Bullion's floor is near its production cost of $1,200, Andrew Su tells CNBC
Gold could rally by as much as 5% -- to about $1,320 -- before the end of 2013, Compass Global Markets chiefAndrew Su tells CNBC in a Dec. 11 interview.
"I think the Fed won't taper this December. I also think that strong technical support levels have been built around the $1,200 level. That's where we see the average production cost of gold," Su said.
"The last time we saw it below $1,200, it bounced very, very quickly. And a combination of other factors will see gold rise relatively rapidly over the next three weeks, and I think $1,350 is a relatively modest target for the end of the year. ... I think we'll see a renewal of the budget crisis in the U.S. ... That will cause some safe-haven buying and I think we'll also see China growth slowing down to about 7% [in the first quarter of 2014] ... That will bring back a bit of risk aversion to the markets and we'll see gold recover as a result," he said.
"We have an end-of-year target of $1,320 for gold and a medium-term target of $1,450," he told the network.
More information can be found online at http://www.goldbullionadvisors.com
Until then, the metal's at its "cyclical bottom," predicts Jeffrey Christian
CPM Group, a consultancy that publishes annual yearbooks on gold, silver, and other precious metals, has never been irrationally exuberant in its recent price forecasts. When gold bulls were saying $2,000 was inevitable, the firm generally reacted with skepticism. However, after gold corrected severely earlier this year, it started to issue cautiously bullish statements.
Now managing partner Jeffrey Christian is repeating those positive sentiments in a new interview published this month atMining Markets, along with a reiteration of his presentation at the Denver Gold Forum in October.
"There are any number of massive financial, economic and political imbalances that have caused all of the economic problems over the last 12 years -- not just 2008-09, but 2000-01 and everything in between," Christian said. "None of those issues have been dealt with effectively. ...
"Our expectation is that by 2016-17, investor concerns over those longer-term imbalances will resurface," he said.
As demand starts to intensify again, supply also will have shrunk as a result of the cuts gold miners are having to make now in response to lower gold prices, Christian said.
"We think that we're at the cyclical bottom for gold," he said.
The gold price should rise sharply from 2016 to 2023, with Christian forecasting new nominal highs above $1,921 in eight to 10 years' time. However, prices could be stuck between $1,240 and $1,500 until then.
As for possible tapering of the Federal Reserve's quantitative-easing stimulus program, Christian says it's already priced into the gold market. "We think that the market is spending far too much attention on it -- it's become the flavor of the month," he said. Christian expects the Fed will begin to pull back on QE sometime in the first half of 2014, but that any reduction in purchases will be very modest until the U.S. economy exhibits more strength.
More information can be found online at http://www.goldbullionadvisors.com
Bullion can preserve capital in inflation or deflation, argues John Ficenec
"In the face of an uncertain future, gold remains the best insurance policy," says John Ficenec at London's Telegraphnewspaper in a staunch defense of bullion published Dec. 8. Ficenec argues that for preservation of capital, nothing beats gold over the long haul, and the metal can help investors weather inflation as well as deflation:
The metal is the only store of wealth that has a proven track record over thousands of years, and as such it should be an essential part of every portfolio.
The market price of gold may have fallen during the year, but hoarding of the precious metal by central banks and private individuals is approaching record levels. ...
The first rule of investment is preservation of capital. The second is to go searching for gains or income that fits with your appetite for risk. Gold has been the insurance of choice for thousands of years to satisfy the first rule, despite the fact it generates no income and actually incurs costs for storage. ...
It seems odd that the price of gold has fallen so sharply. But there are several reasons for this. Like all markets, over-exuberance had pushed the price higher than the fundamentals could support. At the same time, gold's big rival as a store of value, the U.S. dollar, has recovered as strong economic growth supports the world's reserve currency. ...
Gold is simply the best insurance against inflation, or deflation. "I would rather own gold than government bonds, high-yield bonds and equities. If this scenario [deflation] were to pass it would lead to even more money printing around the world," according to Marc Faber, the contrarian Swiss investor.
The first rule of investing is capital preservation. ... A balanced portfolio should hold an allocation of about 5% in assets such as gold. The future is uncertain and gold is the most effective insurance against that.
More information can be found online at http://www.goldbullionadvisors.com
"I hope I never use my gold insurance. But I do have some. I buy some every month."
In promoting his new book "Code Red," Mauldin Economicschief John Mauldin conducted an interview ("How Central Bankers Will Ruin The Global Economy") with Forbespublisher Steve Forbes, in which he discussed the Federal Reserve's fallibility and the necessity of owning gold as insurance.
