on it, but I do believe that gold will ultimately eclipse $5,000," Euro Pacific Capital chief Peter Schiff tells CNBC in a Nov. 20 interview.
"I don't know how high it's going to go because there's no ceiling on how low currencies can go. There is no intrinsic value to the dollar, there's no intrinsic value to any fiat currency, there's no limit to how much money the central banks will print, and [Fed chief] Ben Bernanke has said that he's going to keep printing money until the economy gets better and we create jobs. Well, printing money isn't going to make the economy better; it's not going to create jobs. It's going to prevent the economy from recovering; it's going to destroy jobs, so he's going to print money indefinitely, so there's no bottom on the dollar, and so there's no ceiling on the price of gold."
After Schiff exits, two traders, one at the CME and the other at the Nymex, also weigh in with their opinions on gold, and it's important to note that both are bullish on the metal for the long haul.
"I don't know how high it's going to go because there's no ceiling on how low currencies can go. There is no intrinsic value to the dollar, there's no intrinsic value to any fiat currency, there's no limit to how much money the central banks will print, and [Fed chief] Ben Bernanke has said that he's going to keep printing money until the economy gets better and we create jobs. Well, printing money isn't going to make the economy better; it's not going to create jobs. It's going to prevent the economy from recovering; it's going to destroy jobs, so he's going to print money indefinitely, so there's no bottom on the dollar, and so there's no ceiling on the price of gold."
After Schiff exits, two traders, one at the CME and the other at the Nymex, also weigh in with their opinions on gold, and it's important to note that both are bullish on the metal for the long haul.
More information can be found online at http://www.goldbullionadvisors.com
Tuesday, November 20, 2012
ScotiaMocatta "would not be surprised" to see gold at $2,200
Even though dollar gold prices are relatively strong, ScotiaMocatta, the gold bullion banking division of Scotiabank, observes that gold in a host of currencies has reached record highs this year.
"What is interesting is that this represents a mixture of developed and emerging economies, which highlights the broad-based appeal of gold as an alternative currency."
Meanwhile, "having consolidated between September 2011 and September 2012, we feel gold prices have started another up leg that is likely lead to new highs during 2012," ScotiaMocatta said.
In their November 2012 Precious Metals Forecast, ScotiaMocatta declared "we would not be surprised to see prices reach $2,200/oz. Should prices undergo another correction in the short term, then we would look for good support around $1,600/oz."
"Eventually, once the bull market has run its course and there is less need for safe-havens, then we would look for prices to retrace back towards $1,100/$1,200/oz as investment gold is liquidated and supply surges, but we certainly do not expect that to happen in the year ahead."
In their analysis, ScotiaMocatta acknowledged, "There remain a multitude of factors influencing the gold price, but one of the main reasons we are still bullish is because of the mess the Western world is in."
"What is interesting is that this represents a mixture of developed and emerging economies, which highlights the broad-based appeal of gold as an alternative currency."
Meanwhile, "having consolidated between September 2011 and September 2012, we feel gold prices have started another up leg that is likely lead to new highs during 2012," ScotiaMocatta said.
In their November 2012 Precious Metals Forecast, ScotiaMocatta declared "we would not be surprised to see prices reach $2,200/oz. Should prices undergo another correction in the short term, then we would look for good support around $1,600/oz."
"Eventually, once the bull market has run its course and there is less need for safe-havens, then we would look for prices to retrace back towards $1,100/$1,200/oz as investment gold is liquidated and supply surges, but we certainly do not expect that to happen in the year ahead."
In their analysis, ScotiaMocatta acknowledged, "There remain a multitude of factors influencing the gold price, but one of the main reasons we are still bullish is because of the mess the Western world is in."
More information can be found online at http://www.goldbullionadvisors.com
How many ounces of gold and silver should you own?
Inflation has occurred very quickly, very rapidly, very suddenly many times in the past, just in recent history. Jeff Clark recommends "two thirds of an ounce of gold for every thousand dollars of monthly expenses.
If you look back at the high inflationary times, just in the past 100 years here in the U.S., many of those that hit 12%, 14%, 15% -- two years prior to then, the CPI was completely benign. It was 1%, 2% -- I think at one point it was 4% -- and then all of a sudden within 24 months, it was 12%, 14%. So it can happen very suddenly, and my fear is that is what is going to happen this time. People are in a lull; no one is expecting it: the CPI is low; nothing is really happening with all this money printing; there has been no fallout. But I think that is the critical point. You cannot do these kinds of things we are doing forever and not experience any consequences. Sooner or later there are going to be consequences to what we are doing, and my fear is that it is going to be nasty, catch a lot of people off guard, and really hurt our society. The bottom line for me is, that is why I am buying gold and silver, still, to this day. ...
You want to focus on how many ounces you own, not necessarily looking at whether the price is $5 higher today than it was yesterday. How many ounces do you own? That is really the question you want to ask yourself, so you can focus on how much you are really going to need, and the amount really comes down to this.
For me, I am probably going to use some of this gold if we get high inflation. How are you going to protect your standard of living if we get some kind of runaway inflation? And let's say it's not runaway hyperinflation; let's just say it's high inflation, 10%, 15%. Remember it was 14% in 1980, so the odds of us getting high inflation are realistic. So if I am going to use that gold to cover my standard of living, you are going to need about two-thirds of an ounce of gold for every thousand dollars of monthly expenses. If you want to protect your standard of living and not have your house be ravaged by inflation, so to speak, so that is a good guideline to follow.
