Investing in Gold: Here's What to Do Now
Gold prices tumbled $140.40, or 9.4%, to $1360.60 an ounce. This brought the two-day decline to $203.70, or 13%.
- The Federal Open Market Committee (FOMC) meeting minutes that came out last week suggested the central bank may start scaling back its monetary stimulus measures later this year, reducing inflationary pressures.
- Goldman Sachs Group Inc. (NYSE: GS) last week cut its 2013 average gold forecast, for the second time, to $1,545 from $1,610. Investors like to dump the metal after the release of bearish research.
- There have been rumors financially strapped Cyprus was selling 400 million euros of gold, 75% of its reserves to raise cash.
Gold prices ended the drastic two-day decline Tuesday, up nearly 2% to $1,387.40.Read More...
Keith Fitz-Gerald on What's Driving Down the Price of Gold
Investors want to know: What's driving down the price of gold - and how long will the plunge last?
Gold prices tumbled Monday by more than 9% - the biggest percentage drop in 30 years.Read More...
The yellow metal had fallen to just above $1,360 an ounce Monday afternoon.
Why Gold is Going Down
Gold and silver are taking it on the chin again today - leading many readers to keep asking me why gold is going down, and how long the plunge will last.
Gold futures today (Monday) logged their biggest decline since the 1980s, falling $140.30, or 9.3%, to $1,361.10.
What's up? Or rather, what's down?
On Friday, I went into a few reasons why gold is going down to provide some understanding of the action.
But with still further weakness, I'd like to delve in a little more, without repeating myself.
Why Gold is Down
You see, general markets are selling off today too, and even oil has lost $6 per barrel since Thursday.
Though off slightly, the U.S. dollar has maintained strength, probably thanks to speculation the U.S. Federal Reserve may end its quantitative easing sooner than previously expected. That hurts commodities which are all priced in U.S. dollars.
There's also been a considerable amount of selling of gold exchange-traded fund holdings, which has forced those ETF managers to sell their physical bullion. That has temporarily added supply to the market, which helps push gold's price down.Read More...
Why Are Gold Prices Down?
Gold and to a lesser extent silver got hammered pretty hard today (Friday) - leading many of our investors to write in and ask why gold prices are down so much this week.
Gold closed Friday at its lowest level since July 2011. In the last two days, gold was off about $70 and silver off about $1.60 at their worst points.
So what's going on?
Well, in the search for answers I can see a few reasons.
It started Tuesday, when UBS cut its average gold price forecast for 2013 to $1,740 from $1,900. UBS cited risks the U.S. Federal Reserve would end its current QE sooner than expected, a move into equities, low inflation, improving economic growth, and a stronger U.S. dollar.
Then Wednesday, the leaked Federal Open Market Committee (FOMC) meeting minutes showed that several members believe the costs of the $85 billion monthly bond purchases outweigh the benefits. We're being led to believe that "many participants" think improving unemployment could justify slowing up on bond-buying "at some point over the next several meetings."
Remember that these are not minutes where members' comments are actually written down word-for-word (like they ought to), these are carefully crafted statements to influence opinion. The Fed is known to try to "manage expectations, so it wants it to look like bond-buying will end sooner than later.
But I, for one, don't buy it.Read More...
Goldman Sachs Is Manipulating Gold Prices Right Before Your Eyes
Goldman set the table by predicting a turn in gold prices back in December 2012, which no doubt contributed to the precious metal's 5% decline in the first two months of the year.
At the end of February, Goldman issued a research report that said the big Wall Street bank had soured on the yellow metal, and dropped its three-month target for gold prices from $1,825 an ounce to $1,615, its six-month forecast from $1,805 to $1,600, and its one-year outlook from $1,800 to $1,550.
Then, just yesterday (Wednesday), Goldman doubled down on its negative outlook for gold prices.
The bank's new targets for gold prices are $1,530 in three months, $1,490 in six months and $1,390 in one year.
The double whammy - two downgrades in two months - had its intended effect, as gold prices fell 2%, to $1,558.80, after Goldman released its report. It was the biggest single-day percentage drop for gold in nearly six months.
"If you've ever suspected gold prices are being manipulated, you're not alone - and you're right, they are," said Money Morning Chief Investment Strategist Keith Fitz-Gerald.
The proof is right in front of us.Read More...
- Every Gold Coin Has Two Sides With inflation above the current interest rate, a negative real interest rate increases the attractiveness gold. Frank Holmes explains. Read More Read More...
This Gold Prices Chart Points to a Looming 24% Jump
Despite a pullback in gold prices, hold on to your gold. In fact, look to buy more.
You see, thanks to record highs for the U.S. stock market, a notable shift from defensive assets to "risk-on" trades has occurred.
The yellow metal slumped 1.4% to $1,552.80 Wednesday marking a nine-month low. That's after gold prices slid below $1,600 an ounce in Q1 on hints of a global economic rebound. The slide prompted market participants to shed gold holdings.
It's "certainly understandable" for investors to have sold gold following a 400% appreciation over the last decade and move into stocks, said Malcolm Burne, chairman of the Golden Prospect Precious Metals investment trust.
But, here's why the tide may be about to turn.Read More...
- What Maslow and Rand Would Tell Investors Today (And How It Relates To Gold) The average investor has significantly underperformed oil, stocks, gold and bonds in the past 20 years. While, on average, investors returned 2%, oil, stocks and gold rose about 8%. Let's apply some psychology to find out why. Read More...
- In Gold, Not Cyprus, We Trust The savings-seizing shenanigans in Cyprus just reinforced the importance of having gold and gold stocks in your portfolio. An indeed, with gold at extreme lows, now's a great time to buy more. Frank Holmes explains. Read More...
Is London Manipulating Gold and Silver Prices?
As we've explained before, manipulation of gold and silver prices is happening right here in the United States.
Our Global Resources Specialist Peter Krauth interviewed silver market analyst Ted Butler last year, who explained how big financial institutions were using high-frequency trading to depress silver prices.Read More...
Don't Shy Away from Investing in Gold
The most actively traded gold contract, for April delivery, rose $2.70, or 0.1%, to settle at $1,590.70 a troy ounce on the Comex division of the New York Mercantile Exchange.
"The gold market is getting propped up by a break in the dollar index," Ira Epstein, director of the Ira Epstein division at the Linn Group, told The Wall Street Journal. "The problem is, people are not buying into the rally, they're buying it on the dips."
If gold prices cross the psychologically important $1,600-an-ounce level, confidence in investing in gold could strengthen.
Until then, it looks like investors will stay busy trying to profit from the record-high Dow.Read More...