Gold Prices

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...

Investing in Gold: Don't Ignore this Central Bank Buying Frenzy

2014 Gold Commodity Prices

Anyone investing in gold should recall that before the financial crisis in 2008 central banks were dumping the yellow metal - when it was trading for less than half of where gold prices are today.

But that certainly has changed in recent years.

In 2012, the world's central banks added the most gold to their reserves since 1964. Net official gold purchases added up to 536 metric tons, a gain of 17.4% from the previous year according to a report from Thomson Reuters GFMS. The estimate from the World Gold Council for such purchases is similar at 500 metric tons.

Central banks are forecast by GFMS to purchase 280 metric tons in the first half of 2013 alone.

That's good news for anyone investing in gold.

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How Will the Debt Ceiling Debate Affect Gold Prices?

If you're wondering how the debt ceiling debate will affect gold prices, you need to check out a new report from Goldman Sachs Group Inc. (NYSE: GS).

Investment powerhouse Goldman believes gold prices will log impressive gains over the next three months as the debt ceiling debate takes center stage on Capitol Hill. The bank is advising investors to position portfolios ahead of upward moves in the precious metal.

"We see current prices as a good entry point to re-establish fresh longs," Goldman analysts Damien Courvalin and Alec Phillips wrote in a Jan. 18 report.

The bank reaffirmed its three-month price target for gold of $1,825 an ounce. (Gold was trading at $1,695.20 in New York Tuesday.)

"The uncertainty associated with these (debt-ceiling) issues, combined with our economists' forecast for weak U.S. GDP growth in the first half of 2013 following the negative impact of higher taxes, will push gold" to the three-month target, the report stated.

The Goldman strategists pointed out six instances between 1996 and 2007 when the country hit the debt ceiling and the Treasury responded by using its muscle to execute "extraordinary measures" to keep the country afloat and running.

Gold prices rallied some 10% in half of these instances in the month prior to the debt-limit increase.

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Gold Prices: Have We Reached "Peak Gold"?

Hands with coins

Expectations for gold prices just grew brighter due to a recent outlook on production numbers.

Gold producer Iamgold Corp. (NYSE: IMG), which has mines in Canada and Mali, forecasts gold prices will soar to a record $2,500 an ounce as global output peaks and ore grades decline.

Grade is the relationship between quality, tons, geometry and depth that indicates if a gold find can be extracted at a cost that makes doing so profitable. High grade is key in a gold deposit.

Iamgold CEO Steve Letwin told Bloomberg News in a Jan. 10 interview that the industry has exploited its best-quality gold reserves and as a result is tapping lower-grade and higher-cost deposits.

In fact, he sees this as a sign of "peak gold" - when the maximum rate of global gold extraction is reached.

"I really think we are at Peak Gold. Nobody has seen the kind of production profiles they thought they were going to see," Letwin explained.

What is Peak Gold?

After peak gold is reached, there's a terminal decline in the rate of production.

The "peak gold" theory mirrors the "peak oil" theory, which maintains the earth holds a finite amount of crude, and production will eventually outstrip supply.

The peak gold phenomenon was actually spotted several years back.

Barrick Gold (NYSE: ABX) CEO Aaron Regent told The Daily Telegraph in 2009 at the Royal Bank of Canada's annual gold conference "there is a strong case to be made that we are already at peak gold."

"Production peaked around 2000 and it has been a decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore," Regent said.

In 2001, the world saw what was believed to be record global gold production of 2,649 tons.

And what has happened since then in gold production supports the peak gold theory...

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German Gold Grab Could Call into Question the "Full Faith and Credit" of the U.S.

Gold grab small

The recently publicized move by the German central bank to bring its gold home is sending a major message about trust in the United States.

The bank holds 45% of its 3,396 tons of gold in the vaults of the Federal Reserve Bank in New York, and wants to reduce those holdings to 37%. It also plans to take back all of its 11% of holdings currently stored at the Banque de France in Paris.

