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Gold in shackles amid poor market sentiment Gold in shackles amid poor market sentiment(0)

Gold bugs may be loving the favorable winds that are carrying the price of the yellow metal upwards, but few analysts believe that we are on the verge of a long-term surge. CONTINUE READING

Analysts: Worst of gold free-fall not yet over Analysts: Worst of gold free-fall not yet over(0)

Gold appears to be on a long-term decline as its cover of a so-called safe-haven is blown. CONTINUE READING

denn / Foter.com / CC BY-SA
Geopolitical tension boosts gold prices to USD1,400 Geopolitical tension boosts gold prices to USD1,400(0)

After plunging to a three-year-low in late June to USD 1,180 per ounce, gold has bounced back to above USD 1,400 by September 3. CONTINUE READING

bogenfreund / Foter / CC BY-SA
Lackluster gold dampens South Africa’s prospects Lackluster gold dampens South Africa’s prospects(0)

Mining companies across the world are in retreat, which is set to adversely impact the South African economy. CONTINUE READING

Ben Cooper / Foter / CC BY-NC-SA
Gold to approach USD1,000/ounce mark by 2015 Gold to approach USD1,000/ounce mark by 2015(0)

Gold’s 12-year rally has ended. No matter what happens from here, it will be a new chapter in the trading of gold – post-rally, post-crash. CONTINUE READING

BullionVault / Foter / CC BY-ND
Bearish outlook keeps gold investors at bay Bearish outlook keeps gold investors at bay(0)

Yellow metal investors have seen red over the past few days, as key market makers turned their backs on gold. CONTINUE READING

Central banks seen ditching USD, EUR for gold Central banks seen ditching USD, EUR for gold(0)

Can the US dollar ever be displaced? With its biggest rival euro in the doldrums and the Chinese renminbi nowhere near a currency of global standing, the American greenback seems destined to dominate global financial trade. But its status as a reserve asset is slowly eroding. CONTINUE READING

What’s holding gold back? What’s holding gold back?(0)
digitalmoneyworld / Foter / CC BY

Gold was supposed to be off to the races after Ben Bernanke announced that the Federal Reserve will unleash a third version of quantitative easing and continue supporting until U.S. unemployment figures improved. CONTINUE READING

EU Exits Good For Gold? EU Exits Good For Gold?(0)

Investors heavily exposed to the yellow metal may want to keep a keen eye on the events unravelling in the European Union. READ MORE HERE

Is gold’s real value $10,000? Is gold’s real value $10,000?(0)

Ask any gold investor and he will lament that gold is undervalued. It should actually be anywhere between USD2,000 to USD10,000 per ounce, they say. CONTINUE READING

Gold Will Plateau At $2,000: Analysts Gold Will Plateau At $2,000: Analysts(0)

After a hiatus that lasted several months, gold bugs are waking up from their hibernation. And now they are calling for the elusive USD2,000 for the precious metal within a year. But that’s about as far as it is going to get. READ MORE HERE

World’s Official Biggest Gold Holdings World’s Official Biggest Gold Holdings(0)

Central banks’ have been major buyers of gold over the past few years, especially after the U.S. dollar and euro wobbled. Here is a list of the countries with the biggest official gold reserves. READ MORE HERE

Why Warren Buffett Hates Gold Why Warren Buffett Hates Gold(0)

Warren Buffett, the Oracle of Omaha, sets out his theory on gold and explains why he is not enamoured by its charms. And why there is no treasure to be found in Treasuries. READ MORE HERE

Is Gold Rally Over? Is Gold Rally Over?(0)

Gold haters are predicting the end of the gold rally. But pro-gold analysts say central bank bullying, inflation and negative interest rates will continue to propel the yellow metal forward.  READ MORE HERE

Gold SWOT: CME May Raise Margin Requirements Once More Gold SWOT: CME May Raise Margin Requirements Once More(0)


The strength of gold is rising in 2012. With sites like the U.S. Money Reserve, purchasing gold bullion coins and bars is becoming ever more popular for investors to add to their portfolio.

For the week, spot gold closed at $1,788.68, up $34.03 per ounce, or 1.94 percent. Gold stocks, as measured by the NYSE Arca Golds BUGS Index, rose 1.57 percent. The U.S. Trade-Weighted Dollar Index was essentially flat, with a slide of just 0.02 percent for the week, says Frank Holmes, CEO and Chief Investment Officer, U.S. Global Investor
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Gold SWOT Report: Potential For A Significant Rebound Gold SWOT Report: Potential For A Significant Rebound(0)
hto2008 /Foter

U.S. Global Investors examine the strength, weaknesses, opportunities and threats for the yellow metal:
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Why Gold’s Vulnerable Why Gold’s Vulnerable(0)

Gold walked up the stairs and came down the elevator. And as chatter of a global recession rises, the ‘safe haven’ may not be the place to be parking your funds, says BarCap.

How the mighty have fallen. From calls of $2,000 to $2,500 before the end of the year, gold pundits are scrambling to scale back their forecast for the yellow metal as talks of recession become more widespread. READ MORE HERE
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Why Gold’s Vulnerable In A Recession: Barclays Capital Why Gold’s Vulnerable In A Recession: Barclays Capital(0)

Gold walked up the stairs and came down the elevator. And as chatter of a global recession rises, the ‘safe haven’ may not be the place to be parking your funds, says BarCap.

