Gold Prices: Don't Ignore This Bullish Trend
Gold prices have been languishing in recent weeks as investors have been drawn into riskier assets such as equities.
New highs in major world stock indices including the Dow Jones Industrials and the Nikkei 225 have investors looking for higher returns.
"Investors are not really looking for safe havens at the moment," Eugen Weinberg, head of Commodities research at Commerzbank, told Reuters. "Gold as inflation protection should get more demand from investors in the second half of the year. Right now, the market participants are looking for more yield and they're finding it in other asset classes like equities."
In fact, the amount of gold held by the SPDR Gold Trust (NYSE: GLD) has been declining since it peaked on Dec. 10, 2012. It was at 1,353.35 metric tons then and now stands at 1,244.86 metric tons as money has flowed out of precious metals and into financial assets.
But not everyone is shunning gold - and you shouldn't, either.
Gold and Silver Prices Boosted by These Global Moves
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.Â
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. Â Â
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...
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 not alone--and 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.
Let's begin with the concept of manipulation itself.
In order to understand the players, you have to understand their motivations. You'd think it's all about profit, but that's not entirely true.
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."
Why Russia is Investing in Gold More Than Anyone
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.