If you look back at the high inflationary times, just in the past 100 years here in the U.S., many of those that hit 12%, 14%, 15% -- two years prior to then, the CPI was completely benign. It was 1%, 2% -- I think at one point it was 4% -- and then all of a sudden within 24 months, it was 12%, 14%. So it can happen very suddenly, and my fear is that is what is going to happen this time. People are in a lull; no one is expecting it: the CPI is low; nothing is really happening with all this money printing; there has been no fallout. But I think that is the critical point. You cannot do these kinds of things we are doing forever and not experience any consequences. Sooner or later there are going to be consequences to what we are doing, and my fear is that it is going to be nasty, catch a lot of people off guard, and really hurt our society. The bottom line for me is, that is why I am buying gold and silver, still, to this day. ...
You want to focus on how many ounces you own, not necessarily looking at whether the price is $5 higher today than it was yesterday. How many ounces do you own? That is really the question you want to ask yourself, so you can focus on how much you are really going to need, and the amount really comes down to this.
For me, I am probably going to use some of this gold if we get high inflation. How are you going to protect your standard of living if we get some kind of runaway inflation? And let's say it's not runaway hyperinflation; let's just say it's high inflation, 10%, 15%. Remember it was 14% in 1980, so the odds of us getting high inflation are realistic. So if I am going to use that gold to cover my standard of living, you are going to need about two-thirds of an ounce of gold for every thousand dollars of monthly expenses. If you want to protect your standard of living and not have your house be ravaged by inflation, so to speak, so that is a good guideline to follow.
More information can be found online at http://www.goldbullionadvisors.com
"My three favorite assets are, in no particular order, gold, gold and gold"
My three favorite assets are, in no particular order, gold, gold and gold. After that, there may be silver, and after a long gap of nothing there could be -- if one really stretches the imagination -- certain equities or commercial real estate.
Why gold?
We are, in my assessment, in the endgame of this, mankind's latest and so far most ambitious, experiment with unconstrained fiat money. The present crisis is a paper money crisis. The gigantic imbalances that threaten to unravel the system momentarily are the direct consequences of years and decades of artificially cheap credit and easy money, and are simply unfathomable in a hard money system. Take away fiat money and central banks and our current problems would be inexplicable. (If you are still under the widespread but erroneous impression that the gold standard caused the Great Depression you may want to consider that the strictures of hard money were systematically disabled and the disciplinary power of a true gold standard increasingly weakened with the establishment of the Federal Reserve in 1913, and the introduction and spreading of lender-of-last resort central banking in the US financial system. In any case, we are now in the Greater Depression, and this one is entirely the responsibility of central banking and unlimited fiat money.)
Whenever paper money dies, eternal money -- gold and silver -- stage a comeback. We have already seen a major re-monetisation of gold over the past decade, as the metal again becomes the store of value of choice for many investors. This will continue in my view, and even accelerate.
Why gold?
We are, in my assessment, in the endgame of this, mankind's latest and so far most ambitious, experiment with unconstrained fiat money. The present crisis is a paper money crisis. The gigantic imbalances that threaten to unravel the system momentarily are the direct consequences of years and decades of artificially cheap credit and easy money, and are simply unfathomable in a hard money system. Take away fiat money and central banks and our current problems would be inexplicable. (If you are still under the widespread but erroneous impression that the gold standard caused the Great Depression you may want to consider that the strictures of hard money were systematically disabled and the disciplinary power of a true gold standard increasingly weakened with the establishment of the Federal Reserve in 1913, and the introduction and spreading of lender-of-last resort central banking in the US financial system. In any case, we are now in the Greater Depression, and this one is entirely the responsibility of central banking and unlimited fiat money.)
Whenever paper money dies, eternal money -- gold and silver -- stage a comeback. We have already seen a major re-monetisation of gold over the past decade, as the metal again becomes the store of value of choice for many investors. This will continue in my view, and even accelerate.
More information can be found online at http://www.goldbullionadvisors.com
Friday, November 16, 2012
"I'm buying physical gold every month," Mauldin Economics chief says
If the U.S. puts itself on a path to a controlled deficit, I actually think the dollar becomes much stronger and gold in dollar terms will be challenged. Gold in euro terms or yen terms will be a very good buy. It's the nature of the currencies and the way those countries will have to respond to their particular crisis John Mauldin tells The Gold Report.
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If the U.S. doesn't deal with its deficit, all bets are off. By the way, I will be buying gold if the price goes down. I don't buy gold as an investment. I buy gold as central bank insurance. Even though I sound optimistic and am saying that we will solve this, at the end of the day, I just don't trust the bastards, and I want some insurance. ...
I'm not really adjusting it. I'm still investing in hard assets, technology, fixed income, small businesses, stuff that's optimistic in the long term and protective in the short term. I try not to buy anything that I can't have enough staying power to handle for the long run. I'm probably a little bit more liquid. ...
I'm buying physical gold every month. I've been buying the same amount on the same day of the month every month for years now. I don't think there's a single indicator. There is just a confluence of things. The world is just not so simple that you get a single indicator. If anybody tries to give you some kind of simplistic answer, laugh, close your portfolio and walk away.
More information can be found online at http://www.goldbullionadvisors.com
Thursday, November 15, 2012
India's rebounding gold bullion demand lights up 3rd-quarter data
India's gold demand revived in June-September quarter 2012. According to data compiled by the World Gold Council (WGC), gold demand totalled 223.1 tonnes, up 9% year-on-year from 204.8 tonnes in Q3 2011. China, which had once surpassed India in gold demand two quarters ago has fallen apart with its demand actually falling in Q3.
