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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/16/2006 : 18:03:55
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Gold, silver futures sink; copper hits 6-month low
Excerpt
Gold futures dropped almost $12 an ounce Friday, silver lost 7% and copper prices sank to a six-month low – with all three ending the week lower as the U.S. dollar readied for a weekly gain.
The gold market "looks vulnerable to ... liquidation as the dollar claws back [out] of its recent weakness," said James Moore, an analyst at TheBullionDesk.com, in a note to clients.
Still, "the mid- to longer-term outlook for gold remains bullish due to increasing investor interest and speculation of institutional dollar diversification," he said, in a note to clients.
Gold for February delivery closed down $11.80 at $619.10 an ounce on the New York Mercantile Exchange. That was its lowest closing level since Oct. 31 and it lost $11.90, or 1.9%, for the week.
On Thursday, the contract closed lower but held above $630 an ounce, a key level in recent weeks.
The dollar rose a one-month high versus the yen and three-week high against the euro Friday, after fresh economic reports reinforced market expectations the U.S. economy is likely headed for a soft landing.
The greenback had earlier dropped sharply after a government report showed lower-than-expected U.S. retail-level inflation for November, boosting hopes the Federal Reserve will be in a position to lower interest rates early next year. It reversed course after a separate report showed U.S. industrial production rose more than forecast last month.
U.S. industrial production rose by an overall 0.2% in November, as the auto sector showed signs of life after sharp declines in the prior two months, the Federal Reserve said. Capacity utilization remained steady in November at 81.8% from October.
The Labor Department surprised the market early Friday with a report showing consumer prices were unchanged in November as lower energy and car prices offset higher costs for homeownership and medical care.
The flat readings could encourage the Federal Reserve to begin to relax about inflation. Earlier in the week, the Federal Open Market Committee said it judged inflation risks to be its greatest concern even as it held interest rates steady at 5.25%.
Buy opportunity?
Ned Schmidt, editor of the Value View Gold Report had a bit of advice for metals traders Friday:
"Don't let the paper-asset pushers on the Street muddle your thinking.
Inflation in the U.S. hit a low in October, and is headed up."
Given that, "excessive and emotional selling by Street of metals is creating buying opportunity," he said, warning that "Monday [will] likely to be low for rest of year."
Meanwhile, gold failed to garner support from another key commodity, oil, which was set to end the week higher after the Organization of the Petroleum Exporting Countries agreed on Thursday to cut production by another half a million barrels in February.
"Traders continue to ponder the after-effects of the agreement on OPEC production cuts as well as the reality of record-high equity indices," said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com.
"For better or for worse, money keeps being diverted into paper promises of corporate performance – and any such diversion has a drag on potential gold prices," he said in e-mailed commentary.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/16/2006 : 19:47:52
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A little (very little)good news and gold and silver take a hit, still, it creates a nice buying opportunity.
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Tame CPI Slams Gold
Benign inflation data gave early holiday gifts to stock traders. But not to gold dealers, who saw the price of bullion plunge in Friday's market action.
Contracts for February delivery of gold closed down $11.80 at $619.10 an ounce on the Comex division of the Nymex. The bullion exchange-traded funds streetTracks Gold Shares
and iShares Comex Gold Trust were both falling, off about 1.7% recently.
New Labor Department data revealed lower-than-expected growth in the consumer price index, spurring stocks higher with the Dow Jones Industrial Average recently up 0.3% at 12,450.57. The CPI figures showed zero growth during November vs. the consensus forecasts of 0.2%. The headline numbers were identical to those for the core rate, which excludes the volatile food and energy components.
"In terms of economic data, Santa delivered early," says Jason Schenker, an economist at Wachovia in Charlotte, N.C. "Ameliorating price pressure continues to pave the way for Fed rate cuts."
Schenker predicts the Federal Reserve will lower short-term interest rates by a quarter point twice during the first half of 2007, with the first coming in March and the other by the end of June at the latest. Such events should keep the dollar depreciating "on trend," he says.
The reaction in the foreign exchange markets was mixed. One dollar was recently buying 118.055 yen, down modestly from 117.83 late Thursday. The euro was changing hands for $1.3081, down from $1.3149 a day earlier.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/16/2006 : 23:11:00
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Global news, global views, all facts and opinions give us a leg up on what is going on in the world of gold and silver.
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Gold tumbles on global cues
NEW DELHI: Gold plunged further on the bullion market on Saturday following reduced offtake at the end of marriage season amid reports of weakening global trend, and suffered a loss of Rs 140 at Rs 9,050 per 10 gram.
The precious metal, which had been under selling pressure by stockists since Thursday, recorded a fall of Rs.195 in last three sessions.
Reports of the gold prices touching over five weeks low level in international markets, which normally set price band in domestic markets here, also played a crucial role.
On the other hand, silver plummeted due to speculator selling along with poor offtake by industrial units. Marketmen said fall in demand from local parties due to ending marriage season fuelled the weak trend. The downtrend in global markets has set the price band in the domestic market here.
Gold at overseas market fell $11.80 to $619.10 an ounce on the Comex division of the New York Mercantile Exchange, the lowest since November 8.
Standard gold and ornaments remained under selling pressure and tumbled further by Rs.140 each at Rs.9,050 and Rs.8,900 per 10 grams respectively. Sovereign, followed suit and lost Rs.25 at Rs.7,600 per piece of eight gram.
Silver weekly-based delivery also nosedived by Rs.790 at Rs.20,200 per kilo on frantic selling by speculator, while silver ready gained Rs.50 at Rs.20,000 per kilo. Silver coins dropped by Rs.600 to settle at Rs.23,000 for buying and Rs.23,200 for sellin g of 100 coins. - PTI
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/17/2006 : 16:56:42
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Weakening gold prices look promising for investors
M.R. Subramani
May reach a minimum of $745 an ounce in the next six months
Chennai , Dec. 17
With gold prices declining to a five-week low during the weekend, investors could well be wondering where the yellow metal is headed? Analysts see opportunities for investors,
but are divided
in their view on how gold will behave in the next six months to one year.
According to Mr Raghavan Sundararajan of Kotak Commodities Services Ltd, gold could reach a minimum of $745 an ounce in the next six months.
But Mr Avinash Raheja, Senior Vice-President, Commtrendz, said the yellow metal could target $570-580 in the first half of the coming year.
There is an outlook that is more bullish on gold price target.
Mr Neal Ryan, Vice-President and Director of Research at Blanchard and Company Inc, in an interview to Dow Jones has projected that the yellow metal could top $850 in the first quarter of 2007.
Factors driving trend
How do these analysts support their views on gold price trend? Mr Raghavan says as per the International Monetary Fund, the US gross domestic product is expected to grow at an average 3.4 per cent in 2006 and 2.9 per cent in 2007. This is a clear indication of economic slowdown and further evidence is available from the slump in the US housing market.
"Easing inflation and slowing economy will make the Fed's decision to hike interest rates further very difficult. Lower interest rate differentials will continue to weaken the dollar, thus, stemming foreign inflows," he said. This could slow down financing trade deficit and the scenario would render it difficult to support the dollar. "Hence, firmness in gold prices is expected to continue over the next two quarters," the Kotak Commodities Services Ltd official says.
But a decline is possible if crude oil prices ease; the Chinese economy overheats leading to goods imported by US being more competitive that domestically produced ones; decline in mine production being replaced by rise in Chinese and Peru production; and reluctance of consumers buying jewellery leading to price downtrend.
Mine production
Supporting the mine production projection is the fact that gold mine production in Peru increased to 173.2 tonnes in 2004 from 134 tonnes in 2001, while Chinese output was up from 192.8 tonnes in 2001 to 217.3 tonnes in 2004. At the same time, production in Africa has slid to 614.7 tonnes in 2001 to 556.8 tonnes in 2004.
"A decrease in prices below $450 will make mining of low grade ores unviable in Africa," says Mr Raghavan.
Though crude inventories are rising, the decision of the Organisation of Petroleum Exporting Countries to cut supply could keep prices firm.
"Though the Chinese economy is showing signs of overheating, price competitiveness in goods has a long way to go," he says.
`Rally lacks conviction'
Mr Raheja, in his outlook, says gold's recent rally has been quite unconvincing and lacks conviction. "The recent uptrend is clearly under stress and the market could see a reasonable correction in the price," he says.
Fundamentally, gold's rally came out of currency play and the strengthening of other currencies against the dollar. Mr Raheja says a further upside to the Dow Jones Industrial Average could lead to the dollar reversing its losses and investors could sell everything else, including gold.
Not only gold, but even silver and base metals could be hit if this happens.
Good news for investors
But Raheja feels gold is surely one of the best investments in the coming decade.
For investors, the good time to buy gold will be
in the first half of next year.
"We expect to see gold hitting $615 before 2006 ends and target a price in the range of $570-580 sometime in the first half of 2007. That, according to us, will be the best opportunity for investors to pile up on their gold purchases," he says.
Mr Raheja does see gold surpassing $850 an ounce but that will happen only in the next five years.
Mr Ryan's projection comes out of supply-demand imbalance and central banks selling lower amount of gold. He says the lure of the gold has not faded despite hitting recent highs and the precious metals will take the lead.
