why did gold jump today
- By Peter Krauth, Resource Specialist, Money Morning - May 10, 2013
In mid-April, a black swan crash-landed on the gold market.
Over just two trading days, gold futures prices shed 13%, falling from $1,575 to $1,375.
That $200 cliff dive was the largest two-day drop in 33 years.
Gold prices already had been in steady consolidation mode for 18 months. But the magnitude and swiftness of this dramatic move were rare...to the point of suspicion.
How did markets react? Unlike almost anyone expected.
What caused such a landslide, and who may be behind it? More importantly, what are the implications for the precious metals markets moving forward?
The conclusions will surprise you -- and help you invest more wisely.
why did gold jump today
Why Gold Prices Are Up This Week
- By Tony Daltorio, Contributing Writer, Money Morning - April 26, 2013
It's been a good few days for investors holding on to gold, and we've been getting lots of questions as to why gold prices are up this week.
Gold futures had their biggest one-day gain of the year Thursday, up nearly $40 an ounce, and ended the week up 4.2% at $1,453.60.
At one point this week, gold had retraced half the loss it incurred during its April nosedive. In a two-day period, the yellow metal fell $225 an ounce, hitting a two-year low on April 15.
It is natural for any financial asset to enjoy some sort of a rebound after such a steep plunge. But there are some sound fundamental reasons as to why gold is up.
Does Investing in Gold Top Your List of "Best Investments"?
- By Diane Alter, Contributing Writer, Money Morning - March 28, 2013
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.
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.
These Gold Stocks Are Poised to Rebound in 2013
- By Tony Daltorio, Contributing Writer, Money Morning - March 13, 2013
With gold prices - which closed at a nearly two-week high Tuesday to $1,591.70 - rising year after year for much of the past decade, you might think all gold stocks have increased, too.
But they have not - not by a long shot.
In fact, gold mining companies' stocks specifically have lagged the performance of the precious metal for six years.
This sad tale can be seen by looking at the gold miners ETFs. The biggest fund in the sector is the Market Vectors Gold Miners ETF (NYSE: GDX). It holds 31 of the world's top gold mining companies including the likes of Barrick Gold Corp. (NYSE: ABX), Newmont Mining Corp. (NYSE: NEM) and Goldcorp Inc. (NYSE: GG).
It is down more than 20% in the last three months alone. That puts it at its lowest valuation versus bullion prices in over three years. Over the past year, GDX has fallen nearly 32%, which is roughly triple the decline of the largest gold bullion ETF, the SPDR Gold Trust (NYSE: GLD).
It's even worse for the junior miners. The Market Vectors Junior Miners ETF (NYSE: GDXJ) is down roughly 42% of the past 12 months. This ETF focuses on smaller mining companies such as Argonaut Gold and B2Gold and contains 79 stocks.
So what's behind these declines? And when can investors bet on a reversal?
The Looming Gold Production Cliff That Will Drive Prices Higher
- By Tony Daltorio, Contributing Writer, Money Morning - February 28, 2013
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.
Why Bill Gross Says You Should Be Investing in Gold
- By Diane Alter, Contributing Writer, Money Morning - February 4, 2013
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.
Two Ways to Go Big on Gold Stocks Right Now
- By Don Miller, Contributing Writer, Money Morning - January 29, 2013
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.
Investing in Gold: Don't Ignore this Central Bank Buying Frenzy
- By Tony Daltorio, Contributing Writer, Money Morning - January 25, 2013
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.
Four Sensational Facts About Gold Investing That You Might Not Know
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: