Gold Prices

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.

Other gold majors, including Gold Fields Limited (NYSE: GFI) and Barrick Gold Corp. (NYSE: ABX), have already spun off some of their mines or are in the process of doing so.

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Don't Shy Away from Investing in Gold

Gold prices were up today (Thursday) as the U.S. dollar retreated against other currencies, leading foreign buyers to favor 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.

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Gold and Silver Prices Boosted by These Global Moves

Gold Price trends this year

Gold and silver prices both marched toward their largest gains in more than a week Tuesday joining the uplifting mood on Wall Street. As the Dow Jones Industrial Average reveled in a historic rally that took the benchmark to a record high, commodities also soared. 

Gold prices settled Tuesday's trading session up $2.50, or 0.2%, at $1,574.90 an ounce, supported by stimulus chatter and a weaker dollar. The safe haven metal had reached as high as $1,585.80 an ounce intraday, on course for its biggest leap since Feb. 26.

Year-to-date, gold has dipped 5.7%. The commodity logged its fifth consecutive month of declines in February, marking its longest stretch of declines since 1997.

Silver prices rose 1.7% to $28.97 in early trading, their biggest gain in more than a week. The white metal ended the day at $28.81.

While silver's slip since January has been more modest than gold's, it's well below the $34.89 it traded at during the same period a year ago.

But loose monetary policies worldwide, geopolitical uncertainties, rising oil prices and renewed fears of inflation should support, if not boost, both gold and silver prices in the months ahead.

Aggressive Global Stimulus Here to Stay

Driving gold and silver prices higher Tuesday were comments from Federal Reserve Vice Chairman Janet Yellen.

At the National Association for Business Economics conference Monday, the Federal Open Market Committee's (FOMC) Yellen defended the bank's $85 billion a month of bond purchases.

"At this stage, I do not see any (risks) that would cause me to advocate a curtailment of our purchase program," Yellen said.   

Yellen's sentiments mirror that of Fed Chief Ben Bernanke, who thinks continued stimulus will be good for the U.S. economy. Acknowledging there are risks from the Fed's aggressive efforts to stoke the anemic U.S. economy, Yellen added there are also risks from not being aggressive enough.

This news from overseas is also bullish for gold and silver prices...

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Gold Prices Are Being Manipulated and Here's What To Do About It

If you’ve ever suspected gold prices are being manipulated, you’re right, they are.
Against the backdrop of fiscal mismanagement, political incompetence, and failed austerity measures, the world's biggest traders have all bet heavily on gold. Lately, they've been pulling out all the stops to get what they want (while laughing all the way to bigger bonuses).
Today, I want to talk about who "they" are and share a few tricks you can use to capitalize on their actions without being taken to the poorhouse.
Here's how to play the game to win.

The Looming Gold Production Cliff That Will Drive Prices Higher

Country Canada maple leaf

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.

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Gold Prices: The Yellow Metal's Still a Great Long-Term Investment

Gold Price trends this year

There are a lot of moving parts to the gold story so let's start with the biggest takeaway: Gold prices are facing only a temporary setback.

Longer-term, as the U.S. Federal Reserve and other central banks begin to wind down quantitative easing and, more importantly, begin to ease interest rates back up to more "normal" levels, inflation should begin to kick in and drive gold up to new highs, making the yellow metal a great long-term investment.

First, though, let's tease apart the various factors that currently are driving the price of gold lower.

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Why Russia is Investing in Gold More Than Anyone

money

Now we know what Russia has been doing all these years with all its oil mega-profits: investing in gold.

A Bloomberg News article Monday reported that Russia's central bank added 570 metric tons of gold in the past decade, making the country the world's biggest gold buyer. That amount is a quarter more than the world's second-biggest buyer, China.

The amount of gold Russia added to its stockpile is almost triple the weight of the Statue of Liberty, according to Bloomberg.

It certainly makes sense for Russia to add to its official gold reserves. Gold prices have gained about 400% over the past decade.

"The more gold a country has, the more sovereignty it will have if there's a cataclysm with the dollar, the euro, the pound or any other reserve currency," Evgeny Fedorov, a lawmaker for Putin's United Russia party in the lower house of parliament, told Bloomberg in a telephone interview in Moscow.

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Jim Rogers: Hold on to Your Gold and Silver Coins

Hands with coins

Legendary investor Jim Rogers sees now as a great time to load up on gold and silver coins - and he's not alone.