WGC today said while announcing the gold demand trend report for June-September quarter of 2012 that India's demand went up due to restocking of gold by jewelers for sale during festive season, it attributed the gold preference by Indians to the fact that, 'Indian consumers also seem to have adjusted to the rise in gold price levels.'
On outlook for India's demand, World Gold Council's Managing Director, Investment, Marcus Grubb said,"After a slow start to the first half of 2012, Q3 witnessed a gradual pick up in gold demand in India head of the festive and wedding season that falls in Q4. Against the backdrop of a slowing economy and persistent inflation, this upward trend encouraged by India's socio-cultural affinity and gold's significance as an effective store of wealth is likely to continue through the end of 2012."
In China demand fell 8% to 176.8t in Q3 2012 from 191.2t in Q3 2011 due to falls in jewellery demand by 6% and investment demand by 12% mainly as a result of negative sentiment surrounding China's slowing economy.
Global gold demand in Q3 2012 was 1,084.6 tonnes, down 11% from the record Q3 2011 figure of 1,223.5t. This dip in demand, according to WGC, is in comparison with exceptional demand in Q3 last year. "Gold demand remains resilient. Q3 2012 was above the five year quarterly average of 984.7t, according to the World Gold Council's Gold Demand Trends Report.
Major contributor to the global gold demand was the exchange traded funds and central banks world wide. The report said, 'Central banks bought 97.6 tons in the quarter. In six out of the last seven quarters, central bank demand has been around 100t, which is a sharp increase from as recently as 2010. The year to date figure for central bank buying is up 9%.'
WGC today said while announcing the gold demand trend report for June-September quarter of 2012 that India's demand went up due to restocking of gold by jewelers for sale during festive season, it attributed the gold preference by Indians to the fact that, 'Indian consumers also seem to have adjusted to the rise in gold price levels.'
On outlook for India's demand, World Gold Council's Managing Director, Investment, Marcus Grubb said,"After a slow start to the first half of 2012, Q3 witnessed a gradual pick up in gold demand in India head of the festive and wedding season that falls in Q4. Against the backdrop of a slowing economy and persistent inflation, this upward trend encouraged by India's socio-cultural affinity and gold's significance as an effective store of wealth is likely to continue through the end of 2012."
In China demand fell 8% to 176.8t in Q3 2012 from 191.2t in Q3 2011 due to falls in jewellery demand by 6% and investment demand by 12% mainly as a result of negative sentiment surrounding China's slowing economy.
Global gold demand in Q3 2012 was 1,084.6 tonnes, down 11% from the record Q3 2011 figure of 1,223.5t. This dip in demand, according to WGC, is in comparison with exceptional demand in Q3 last year. "Gold demand remains resilient. Q3 2012 was above the five year quarterly average of 984.7t, according to the World Gold Council's Gold Demand Trends Report.
Major contributor to the global gold demand was the exchange traded funds and central banks world wide. The report said, 'Central banks bought 97.6 tons in the quarter. In six out of the last seven quarters, central bank demand has been around 100t, which is a sharp increase from as recently as 2010. The year to date figure for central bank buying is up 9%.'
More information can be found online at http://www.goldbullionadvisors.com
Wednesday, November 14, 2012
China must increase gold reserves for national economic security, official says
During this historic time when China undergoes a once-in-a-decade leadership change, its currency -- the yuan -- hit an all-time high versus the U.S. dollar, prompting gold guru Jim Sinclair to comment: "A currency can become a reserve currency by default."
Here is the Xinhua news agency's report: "The spot price of the yuan against the U.S. dollar rose to 6.2262 on Tuesday, marking a record high since China's foreign exchange reforms seven years ago.
"Tuesday was the second consecutive day that the spot price of the yuan against the U.S. dollar hit a record high since China launched its foreign exchange reforms in 2005.
"Enterprises and banks have been selling off foreign currencies in anticipation of the yuan's appreciation, pushing up the price of the currency, said Ding Zhijie, an economics professor at the University of International Business and Economics."
Meanwhile, Bloomberg has reported some bombshell gold-related comments made by a Chinese official:
China needs to add to its gold reserves to ensure national economic and financial safety, promote yuan globalization and as a hedge against foreign-reserve risks, Gao Wei, an official from the Department of International Economic Affairs of Ministry of Foreign Affairs, writes in a commentary in the China Securities Journal today.
While gold prices are currently near record highs, China can build its reserves by buying low and selling high amid the short-term volatility, Gao writes in newspaper. China's gold reserve is "too small," Gao says.
Zero Hedge commented: "And there it is: while many have speculated that China, which has not given an update of its official holdings in nearly 4 years, is quietly building up its gold reserve holdings behind the scenes, there was no reason to worry. The time to worry would be when China was starting to give indications it is prepared to tell the world what its true gold holdings are (by now certainly well over 1000 tonnes). And the above piece from Wei is just that: because in saying very little, the Chinese official with a key political post has just given the first hint that China is preparing to give its official gold far greater focus. And from there, the time until China releases an IMF update on its official reserve holdings will be measured in days if not hours. Because all the gold will have long been accumulated."
Here is the Xinhua news agency's report: "The spot price of the yuan against the U.S. dollar rose to 6.2262 on Tuesday, marking a record high since China's foreign exchange reforms seven years ago.
"Tuesday was the second consecutive day that the spot price of the yuan against the U.S. dollar hit a record high since China launched its foreign exchange reforms in 2005.