The immediate reaction to the German central bank's decision to repatriate some of its gold was to assert that the Bundesbank no longer trusted overseas central banks to look after their gold.

The German Federal Court of Auditors (Bundesrechnungshof) has ordered the Bundesbank to audit its gold reserves "because stocks have never been checked for authenticity and weight."

Prior to that, the Bundesbank had simply relied upon written certification from the central banks where its offshore gold is stored that the correct amount of gold is actually in the vaults and is of the appropriate fineness.

What's more, samples of gold from the Fed and the Banque de France will be melted down and tested for fineness or quality.

Suppose Germany's gold isn't all it is supposed to be?

The "full faith and credit" of the United States would certainly be called into question.

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Gold Prices: Don’t Let Faber Scare You

The Future of Gold Prices

After hitting its 12th straight year of new highs, gold prices got off to a bumpy start in 2013.

"Dr. Doom" Marc Faber even came out Tuesday with a reduced price prediction for gold.

In a CNBC "Squawk Box" interview, Faber said, "I don't think [gold] will go up right away, and we maybe have a correction of 10 percent or so on the downside."

Faber had also estimated a gold price range in his JanuaryMarket Commentary of "... perhaps down to between $1550 and $1600."

But any gold price correction would be a short-term move. Even Faber admitted central bank action is a reason to bet on higher gold prices for the long term.

That's why investors should look at any price correction in gold as an opportunity to stock up.

By Thursday, the yellow metal jumped 1% after the European Central Bank left interest rates the same and the euro rose against the dollar. The February gold contract jumped $20.90 (1.3%) to $1,676.40 per troy ounce.

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Seven Ways to Tell if Your Gold Is Counterfeit

Gold bars I had just finished a walking tour of the Royal Canadian Mint when I saw it. Right there, out in the open, was a 400-ounce bar of pure gold.

It was chained to a display table and kept safe by an armed guard. At the time, in 2005, the bar was worth $220,000.

Today, the same bar is worth $549,200. In just eight years, gold prices have jumped by 150% -- and that's even with a 27% drop from the peak of $1,900 in 2011.

But it's not the eternal fascination with gold that has boosted the price. With growing levels of worldwide uncertainties, mounting inflation risks, and government distrust, people are clamoring for gold primarily as insurance.

According to the World Gold Council, 2011 saw gold bars and coins reach nearly $77 billion in sales, versus 2002's $3.5 billion. And in November alone, the U.S. Mint's sales of the popular American Eagle coins jumped 131% in the wake of the election.

Editor's Note: Right now, four separate indicators are saying gold is set to surge. Any one of them is bullish on its own. But when all four signals flash at once...

With the market for gold growing at a feverish pace, it's now more important than ever to know that your gold is the real deal - especially now that gold has begun to show signs of a strong rebound.

Here's why...

Gold counterfeiting is nothing new. In fact, just recently there were reports of fake gold bars from China turning up in New York. Instead of gold, their centers were stuffed with tungsten.

But rest assured there are a number of methods you can use to mitigate the risks of ending up with counterfeit gold. Some are simple, quick, and inexpensive. Others are more elaborate, detailed, and not so readily accessible.

Here are seven ways to find out if the gold you own is real:

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Gold Prices in 2013 to Go Higher Thanks to These "Wars"

Gold nuggets Gold prices in 2013 are already expected to top $2,200, and adding fuel to that price surge is an accelerating trend in the global economy.

We're talking about currency wars.

The term currency wars describes a race between many of the world's central banks to make their currencies worth less relative to other currencies, with the goal of increasing exports by making them cheaper.

Such a strategy becomes less effective as more countries join in the battle, but a growing currency war has another effect that investors can exploit: As central banks devalue their currencies, they create inflation and cause hard assets like gold to rise against them.

Fortunately for gold investors, most of the world's central banks, from the U.S. Federal Reserve to the Bank of Japan, are expected to further step up their currency devaluation in 2013.