As usual, two different analysts see the same data and come up with two different predictions.
As far as "mild inflation" is concerned, the gub'ment has been fooling with the inflation figures, CPI and just about every other method of tracking what the economy is going on, that tossing a coin is just as accurate as to figure out what the economy will do next.
By government analysis, if you don't include food or energy, inflation looks mild.
I guess that if we give up eating and give up heat in the winter and air conditioning in the summer then inflation will magically disappear. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/18/2006 : 18:04:03
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Gold, silver and platinum drift. Where to now?
LONDON (Mineweb.com) --A slight recovery in the rating of the US dollar, and the nowadays long run in to the Christmas holiday has seen gold drifting well below its recent highs – but still only back to the level of just over a month ago.
As gold has fallen, it has dragged silver and platinum down with it and to an extent the yellow metal will probably remain the main driver of price levels across the precious metals sector in the short term.
Europe nowadays virtually closes down between Christmas and the New Year, so with the festive season with us activity may be a little muted.
Chartists will point to a strong resistance level to further falls at around the $615 mark – where the price resides this weekend – and foresee another decline should this level be breached substantially, but wouldn’t yet see this as the signal for a bear market to develop in precious metals unless the fall continues down to below the $580 level. Anything above this they would see as a correction from which the metal price should bounce back.
Most serious commentators still see the metal testing its 2006 highs of well above $700 during 2007.
The precious metals price rises of recent weeks have arisen from dollar weakness, so it shouldn’t be seen as too surprising that a small – and it is a small – recovery in the dollar against European and Far Eastern currencies sees a corresponding correction downwards in the gold price.
The big question is whether the mild dollar recovery is likely to be sustained. The latest economic indicators suggest that the US economy is not turning down quite as fast as some suspected, and prospects for increasing US inflation are not quite as poor as predicted and the market has reacted with a little sigh of relief.
However,
there is no doubt that the US economy is still weak compared with the world’s other major markets and if one looks at dollar charts the recent rapid fall may have been overdone – hence the correction – but overall the trend is still downwards, which suggests that the gold price may well rally, but a return to the $640-$650 level may not be rapid, and is now probably unlikely to occur before the New Year is well under way. Should gold move up through the $650 level, the major upper resistance level looks like being around $680 and should this be breached then the run up to the mid $700s could be rapid.
There are a lot of ‘shoulds’ in the above analysis.
As always the gold price and dollar movements can be unpredictable,
but the overall trend still remains up for gold and down for the dollar.
Silver will almost certainly follow gold, whichever way it runs, but platinum – where industrial demand is much more significant, could buck the trend should gold and silver stay weak
For investors in gold stocks though, little should have changed. The miners are mostly very profitable at current price levels – even the marginals. Cost escalation is a little worrying though and the dollar weakness suggests that inflationary pressures on North American mines (and those mines in countries where the local currency tends to be tied closely to the US dollar) may suffer most from these pressures as machinery and supplies from Europe and the Far East get more expensive. And, because people tend to refer to the price of gold in US dollar terms, the perceived higher price levels for the metal have generated pressure from stakeholders (labour and government) that they should be getting rather more of what is seen as a much larger pie.
Overall – unless the dollar’s recent upturn is sustained,
which seems a little unlikely on the data available –
then one can expect a recovery in gold and silver, although perhaps not as rapid as we might have thought a couple of weeks ago. Platinum should move up anyway, purely on fundamentals.
Overall the current weaknesses may prove a buying opportunity.
Even bank analysts have been raising their gold price predictions for 2007 –
and this is the most cautious of breeds.
The independents for the most part are looking to $700 gold, while the real gold bulls are still pushing $1,000 + as their take on the market. There aren’t a great number of real bears on the gold price out there at the moment, although they may come to the fore if there is further weakness in the price. You can rest assured that wherever the price goes there will be someone out there who will claim to have predicted it absolutely accurately.
Key word here, buying opportunity,
While the markets take off for Christmas week
Expect in 07' precious metals to peak |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/19/2006 : 17:13:37
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U.S. gold, silver close strong as dollar drops
NEW YORK, Dec 19 (Reuters) - Gold and silver futures finished with healthy gains on Tuesday when a steep drop in the dollar against the euro and surprising gains in the U.S. producer price index drew bulls back in the market after two days of heavy selling, traders said.
"Key factors (for precious metals gains): the significant drop in the dollar, the strong move higher in the euro, higher energy prices, and the PPI numbers that came out unexpectedly strong. Gold is a generally a fan of inflationary concerns," said Alaron Trading metals analyst David Meger.
"All of these factors led to higher gold prices today, along with what was already an oversold market created yesterday," Meger added.
Benchmark February gold at the COMEX division of the New York Mercantile Exchange settled up $7.50 at $625.40 an ounce. On Monday, it fell to a low dating back to Nov. 1. By Tuesday, bulls sent it to a high at $625.70 from a low at $618.30 an ounce.
COMEX estimated ending volume at 18,000 lots, compared with 52,725 lots on Monday.
Spot gold bullion was quoted at $621.70/3.20 an ounce by late Tuesday, up from $615.30/6.80 an ounce at Monday's end. London bullion dealers fixed gold at $620.50.
After precipitous declines to 7-week lows in both gold and silver over two trading sessions, some observers said they thought support levels were found on Monday's moderately heavy volumes. So technical buying emerged on Tuesday.
"We thought we might be putting in a near-term bottom, and we thought we were seeing a technical bounce off of that support level. We did have some buying on that," said Meger.
The technical set-up readied both gold and silver for a rally when the dollar tumbled, energy prices surged and U.S. producer prices showed a surprising gain, traders said.
The dollar fell against the euro on Tuesday after data showing surprisingly strong German business sentiment bolstered the case for higher euro zone interest rates.
While the key U.S. overnight interest rate was thought to be indefinitely on hold at 5.25 percent, financial markets were gearing up for another rate hike in early 2007 from the European Central Bank, thus boosting the euro. [nN19270440]
November U.S. producer prices increased by a greater-than-forecast 2 percent, the largest rise in more than three decades, on a spike in energy prices. On average, economists were forecasting an 0.5 percent gain.
Excluding volatile food and energy costs, producer prices were up 1.3 percent, the largest rise since July 1980.
Analysts said the surge in the producer price index heightened fears of a pick-up in inflation and sparked demand for gold as an inflation hedge.
Oil prices jumped nearly $1 on Tuesday as dealers anticipated shipping delays along the U.S. Gulf Coast since last week would cut U.S. commercial crude stockpiles.
NYMEX March silver rallied 18.50 cents to end at $12.71 an ounce, on bargain hunting buying following two days of heavy selling that led to lows unseen since Oct. 31. Tuesday's range ran $12.45 to $12.85.
COMEX pegged final silver volume at 7,000 lots, after Monday's official tally of 29,513 lots.
Spot silver advanced to $12.62/12.69 by late Tuesday, up from $12.42/12.49 on Monday. Tuesday's London silver fix was lower at $12.46 an ounce.
NYMEX January platinum firmed $16.40 to close at $1,118.50 an ounce. Spot platinum was quoted higher at $1,118.00/1,123 an ounce.
March palladium rose $4.30 to finish at $329.25 an ounce. Spot palladium rose to $318/323 on Tuesday.
...........I think this is the trend to watch,
when news or opinion about the US Economy or dollar is good,
precious metals go down and its time to buy.
When the US Economy or dollar news/opinion is bad, its time to sit back and watch the price go up.
As they say, the trend is your friend. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/20/2006 : 17:10:23
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Gold Bear
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Gold ends under $625; copper drops to 6-month low
Gold Bull
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Gold back over $620/oz
As mentioned previously, a bull and a bear can see the same piece of news and come to completely different conclusions.
Don't get too worked up over gold and silver prices until the new year. Traders will be off for vacation, year end bonuses for pecious metals buyers won't be given out until before Christmas, it's just a slow period for metals and markets. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/25/2006 : 17:39:33
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Is there monkey business going on in the world of precious metals?
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This Must Stop!
by Rob Kirby
KirbyAnalytics.com
December 18, 2006
Folks who still have the capacity to independently read, write and articulate themselves need to gather their wits and express their condemnation at what’s become of our financial markets – the “so called” heart beat of our Free Market Capitalist System.
As Mr. James Turk reveals in a piece he penned this past weekend – Friday’s late afternoon “massacre” of the gold and silver price on the COMEX exchange bears the unmistakable signature of a GOLD CARTEL,
“the unholy alliance between a few of the big bullion trading banks, several central banks with large gold holdings and the US government. This reprehensible group seeks to manage and completely control the gold price to their advantage, regardless of the disruption that they cause to the free-market.”
For those of you who might be scratching your head wondering what I’m speaking of, here’s a picture of exactly what the esteemed Mr. Turk is referring to [ the slaughter in the silver market was even more pronounced ]
Turk goes on to point out,
“Each of the cartel members has a different objective. The US government aims to make the dollar look worthy of being the world’s reserve currency, which it hopes to do by beating up on gold, which was the world’s global currency until it was supplanted by the dollar.”