"Enterprises and banks have been selling off foreign currencies in anticipation of the yuan's appreciation, pushing up the price of the currency, said Ding Zhijie, an economics professor at the University of International Business and Economics."
Meanwhile, Bloomberg has reported some bombshell gold-related comments made by a Chinese official:
China needs to add to its gold reserves to ensure national economic and financial safety, promote yuan globalization and as a hedge against foreign-reserve risks, Gao Wei, an official from the Department of International Economic Affairs of Ministry of Foreign Affairs, writes in a commentary in the China Securities Journal today.
While gold prices are currently near record highs, China can build its reserves by buying low and selling high amid the short-term volatility, Gao writes in newspaper. China's gold reserve is "too small," Gao says.
Zero Hedge commented: "And there it is: while many have speculated that China, which has not given an update of its official holdings in nearly 4 years, is quietly building up its gold reserve holdings behind the scenes, there was no reason to worry. The time to worry would be when China was starting to give indications it is prepared to tell the world what its true gold holdings are (by now certainly well over 1000 tonnes). And the above piece from Wei is just that: because in saying very little, the Chinese official with a key political post has just given the first hint that China is preparing to give its official gold far greater focus. And from there, the time until China releases an IMF update on its official reserve holdings will be measured in days if not hours. Because all the gold will have long been accumulated."
More information can be found online at http://www.goldbullionadvisors.com
Gold to rise by 6% to $1,843 by September 2013, conference poll predicts
Participants in an annual gathering of the London Bullion Metal Association on Tuesday expected gold to reach $1,843 an ounce by the time of the next conference in September 2013, and forecast silver to reach $38.40. ...
The forecast rise of 6.7 percent in the price of gold is based on expectations for growing demand in Asia, particularly China, as well as a continuation of the easy monetary policy of the United States. ...
Just over half of the participants expect the U.S. Federal Reserve to launch another round of quantitative easing, and 56 percent of them see China's economy growing between 7 and 8 percent in 2013.
China is expected to overtake India as the world's top gold consumer, as demand in that country has been resilient, although the pace has slowed from the past couple of years.
Thirty-six percent of conference participants expect Shanghai to become Asia's precious metals trading hub in the next year, topping Hong Kong and Singapore, which are vying for the position.
The forecast rise of 6.7 percent in the price of gold is based on expectations for growing demand in Asia, particularly China, as well as a continuation of the easy monetary policy of the United States. ...
Just over half of the participants expect the U.S. Federal Reserve to launch another round of quantitative easing, and 56 percent of them see China's economy growing between 7 and 8 percent in 2013.
China is expected to overtake India as the world's top gold consumer, as demand in that country has been resilient, although the pace has slowed from the past couple of years.
Thirty-six percent of conference participants expect Shanghai to become Asia's precious metals trading hub in the next year, topping Hong Kong and Singapore, which are vying for the position.
More information can be found online at http://www.goldbullionadvisors.com
Tuesday, November 13, 2012
"Gold bugs love fiscal cliff fears"
If Congress and President Obama hurl America over the fiscal cliff, some fearful investors may clutch tightly to gold on the long way down.
Stocks have been hit hard since Election Day as fiscal cliff concerns dominate the daily market chatter. But it's been a different story for gold, which has rallied more than 3% in the past week.
It makes sense to a certain degree. Gold is often viewed as the classic fear trade and it's also a hedge against inflation. And gold is not the only metal that's heading higher as a bet that politics as usual will lead to economic stagnation in 2013. Silver and platinum have also moved higher in the past week.
Even if some deal is reached in the next few weeks, experts are not holding their breath for a so-called Grand Bargain that would solve the nation's debt problems for good.
The fact that President Obama won re-election and the make-up of Congress remains mostly unchanged can be viewed as a signal from voters that they are not interested in the kind of tax hikes and spending cuts that would be required to truly get the deficit under control.
"I think many people feel that the can will continue to get kicked down the road. The outcome of the election seems to show there is not an appetite for major tax increases or meaningful cuts in spending," said Christopher Blasi, president of Neptune Global Holdings LCC in Wilmington, Del. "So even if there are compromises to avoid the cliff in the short-term, the fundamentals are still there for gold to keep rallying."
Blasi thinks it is a real possibility that gold will hit $2500 an ounce -- which is nearly 45% higher than current levels -- sometime in the next two years. ...
In other words, the forces that have helped lift gold from about $800 to $1730 in the past four years aren't going to change anytime soon.
Stocks have been hit hard since Election Day as fiscal cliff concerns dominate the daily market chatter. But it's been a different story for gold, which has rallied more than 3% in the past week.
It makes sense to a certain degree. Gold is often viewed as the classic fear trade and it's also a hedge against inflation. And gold is not the only metal that's heading higher as a bet that politics as usual will lead to economic stagnation in 2013. Silver and platinum have also moved higher in the past week.
Even if some deal is reached in the next few weeks, experts are not holding their breath for a so-called Grand Bargain that would solve the nation's debt problems for good.
The fact that President Obama won re-election and the make-up of Congress remains mostly unchanged can be viewed as a signal from voters that they are not interested in the kind of tax hikes and spending cuts that would be required to truly get the deficit under control.
"I think many people feel that the can will continue to get kicked down the road. The outcome of the election seems to show there is not an appetite for major tax increases or meaningful cuts in spending," said Christopher Blasi, president of Neptune Global Holdings LCC in Wilmington, Del. "So even if there are compromises to avoid the cliff in the short-term, the fundamentals are still there for gold to keep rallying."
Blasi thinks it is a real possibility that gold will hit $2500 an ounce -- which is nearly 45% higher than current levels -- sometime in the next two years. ...
