With inflation above the current interest rate, a negative real interest rate increases the attractiveness gold. Frank Holmes explains. Read More
Even though the Dow Jones Industrial Average and Standard & Poor's 500 Index have hit record highs this year, investing in gold remains the top investment pick in CNBC's latest All-America Economic Survey.
The March poll shows the yellow metal is the favored investment choice among 35% of respondents, beating real estate at 27% and stocks at 21%. This is the second year that investing in gold has topped the list of what those surveyed consider the "best investment" to make now.
While survey participants are more optimistic this year than last about the stock market, 21% are uncertain if now is a good time to dabble in stocks, up from 11% in December 2009.
Those who believe the current environment make it a good time to buy stocks jumped from 31% in November to 40%, the highest amount since December 2009.
Moreover, in spite of the improved outlook for stocks, the overall view of the current state of the economy remains bleak. Currently, 60% of those surveyed are pessimistic about the U.S. economy, up from 56% in November.
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.
I’ll bet a few Cypriot bank account holders are paying much closer attention to gold now.
Since the announcement that Cyprus was looking to confiscate up to 10% of bank deposits, gold has risen by up to $24/ounce on safe haven demand. That’s no surprise. The yellow metal is not only real wealth, but the only asset that’s not simultaneously someone else’s liability.
Now that trust in the banks has broken down again, we’ve been given another hard lesson on the dangers of fiat money.
Here’s why this may be your last chance to buy gold so cheap...
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.
They almost HAVE to. Fact is, gold mining companies' stocks specifically have lagged the performance of the precious metal for six years. Here's why investors can expect a reversal in the next nine months.
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.
It's still among the wisest investments you can make right now. As Frank Holmes explains, the gold price could rise more than 16% in the short term. You have to see this chart...
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.
Nobel Prize-winning economist and New York Times columnist Dr. Paul Krugman is at it again. He claimed earlier this week that fixing the deficit is important, but added that "doing it now would be disastrous." He also observed that the 10-year U.S. debt situation isn't really all that bad.
I don’t know how he can make that argument with a straight face.
For five years now, Dr. Krugman has argued that increasing U.S. government spending is vital to our nation's recovery. And for five years he's been dead wrong.
Dr. Krugman claims that "we" just haven't spent enough money... yet.
Here's why that makes him very dangerous...
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.
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.
When it comes to gold and gold miners, many investors leave "the driving" to active money managers, who are supposed to understand these specialized assets and the global trends affecting them. But with these charts, you can know what they know right now. Check it out.
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.
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.