The Roosevelt Administration Executive Order of 1933 required U.S. citizens to turn over most of their gold coins, gold bullion and gold certificates in return for paper currency. Is the government eyeing your gold again?
- How to Buy Gold: Don't Miss the Yellow Metal's Next Move Up
- The Silver and Gold Prices 'Super Cycle' is Far From Over
- Why Gold Prices Will Soar After the Dec. 12 FOMC Meeting
- Will Fiscal Cliff Talks Push Gold Prices to $1,800?
- Why Brazil Will Keep Buying Gold – and Driving Up the Price
- 2013 Gold Price Forecast: Expect Gold to Deliver Another Record-Setting Year
- The Ultimate Gift for Your Gold Lover and 5 Other Amazing Consumer Trends
- The "Two Outlooks" for Gold Prices
- Billionaires Buying Gold Bullish for the Yellow Metal
- Why China's Buying Gold
- Why Obama's Victory Means Higher Gold Prices
- Why the Price of Gold is Headed to $2,000 an Ounce
- What South Africa's Mining Turmoil Means for Investing in Gold
- How Helicopter Ben Helps Jobs and, Inadvertently, Gold Prices
- If You're Investing in Gold, Singapore Just Became More Important to You
- Bill Gross, the Ring of Fire, and Gold Prices
Due to short-covering in anticipation of Friday's employment numbers and comments from European Central Bank (ECB) President Mario Draghi raising expectations for an interest rate cut, Comex February gold rose $8 an ounce to $1,701.80.
Gold exchange-traded funds (ETFs) also had a good day on Thursday as they hit record highs of 76.133 million ounces.
Peter Spina, president of Goldseek.com said to Investor's Business Daily of Thursday's levels, "If gold does remain around these levels for the near term (several months), this remains a very healthy gold market, which will set the tone for the next move up."
After the November U.S. jobs report, which had been expected to be skewed from Superstorm Sandy, came out better-than-expected on Friday, gold went above $1,700 again. Expectations for Federal Open Market Committee (FOMC) easing fell a bit.
Until the Dec. 10 and Dec. 11 FOMC meeting ends, investors are expected to hit the sidelines.
At next week's meeting, FOMC members will decide what to do with "Operation Twist" as it comes to an end. Many think they will extend it, plus implement a "QE4."
This would be good for the precious metals markets. But gold prices are affected by much more than the FOMC.
According to the facts and figures cited last week by Money Morning Global Resources Specialist Peter Krauth, 2013 should be a banner year for gold. Krauth projects prices for the primary precious metal could easily climb from the current $1,704 an ounce to $2,200 - or even more - a one-year gain in excess of 25%.
That means every serious investor should have at least some gold in their portfolio.
That raises two immediate questions:
1) What are the best vehicles for investing in gold; and,
2) What are the best ways to buy the yellow metal?
For each investor, the best approach to how to buy gold depends on your goals and expectations.
How to Buy GoldIf you're worried global political and economic tensions will intensify, then holding the actual physical metal is your best choice.
Possible flash points include strife in the Middle East, a meltdown in the Eurozone debt crisis, a continued slowing of China's growth rate and, of course, the U.S. fiscal cliff crisis, which could plunge America and perhaps the world economy back into recession - or worse.
Under such conditions, purists feel holding physical gold provides the only truly effective hedge against almost certain declines in the value of the dollar and other fiat currencies - declines that could be amplified by sharp reversals in global financial markets.
For smaller investors, how to buy gold in physical form typically means buying gold bullion bars, rounds (unadorned coin-shaped pieces) or minted gold bullion coins.
Looking at a 10-year gold prices or silver prices chart and seeing respective gains of 423% and 650% can get investors pretty excited, and for good reasons.
Whether you enjoyed the previous commodities bull run and are currently adding to your positions, or just initiating one, now is the time to buy gold and silver, as both are expected to continue climbing in value.
Decisions made at the Dec. 12 FOMC meeting could add as much as $2.2 trillion to the Fed's balance sheet over the next two years, which will turbocharge gold prices, silver prices and oil prices.
The FOMC is the select group within the Fed that sets monetary policy, such as interest rates and the bond-buying programs known as quantitative easing, or QE.
That the Fed will dramatically increase QE3, which launched in September with the monthly purchase of $40 billion in mortgage-backed securities (MBS), at the Dec. 12 FOMC meeting is almost a given; it practically has no choice. QE3.
But the real issue at the Dec. 12 FOMC meeting will be what to do about the Dec. 31 expiration of the Operation Twist program. In Operation Twist, the Fed sells about $45 billion of short-term Treasuries each month and uses the proceeds to buy long-term Treasuries.