He then eruditely explains the significance / timeliness of this “ambush” on the price of precious metal;
“Because London closes at 12:00 noon New York time, trading during the 1½ hours to the 1:30pm New York close is notoriously thin, which means it is a difficult time to liquidate large positions. The gold cartel knows this, so the late Friday sell-off depicted above is not the first time one has happened.”
If there is any doubt in your mind as to the intentions of the sellers – ask yourself what possible motivation could ANYONE possibly have to precipitously hammer the price of a valuable commodity DOWN at a time when the market is its thinnest [London closed and gone for the weekend]? You see folks, in the absence of MARKET MOVING NEWS – there is NO reason why ANY profit maximizing entity would undertake to sell their goods at less than the going market rate – unless their motives are OTHER THAN POFIT MAXIMIZATION [price rigging].
And the last time I checked, Price Rigging is still illegal under the auspices of the Sherman Antitrust Act in the United States.
While the U.S. Government, bullion banks and Barrick Gold Corp. have in the past been subject of litigation in this regard, perhaps the most telling account of market manipulation ever admitted was by none other than Barrick Gold themselves when they submitted in court of law,
“……a motion arguing that in borrowing gold and selling it into the market, the company was acting as the agent of central banks and carrying out their policies in the gold market and thus should share their immunity from lawsuits.”
As clearly demonstrated here, the Cartel was at it again today – especially in the silver market – with the price of silver “diving 3 % [.40] in a space of 15 minutes this morning – again in a vacuum – devoid of market moving news;
Folks, this is Lie – plain and simple. Metals prices are being manipulated down to hide the fact that government [or the Fed] is PRINTING TOO MUCH MONEY. This is why – contrary to government data saying inflationary pressures are non existent – the cost of virtually EVERYTHING from base metals to crude oil has increased in recent years.
Rising metals prices have ALWAYS served as the canary in the coal mine to alert investors of excessive money creation.
This is why precious metals cannot be seen to be “precious”.
...........(Considering our goal is to aquire silver & gold at the best and cheapest price possible, this should be viewed as Good news. The lower the price, the more there is to buy with our fiat scraps of scrip. Inflation and demand win in the end in spite of the best efforts of price manipulators. The London Gold Pool tried to control the price of the yellow metal until it collapsed in 1968. Don't think history will repeat itself again?
Worldwide demand is too strong for the manipulators to hold down the price for long. Russia and China both want gold to back up their currencies and will use a drop in its value to buy more, and so should we.
Given the choice between paper backed by the word of the government,
or metals which actually have a value trade/jewelry/electronics/ wise, who wouldn't want precious metals over scrip? |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/25/2006 : 18:00:19
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Gold May Rise as Investors Seek Alternative to Dollar Assets
By Pham-Duy Nguyen
Dec. 26 (Bloomberg) -- Gold may gain for a second straight week as investors purchase bullion and avoid dollar-denominated assets.
Thirteen of 34 traders, investors and analysts surveyed by Bloomberg from Sydney to Chicago on Dec. 21 and Dec. 22 advised buying gold, which rose 0.5 percent last week in New York to $622.30 an ounce, the first gain in three weeks. Nine respondents said to sell the metal, and 12 were neutral.
Investment in the StreetTracks Gold Trust,
a $9 billion exchange-traded fund linked to the price of the metal,
has more than doubled in value this year and the number of shares outstanding jumped 78 percent.
Gold is up 20 percent and heading for its sixth straight annual gain, while the dollar has fallen 8 percent against a basket of six major currencies.
``There is too much capital chasing not enough goods,'' said Friedrich Kernstock, a director at Vienna-based Kernco Metal Trading GmbH, a metals trading and investment company, who expects gold to average $700 in 2007. ``More instruments have been developed for the small investor to take part in the bull run for commodities. Gold should go up.''
Gold for December delivery rose $3.20 an ounce last week on the Comex division of the New York Mercantile Exchange, in line with a majority of analysts who predicted a gain when surveyed Dec. 14 and Dec. 15. Bloomberg's survey has accurately forecast the direction of prices in 84 of 139 weeks, or 60 percent.
Rising Investment
StreetTracks, which began trading on the New York Stock Exchange in November 2004, attracted $4.7 billion this year. Investors poured $3 billion into the fund in 2005. Similar funds are listed on exchanges in Singapore, the U.K., France, Australia and South Africa.
Gold has outperformed stocks, bonds and the U.S. dollar this year. The Standard & Poor's 500 Index gained 13 percent while the benchmark 10-year U.S. Treasury returned 2.3 percent for investors.
``I see the gold market resuming its uptrend in the first quarter,'' said William O'Neill, a partner at Logic Advisors Inc., a commodity-research firm Logic Advisors LLC in Upper Saddle River, New Jersey. ``I forecast a weaker dollar which will help gold.''
Investors are counting on a decline in the U.S. dollar to help boost gold prices. The U.S. economy grew at the slowest pace this year in the third quarter, the Commerce Department said on Dec. 21. The biggest decline in homebuilding in 15 years may stymie growth, forcing Federal Reserve officials to cut interest rates next year and hurting the outlook for the U.S. currency.
Rates Unchanged
The Fed has kept rates unchanged at 5.25 percent since June, after two consecutive years of increases. The European Central Bank raised rates to 3.5 percent on Dec. 7, the sixth increase in a year. The euro is up 11 percent against the dollar this year.
``The gold market is not weak in fundamentals,'' said Mikikaru Amano, a commodity analyst at Taiheiyo Bussan Co. in Tokyo. ``Investors expect gold prices will go higher early next month on expectations of new money coming from pension funds.''
Gold, sold in dollars, generally moves in the opposite direction of the U.S. currency. The metal has gained every year since 2001, moving in tandem with the euro from 2002 to 2004. Gold gained 18 percent last year even as the dollar gained 14 percent against the euro.
Inflation Concern
Investors also may buy gold on speculation inflation will accelerate. Prices paid to U.S. producers in November jumped by the most since 1974, the Labor Department said on Dec. 19. The producer-price index climbed 2 percent in November from a month earlier, led by higher energy costs.
``The latest PPI report shows that there is a lot of inflationary pressure in the pipeline, but the bigger issue is the decline in the demand for the dollar outside the U.S.,'' said James Turk, founder of GoldMoney.com, which had $180 million worth of gold and silver in storage for investors at the end of November.
Gold reached a record $873 an ounce in January 1980 after Iran cut oil supplies, doubling the cost of oil and sparking a surge in the inflation rate.
Iran, the world's fourth-largest oil producer, said on Dec. 18 it will calculate its fuel and other overseas revenue in euros rather than dollars. The U.S. is pressing the United Nations to impose sanctions against Iran because of its nuclear program.
``We already know that central banks are diversifying out of the dollar and now Iran has announced it is dumping the dollar in favor of the euro,'' Turk said. GoldMoney.com is based in Jersey, Channel Islands.
December Decline
Still, a gain in the equities market this month has discouraged some investors from buying gold until next year, some analysts said. The S&P Index is up 0.7 percent in December while gold futures have fallen 4.2 percent, the first decline in three months. The S&P is up 13 percent for the year, which would be the biggest annual gain since 2003.
``Equities are the fly in the ointment for gold and commodities right now,'' said Michael Guido, director of hedge- fund marketing at Societe Generale SA in New York. ``If equity markets keep trending up, that's going to be a reallocation threat to gold.''
The 38 percent of respondents who said to buy gold this week was the lowest for a Bloomberg survey since Aug. 25.
Hedge-fund managers and other large speculators decreased their net-long position in Comex gold futures by 15 percent in the week ended Dec. 19, according to U.S. Commodity Futures Trading Commission data.
Speculator Holdings
Speculative long positions, or bets prices will rise, outnumbered short positions by 69,893 contracts, down 11,936 from the previous week, the Washington-based commission said Dec. 22.
Some analysts are skeptical gold can gain for a seventh straight year, a feat unmatched in the metal's trading history.
There will be ``new interest initially,'' said Christoph Eibl, co-founder of Tiberius Asset Management AG in Zug, Switzerland, who predicts gold will average $580 in 2007. ``Then commodities will burst.''
.........(Commodities will burst? Based on what information?)
Quote
``Equities are the fly in the ointment for gold and commodities right now,'' said Michael Guido, director of hedge- fund marketing at Societe Generale SA in New York. ``If equity markets keep trending up, that's going to be a reallocation threat to gold.''
Or, to put it more clearly, if Inflation news 'looks' good, investors will slip out of gold and into stocks, while real inflation erodes the buying power of any gains achieved.
Gold and silver have always been the foundation of any portfolio, to ignore the foundation is to risk all when the flood waters roll in.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/26/2006 : 16:41:46
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The Motley Fool is starting to get the idea that gold is a good thing to own.
As more and more rediscover that gold is a foundation investment(the foundation in your investment portfolio), more and more will start to jump on the gold bandwagon. Of course, for those who can't afford large purchases of gold, silver is the next best thing.
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Dreaming of a Gold Christmas?
