Latest Market Research And News On Gold Developments
November 23rd, 2009
- Gold has rallied to new record nominal highs in dollars with geopolitical concerns about Iran escalating and the dollar falling again. Possibly of more importance are increasing concerns about the unprecedented and huge public debt levels in large industrialized nations and the as of yet remote possibility of sovereign default.
- Research analysts at Deutsche Bank suggest the bull market in gold may endure even if inflation never emerges or the U.S. dollar happens to strengthen. They argue that central banks around the world are using the precious metal as a backup “reserve currency.”
- A U.S. Congressional panel approved a measure to open the Federal Reserve’s monetary policy decision to government audits. This is a further slap at the U.S. central bank following a Senate overhaul proposal aimed at stripping the Fed of its regulatory authority. Fed Vice Chairman Donald Kohn said back in July that “history provides numerous examples of non-independent central bankers being forced to finance large government budget deficits. Such episodes invariably lead to high inflation.”
- The World Gold Council reported that investment demand for gold bars increased to 81.2 tons in the third quarter, compared to just 57.7 tons in the previous quarter. The WGC also highlighted that central banks bought 15 tons more gold than they sold during the period, another positive for gold.
- Global economic uncertainty has fueled demand and has caused gold coin production at Britain’s Royal Mint to quadruple in the third quarter, having reached 32,735.8 ounces from 7,500 ounces during the same period of 2008.
Tags: golbal economy, gold as an investment, Gold News, Gold price
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November 23rd, 2009
- With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.
- St. Louis Fed member Bullard said over the weekend that he favors extending the Fed’s program of purchasing mortgage-backed securities beyond the 1st Q next year. This adds many more months to the low rates for an ‘extended period of time.’ His comments have pummeled the US Greenback, and as the dollar fell, stock futures soared
Tags: dollar demise, dollar fall, Dollar News, hedge against declining dollar, interest expense, mortgage-backed securities, national debt, weak dollar
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November 18th, 2009
- Gold continues to climb a wall of worry with many analysts bearish and much of the public remaining on the sidelines due to misplaced fears that gold is another asset bubble. These fears are understandable given investors’ painful experience of the bursting of the real estate and equity bubbles, but the fears are misplaced and come about due to a fundamental lack of knowledge of the still very strong supply and demand factors driving the gold (and silver) market.
- The dollar is due a short term rally but any bounce is likely to be short term in nature as the Federal Reserve remains in a ‘catch 22’ needing to raise interest rates to contain inflation in the medium and long term, and protect the dollar, but realizing that an increase in interest rates will likely snuff out the tentative economic recovery.
- The government says consumer prices edged up slightly faster than expected in October, driven higher by another increase in energy prices and the biggest increase in new car prices in 28 years.
Tags: economic recovery, Gold News, Gold price
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November 17th, 2009
- GMAC CEO Alvaro de Molina was asked to resign by the board after only 19 months at the helm. GMAC had been preparing a request for additional bailout funds from the Treasury.
- General Motors posted a $1.5B loss for Q3, but announced it would repay $6.7B of its $50B government bailout, at the rate of $1B per quarter.
- Bernanke signaled yesterday that the ‘extended’ low interest rate period may become longer as jobless rates rises.
Tags: bernanke, General Motors, GMAC
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November 17th, 2009
A prominent hedge fund manager says gold prices will continue on their impressive upward path, Bloomberg reports.
The yellow metal is on an eight-year bull run but has performed particularly well in 2009, increasing by about 28 percent and repeatedly reaching record highs in recent weeks.
Now Evy Hambro, who helps to manage BlackRock Investment Management’s flagship $11.6 billion World Mining Fund, has explained that lower supplies and higher demand will see those gains extended further.
“The gold trend to me is an incredibly powerful trend. Supply is still falling for the industry, which is not a sign of an industry enjoying massive prices,” he told the news provider.
“There are very few gold companies that are able to replace their reserves every year by exploration. If there were, we’d be increasing our exposure, but there are not.”
A similar argument was put forward last week by Afshin Nabavi, a senior vice-president at Geneva-based bullion refiner MKS Finance.
He predicted that the current rally still has room to continue because the dollar – which shares an inverse relationship with Gold Prices – is showing no signs of ending its recent struggles.
“The dollar will continue to have a very big impact on the metals and gold. Gold has got quite a way to go,” he said in a Bloomberg interview.