"Implementation of the European Central Bank's Outright Monetary Transactions, andfurther Bank of Japan easing -- both of which we expect - [will] support gold, aswould a weaker outlook for the yen, which competes with gold as a flight-to-qualityasset," wrote UBS analyst Edel Tully in a recent research note.

Why Currency Wars Will Get Worse in 2013

While the central banks' easy money policies have been aimed at stimulating their own sluggish economies, the effect has been to strengthen other world currencies, particularly those in emerging markets.

That has made their exports more expensive, hurting their economies. And they've had enough.

"Advanced countries cannot count on exporting their way out of the crisis at the expense of emerging market economies," Brazilian Finance Minister Guido Mantega said at an International Monetary Fund Meeting last week. "Brazil, for one, will take whatever measures it deems necessary to avoid the detrimental effects of these spillovers."

Mantega singled out the Fed in particular, calling its bond-buying QE3 (quantitative easing) program "selfish."

Emerging economies are also uneasy about the recent election of Shinzo Abe as Prime Minister of Japan. Abe and his Liberal Democratic Party are expected to push for as much as $120 billion of stimulus spending plus call on the Bank of Japan to print piles of yen.

"It's almost obscene what they're talking about doing," John Mauldin, chairman of Mauldin Economics, told The Daily Ticker.

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Your 2013 Guide to Investing in Gold

Gold bullion, gold stocks or no gold at all?

I put that question to Real Asset Returns Editor Peter Krauth last week.

You see, there's a lot of interest in investing in gold right now. Or perhaps I should say that there's a lot of interest in what gold might do.

And you can certainly understand why.

From its November 2008 market lows, the SPDR Gold Trust (NYSE: GLD) - the No. 1 proxy for the "yellow metal" - rose as much as 158%, reaching its peak in September 2011. But it's down about 13% since that time (though it's up 5% year to date), and a lot of folks are wondering what gold is worth, and how they should play it.

Wall Street has grown more tepid on gold, with many of the investment banks ratcheting back just a bit on their target prices. But most also see prices heading up to and beyond the $2,000 level in 2013, meaning they see a potential gain of 22% or better.

Peter's target price is a bit more aggressive: He sees gold trading as high as $2,200 an ounce - 34% above current prices in the $1,640 range.

I've worked with Peter for several years now, and admire the way he works.

He based himself in resource-rich Canada in order to be closer to the many companies that he covers. And he's made a number of truly superb market calls: In September 2010, for instance, when silver was trading at $19 an ounce, Peter told investors the metal was a "Buy" - and we then watched it soar to a high of $48 (a 153% windfall).

So when I decided to bring you the latest insights on gold - and some recommendations, as well - I went to Peter.

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Why Are Gold Prices Down?

Gold prices plunged Thursday, hitting lows not seen since August, after the U.S. Commerce Department reported an unexpectedly robust reading on third quarter U.S. gross domestic product (GDP).

After the surprising strong report, February gold tumbled $14.50 an ounce to $1,653.50 and spot gold sank $22.80 to $1,643.10.

Silver prices fell as well, losing $1.13 to $29.95 shortly before noon. Prior to the report, the yellow and white metals were little changed.

The fresh report revealed GDP in the third quarter expanded at an annual rate of 3.1%, the fastest growth since late 2011. That was up from the 2.7% pace logged last month, and better than economists' expected 2.8% rate.

Phil Streible, a senior commodity broker at R.J. O'Brien & Associates in Chicago told Bloomberg News, "The GDP number was better than forecast, so the thinking is that improving conditions in the economy might mean a light at the end of the tunnel on when the Fed will end QE3."

Gold and silver have been big beneficiaries of the FOMC's generous QE3 programs.

But there's more than the end of QE measures as to why gold prices are down.

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Gold Prices: What Happened to the Rise?

One of the more confusing things for investors right now is why gold prices aren't going through the roof. As the Fed, European banks, China and Japan pump massive amounts of money into global markets, investors are scratching their heads when they look at the price of gold. Since reaching the $1,800 an ounce level […]

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