By Robert Aronen
December 21, 2006
Since the beginning of time
For thousands of years, gold has been used as a form of money or a display of wealth in the form of jewelry. Many Roman coins were made from gold. Egyptian kings were buried with fantastic gold ornaments. In modern times, the U.S. economy grew into the most powerful on Earth with a dollar backed by gold. With such a history, gold is a gift much more significant than writing your nephew a check with a note that says, Don't blow it all on video games.
What is it about gold that makes it endure through the millennia? It is beautiful (i.e. bling), it does not tarnish or diminish with age, and it is rare. These are only a few of its attributes. Gold, how do I love thee? Let me count the ways.
Gold is rare
While many commodities have been experiencing bull markets for the past few years, most other rocks and minerals are plentiful. At a given price, the supply of copper, coal, or iron ore can be increased. With gold, higher prices certainly lead to increased mining activity, but those efforts may or may not yield additional production. Looking at global production over the past 10 years shows essentially no production increase, even in the past several years of rising gold prices.
Year
Gold Production (Metric Tons)
1996
2,290
1997
2,450
1998
2,500
1999
2,570
2000
2,570
2001
2,560
2002
2,550
2003
2,550
2004
2,430
2005
2,450
Source: U.S. Geological Survey.
Annual production of gold tells only part of the story, because gold is not consumed the way other commodities are. It is not burned to make power as coal is, or converted to ethanol as corn is. Central banks and ETFs keep it in vaults. Private parties keep their jewelry and then go down to the pawn shop to hock it when times get rough. It is estimated that of all the gold ever mined, 85% of it remains, and it's estimated at 129,000 tons. Of that amount, 33,000 tons are held in central banks, and 96,000 tons are in jewelry. It is precisely because gold does not go away that it has lasting appeal as money. Given the numbers above, it is a money supply that only grows at 2% per year and thus maintains its value.
Demand is rising
Demand for gold is driven mostly by the jewelry market, central bank reserves, and investments. Consider jewelry. As the number of wealthy people in the world increases, demand for gold jewelry is predicted to rise. Central banks, on the other hand, were net sellers of gold from 1995 to 2001 -- and here is where we note the irony of the best financial minds selling gold when it was at a 30-year low in price. Since 2001, there has been speculation about Russia and China increasing their central-bank gold reserves, but limited data is available. On the investment front, ETFs including StreetTRACKS Gold Shares (NYSE: GLD) and iShares COMEX Gold (AMEX: IAU) have made investing in gold much more accessible to individual investor. These funds and similar products available in foreign markets have helped increase demand for investment gold.
Gold protects
In a peaceful, stable, non-inflationary world, gold would be valuable, but it would likely underperform as an investment class. However, gold prices rise in times of war, unpredictability, and inflation. In the past five years, the world seems to have become less peaceful, with instability rising in key energy-producing regions.
Furthermore, inflation continues to raise its ugly head, as evidenced yesterday, when the core producer price index for November was reported at 1.3% -- the highest reading since 1980.
Of course, no one can predict the future, and no one knows whether war, instability, or inflation will increase or decrease. Study after study has shown that a well-chosen portfolio of stocks has always been your best bet for long-term capital appreciation. Many of those same studies also show that gold returns are not correlated to stock-market performance. Therefore, a 5%-10% position in gold in your holdings may soften the blow of the next bear market.
Foolish bottom line
When thinking of the ones you love, give a gift that will love them back. Gold will last far beyond our time on Earth and will remain beautiful. A thousand years from now, people will likely still adorn themselves with gold. In the coming decades, the supply of gold will rise only slowly, and that will keep the metal precious. Demand will likely rise as billions of people increase their purchasing power and barriers to investing in gold are eliminated. Finally, the next time the stock market tumbles, a position in gold might just help you sleep through the cold winter nights.
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Edited by - pencilvanian on 12/26/2006 16:43:48 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/26/2006 : 16:55:54
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This might effect prices some in the coming months.
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Russia's gold production down 1.6% in 11 mths
Russia reduced gold production 1.6% year-on-year in January-November October to 155.097 tonnes, the Russian Gold Producers' Union said.
Mine output fell 2.3% year-on-year to 139.92 tonnes, with incidental or byproduct gold production rising 3.2% to 10.79 tonnes and secondary production edging up 0.7% to 4.388 tonnes.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/26/2006 : 17:47:15
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Gold Stocks Did What They Needed to Do, Did You?
by Michael Swanson
Bull markets pull back.
They attract buyers as they go up who don't really know what they are doing.
They see stocks go up, sit back and think they should buy, don't, then buy at the top because they are afraid they'll miss out.
You saw this in classic form in gold stocks last March and now you just saw it again happen at the beginning of December.
And of course every time this occurs you get a pullback that shakes out the loose hands and recharges the bull market for another move up.
And over the past three weeks we have had a classic pullback in gold stocks.
As I've been writing over the past few years, the XAU gold stock index tends to pullback to its 50-day moving average every six weeks when it is in an uptrend.
It also tends to retrace 30% or 50% of its gains on pullbacks too.
Well, on Friday the XAU went through its 50-day moving average and then hit the 1/3 fibonacci retracement level
(?)
before rallying into the close, to create a potential candlestick reversal.
(?)
We may see the XAU go sideways another day or two, but by Friday's close it should be back into the 140's, if not sooner.
Now we know what the gold stocks have done,
but I'm wondering what you are doing?
Are you one of the people who buy at the top and then sell out during times like we saw last week?
If so then you need to start to get your thinking right and think backwards from the way you have been thinking.
You need to realize that gold stocks are on a bullish uptrend and the best way to take advantage of that isn't by being an emotional manic investor,
but to use technical indicators and a careful game plan to time better entry and exit points. This isn't mad money folks. It's slow and steady.
You need to start to buy dips and sell into strength when the time is right.
I didn't sell at the beginning of December, because I think we have much higher to go, but at some point I will and I expect to have huge profits when I do, along with other gold investors who don't get shaken out of the market every time there is a temporary pullback.
.......Good advice, don't let the fluctuations shake your confidence.
The only drawback is the author, like so many chartists over rely on charts to decide what to do. Charts are a tool, but not the only tool to be used. You wouldn't want to take your car to get fixed by a mechanic whose only tool is a sledgehammer, now would you?
What is moving the market,
not the the market moved because the chart said so,
is vital to determine what to do next, buy , sell, or hold. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/28/2006 : 16:46:04
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While not exactly the largest source of gold in the world, with the last Welsh gold producer closing, it shows that increased demand does not gaurantee a never ending supply.
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Farewell to Lords of the rings as Welsh gold goes down the pan
Louisa Barnett
Last producer to close in new year
Current stocks will last 12 months
Pure Welsh gold, the metal of choice for the wedding rings of royalty and the rich and famous, is expected to run out in the new year.
The last remaining regular producer of the gold, described as the world’s most valuable precious metal”, is due to close early next year.
Welsh gold has been prized for use in jewellery for centuries,
and dates back to the days of the Celtic kingdoms, when nobles wore gold torcs as a badge of rank and power. More recently it has been used to create wedding rings for Diana, Princess of Wales, and Camilla Parker Bowles.
The Hollywood actor Michael Douglas also chose a band of Welsh gold to demonstrate his love for Catherine Zeta-Jones on their wedding day.
Roland Phelps, the managing director of Welsh Gold plc, said that the current supply came from reworking old surface tips at Gwynfynydd Mines Royal, in Dolgellau, North Wales.
He said: “We haven’t got a date for it yet as it’s produced in a haphazard way and one can never forecast sales, but we expect to be very close to running out within the early part of next year.
“We’ve looked elsewhere to see if there’s anywhere we might possibly go, but there isn’t anywhere we consider economical.
“This isn’t to say there won’t be a small amount of gold panned in Welsh rivers, but we don’t consider that a commercial operation. We won’t be producing Welsh gold any more.
“We’ve switched our attention over to Ireland, where Welsh Gold plc has an important shareholding in another company, Galantas, which is currently developing Ireland’s first gold mine in Omagh.”
He said that there was only one man left working at the mine in Dolgellau and that he was employed only part-time. “It has always been a difficult living to make,” he said. “It was always feast or famine, and you need a steady business alongside.
“We’ve kept it going on a small scale for many years now because of the importance of the trade of Welsh gold.
“It has a special place in people’s hearts.
“But if you’re selling pure Welsh gold and you run out you can’t make any more. It’s not like diluted products, which you can go on diluting ad infinitum.”
But even sellers of diluted Welsh gold said that their supply was about to dry up.
Ifan Evans, director of Rhiannon Welsh Gold Centre in Tregaron, West Wales, said that his company’s supply would run out in about 12 months’ time, so it was using its stocks only for wedding and engagement rings
The centre sells jewellery containing 10 per cent Welsh gold from the Gwynfynydd Mines Royal, and Mr Evans said that he did not want to dilute it any further. He said: “Some companies make jewellery containing ‘a touch’ of Welsh gold, but that’s not a route we want to go down.
“We still get lots of people asking for 100 per cent Welsh gold, but we haven’t been able to buy any new Welsh gold for some years.”
Mr Evans said he was optimistic that Welsh gold would be mined again at some point. “We’ve been offered it by people who pan for gold, but you can’t guarantee its authenticity,” he added.