The Fed probably would opt to extend Operation Twist - which has not added to the Fed's balance sheet as QE1, QE2 and QE3 have -- except that it is starting to run low on short-term securities to sell.
Yet the Fed committed in October to extending its easing policies as long as necessary to bring down unemployment and aid the U.S. economy. Its only option is to convert Operation Twist to a conventional bond-buying program - effectively doubling its QE3 money-printing.
"Our baseline expectation is a continuation of the current pace of asset purchases of $85 billion per month on an open-ended basis, which would imply that the current $45 billion per month in [Operation] Twist-financed Treasury purchases is replaced by $45 billion per month in QE-financed Treasury purchases," Jan Hatzius of Goldman Sachs (NYSE: GS) said of the likely actions at the Dec. 12 FOMC meeting.
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Washington appears closer to making a deal to avert the looming fiscal cliff. But the longer investors have to wait for a deal, the more likely gold prices will rise.
As a group, central banks will have bought about 500 tons of gold this year, the most in more than 40 years. More large purchases are expected in 2013.
Foremost amongst the gold buyers are the central banks of emerging economies around the globe. Recent years have seen purchases by Russia, South Korea, Mexico, India and, as most believe, China.
Another country joining the party, or in this case the carnival, is Brazil.
According to the International Monetary Fund, Brazil raised its gold reserves for the second month in a row in October. Brazil made its first significant gold purchase in more than a decade in September. It expanded its gold holdings by a hefty 17.2 tons last month to 52.5 tons.
This is the largest amount of gold Brazil has held in more than 11 years, since January 2001.
So why is Brazil jumping aboard the bandwagon now and buying gold at a record pace?
During the last secular gold bull market in the 1970s, gold rose from $35 in 1968 all the way to $200 by late 1974.
Then the unthinkable happened. Between late 1974 and mid-1976, gold prices were cut in half, dropping from about $200 to $100.
At the time, many gold investors sold out in disgust, never to return.
But then a funny thing occurred. Gold prices started to climb again, rising from $100 in mid-1976 all the way to $800 by January 1980.
And anyone who was fortunate enough to own gold at $35 earned better than 20 times their investment in just 12 years.
Twenty-one years later, a new bull market began. Since 2001, gold has consistently performed in what now appears to be a record-setting run.
In fact, since 2001 the average return on gold is now just shy of 18% annually over the last 11 years.
I know of no other major asset that has turned in this kind of performance -- ever. This rise in gold prices is simply unmatched.
This is what a stealth bull market looks like, one that I fully expect will keep powering on.
Now, let's have a look at where gold prices might be headed in 2013...
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According to the latest survey from the Consumer Electronic Association, about 60 percent of adults plan to shop in stores or online during the holiday weekend, with the average person indicating they'll fork over $218 for gifts and merchandise from Thanksgiving through Cyber Monday.
This is a sharp increase from 2011, where shoppers said they'd spend $159.
For the ultimate gold lover on your shopping list, one amazing purchase you can nab is a Christmas tree complete with Disney characters and gold leaf ribbons made of 88 pounds of pure gold from a jewelry store in Tokyo, according to Reuters.
The ornamental tree will set you back $4.2 million, but there's also a smaller version available for $243,000.
But that's not the only thing that has grabbed my attention this holiday season. Here are 5 other amazing consumer trends that are happening around the world.
And two recent columns in particular on gold generated a larger-than-normal response.
The comments were related to the two-parter on gold prices that we published on Nov. 5 ("The Secret Gold Standard") and Nov. 13 ("Why Obama's Victory Means Higher Gold Prices").
Let's take a look at what you had to say.
The comments related to the "Secret Gold Standard" column were especially intriguing because a number of you thought I was advocating a literal return to the "gold standard."
I wasn't, of course. I employed the term as a convenient metaphor to try and help folks understand how the world's central banks were adding gold reserves for the first time in nearly a quarter century.
In fact, a global return to the gold standard isn't possible - there literally isn't enough gold to allow that to happen. It would crimp money-supply growth in such a way that global economic growth would be stymied.
A number of you wrote in to make that same point - including one reader who actually performed all the necessary calculations to make his case.
Al K. wrote in to ask: "Some analysts believe gold will drop further & others believe gold has bottomed out now. What do the experts of Money Morning believe?"
Since Al requested an "expert" opinion - a fair request - I put in a call to Chief Investment Strategist Keith Fitz-Gerald.