On the Fed: "The Fed economists are particularly bad at predicting the future. It's worse than if you and I just flipped a coin. OK? It's almost statistically impossible to be as bad as central bankers are about predicting the future. And yet we're supposed to trust them that their data tells them, 'Well, we need to apply this amount of quantitative easing and this amount of money and this interest rate level. And somehow or another it's magically gonna transform into these numbers out here that for decades we've been predicting and we haven't been right.' So it doesn't end well. We have 12 men and women sitting in a room thinking they can manipulate an economy with data they truly don't understand, with an economy they can't measure and with tools they're making up as they go along. Is that impassionate enough, Steve? I get wound up, but it has consequences."
On gold: "I believe gold is insurance. It's central bank insurance. ... I buy fire insurance. I have health insurance. I hope I never use them. I'm particularly aggressively working at never having to use my life insurance, although I have it. And I hope I never use my gold insurance. But I do have some. I buy some every month. ...
"I'm getting ready to establish an account. I now have five grandchildren. You're working on catching up, I understand. But I have found a place where I can buy a small amount of gold for them every month. It'll be stored outside the United States. And my grandchildren are from six months to four years. So I can buy that same amount of gold, put it into an account for them and when they get to a place where they can use it. Or I'm not certain what education will be in 20 years. I think it will be significantly different than it is today. But when they get to that launching pad, I believe that gold will have more of a store value of money in 20 years than putting a hundred dollars a month into a savings account that is not gonna be able to access anything but low interest rate regimes for a long time.
"Now, I honestly might change my mind in ten years and say, 'Ah, the world's changed. I'd rather put it in something else.' But today, I think when I think about 20 years and I want to make sure that my children have something outside of the United States in a neutral facility, that I can move in a heartbeat to another neutral facility if I were beginning to notice things change. Yeah, I think gold has its usefulness."
More information can be found online at http://www.goldbullionadvisors.com
Yellow metal holds support at $1,210 and climbs back near $1,250
Gold rebounded from session lows to rise 2% on Wednesday, briefly breaking above $1,250, to post its largest gain since Oct. 17, while silver rose about than 3%. After a slew of mixed economic data, investors are now looking to Thursday's U.S. GDP report and Friday's crucial nonfarm-payrolls report to gauge the Federal Reserve's direction on tapering its stimulus program.
In contrast to gold, U.S. stocks finished mostly lower on tapering fears, with both the S&P 500 and the Dow Jones Industrial Average racking up four-day losing streaks.
The reason for rising tapering fears? Some bright spots in U.S. economic data:
*New-home sales surged about 25% to hit their highest level in 30 years, partly because of a drop in prices, tumbling to $245,800, down from $257,400 and well below the recent highs of $279,300.
*The U.S. trade deficit fell 5.4% in October, partly because of rising petroleum exports.
* The Fed's latest Beige Book found that the economy continues to expand at the same "modest to moderate pace" it has seen over most of the past year, though it detailed strong "concerns about future cost increases attributable to [Obamacare]." This is now the 11th consecutive Beige Book in which the Fed has heard loud concerns about theAffordable Care Act from the regional businesses it surveys.
But most importantly, private-sector hiring in November was the hottest in a year, as 215,000 jobs were added, beating expectation of 178,000, according to a report fromAutomatic Data Processing released Wednesday morning. This report, along with Thursday's weekly initial jobless claims number, is seen as a bellwether for Friday's all-important NFP data.
Already largely oversold, gold's rebound Wednesday was partly attributable to short covering. After the price held the $1,210 level, traders betting the price would fall were forced to repurchase previously sold positions, or short contracts, to neutralize bets that profit when gold prices fall.
Now the attention of investors is shifting to Friday's payrolls report. Thursday's GDP number is important, but with the Fed's stimulus policy linked to the unemployment rate, the NFP is key to predicting the Fed's next move. If the unemployment level rises or stays the same, the Fed is less likely to taper. If the unemployment rate improves, the Fed might be more inclined to reduce stimulus sooner. The Fed's next policy meeting on Dec. 17-18.
"Better-than-expected ADP today points to the likelihood of strong nonfarm payrolls," Citi analyst David Wilson said. "We are all going to watch data on Friday to see what happens.''
A strong NFP report could knock further wind out of stocks and gold, but with the latter already down more than 20% on the year and stocks off all-time record highs, the real bargain here is gold (and silver).
More information can be found online at http://www.goldbullionadvisors.com