A record 7.5 million ounces of silver coins were sold in January as investors hunted for a safe haven investment.

"You can't get [silver coins]. They sell out," Rogers, who owns a rare 2013 silver coin, said on Yahoo! Finance's "The Daily Ticker." "Several mints have run out of coins because everybody's worried about the future of the world."

And 150,000 ounces of American Eagle gold coins were sold in January, the highest monthly total since July 2010.

"Gold has been up 12 years in a row which is extremely unusual for anything," added Rogers. "A lot of speculators are rushing into gold right now. I'm not rushing into gold, but I'm certainly not selling it. If it goes down, I'm buying more."

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Gold Prices Will Ride Higher on this New Investment from China

Gold ingots Chinese 2 small

China remains a small player on the international gold scene, but that's about to change, and that's good news for those betting on higher gold prices.

You see, currently China's gold investors have few opportunities to play rising gold prices, which they want to do increasingly to hedge against risk and inflation. Most buy gold bars and notes to bet on higher gold prices.

But they will soon have more options.

The China Securities Regulatory Commission on Jan. 25 announced the country's rising gold demand required diversified investment instruments. It announced provisional guidelines for gold exchange-traded funds (ETFs), which have been prepared for launch over the past few years and will be made available soon.

The CSRC said that the gold ETFs would be invested in the spot contract traded on the Shanghai Gold Exchange and up to 10% on other products.

In the future, the funds could be opened up to futures contracts.

"Later on, we will further open up the market and quicken the steps to integrate into the international market," Xie Duo of People's Bank of China said. "We should actively create conditions for the gold market to become integrated with the international gold market."

Here's how this news is bullish for gold prices.

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Why Bill Gross Says You Should Be Investing in Gold

What is the Price of Gold Today?

Renowned bond investor Bill Gross, the manager of PIMCO's Total Return Fund, the world's largest bond fund, just shared his top investment picks with Barron's. Leading the savvy investor's short and selective list was gold.

Why is a bond bull keen on investing in gold?

It's because Gross sees gold as a stellar inflationary hedge as global central banks attempt to reflate their economies.

Gross explained that while it looks like loose monetary policies and the deluge of dollars will continue for a while, at some point both will have to stop and "when all this money printing by central banks ends, it won't be pretty."

Gross sees trouble brewing in the artificially-priced U.S. Treasury market.

"The Fed is buying 80% of the Treasury market today. It is remarkable to think that when the Treasury issues debt in the trillion-dollar-plus category, the Fed ends up buying most of it. The Treasury sells it to banks and primary dealers, who sell it back to the Fed at a higher bid," Gross explained.

"This is very different from the free-market capitalism we've come to know. And it will continue until inflation exceeds the upper end of the central bank's target of 2.5% or, by some miracle, we get real economic growth," Gross continued.

The artificially priced bonds leave investors to question if investing in them is worth the slender reward, given the paltry yields from a bevy of bonds except high-risk junk bonds.

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Two Ways to Go Big on Gold Stocks Right Now

There are plenty of reasons for you to have some gold stocks in your portfolio.

Governments are stockpiling record amounts of the shiny metal. Mints are pumping out new coins as fast as they can. And the Fed under "Helicopter" Ben Bernanke is wallpapering the world with greenbacks, pumping out $85 billion a month until...well, who knows when?

But there's more.

The Europeans have joined the party by bailing out their weak sisters with hundreds of billions of euros.

And the Bank of Japan just announced a $1.2 trillion bond purchase program for 2013 and $150 billion per month after that - almost twice the size of the Fed's folly.

Now the yahoos in Washington are threatening to spill more blood over the debt ceiling.

All this spells big upside for gold prices in 2013...and the companies that produce gold.

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Why Germany Wants its Gold Back

After spending more than 50 years in foreign hands, Germany's gold is finally going home.
The Bundesbank (Germany's central bank) is the second-largest gold holder in the world. And it wants at least half of its gold to be held in its own vaults. That's going to mean moving 54,000 bars of the shiny metal.
But why does Germany want its gold back, and why now?
Part of it has to do with pressure from a grassroots group led by a group of economists, business executives, and lawyers, along with the German Precious Metals Association, who have put together a "Repatriate our Gold!" campaign.
But that's only part of the story...