“You don’t need that much money to commercially mine for Welsh gold — you’re talking hundreds of thousands of pounds rather than millions — and I’m sure someone will come along with hundreds of thousands of pounds they want to risk,” he said.
Mr Evans added that he believed the Queen had been given a kilogram of pure Welsh gold in the 1980s, which should keep the Royal Family in wedding rings for quite some time.
Gold nuggets
Welsh gold is mined by hand and lies in a band stretching from Barmouth, past Dolgellau and up towards Snowdonia
There is reference in the earliest of Welsh writings, the triads, to three Welsh chieftains possessing chariots of gold
After hallmarking at the Edinburgh Assay Office, each item of Welsh gold is stamped with a unique set of marks, guaranteeing its proportion of Welsh gold
Classical writers reported that Boudicca, feared queen of the Iceni, wore a golden neckring into battle
Sian Lloyd, the TV meteorologist, has vowed to keep her Welsh gold engagement ring given to her by her ex-fiancé Lembit Öpik, MP.
Source: Cymru Calling
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/28/2006 : 17:15:11
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Gold gains for fourth straight session as dollar falls
Gold futures closed higher Thursday for a fourth straight session, finding support from a mixed dollar and firmer oil prices after data showed a bigger-than-expected drawdown in crude supplies in the latest week.
Gold for February delivery finished up $6.60 at $636.90 an ounce on the New York Mercantile Exchange. On Wednesday, the contract closed up more than $3 on a weaker dollar and political concerns, particularly those related to Iran's nuclear aspirations.
"Gold is showing a strength beyond oil or the dollar which will stand apart from these other markets,' said Julian Phillips, analyst at Goldforecaster.com. "As we enter into 2007 we do expect to see rising volatility, uncertainty, tensions all sufficient to cause concern enough for gold and silver to become safe haven assets in their own right."
Gold held higher even as the dollar came off its worst levels following a batch of data. The dollar was last trading down 0.1% against the euro and 0.1% against the British pound but was up 0.2% against the yen.
In the oil market, light sweet crude futures were up 36 cents at $60.70 a barrel after supply data showed a surprise 8.1 million barrel decline in inventories of crude in the week ended Dec. 22. Analysts had forecast a decline of up to 3 million barrels.
Jon Nadler, investment analyst at bullion dealers Kitco.com, said traders were speculating that gold would be even higher if the market had full participation levels, which should return next week.
"In the interim, bullion is zeroing in on quite a decent average value for the trading year that concludes tomorrow," and could attempt a return to $645 to $652 in the opening weeks of the new year, he said.
Other metals were mixed. Silver rose 1.5 cent to $12.94 an ounce. Platinum closed higher, but palladium ended lower. Copper fell 1.9 cents to $2.8950 a pound.
On the supply side, gold warehouse stocks were unchanged at 7.53 million troy ounces as of late Wednesday, according to Nymex data. Silver supplies fell by 281,151 troy ounces at 111 million troy ounces and copper stocks rose by 489 short tons to 34,071 short tons.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/29/2006 : 20:30:48
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Gold is up again but I don't want to say too much and jinx it.
Nice steady rise, good opportunity to add to our collections.
I found out that Kitco not only offers news in the world of precious & base metals, they also offer silver & gold for sale.
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I don't know if their prices are good or not so good, worth looking at to gauge prices anyway. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/01/2007 : 11:53:52
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Happy, healthy and prosperous new year tou you all!
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Buying Cheap Gold
Bill Haynes
Jan 2, 2007
Considering that gold is trading north of $600, one has to ask how it is possible to buy cheap gold. After all, in late 2005 gold traded at $460, and in 2001 gold traded below $300.
What we are talking about is buying low-premium gold bullion coins, favorites of seasoned gold bullion investors. Premiums are also called markups. All gold bullion coins sell at premiums over spot.
In the U.S. gold market, the 1-oz American Gold Eagles are the standard by which all modern gold bullion coins are measured, and other gold bullion coins are commonly quoted at premiums or discounts to Gold Eagles. The venerable Krugerrand is a good example. Currently, Krugerrands are selling at $13 to $15 discounts to Gold Eagles.
South Africa introduced the Krugerrand, the first gold bullion coin to contain exactly one ounce of gold, in the 1970s, when inflation was running rampant, with rates hitting 13%, and the prime rate topping 21%. Further, the Cold War was still hot, with the Russians having rolled into Afghanistan. Of the fifty million Krugerrands sold, probably half were sold in the United States, possibly more.
The South Africans for the most part had the U.S. market to themselves. The Canadian Maple Leafs would not be introduced until 1979, and the American Gold Eagles not until late 1986. It was in 1985, however, that the South Africans ran into a major ro*******.
The U.S. Congress banned the importation of Krugerrands, as a slap on the hand of white-ruled South Africa. The ban lasted ten years, until 1995 after Nelson Mandela had been elected South Africa's first black President, in an election in which black South Africans were permitted to vote for the first time.
By time the ban was lifted, American Gold Eagles had become the dominant gold bullion coins in the United States, and they remain the most popular gold bullion coins in the U.S. However, the U.S. Mint's new Buffalo Gold Coins, introduced in June 2006, out-sold Gold Eagles in 2006. In 2007, we will learn if the Gold Buffs are to become the best selling gold bullion coins in the U.S.
The introduction of the 1-oz gold Krugerrand was a brilliant move for the South Africans, coming at just the right time. However, that was then, and this is now.
Today, Krugerrands are no longer promoted, and the cost of manufacture has fallen out of their price, and they sell at small premiums over spot gold, a premium that simply reflects gold in a useful, recognized form.
Other recognized low premium gold bullion coins include the Austrian 100 Coronas and the Mexican 50 Pesos. Austrian 100 Coronas contain .9802 ounce of gold, and the Mexican 50 Pesos are the largest readily-available gold bullion coins on the market, containing 1.2057 ounce of gold.
The Austrian 100 Coronas and the Mexican 50 Pesos were never promoted as the South Africans promoted the Krugerrands and as the U.S. Mint promotes its Gold Eagles. The Austrian 100 Coronas and the Mexican 50 Pesos are restrikes, officially issued reproductions of formerly circulating coins.
Investors wanting cheap gold cannot go wrong picking one of these three cheap gold coins. Krugerrands, however, are better known than either the Austrian 100 Coronas or the Mexican 50 Pesos. Consequently, the 100 Coronas and the 50 Pesos are often available at slightly smaller premiums than Krugerrands.
Although the 100 Coronas and the 50 Pesos are not always available in large quantities, investors wanting low premium gold coins should inquire about the 100 Coronas and the 50 Pesos when looking to buy cheap gold.
Bill Haynes
........(I have seen Krugerrands selling for a little less than Eagles, so the author has a point, buy the bullion coins that are out of favor or "last year's fashion" and invest the small savings into silver, copper or nickel.
Point to keep in mind: You are buying bullion in coin form, not collectable coins. You are buying bullion in coin form instead of ingot form. The resale value of gold bullion is the going rate of gold bullion, there will be little if any collectable value so don't overpay for your purchases.
Another thing to keep in mind, for the Mexican and Austrian gold,
Many, if not most buyers of gold, only know Eagles, Maple Leafs and Kruggerrands, perhaps a few have sen or sold British Sovereigns, they may not know other foreign gold bullion coins. They may want these foreign gold bullion coins tested to insure they truly are gold or they may refuse to buy outright due to low resale demand for these foreigners. If you are going to buy these foreign gold coins, make sure there will be a resale market or demand for them, or you may have to melt them down yourself to sell them as scrap.
Even in a post WTSHTF world, some may be reluctant to take foreign gold since they have never seen such coins before, while the Eagles and Maple Leafs and probably the Kruggerrands will be recognized on sight and accepted for trade.
Buy smart, make a great profit! |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/01/2007 : 12:07:39
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Gold forecast to average $670 an ounce in 2007
M.R. Subramani
Gold likely to lose ground
Gnanasekar T.
Both stories appear in 'The Hindu Business Line' within minutes of each other. As usual, gold bulls and gold bears see what they want to see.
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Gold likely to lose ground
Gnanasekar T.
Gold futures ended higher Friday, on a weaker dollar finishing the year with good gains. Ging into 2007, the dollar is mostly expected to mostly dictate direction for gold. Rising demand, falling production, dollar weakness, inflation worries adds up to one thing- rising gold prices. However, equity markets can be a real threat for gold in 2007. Rising equity markets can discourage fund allocation to commodities, and on the other hand falling equities will bring down all other assets including commodities.
COMEX gold futures rose sharply higher against our expectations. The current momentum has the potential to take prices higher to $644-45 levels, being a trend line resistance point. Break above $646 and a close above recent high of $655 will be a decisive sign of bullishness. However, the recent price action has happened in thin volumes and therefore need to watch for topping signs in the $645-654 range.
Our favoured view would be to expect a fall to $610 or even lower followed by a sharp rally higher to test the recent highs of $730. We believe that the third wave could have ended at $732 and the corrective fourth wave still in motion. Break above $678 will signal the beginning of the fifth wave move. RSI is in the neutral zone indicating that it is neither overbought nor oversold.