In other words, the forces that have helped lift gold from about $800 to $1730 in the past four years aren't going to change anytime soon.
More information can be found online at http://www.goldbullionadvisors.com
Monday, November 12, 2012
"China really does look good for gold," Telegraph reports
China is the largest consumer of commodities in the world -- so this week's changes at its top table matter to miners, metal traders and investors.
At the 18th Chinese Communist Party Congress a once-a-decade leadership change is about to take place. Later this week, the 25-member Politburo will be selected, with the all-powerful Politburo Standing Committee chosen from its ranks. ...
In September, China approved $156 billion (98 billion British pounds) of infrastructure spend, in an attempt to boost slowing growth. However, despite the last decade being about iron ore and copper as large-scale building operations came to the fore, the next 10 years could be very different, according to Kieron Hodgson, a resources analyst at Charles Stanley.
"The growth in infrastructure spend in China is now moving to more secondary infrastructure such as telephone lines, which will be built out of fibre-optic cables and not copper," he says. "China does not just intend to match western infrastructure, it intends to beat it." ...
He is also very bullish on the prospects of precious metals, as Chinese citizens have only been legally allowed to own gold since 2004. Mr Hodgson points out that China is expected to become the world's largest gold consumer this year and the rising numbers of middle classes are likely to continue to boost demand further.
China is already the world's fastest-growing gold jewellery market, according to the World Gold Council (WGC), with consumers keen on purity. This means around 80% of the gold jewellery sold in the country is 24 carat, the WGC says.
Despite the recent fall in prices, Mr Hodgson is also bullish on Chinese demand for diamonds, "the ultimate discretionary purchase," he notes.
A strengthening Chinese economy is positive for commodities and the next decade could be very different in terms of commodity demand, but China really does look good for gold.
At the 18th Chinese Communist Party Congress a once-a-decade leadership change is about to take place. Later this week, the 25-member Politburo will be selected, with the all-powerful Politburo Standing Committee chosen from its ranks. ...
In September, China approved $156 billion (98 billion British pounds) of infrastructure spend, in an attempt to boost slowing growth. However, despite the last decade being about iron ore and copper as large-scale building operations came to the fore, the next 10 years could be very different, according to Kieron Hodgson, a resources analyst at Charles Stanley.
"The growth in infrastructure spend in China is now moving to more secondary infrastructure such as telephone lines, which will be built out of fibre-optic cables and not copper," he says. "China does not just intend to match western infrastructure, it intends to beat it." ...
He is also very bullish on the prospects of precious metals, as Chinese citizens have only been legally allowed to own gold since 2004. Mr Hodgson points out that China is expected to become the world's largest gold consumer this year and the rising numbers of middle classes are likely to continue to boost demand further.
China is already the world's fastest-growing gold jewellery market, according to the World Gold Council (WGC), with consumers keen on purity. This means around 80% of the gold jewellery sold in the country is 24 carat, the WGC says.
Despite the recent fall in prices, Mr Hodgson is also bullish on Chinese demand for diamonds, "the ultimate discretionary purchase," he notes.
A strengthening Chinese economy is positive for commodities and the next decade could be very different in terms of commodity demand, but China really does look good for gold.
More information can be found online at http://www.goldbullionadvisors.com
"Gold back in favor after U.S. election," Wall Street Journal reports
Gold prices are climbing again following a wild two weeks leading up to the U.S. presidential election, as traders are now putting their bets on continued easy-money policies that could spur demand for the precious metal.
"The election results bring clarity on monetary policy -- highly accommodative is here to stay," analysts with Barclays said in a note.
Additionally, the package of U.S. tax increases and government spending cuts collectively termed the "fiscal cliff," has also raised concerns about a potential new drag on U.S. growth that could lead to higher demand for alternative assets such as gold.
Many market watchers expect the Federal Reserve's open-ended quantitative-easing program to push investors looking for a hedge against inflation into gold. Easing measures, which effectively increase liquidity in financial markets, can weaken paper currencies. Some investors hold gold in their portfolios in an effort to limit that hit.
"With QE infinity here to stay and the looming U.S. fiscal cliff, gold has an attractive story at the moment," traders with TD Securities said in a note.
"The election results bring clarity on monetary policy -- highly accommodative is here to stay," analysts with Barclays said in a note.
Additionally, the package of U.S. tax increases and government spending cuts collectively termed the "fiscal cliff," has also raised concerns about a potential new drag on U.S. growth that could lead to higher demand for alternative assets such as gold.
Many market watchers expect the Federal Reserve's open-ended quantitative-easing program to push investors looking for a hedge against inflation into gold. Easing measures, which effectively increase liquidity in financial markets, can weaken paper currencies. Some investors hold gold in their portfolios in an effort to limit that hit.
"With QE infinity here to stay and the looming U.S. fiscal cliff, gold has an attractive story at the moment," traders with TD Securities said in a note.
More information can be found online at http://www.goldbullionadvisors.com
Friday, November 9, 2012
"Fearful investors should stock up on Gold Bullion," says Financial Times
Gold usually rises in times of fiscal uncertainty, especially when such times lead to a big increase in money-printing and very low interest rates. Further price drivers are international crises, such as the Israel/Iran situation, the Syria/Turkey border incident, and the longer-term threat that the Muslim Brotherhood -- which controls Egypt -- will seek to extend its influence in the oil-rich countries in the Middle East tinderbox.
