- By Diane Alter, Contributing Writer, Money Morning - October 4, 2013
It's been a volatile year for those investing in gold and silver.
Gold is down some 20% year to date, and silver has lost more than 30%. The yellow metal tumbled more than 30% in the three quarters to June as fears mounted of an early end to the U.S. Federal Reserve's bond-buying program.
But the stars are aligning for better times ahead.
Following a record 23% drop in Q2, in which gold suffered a two-day carnage (April 15-16) that took prices down some $225 an ounce, gold gained nearly 9% in Q3. The gains ended gold's longest quarterly losing streak since 2001.
Silver prices fared even better in the latest quarter, bouncing 10.5%.
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Has the Great Gold Crash Divorced Bullion from Futures Prices?
- By Peter Krauth, Resource Specialist, Money Morning - May 10, 2013
In mid-April, a black swan crash-landed on the gold market.
Over just two trading days, gold futures prices shed 13%, falling from $1,575 to $1,375.
That $200 cliff dive was the largest two-day drop in 33 years.
Gold prices already had been in steady consolidation mode for 18 months. But the magnitude and swiftness of this dramatic move were rare...to the point of suspicion.
How did markets react? Unlike almost anyone expected.
What caused such a landslide, and who may be behind it? More importantly, what are the implications for the precious metals markets moving forward?
The conclusions will surprise you -- and help you invest more wisely.
Why Gold Prices Are Up This Week
- By Tony Daltorio, Contributing Writer, Money Morning - April 26, 2013
It's been a good few days for investors holding on to gold, and we've been getting lots of questions as to why gold prices are up this week.
Gold futures had their biggest one-day gain of the year Thursday, up nearly $40 an ounce, and ended the week up 4.2% at $1,453.60.
At one point this week, gold had retraced half the loss it incurred during its April nosedive. In a two-day period, the yellow metal fell $225 an ounce, hitting a two-year low on April 15.
It is natural for any financial asset to enjoy some sort of a rebound after such a steep plunge. But there are some sound fundamental reasons as to why gold is up.
Gold Buyers Get Physical As Coin and Jewelry Sales Surge
I was honored to be in St. Paul's Cathedral attending Margaret Thatcher's funeral last week. It was quite a special opportunity to pay tribute to Britain's longest-serving prime minister in person, and the ceremony provided a reflective occasion on her influential leadership and unwavering conviction.
As her country faced an economic crisis with high inflation, high tax rates and hundreds of mining strikes, the lady's iron courage helped her make the difficult decisions that steered the United Kingdom to a more sustainable path.
A steely resolve seems to be lacking in many of our world leaders today. Maggie led the U.K. down the path of privatization, encouraging entrepreneurship and free markets because her belief was that "Socialist governments traditionally do make a financial mess. They always run out of other people's money."
In his recent webcast, Global Portfolio Strategist Don Coxe points out the effectiveness of this privatization path, showing the rise in the U.K.'s real GDP from the time she was elected Leader of the Opposition in 1975 through today.
This Gold Slam is a Massive Wealth Transfer from Our Pockets to the Banks
I am very disappointed by, but not surprised at, the latest transfer of weath to the bankers from everyone else. The most recent gold bear raid has vastly enriched the bullion bankers, once again, at the expense of everyone trying to protect their wealth from global central bank money printing.
The central plank of Bernanke's magic recovery plan has been to get everybody back borrowing, spending, and "investing" in stocks, bonds, and other financial assets. But not equally so - he has been instrumental in distorting the landscape towards risk assets and away from safe harbors.
Does Investing in Gold Top Your List of "Best Investments"?
- By Diane Alter, Contributing Writer, Money Morning - March 28, 2013
Even though the Dow Jones Industrial Average and Standard & Poor's 500 Index have hit record highs this year, investing in gold remains the top investment pick in CNBC's latest All-America Economic Survey.
The March poll shows the yellow metal is the favored investment choice among 35% of respondents, beating real estate at 27% and stocks at 21%. This is the second year that investing in gold has topped the list of what those surveyed consider the "best investment" to make now.