The averages in MACD are again above the zero line of the indicator suggesting a bullish reversal. Prices are below the short-term 8-day period EMA at $631 followed by the 34-day period EMA at $628. Therefore, look for Comex gold to test the test the resistance levels and fall lower.
Supports are at $633, 624 and 615. Resistances are at $642, 645 and 654.
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Gold forecast to average $670 an ounce in 2007
M.R. Subramani
Demand seen as hedge against possible depreciation of dollar: Abare
Uptrend
Global gold mine production in 2007 is expected to increase 3 per cent to 2,587 tonnes.
Global fabrication demand is expected to increase 4 per cent to 3,029 tonnes.
--------------------------------------------------------------------------------
Chennai , Dec. 31
Gold prices in 2007 are forecast to average $670 an ounce, 11 per cent higher than the estimated 2006 average of $606, mainly on ongoing strength in investment demand.
Australia's independent government economic research agency Abare, in its commodities outlook, has said uncertainty over the outlook for short-term interest rates in the US and the consequent implications for the dollar is expected to support the investment demand for the yellow metal.
The demand of gold is seen as a hedge against a possible depreciation of the dollar.
"In addition, investment demand for gold is also expected to be supported by geopolitical uncertainty and the ongoing possibility of terrorist activity," it said.
Pointing out to the growing number of "exchange-traded funds" and increasing ease of investing in gold, Abare said the combined holdings of nine global exchange-trade funds in November last was over 600 tonnes, up over 200 tonnes since the beginning of 2006.
Rise in mine output
Global gold mine production in 2007 is expected to increase 3 per cent to 2,587 tonnes on higher production in Australia, the US and Latin America. This rise will offset further decline in South African production, according to the research body.
Newmont's Leeville and Phoenix mines in the US had commenced commercial production in the final quarter of 2006 and the output would be further ramped up in 2007.
Also, Barrick Gold's Ruby Hill project in the US was set to commence production in early 2007, Abare said.
During 2006, South African production was estimated to have declined by seven per cent to 276 tonnes compared with a 14 per cent in 2005. In 2007, the production could decline further by three per cent to 268 tonnes.
Fabrication demand
In the first three quarters of 2006, gold fabrication demand declined substantially. This was mainly due to fall in jewellery demand in India, which accounted for 23 per cent of the global gold jewellery purchase in 2005 and West Asia.
However, in 2007 global fabrication demand was expected to increase four per cent to 3,029 tonnes on recovery in gold jewellery demand in India, West Asia and China.
This is in view of an anticipated rise in household disposable incomes.
Official sector sales
Official sector sales in 2006 declined 44 per cent to 365 tonnes, which reflected a dip in gold sales by central banks in various nations that had signed the Central Bank Gold or the Washington Agreement.
In the second year of the agreement between September 2005 and August 2006, the signatories sold only 395 tonnes against the annual limit of 500 tonnes.
In 2007, the official sector sales are seen largely unchanged and again, the sales may not meet the targeted 500 tonnes, according to Abare.
The Washington Agreement was signed by the Central Banks as an effort to ensure that gold prices do not decline alarmingly due to sales of the yellow metal by them from the reserves.
De-Hedging
In the first three quarters of 2006, gold producers reduced their outstanding hedge position by 357 tonnes. For the entire year, the projected dehedging has been put at 400 tonnes. This could be further reduced by 200 tonnes in 2007. However, Abare has a caution.
"While major global mining companies are expected to continue to favour dehedging in the short-term, their ability to do so will be constrained by the reduced size of the remaining outstanding global hedge position," it said.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/02/2007 : 19:06:53
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If no one objects, I have decided not to comment too much on the positive change in the price of gold or silver, since I do not want to jinx it (call me superstitious if you will, but I do not want to tempt Fate, you know how fate gets when it is riled up.)
I will simply report on information concerning gold and silver, both opinions, commentaries and news and leave forum members to read this section to make educated decisions concerning the precious metals.
I realize I have neglected to mention Platinum and the family of Platinum metals on this topic section. That is due to the fact that, while such metals are expensive, they have not been considered precious metals as long as gold and silver have been. Platinum is a relative newcomer in the world of precious metals, having been only considerd valuable, and workable, for the past few centuries.
For many years Platinum, like nickel, would not melt no matter how hot the forges got (in the 1600's and 1700's.) As far as Platinum was concerned, Arsenic had to be added to lower Platinum's melting point to make it melt and workable. (There is NO residue of arsenic on Platinum now since high temperature electric furnaces are now used to melt Platinum.)
Also, due to the high prices for Platinum and its 'cousins' it takes much more money and wisdom to buy and sell successfully. While diversifying into Platinum is a good idea, for many of us, it is a bit too much on the budget.
I am not trying to dissuade you from buying anything, buy what you like and buy what makes the most sense to you financially and economically, just educate yourselves before jumping into any opportunities.
As far as 'once in a lifetime opportunities' are concerned, I used to get them every week in the mail before the dot com bubble burst.
(If they were once in a lifetime opportunities, does that mean I'm like a cat, having nine lives?)
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Gold trades at 1 month high
Tue, 02 Jan 2007
A weaker dollar gave gold an early 2007 boost on Tuesday, pushing the price of the yellow metal over $640/oz for the first time in nearly a month.
"The weaker dollar is definitely helping and demand is coming in," said a Johannesburg-based trader.
The precious metal has been heading upwards since it bottomed at $611.30/oz two weeks ago, helped by recent tensions between Iran and the West and thin end of year markets.
The dollar weakened to $1.3289 against the euro on Tuesday, its weakest level since the first half of December.
Resistance level
Overall, gold was up $3.25/oz at $639.23/oz by afternoon trade on Tuesday. Technical analysts have pointed out a resistance level of $642/oz.
The dollar was last at $1.3272 against the euro, compared to $1.3212 late on Monday.
Oil, another influence for gold as higher prices affect global inflation, was also up, with Brent near term futures trading at $61.14 a barrel compared to $60.86 a barrel previously.
Conditions are expected to remain tight as US markets are closed due to the funeral of former President Ford.
Platinum was up $7.50/oz at $1137/oz, while palladium was quoted at $335/oz, up $4.50/oz from its previous close.
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Edited by - pencilvanian on 01/02/2007 19:10:17 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/02/2007 : 19:20:40
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"The U.S. has told North Korea that, if the nuclear weapons and ballistic missile programs are shut down, along with the drug dealing and counterfeiting, American banking restrictions would be lifted. The North Koreans are fuming over that, and are getting desperate, as can be seen in the attempt to sell their gold reserves."
Full story
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Going for the Gold
January 2, 2007: The United States has gotten North Korea's attention, and in an unexpected way. By telling the world's banks that they will be cut off from access to the U.S. banking system if they do business with North Korea, the North Koreans suddenly find that many of their criminal activities are much more difficult, if not impossible, to carry out. The American plan was accompanied by U.S. government officials giving a compelling presentation detailing North Korean crimes, and abuse of the international banking system. This convinced all the major international banks that it was not worth the trouble, and risk, to do business with the North Koreans. As a result, North Korea has put regaining access to the banking system at the top of its list of demands. The U.S. has told North Korea that, if the nuclear weapons and ballistic missile programs are shut down, along with the drug dealing and counterfeiting, American banking restrictions would be lifted.
The North Koreans are fuming over that, and are getting desperate, as can be seen in the attempt to sell their gold reserves.
January 1, 2007: Economic reforms in North Korea have made it easier for people with government jobs, or connections, to go into business and make more money. But for most urban North Koreans, the higher prices (particularly for food) have been a real hardship. Also, the bribes government officials demand to get things done (like getting promotions, or a kid into college), have gone up.
December 30, 2006: South Korea's Defense Ministry issued their bi-annual report on North Korean military strength. Although North Korea's conventional forces continue to decline due to lack of money for maintenance and fuel, the northerners now have enough nuclear material for seven atomic bombs, and still maintain a large supply of chemical and biological (mainly Anthrax) weapons. While South Korea now possesses the capability to shut down most of the missiles and artillery aimed at Seoul, the North Koreans can still deliver nuclear, chemical and biological warheads to South Koreans largest city. For this reason, many South Korean, and foreign, diplomats suggest that South Korea give in to the North Korean extortion demands, as it is also obvious that the communist police state up north is coming apart and will eventually collapse. Other nations, led by the U.S., want the North Korean dictatorship put out of business, sooner rather than later, in order to avoid North Korea selling any of its special weapons to terrorists. North Korea has been selling weapons, drugs, counterfeit currency and just about anything else, for years in order to keep its decrepit dictatorship alive. But South Korea sees the north as a more immediate threat to itself, than to any foreign country, and demands that it's kinder and gentler approach be adopted by all.
December 28, 2006: North Korea is attempting to circomevent American banking restrictions by registering with a London gold trading organization, in preparation for a sale of its gold reserves (of some $25 billion).
The gold is the North Korean emergency reserve,
and when it is being sold, it means the north is out of options.
Several hundred million dollars worth of gold was sold in 2006, apparently in barter deals, outside the banking system.