On the supply side, gold miners are running out of high-grade ore, there are problems with labour in South Africa, and both working and capital costs have risen. Central banks have stopped selling their gold and become big buyers. A number of problems are close to tipping point. ...
With a supreme effort, we might manage to solve one of these big problems and perhaps muddle through another one or even two. However, taking them together, the cumulative risk makes it highly likely that a few of the tipping points will be reached. Unfortunately, there is little investors can do other than sit it out and prepare their portfolios according to their hopes and fears.
On the supply side, gold miners are running out of high-grade ore, there are problems with labour in South Africa, and both working and capital costs have risen. Central banks have stopped selling their gold and become big buyers. A number of problems are close to tipping point. ...
With a supreme effort, we might manage to solve one of these big problems and perhaps muddle through another one or even two. However, taking them together, the cumulative risk makes it highly likely that a few of the tipping points will be reached. Unfortunately, there is little investors can do other than sit it out and prepare their portfolios according to their hopes and fears.
More information can be found online at http://www.goldbullionadvisors.com
$3,000 to $3,500 gold in 3 to 4 years, predicts Bull and Bear Partners CEO
"You've got a president, you've got a Fed that is inflating the economy; inflation is going to be one of the ancillary effects of everything that's being done right now," Bull and Bear Partners CEO Jack Bouroudjian tells CNBC in a Nov. 8 interview.
"Look at gold over the course of the last four years. It went up 100% under President Obama. I think that is the canary in the coal mine and more indicative of what we're going to see happen not only in commodities but also in stocks. ... I think gold could be twice where it's at right now. I'm looking at $3,000-$3,500 within three to four years time. And a lot of that is going to be because we've got a Federal Reserve -- well, think about it: You've got a Fed that is already out there. The Federal Reserve has now become QE infinity. It's Buzz Lightyear from 'Toy Story.' So until we get a Fed that is going to rein it in, you have got to be thinking that you've got to be long gold, precious metals, grains, commodities, basically across the board."
"Look at gold over the course of the last four years. It went up 100% under President Obama. I think that is the canary in the coal mine and more indicative of what we're going to see happen not only in commodities but also in stocks. ... I think gold could be twice where it's at right now. I'm looking at $3,000-$3,500 within three to four years time. And a lot of that is going to be because we've got a Federal Reserve -- well, think about it: You've got a Fed that is already out there. The Federal Reserve has now become QE infinity. It's Buzz Lightyear from 'Toy Story.' So until we get a Fed that is going to rein it in, you have got to be thinking that you've got to be long gold, precious metals, grains, commodities, basically across the board."
More information can be found online at http://www.goldbullionadvisors.com
Thursday, November 8, 2012
Green light for gold: Fed might buy $600 billion in bonds into next year
Federal Reserve Bank of San Francisco President John Williams said the central bank may buy more than $600 billion in bonds by extending its third round of quantitative easing well into next year.
The Federal Open Market Committee last month affirmed its decision in September to buy $40 billion of mortgage-backed securities each month without specifying the total size or duration of the purchases. Williams, who holds a vote on policy this year, was among the first Fed officials to advocate open- ended bond buying.
"It should be at least that big, but I would think it would probably be bigger given my view on how slow the economy is going," Williams said yesterday, referring to his Aug. 31 comment that the Fed should purchase $600 billion in bonds in a third round of asset purchases.
"It's going to take a long time for unemployment to come down and growth to really pick up," Williams said.
The Federal Open Market Committee last month affirmed its decision in September to buy $40 billion of mortgage-backed securities each month without specifying the total size or duration of the purchases. Williams, who holds a vote on policy this year, was among the first Fed officials to advocate open- ended bond buying.
"It should be at least that big, but I would think it would probably be bigger given my view on how slow the economy is going," Williams said yesterday, referring to his Aug. 31 comment that the Fed should purchase $600 billion in bonds in a third round of asset purchases.
"It's going to take a long time for unemployment to come down and growth to really pick up," Williams said.
More information can be found online at http://www.goldbullionadvisors.com
Gold historically performs better in second presidential terms
"The price of gold performs well under either political party, but has typically climbed higher under Democrats. Since Richard Nixon, the president that cut the final link to a gold standard and ended the trading of gold at a fixed price of $35 an ounce, gold has surged nearly 360 percent over the terms of Democrats. In comparison, the precious metal has jumped 121 percent over the terms of Republicans notes Eric McWhinnie of Wall St. Cheat Sheet..
"A recent note from HSBC also suggests a correlation between Democratic control of the White House and Congress, and higher gold prices. The bank explains, 'The heaviest Democratic majorities in 1975-1979 coincide with a powerful and prolonged rally in gold prices from below $200 per ounce to more than $800 per ounce. In the early 1980s, Democratic majorities were reduced and gold prices eased. Gold declined, however, from 1983 to January 1985, a period when the Democrat majority increased. Gold also moved higher from January 1985 to October 1987, a period when Democrats lost seats but still held a majority,' according to Mineweb.
"Under President Obama's first term, gold reached its highest nominal price in history at approximately $1,920 an ounce. This was a lofty level for gold, but it was still below the inflation-adjusted record of $2,300 achieved under Jimmy Carter. However, with Obama being chosen for a second term, history suggests that it may not be too long before gold breaks this record as well. ... Gold often performs even better during a president's second term, regardless of the party. George Bush Jr. takes the cake with an 89 percent surge in gold prices during his second term, compared to a 25 percent increase in his first term. Ronald Reagan and Bill Clinton both saw gold prices decline in their first terms, but the precious metal rebounded in their second terms with gains of 28 percent and 5 percent, respectively."