Tags: Afshin Nabavi, Blackrock, Evy Hambro, Gold News, Gold price, MKS Finance, World Mining Fund
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November 16th, 2009
- Gold has made a determined break to the upside this morning trading as high as $1,134. In the last 52 weeks gold has now risen 52.13%. Investors are continuing to seek safety from an uncertain dollar, potentially medium term inflation and near term deflation.
- Respected fund manager Blackrock, who manages a total $1.4 trillion in assets, has added fuel to the markets with its view that Central banks will become net buyers of gold this year. India’s recent purchase of a portion of the IMF’s gold at a price of $1,045/oz is finding many plaudits and indeed may spur other central banks with significant dollar exposure to emulate the move.
- Steve Forbes of Forbes magazine was on CNBC on 11/9. When asked how much gold he had, he said “not as much as I should have”. When asked what percentage of his portfolio was in gold, say 5, 10%, 15%, he said “probably around that”.
- Gold prices jumped to a record for the fourth time in six sessions as investors purchased the precious metal as an alternative to a slumping dollar.
- “People want to own gold now because gold is the ultimate currency,” said Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York. “It’s clear that with such low interest rates, the dollar is being allowed to weaken, and there’s no incentive to hold it. There’s an increasing awareness among investors that they should hold some insurance against the lower currency.”
- “Gold is in a secular bull market and all the fundamentals show that prices will keep moving higher,” Joe Foster, who helps manage $8 billion at Van Eck Associates in New York, said in an interview last week. “We’re in an environment where financial stress, including the weaker dollar, is driving the price. Gold had been a forgotten asset for years and years, and now people are all starting to diversify into gold.”
Tags: Blackrock, FORBES, Gijsbert Groenewegen, Gold Arrow Capital Management, Gold News, Gold price, IMF, India, Joe Foster, Van Eck Associates
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November 13th, 2009
• The Treasury is confident Congress will raise the U.S. debt limit by year-end, and not allow a showdown similar to one that shuttered parts of the government in 1995. Sources say the White House is looking for a $1-1.5T increase beyond its current $12.1T limit. The request is higher than a proposed increase already passed in the House, but would get the government through the November 2010 midterm congressional elections without needing another increase. Geithner has repeatedly stressed the need to bring deficits down to sustainable levels, but in the short-term he’s more worried about the need to keep up spending until unemployment recedes.
• The FDIC’s board approved Thursday $45B of bank premium prepayments that it needs after its deposit insurance fund slipped into a deficit at the end of Q3. The prepayments – which equate to three years of dues – will satisfy the fund’s “need for liquidity without imposing undue burden on the industry,” FDIC Chairman Sheila Bair said. A surge in failures – 120 so far this year – has pushed the industry-supported fund into a deficit for the first time since 1991.
Tags: Economic News, economic recovery, economy, FDIC
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November 13th, 2009
• Gold was poised finish the week with a 1% gain after rising 4.9% last week, which was the biggest weekly gain since late April.
• “It’s tracking the dollar,” said David Thurtell, an analyst at Citi, adding that Citi predicts further losses in the dollar. “There’s so much bullishness now about gold,” he said. “It’s hard to see any real reasons why you’d want to sell it. It can get to $1,250 before we get a really serious correction.
• Vietnam has lifted its ban on gold imports which will add fresh demand into a historically pro-gold region.
Tags: Gold News, Gold price
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November 12th, 2009
• Global gold production is in terminal decline despite record prices and Herculean efforts by mining companies to discover fresh sources of ore in remote spots, according to the world’s top producer Barrick Gold.
• Aaron Regent, president of Barrick, said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run. “There is a strong case to be made that we are already at ‘peak gold’,” he told The Daily Telegraph at the RBC’s annual gold conference in London. “Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore,” he said.
• The key driver over recent days has been the move by India’s central bank to soak up half of the gold being sold by the International Monetary Fund. It is the latest sign that the rising powers of Asia and the commodity bloc are growing wary of Western paper money and debt.
• China has quietly doubled holdings to 1,054 tonnes and is thought to be adding gradually on price dips, creating a market floor. Gold remains a tiny fraction of its $2.3 trillion in foreign reserves.
• Gold exchange-traded funds (ETFs) – dubbed the “People’s Central Bank” – have accumulated 1,778 tonnes, making them the fifth biggest holder after the US, Germany, France, and Italy.
• The “false mine of central banks” had been the only new source of gold supply this decade as they auction off reserves, but they are switching sides to become net buyers.
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