May effect the price of gold
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Kyrgyzstan sees gold output plummet 36% in 11 mths
BISHKEK. Jan 2 (Interfax) - Kyrgyzstan reduced gold production 35.9% year-on-year in January-November to 9.048 tonnes, the State Geology and Mineral Resources Agency told Interfax.
Gold production was 17.9% less than planned.
Gold output in value was 14.833 billion som (38.7036 som/$1 on Dec. 15), which was 1.9% above target due to a rise in gold prices, but 14.6% less than in January-November last year.
The agency said mining targets were missed because Kumtor Gold Company did not ship as much gold to Kyrgyzaltyn to be refined.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/03/2007 : 19:16:05
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Another day another pothole.
Buying opportunity with the price low?
Don't let a few days of price fluctuations make you panic and sell, gold and silver are a looooong term play.
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Forecasts see bullion above $US700/oz, but cooler markets
4th January 2007, 7:00 WST
The gold price jumped to its highest level in nearly a month with the new year, providing early support to brokers’ predictions that bullion will surge past $US700 an ounce and beyond in 2007.
More than half the brokers polled for WestBusiness’ annual survey bet on more upside to the gold price, with bulls tipping as high as $US835 an ounce by year-end, up from a high of $US640.80/oz yesterday.
However, their views vary considerably on the sharemarket, with tips for the broader all-ordinaries index ranging from a subdued year-end of 5200 — it finished at 5626.8 yesterday — to a stellar 6400.
Further US dollar weakness underpinned brokers’ forecasts for strong gains in the bullion price, which generally moves in the opposite direction to the greenback.
Gold gained 23 per cent last year, while the dollar fell 10 per cent against the euro. Seven brokers who provided gold tips predicted a 2007 finish of between $US650/oz and $US835/oz. Four tipped $US700/oz and better.
Last year’s most accurate gold price tipster, Sentinel Stockbroking chief executive Norman Robinson, believes bullion could reach $US700 this year if it maintains its present upward trend.
The gold price has been rallying since October, climbing from $US566.30/oz to $US647.11/oz at the end of November before finishing the year at $US636.20/oz.
Mr Robinson said demand for bullion now outstripped supply and the prevailing market view was for a further fall in the US dollar.
“People are allocating some funds to gold almost as if on speculation that something will go wrong with the US dollar,” he said.
Argonaut Securities senior dealer James McGlew remains bullish on gold despite overshooting with his gold price prediction in last year’s survey.
Mr McGlew said that in addition to the US dollar weakness, high oil prices and commodity prices would start to fuel global inflation.
However, Bell Potter Securities head of wealth management Heather Zampatti, Aequs Securities institutional dealer Ric Klusman and ABN AMRO Morgan investment manager Tim Carvolth forecast gold prices would recede in 2007.
Mr Klusman said that the US dollar might weaken slightly this year but it would remain supported by higher-than-expected US interest rates, which would be maintained to fund the nation’s bond program.
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GOLD
Gold slumps; more corrections due
Gareth Tredway
Wed, 03 Jan 2007
The gold price slumped more than one percent in Wednesday trade, as the dollar recovered from its worst level to the euro in nearly a month on Tuesday.
The price of the yellow metal had broken through the $640 a troy ounce level for the first time in around a month on Tuesday, and held above there until Wednesday morning.
However, the dollar has shown strength since this morning, gaining from just below $1.33 against the euro to the current price of $1.3226.
The dollar had weakened to $1.3289 against the euro on Tuesday, its weakest level since the first half of December.
Correction due?
The US markets opened for the first trading day this year, after the New Year's day holiday and the closure of some markets due to the funeral of Gerald Ford, a former US president yesterday.
Standard Bank in London said in its daily note that the gold market could be in for a correction considering the light volumes on which the past weeks gains were made.
US data set to be released on Wednesday include the FOMC minutes and ISM data, as well as construction spending and vehicle sales from the world's largest economy.
Overall, gold was trading at $633.55 a troy ounce by late afternoon, one percent lower. Technical analysts have pointed out a resistance level of $642/oz.
Oil, another influence for gold due to a higher prices effect on global inflation, was down slightly, with Brent near term futures trading at $60.05 a barrel compared to $60.44 a barrel previously.
In the platinum market, Virtual Metals analyst, Matthew Turner said the market will still take a while to shake out the effects of the metal's rapid rise to $1400/oz late last year.
In palladium he said in the next few weeks, data on the estimated sales from Russia's large stockpiles in December will become available.
Platinum was down $1/oz at $1132/oz, while palladium was quoted at $334/oz, up $1/oz from its previous close.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/04/2007 : 18:27:27
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1-4-07
Gold is down 
Silver is down
oil is down(My investments are taking a hit)
And after hearing all this news, I'm a little down myself
The Good news(if there is any) is that with a mild winter, oil is down for now but that doesn't mean oil will be down when the summer driving season starts. Now wouldn't be a bad time to buy some reasonably priced oil stocks.
Oil can't stay this depressed forever, and with lower prices, this means that the turbo-charged engine of growth (China) is buying more for less to fill its oil reserve tanks. Ditto with gold and silver.
China and Russia both stated they wanted to buy gold to add to their reserves, and with slightly lower prices, it means they will be buying more for less, meaning that in the near future, there will be a tighter supply of gold available. What is the old saying,
'ignore the hot tips and buy on the dips'
or something like that?
Ping pong ball, pogo stick, yoyo, call it what you will, the precious metals are bouncing around again, but lower prices means more bang for the buck, while the buck still has a bang left in it. |
Edited by - pencilvanian on 01/04/2007 18:40:39 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/04/2007 : 18:49:12
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You must be logged in to see this link.\ACQRTT200701041439RTTRADERUSEQUITY_1063.htm&selected=9999&selecteddisplaysymbol=9999&StoryTargetFrame=_top&mkt=WORLD&chk=unchecked&lang=&link=&headlinereturnpage=http://www.international.nasd
The Price Of Gold Closes Down Amid Lower Oil And Stronger Dollar
(RTTNews) - After showing a steep decline in the previous session, the price of gold saw some further downside over the course of the trading day on Thursday. Gold for February delivery closed down $3.60 at $626.20 an ounce after ending Wednesday's trading down more than $8 an ounce.
The continued price decrease was partly due to a substantial decrease by the price of oil, which extended the steep downward move that was seen on Wednesday. Some strength in the value of the U.S. dollar also inspired traders to move their money out of gold.
The price of copper also saw some further downside after coming under pressure in the previous session, with copper for March delivery closing down $0.047 at $2.602 a pound.
Meanwhile, other metal prices closed higher, with silver for March delivery closing up $0.165 at $12.835 an ounce, while January platinum closed up $0.10 at $1,132.50 an ounce and March palladium closed up $3.50 at $345.55 an ounce.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/05/2007 : 18:48:10
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Story in a nutshell
Jobs figures 'looked' good so the dollar looked good so the big boys bailed out of gold & silver.
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U.S. gold plunges 3 pct as funds sell
Fri Jan 5, 2007 3:36pm ET
NEW YORK (Reuters) - Gold futures plunged more than 3 percent in heavy trade Friday to their lowest level in more than two months, and silver tumbled almost 5 percent,
as funds bailed out on the precious metals after the dollar surged on a surprisingly strong U.S. jobs report.
Benchmark gold for February delivery <GCG7> on the COMEX division of the New York Mercantile Exchange settled down $19.30, or 3.1 percent, at $606.90 an ounce, which was last seen on Oct 30. It traded in a broad range between $603 and $627.9 an ounce.
Estimated volume was 52,000 contracts, and options turnover was 20,000. Turnover in the Chicago Board of Trade's electronically traded 100-oz gold contract was 81,051 contracts as of 2:41 p.m. EST (1941 GMT). (You must be logged in to see this link.).
Gold losses accelerated throughout the morning, but by late morning, it seemed to find support around the $605 level.
The February contract lost almost 5 percent of its value this week, down from a settlement of $638 last Friday.
Friday's decline was the contract's biggest one-day percentage drop in three months.
George Gero, senior vice president at RBC Capital Markets, attributed gold's decline to weakening oil prices, strong U.S. jobs data that pushed the dollar to a new high, and profit taking ahead of the weekend.
"When all the negatives come together at once, the funds pull the trigger," Gero said. "The funds hate uncertainty. Always, it's easier to just sell and then take a second look."
The dollar rallied for a third day after the Labor Department said the U.S. economy generated 167,000 new jobs in December, well above market expectations for a rise of 100,000, leading investors to scale back expectations of a Federal Reserve interest rate cut in the near future.
"The payroll number does indeed cause a rethink on the Fed expectation that's been embedded in the fixed-income and stock markets in the U.S.," said Greg Weldon, chief executive of weldononline.com
Weldon called the precious metals' decline "a wholesale liquidation in commodities for a variety of reasons."
Weldon said news about tightened money supplies in China and India, and French President Jacques Chirac's urge for a growth-oriented euro policy, led to a firmer greenback, which is bearish for dollar-denominated gold.
"The dollar trading at these levels is creating doubts in the bullion traders' mind that it will be able to sustain the dollar's strength," said George Nickas of FC Stone.
Nickas added that investors were also nervous because the energy markets lately "got beat up so badly."