"A recent note from HSBC also suggests a correlation between Democratic control of the White House and Congress, and higher gold prices. The bank explains, 'The heaviest Democratic majorities in 1975-1979 coincide with a powerful and prolonged rally in gold prices from below $200 per ounce to more than $800 per ounce. In the early 1980s, Democratic majorities were reduced and gold prices eased. Gold declined, however, from 1983 to January 1985, a period when the Democrat majority increased. Gold also moved higher from January 1985 to October 1987, a period when Democrats lost seats but still held a majority,' according to Mineweb.
"Under President Obama's first term, gold reached its highest nominal price in history at approximately $1,920 an ounce. This was a lofty level for gold, but it was still below the inflation-adjusted record of $2,300 achieved under Jimmy Carter. However, with Obama being chosen for a second term, history suggests that it may not be too long before gold breaks this record as well. ... Gold often performs even better during a president's second term, regardless of the party. George Bush Jr. takes the cake with an 89 percent surge in gold prices during his second term, compared to a 25 percent increase in his first term. Ronald Reagan and Bill Clinton both saw gold prices decline in their first terms, but the precious metal rebounded in their second terms with gains of 28 percent and 5 percent, respectively."
More information can be found online at http://www.goldbullionadvisors.com
Wednesday, November 7, 2012
MoneyWeek analyst "positive on Gold Bullion"
This week I am very close to doing something I haven't done in a long time says Dominic Frisby of MoneyWeek. And that's placing a massive bet on gold. ...
I've been saying since September 2011 that gold is in a consolidation phase. That phase would last at least a year, I said, and we wouldn't see new highs until autumn-winter 2012 at the earliest.
I base this theory on a repeating pattern that gold has followed since this bull market began around the turn of the century. Gold tends to make a move up, which might last several months. It then enters a phase of consolidation. The magnitude of this consolidation phase tends to reflect the previous move up. ...
I'm of the mind now that the current period of consolidation is coming to a close. First, we have meandered for over a year - we've done our time. Second, gold is playing out according to its typical seasonal pattern. I said a few weeks back, when gold was at $1,750, that $1,700 wouldn't hold, but that we would find support in the mid- to high-$1,600s.
That's what has happened and, so far, support has held. These corrections always seem to happen in October. It is a bad month for gold. November, however, is a good month. ...
Obama has now won a second term. But I had noticed a lot of gold bugs cheering on Mitt Romney. I can't understand why. Gold likes the Democrats. ... The average is for a 358% gain under a Democrat president. I guess it's all the deficit spending. A 358% move from here would take us over $6,000.
I've been saying since September 2011 that gold is in a consolidation phase. That phase would last at least a year, I said, and we wouldn't see new highs until autumn-winter 2012 at the earliest.
I base this theory on a repeating pattern that gold has followed since this bull market began around the turn of the century. Gold tends to make a move up, which might last several months. It then enters a phase of consolidation. The magnitude of this consolidation phase tends to reflect the previous move up. ...
I'm of the mind now that the current period of consolidation is coming to a close. First, we have meandered for over a year - we've done our time. Second, gold is playing out according to its typical seasonal pattern. I said a few weeks back, when gold was at $1,750, that $1,700 wouldn't hold, but that we would find support in the mid- to high-$1,600s.
That's what has happened and, so far, support has held. These corrections always seem to happen in October. It is a bad month for gold. November, however, is a good month. ...
Obama has now won a second term. But I had noticed a lot of gold bugs cheering on Mitt Romney. I can't understand why. Gold likes the Democrats. ... The average is for a 358% gain under a Democrat president. I guess it's all the deficit spending. A 358% move from here would take us over $6,000.
More information can be found online at http://www.goldbullionadvisors.com
Monday, November 5, 2012
"Gold could reach $4,000 as early as September 2016"
I am not predicting a future price of gold or the date that gold will trade at $4,000 says GE Christenson, but I am making a projection based on rational analysis that indicates a likely time period for gold to trade at $4,000 per ounce. Yes, $4,000 gold is completely plausible if you assume the following:
* The US government will continue to spend in excess of $1 Trillion per year more than it collects in revenue, as it has done for the previous four years, and as the government budget projects for many more years.
* Our financial world continues on its current path of deficit spending, debt monetization, Quantitative Easing (QE), weaker currencies, war and welfare, ballooning debts, and business as usual.
* A massive and devastating financial and economic melt-down does NOT occur in the next four to six years. If such a melt-down occurs, the price of gold could skyrocket during hyperinflation or stagnate under a deflationary depression scenario. ...
* National debt is plotted on the left axis - yes, it was larger than $16 Trillion as of September 30, 2012. Gold is plotted on the right axis. The data covers an 11 year span from September 2001 through September 2012. This period includes the time after the stock market crash of 2000, the game-changing events of 9-11, the real estate crash, and the new bull market in commodities. Each month represents one data point. Note the similarity between the two trends. The statistical measure R-Squared for this 11 year period of monthly data is 0.969 - very high.
* This expansion in the national debt is a simple proxy for expansion of the money supply and the devaluation of the dollar. ...
Since gold correlates closely with national debt, we now have a clear, objective, and believable proxy (national debt) to model the future price of gold. Extend national debt and gold prices forward for the next five years based on the exponential increase from the last five years, and the result is the following table. Bracket gold prices, high and low, based on past annual volatility at about 15%. ...
As you can see, this projection for gold prices indicates that gold could reach $4,000 as early as September 2016, with a theoretical projected price of $4,000 in late 2016 or early 2017.