How the mighty have fallen. From calls of $2,000 to $2,500 before the end of the year, gold pundits are scrambling to scale back their forecast for the yellow metal as talks of recession become more widespread. READ MORE HERE

Is Gold A Bubble? Wells Fargo Seems To Think So Is Gold A Bubble? Wells Fargo Seems To Think So(0)

What’s in store for oil and gold — the ying and yang of the global economy? At least one analyst thinks gold is a bubble poised to burst.

In the space of a short few weeks, the world looks less sure of its self. Aggressive forecasts are being toned down, massive plans are being scaled back, growth figures are being revised downwards, and bulls have turned slightly bearish. READ MORE HERE

Deutsche Bank Forecast $2,000 For Gold, Says Not A Bubble Deutsche Bank Forecast $2,000 For Gold, Says Not A Bubble(0)

Gold may have risen 521% since 2001,  but Deutsche Bank thinks gold prices will need to rise a good $550 more before it will be considered a bubble.

“In our view, the prospect of powerful rally in gold reflects ongoing stress in the financial system and the maintenance of super low interest rates. The popularity of physically backed gold ETFs have also changed  the relationship of the gold price to the US dollar such that gold can now rally in both rising and falling US dollar environments,” says  Deutsche Bank.

The bank has a target price of $2,000 for a Troy ounce of gold, before it expects the market would be ‘considered a bubble’.

READ MORE HERE

Central Banks Buying To Boost Gold: HSBC Central Banks Buying To Boost Gold: HSBC(2)

Central banks are buying gold, says HSBC. That mean that the metal’s stratospheric rise may not be over yet. And with Goldman Sachs spelling doom for the dollar, gold fundamentals look strong
“Gold gets dug out of the ground… we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head,” said Warren Buffett, the legendary chief of Berkshire Hathaway in 1998. He still has not changed his position on gold, but he may find himself these days in the minority, given the yellow metal’s stellar rise.

The price of gold is normally determined by a combination of global real interest rates, the value of the U.S. dollar and risk aversion (so-called ‘safe haven’ demand) plus net supply from new production and changes in stocks held by central banks.

Calculate them and you get a two-year chart of gold which looks like this:

While retail demand from China and India are strong drivers of gold prices, HSBC believes that the arrival of central banks into the fray will mark a new chapter for growth in gold prices.

“The change in central bank demand is an important structural difference in net supply and demand conditions relative to the past and it seems set to continue. Central banks in the emerging world remain keen to diversify away from the US dollar and the attraction of precious metals, including gold is unlikely to fade anytime soon.”

“Changes in central bank stocks of gold can make a bigger difference to net supply than changes in production because of the huge size of stocks relative to annual production. Central banks are the holders of the largest stock piles of gold. For many years they were net sellers of gold. They preferred to own assets that generated a running yield because the focus was on improving the rate of return on their assets,” says HSBC.

Concern about dollar weakness and debasement from ultra loose monetary policy has turned central banks into a source of net demand for gold not net supply. Central banks in India, China, Russia and Mexico have recently been buyers of gold in an effort to diversify their foreign exchange reserves away from excessive dependence on US treasuries and other US dollar-denominated assets.

The figures from World Gold Council confirm that trend.

“Significant purchases by central banks across a number of regions in the first quarter reinforced gold’s vital role as a reserve asset. Purchases by central banks jumped to 129.0 tonnes (US$5.7-billion), more than the total for 2010 as a whole,” says WGC, which believes 2011 will see more central banks turn to gold purchasing programmes as a means of diversifying their reserves.

Central banks of emerging economies remain under weight in their gold hoardings and WGC expects the rebalancing to continue.

The growth will be largely driven by the People’s Bank of China (PBOC), the country’s central bank, which is already the sixth largest official holder of gold. Still, gold is a mere 1.6% of its overall reserves and the statements coming out of the PBOC suggest that it views gold as a strong investment alternative to offset rising inflation and global instability.

Apart from central banks, investors are also piling in. Despite the high prices, demand for gold in the first quarter rose by 100tonnes, to reach 981.3 tonnes, worth $43.7-billion.

“Much of the 100-tonne increase in demand was due to strong growth in the investment sector. We believe that suitable conditions remain in place to ensure that investment demand will maintain its solid growth in the coming quarters.”

GOLD VS DOLLAR
Gold’s strong inverse co-relation to the U.S. dollar has been a key driver of high gold prices. Goldman Sachs thinks the U.S. greenback is about to go down further.

Here are Goldman Sachs’ two reasons why the dollar will sink again:

U.S. trade and investment balances with the rest of the world remain negative. “The U.S. trade deficit is still widening and we expect it to continue to widen,” Goldman analysts said in its note. “Ultimately, it is difficult to envisage a dollar-bullish scenario without a notably stronger U.S tradable goods sector.”

The bank says continued deterioration in the trade balance will pass through into a continued deterioration of the U.S. current account deficit. For the dollar to strengthen in this scenario, foreign appetite for U.S. assets need to pick up substantially to have the deficit financed through foreign direct investment and portfolio inflows, Goldman says. But data shows that is not happening.

The Fed will be the last among major economies to raise interest rates, and the U.S. Federal Reserve will leave interest rates on hold this year and next.

The bank now sees EUR/USD at 1.45, 1.50 and 1.55 in three, six and 12 months vs 1.40, 1.45 and 1.50 previously. It projects $/JPY at 82, 82 and 86 over three, six and 12 months from 86, 86 and 90, previously.

With such structural forces driving gold, the fundamentals for the yellow metal look solid. But fundamentals don’t always drive markets.

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