While survey participants are more optimistic this year than last about the stock market, 21% are uncertain if now is a good time to dabble in stocks, up from 11% in December 2009.
Those who believe the current environment make it a good time to buy stocks jumped from 31% in November to 40%, the highest amount since December 2009.
Moreover, in spite of the improved outlook for stocks, the overall view of the current state of the economy remains bleak. Currently, 60% of those surveyed are pessimistic about the U.S. economy, up from 56% in November.
Can Gold Miners Increase Profits Through Spin Offs?
After more than a decade of merger mania, gold miners are now looking to spin off some of their acquisitions.
By doing so, the gold miners hope for better results after abysmal performance recently, as gold prices have fallen. And, as always, gold miners' profits rise and fall much faster than the yellow metal's price.
The underperformance of the Market Vectors Gold Miners ETF (NYSE: GDX) compared with that of the SPDR Gold Trust (NYSE: GLD) bears this out. GDX is down 20.5% since the end of last year, while GLD is down 4.8%.
Investors are starting to get really impatient with the gold miners - so much so that billionaire hedge fund manager John Paulson is arguing some of the world's biggest gold mining companies, including AngloGold Ashanti Limited (NYSE: AU), spin off some of the mines that they have acquired through M&A over the past 10 years.
Paulson, the largest shareholder of GLD and AU, thinks the sum of the parts is greater than the value of the whole mining company. Paulson certainly can't be pleased with AU's 23.5% decline so far in 2013.
These Gold Stocks Are Poised to Rebound in 2013
- By Tony Daltorio, Contributing Writer, Money Morning - March 13, 2013
With gold prices - which closed at a nearly two-week high Tuesday to $1,591.70 - rising year after year for much of the past decade, you might think all gold stocks have increased, too.
But they have not - not by a long shot.
In fact, gold mining companies' stocks specifically have lagged the performance of the precious metal for six years.
This sad tale can be seen by looking at the gold miners ETFs. The biggest fund in the sector is the Market Vectors Gold Miners ETF (NYSE: GDX). It holds 31 of the world's top gold mining companies including the likes of Barrick Gold Corp. (NYSE: ABX), Newmont Mining Corp. (NYSE: NEM) and Goldcorp Inc. (NYSE: GG).
It is down more than 20% in the last three months alone. That puts it at its lowest valuation versus bullion prices in over three years. Over the past year, GDX has fallen nearly 32%, which is roughly triple the decline of the largest gold bullion ETF, the SPDR Gold Trust (NYSE: GLD).
It's even worse for the junior miners. The Market Vectors Junior Miners ETF (NYSE: GDXJ) is down roughly 42% of the past 12 months. This ETF focuses on smaller mining companies such as Argonaut Gold and B2Gold and contains 79 stocks.
So what's behind these declines? And when can investors bet on a reversal?
The Looming Gold Production Cliff That Will Drive Prices Higher
- By Tony Daltorio, Contributing Writer, Money Morning - February 28, 2013
In recent years, global gold production has been at or near record levels. The plentiful supplies have led gold bears to argue that the yellow metal's decade-long bull run will end.
But gold bears are dead wrong.
In fact, the 'glory days' of gold production may be ending soon.
That's because some industry experts are beginning to point to a gold "production cliff' that is looming not far in the future.
And this coming decline in production can mean only one thing: higher gold prices.
A Test of Strength for Gold
When investing in gold, I often say diverse opinions promote critical thinking and a healthy market. I believe elevated groups of buyers and sellers create a competitive tug-of-war in the bid and ask price of the precious metal.
Last week, we saw the gold bears growling louder and gaining strength, as the world's largest gold-backed ETF, the SPDR Gold Trust, experienced its largest one-day outflows since August 2011.
The Fear Trade fled the sector following the Federal Reserve's meeting that revealed a growing dissension among some of its members over the central bank's bond-buying program.
Despite the discord, the Fed is continuing its course to purchase $85 billion of bonds every month and keep interest rates near zero. Ben Bernanke's plan bloating the balance sheet to more than $3 trillion has been keeping the Fear Trade coming back for more metal.