* The US government will continue to spend in excess of $1 Trillion per year more than it collects in revenue, as it has done for the previous four years, and as the government budget projects for many more years.
* Our financial world continues on its current path of deficit spending, debt monetization, Quantitative Easing (QE), weaker currencies, war and welfare, ballooning debts, and business as usual.
* A massive and devastating financial and economic melt-down does NOT occur in the next four to six years. If such a melt-down occurs, the price of gold could skyrocket during hyperinflation or stagnate under a deflationary depression scenario. ...
* National debt is plotted on the left axis - yes, it was larger than $16 Trillion as of September 30, 2012. Gold is plotted on the right axis. The data covers an 11 year span from September 2001 through September 2012. This period includes the time after the stock market crash of 2000, the game-changing events of 9-11, the real estate crash, and the new bull market in commodities. Each month represents one data point. Note the similarity between the two trends. The statistical measure R-Squared for this 11 year period of monthly data is 0.969 - very high.
* This expansion in the national debt is a simple proxy for expansion of the money supply and the devaluation of the dollar. ...
Since gold correlates closely with national debt, we now have a clear, objective, and believable proxy (national debt) to model the future price of gold. Extend national debt and gold prices forward for the next five years based on the exponential increase from the last five years, and the result is the following table. Bracket gold prices, high and low, based on past annual volatility at about 15%. ...
As you can see, this projection for gold prices indicates that gold could reach $4,000 as early as September 2016, with a theoretical projected price of $4,000 in late 2016 or early 2017.
More information can be found online at http://www.goldbullionadvisors.com
"Gold's performance is a measurement of the world's view of the dollar"
America is more bankrupt, leveraged and vulnerable than Europe. And to finance its debt, one branch of the state (Treasury) borrows money from another branch of the state (the Federal Reserve) and everybody thinks this is the norm -- they call it quantitative easing (QE) as the Fed embarks on a third round of quantitative easing which could eclipse the first one's trillion dollar cost pushing America closer to the fiscal cliff on their mountain of debt. America's debt as a share of GDP excluding the debt of Fannie Mae and Freddie Mac is already over 100 percent. Although the cost of servicing that debt is only 1.4 percent of GDP because of low interest rates, half of America's debt is in foreign hands and so interest rate levels around the world are important. If America had to pay the rate of comparable sick countries, say six percent, the debt burden alone would exceed the spending on Social Security, Medicare or national defense. ...
To avoid such woes, the world needs a currency backed by assets, not by faith. Gold of course, reached a record high just a year ago and flirted with the old highs last month. Throughout gold has risen against all currencies, especially the dollar. Gold's stellar performance is due more to the fact that the dollar has fallen in terms of gold. Gold's performance is a measurement of the world's view of the dollar value which is weakening with every printed IOU. Gold is simply an alternative investment to the dollar by central banks and savers alike. As a result, hopes have been raised for a new order with a return to a gold standard. Nostalgia buffs tell us that a gold standard simply limits the central banks' ability to print money in unlimited quantities. True, but is it practical today?
The idea of a gold standard is enjoying a renaissance because it takes policy away from central bankers who lately are more adept at printing money in copious quantities, than maintaining the value of their respective currencies. And that is the problem. Empty promises show empty results. We believe that a return to a gold standard is less radical than the helicopter money printing exercise of the Fed which has fueled the public's distrust of politicians, central bankers and money. The relentless pressure from the markets leaves governments little breathing space to implement the difficult and controversial measures needed. Needed is a reliable store of value. Even the state of Utah has recognized gold and silver as official means of payment. Monetary financing of governments has to become more conservative and dependent upon reserves and their currencies must be anchored to some system which they can respect and cannot duplicate. America's biggest creditor, China is now actively pursuing alternatives promoting the cross-border use of the renminbi in trade and investment. The People's Bank of China once commented, "to prevent the deficiencies in the main reserve currency, there's a need to create a new currency that's delinked from the economies of the issue." Next? Gold.
To avoid such woes, the world needs a currency backed by assets, not by faith. Gold of course, reached a record high just a year ago and flirted with the old highs last month. Throughout gold has risen against all currencies, especially the dollar. Gold's stellar performance is due more to the fact that the dollar has fallen in terms of gold. Gold's performance is a measurement of the world's view of the dollar value which is weakening with every printed IOU. Gold is simply an alternative investment to the dollar by central banks and savers alike. As a result, hopes have been raised for a new order with a return to a gold standard. Nostalgia buffs tell us that a gold standard simply limits the central banks' ability to print money in unlimited quantities. True, but is it practical today?
The idea of a gold standard is enjoying a renaissance because it takes policy away from central bankers who lately are more adept at printing money in copious quantities, than maintaining the value of their respective currencies. And that is the problem. Empty promises show empty results. We believe that a return to a gold standard is less radical than the helicopter money printing exercise of the Fed which has fueled the public's distrust of politicians, central bankers and money. The relentless pressure from the markets leaves governments little breathing space to implement the difficult and controversial measures needed. Needed is a reliable store of value. Even the state of Utah has recognized gold and silver as official means of payment. Monetary financing of governments has to become more conservative and dependent upon reserves and their currencies must be anchored to some system which they can respect and cannot duplicate. America's biggest creditor, China is now actively pursuing alternatives promoting the cross-border use of the renminbi in trade and investment. The People's Bank of China once commented, "to prevent the deficiencies in the main reserve currency, there's a need to create a new currency that's delinked from the economies of the issue." Next? Gold.
More information can be found online at http://www.goldbullionadvisors.com
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