gold stocks- Money Morning - Only the News You Can Profit From.
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Precious Metals
Investing in Gold Stocks
Gold prices hit their death cross last week, technically a bearish indicator, but what does that really mean for investing in gold stocks?
According to Goldman Sachs Group Inc. (NYSE: GS) it means gold is headed down for the remainder of the year. In a Feb. 25 note to clients, Goldman lowered its three-month gold-price forecast to $1,615 an ounce from $1,825, its six-month forecast to $1,600 an ounce from $1,805 and its 12-month forecast to $1,550 an ounce from $1,800.
But, once again, Goldman is wrong.
"The fact is, despite this pullback, gold prices are consolidating at a relatively high level, which is rather bullish. As well, gold's price is forming a technical pattern known as a "symmetrical triangle,' which also provides a bullish setup," said Money Morning Global Resources Specialist Peter Krauth when the sell-off began earlier this month.
"The last time we had this was in 2008 to 2009," explained Krauth. "After that consolidation, gold began a multi-year climb that nearly doubled its price. I think we are in the first innings of another such cycle that could take the price much higher, and almost certainly to new all-time highs."As for investing in gold stocks, Krauth said now's a good time to stock up on the yellow metal.
"I believe the best strategy, as gold remains in a secular bull, is to accumulate on dips," said Krauth. "So this very recent weakness has created a great opportunity for true contrarian investors to do just that and add to their gold positions."
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Precious Metals1Why Russia is Investing in Gold More Than Anyone
- Jeff Uscher, Contributing Writer
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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Precious Metals2Why Bill Gross Says You Should Be Investing in Gold
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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Precious Metals2Two 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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Precious Metals48Why Germany Wants its Gold Back
After spending more than 50 years in foreign hands, Germany's gold is finally going home.
In a recent watershed decision the Bundesbank, Germany's central bank, has decided at least half of its gold should be held in its own vaults.
Since the Bundesbank is the second-largest gold holder in the world, that's going to mean moving 54,000 bars of the shiny metal.
So 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...
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Precious Metals9Investing in Gold: Don't Ignore this Central Bank Buying Frenzy
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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Commodities6Four Sensational Facts About Gold Investing That You Might Not Know
- By Frank Holmes, Guest Writer
Our ever-popular Periodic Table of Commodity Returns has been updated through 2012.
Investor Alert readers love this chart as it shows a decade of results across 14 different commodities, providing strikingly rich information in a very familiar format.
Last year, 11 commodities rose in value, with wheat rising as the top crop after seeing a significant decline in 2011. It was a similar rags-to-riches story for the next few leaders, including lead, zinc, natural gas and platinum, which all climbed double digits in 2012 after falling in 2011.
Only three commodities declined over the year: Crude oil fell by 7% after rising 8% the previous year. Nickel declined for the second year in a row. In 2012, the metal lost 9% and in 2011, nickel fell another 24%.
Coal was the worst-performing commodity in 2012, falling nearly 17%. Coal's been going through a rough spell lately; in fact, the commodity has not been king for five years (although it did record a 31 % increase in 2010).
As you can see from the table, commodities often have wide price fluctuations from year to year given the many factors affecting supply and demand, such as government policies, union strikes, and currency volatility.
That's why when it comes to commodities and commodity producers, many investors "leave the driving" to active money managers who understand these specialized assets and the global trends affecting them.
Take gold and gold companies, for example. After investing in the mining industry for decades, we've taken note of several facts about gold that continue to surprise our investors. Here are four of the latest:
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CommoditiesHow 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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Precious MetalsGold Prices: Have We Reached "Peak Gold"?
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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Your MoneyThe Move that is Costing Investors Big-Time
An interesting study published in Science recently found that people frequently underestimate their future selves. When asked to score their current preferences, values and personality traits compared with how they felt
10 years ago and how they will feel 10 years in the future, people believe they changed more in the past than they will in the future.
It didn't matter whether the participants were teenagers or middle-aged; people just assume that their present selves are "as good as it gets."
Investors have held a similar illusion about the stock market since the financial crisis.With the barrage of negative headlines and abhorrence toward risk, investors seemed to feel that equities would not improve going forward.
This turned out to be a mistaken belief: Take a look at the last four years of U.S. market and gold returns.