The Outlook For Gold PricesRight now, Keith explained, there are two separate outlooks for gold - one for the near-term and another for the longer-term.
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Three well-known billionaire investors - George Soros, John Paulsen and Julian Robertson - have been adding heavily to their gold holdings this year.
Gold buying by some of the world's most successful investors is a strong argument that gold prices, despite their impressive rise over the past several years, still have a long way to go.
The precious metal is expected to enjoy its 12th straight year of increases in 2013. So far this year, gold prices are up about 10%.
Forecasters see gold rising each quarter in 2013, ending at $1,925 an ounce in the last quarter, or 11% higher than current prices, according to Bloomberg.
While gold prices haven't moved much lately, investors need to stay focused on the long term.
On Tuesday, December gold futures on the Comex fell $8.50 (0.5%) to $1,725.9 an ounce. This came after remarks by Fed Chairman Ben Bernanke that the looming fiscal cliff could threaten the U.S. economy.
Of course, such minor bumps haven't kept the smart money - billionaire investors -- from buying gold.
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Now China's buying gold in an attempt to play catch up with the United States and other influential nations, the London Bullion Market Association reports.
At a recent conference in Hong Kong, Chairman David Gornall told the association's conference, "When comparing China to the U.S., it would seem that in China, gold asset allocation can only go in one direction. The country has only 2% of its reserves in the form of gold compared with the U.S. at 75%."
Other developed countries, including Germany, Italy and France, maintain a gold reserve in excess of 70%. Meanwhile, China's share lags, data from the World Gold Council reveals, trailing at a paltry 2%.
Since 2009, The People's Bank of China has not disclosed any changes to its gold holdings. At that time, the bank noted its stash had risen by 76% to some 1,054 tons. Its cache is set to swell again as the country, facing an economic slowdown from a plethora of lethargic international markets, gets defensive.
The spike in gold imports to China, via Hong Kong, reveals new significant accumulations of the commodity. Chinese imports of the precious metal totaled 69.7 metric tons in September, a striking 22% increase from a year ago.
In response to the article, John wrote:
"All this talk about buying gold. Where is the gold going to come from? No one seems to be selling. And what about all the scamming that's going on in the gold market these days?"
Here's the thing: John essentially agrees with the case we made for gold - he just doesn't realize it.
And with President Barack Obama's successful re-election, the case for higher gold prices got even stronger - overnight.
Let me give you seven reasons that gold prices are destined to head much higher in the next several years. Let's call it the Obama "baker's half-dozen" case for gold:
- The Central Banker Effect: Official statistics, which some observers dispute (I'll get to that in a minute), say that the world's central banks have become net buyers of gold for the first time in nearly a quarter century. If that's the case, that's clearly bullish for gold. At the very least, we're not going to see any big selling.
- The Central Banker Effect (Part Deux): Although we referred to the "Secret Gold Standard" to underscore the point that central banks were returning to the gold market, we made clear this wasn't a literal return to a Bretton Woods-style "gold standard." There's not enough gold in the world to support such a move - which is why Capital Economics Chief Economist Julian Jessop recently estimated that a return to the gold standard would cause the price of the yellow metal to spike to $10,000 an ounce. There's an important lesson here: If central banks are hoarding gold, prices can't help but go higher - gold standard or not.
Meanwhile, over the last eight years, silver soared 790% before profit taking took some of the sheen out of the white metal. It is difficult or nearly impossible to find other investments that can boast those kinds of gains.
Despite the recent pullbacks and sideways trading in the metals' markets since mid-September, gold and silver are heading higher.
CIBC World Markets agrees and just turned more bullish on both commodities. The firm says both gold and silver are due for a seasonal bounce and investors should plunge into the sector now.
"We are about to head into the strongest month for gold performance, and indeed in looking at the next four months, investors could capture 56% of the annual gold gains and a whopping 66% of the annual silver gains by holding the metals over the period November to February," CIBC analysts Barry Cooper and Alec Kodatsky wrote in a note to clients.
Precious metals investors no doubt have seen the recent headlines coming out of South Africa. Violent strikes (resulting in dozens of deaths) and work stoppages have plagued the platinum industry there in the past few months.
The causes of the labor unrest include poor wages and unsafe working conditions. There has also been a tussle for power between two warring labor unions - the Nation Union of Mineworkers and the far more militant Association of Mineworkers and Construction Union.
The result of all this turmoil is quite obvious for the global platinum market. The majority of the world's platinum, roughly 80%, comes from South Africa. Not to mention that 90% of that production comes from a limited area, the Western Bushveld region of the country.
But here's where it gets interesting, especially for those investing in gold.