Oil futures lost nearly 9 percent this week because warm winter conditions in the U.S. Northeast, the world's top heating oil market, has curbed heating fuel demand and knocked prices to their lowest in 18 months.
Looking forward, Weldon said he was pegging gold's significant support at the $570 area.
Gero, however, said he noted COMEX open interest for gold rose on Thursday. "This indicates to me that some of the selling is new shorts coming into the market. In the longer term, it will be good for the market."
Spot gold <XAU=> was quoted at $606.70/7.70, down from $621.60/2.60 in late trade on Thursday. London's afternoon gold fix was $609.50.
COMEX March silver <SIH7> tracked gold's decline. It sank 60.5 cents, or 4.7 percent, to close at $12.230 an ounce, a 10-week low, after trading between $12.10 and $12.835.
Spot silver <XAG=> fell to $12.180/2.250, down from $12.610/2.680 late Thursday. Silver was fixed in London at $12.700 an ounce.
NYMEX January platinum <PLF7> finished down $23.50, or 2.1 percent, at $1,109.00 an ounce. Spot platinum <XPT=> fetched
$1,105.00/1,110.00.
March palladium <PAH7> dropped $10.45, or 3 percent, to end at $335.10 an ounce. Spot palladium <XPD=> was quoted at $331/336.00.
.........(This is the reason I am not a big fan of charts, all a chart shows is that something moved, the chart would not say, as in this instance, why something moved, in this case good jobs numbers and a suposedly stronger looking dollar, but we all know how looks can be decieving.)
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/05/2007 : 20:07:20
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Gut-Check Time in Gold Patch
Excerpt
Further undermining bullion was speculation that Iran's supreme leader Ayatollah Ali Khameini is seriously ill. In the event of his death, the likely new leader, former Iranian President Hashemi Rafsanjani, could possibly lead to a less antagonistic Iran and perhaps a more productive Mideast peace process, Miller Tabak says in market brief. If that happens, tensions could be reduced, reducing the allure of gold as a safe haven investment. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/08/2007 : 16:50:43
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Gold gains, but ends off high on oil weakness
Futures prices off high of $611; silver prices still higher
SAN FRANCISCO (MarketWatch) -- Gold futures rose Monday but closed below the session's high above $611 an ounce, as the market found support from a retreat in the U.S. dollar but also saw pressure from weak oil prices.
Gold for February delivery closed up $2.50 at $609.40 an ounce on the New York Mercantile Exchange, retreating from an earlier high of $611.10.
The contract, which on Friday touched its lowest level since late October, lost $31.10, or 4.9%, last week, hurt by unexpected strength in the dollar, worry about an economic slowdown and recent weakness in energy futures.
"While gold is hovering very much near critical support, there are no guarantees that the almost 3% fall recorded in the last session has been halted," said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com.
"Gold cannot be immune to a commodity bubble cave-in, at least in the initial phases thereof," he said, adding that "there is collateral damage to be incurred by gold simply by virtue of its proximity to other commodity metals."
Crude futures lost nearly 8% last week, and the February contract fell under $56 Monday as warmer-than-usual weather continued in the Northeast for now and some market estimates called for the Energy Department to report on Wednesday a rise in petroleum supplies. See Futures Movers.
"Eventually, we expect gold to de-couple from this 'guilt by association' syndrome and march ahead on its own strengths, most notably its monetary attributes," said Nadler.
"Invariably, investors always return to the ever-dependable safe haven (be it from other assets and currencies, be it from geopolitics) characteristics of gold and positive trends are reestablished," he said.
For now, dollar weakness helped gold keep its footing.
The dollar edged lower against most major currencies Monday, consolidating after staging an impressive recovery last week.
Weighing prospects
Wachovia Corp. has said that most metals prices were likely to fall with economic growth in 2007.
Indeed, "growth is slowing all over the world," said Wachovia Economist Jason Schenker, in a note released Monday, adding that he expects growth to slow further so prices for most metals "face downside-price risks."
Even so, gold prices are "likely to rise moderately as foreign central banks increase their gold reserves and the [dollar] depreciates gradually against most major currencies," he said.
As a result, he said Wachovia has raised its average 2007 price forecast on gold to $630 from $606.
Other metals were mixed, with March silver closing up 13 cents at $12.36 an ounce after losing 5.5% last week and March copper falling 0.7 cent to end at $2.528 a pound.
Last week, March copper fell 11.7% on concerns about slowing economic growth.
.......
On the supply side, gold warehouse stocks were down 2,900 troy ounces at 7.53 million troy ounces as of late Friday, according to Nymex data. Silver supplies were flat at 113.5 million troy ounces and copper supplies rose by 1,326 short tons to 35,321.
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Gold gains, but ends off high on oil weakness
Gold futures rose Monday but closed below the session's high above $611 an ounce, as the market found support from a retreat in the U.S. dollar but also saw pressure from weak oil prices.
Gold for February delivery closed up $2.50 at $609.40 an ounce on the New York Mercantile Exchange, retreating from an earlier high of $611.10.
The contract, which on Friday touched its lowest level since late October, lost $31.10, or 4.9%, last week, hurt by unexpected strength in the dollar, worry about an economic slowdown and recent weakness in energy futures.
"While gold is hovering very much near critical support, there are no guarantees that the almost 3% fall recorded in the last session has been halted," said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com.
"Gold cannot be immune to a commodity bubble cave-in, at least in the initial phases thereof," he said, adding that "there is collateral damage to be incurred by gold simply by virtue of its proximity to other commodity metals."
Crude futures lost nearly 8% last week, and the February contract fell under $56 Monday as warmer-than-usual weather continued in the Northeast for now and some market estimates called for the Energy Department to report on Wednesday a rise in petroleum supplies.
"Eventually, we expect gold to de-couple from this 'guilt by association' syndrome and march ahead on its own strengths, most notably its monetary attributes," said Nadler.
"Invariably, investors always return to the ever-dependable safe haven (be it from other assets and currencies, be it from geopolitics) characteristics of gold and positive trends are reestablished," he said.
For now, dollar weakness helped gold keep its footing. The dollar edged lower against major currencies Monday, consolidating after staging an impressive recovery last week.
Weighing prospects
Wachovia Corp. has said that most metals prices were likely to fall with economic growth in 2007.
Indeed, "growth is slowing all over the world," said Wachovia Economist Jason Schenker, in a note released Monday, adding that he expects growth to slow further so prices for most metals "face downside-price risks."
Even so, gold prices are "likely to rise moderately as foreign central banks increase their gold reserves and the [dollar] depreciates gradually against most major currencies," he said.
As a result, he said Wachovia has raised its average 2007 price forecast on gold to $630 from $606.
Other metals were mixed, with March silver closing up 13 cents at $12.36 an ounce after losing 5.5% last week and March copper falling 0.7 cent to end at $2.528 a pound.
Last week, March copper fell 11.7% on concerns about slowing economic growth.
March palladium closed down $3 at $332.10 an ounce, while April platinum added $14.90 to close at $1,126.90 an ounce.
On the supply side, gold warehouse stocks were down 2,900 troy ounces at 7.53 million troy ounces as of late Friday, according to Nymex data. Silver supplies were flat at 113.5 million troy ounces and copper supplies rose by 1,326 short tons to 35,321.
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Peru's gold output falls in November
Peru's output of gold fell in November, while that of copper, zinc and silver rose in the month, the Energy and Mines Ministry said Friday.
Mineral production has become a motor of the Andean nation's economic growth, with a number of new mines opening in recent years.
The government said that gold output totaled 16,240 kilograms in November, down 28.15% compared with the same month a year before.
Zinc production was 105,072 tons in November, up 4.89% from the same month a year earlier.
Copper production rose 11.63% to 92,566 metric tons in November from the same month a year before.
Silver production in November was 291,270 kgs, an increase of 6.14% from the same period a year before.
Among some of the other minerals, the government said that molybdenum output rose 48.12% to 1,502 tons in November.
Lead production was 27,485 tons in November, an increase of 4.58% from the same month in the previous year.
Tin output was 3,090 tons in November, down 13.36% from the same month in the previous year.
Iron output totaled 378,523 tons in November, an 0.44% increase from the same month in the previous year, the government said.
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2007 gold price performance will depend on periodic strength of dollar
JOHANNESBURG (Mineweb.com) --Periodic strength in the US dollar is expected to weigh on the gold price this year as the commodity normally maintains an inverse relationship with the dollar.
Helen Holten, head of commodity research at Standard Chartered Bank, says she expects the gold price to peak in the first quarter of 2007, before the US dollar displays renewed strength due to a turn in the US central bank (Fed) cycle.
Holten said the key question around the gold price this year was
whether gold’s investment value would be strong enough to withstand the dollar’s periodic strength.
Gold’s inverse relationship with the American dollar became apparent again in 2006, after the performance of the commodity and currency disconnected during 2005.
Holten said the extent to which gold will be able to withstand strength in the US dollar, will depend on the level where fabrication demand kicks in.
“The key here is the perception of an acceptable price for gold.
“As gold fell over the last few days, demand kicked in at just above US $600/ounce. Demand from fabricators becomes pretty firm around US$ 580-590/ounce.”
Holten said inflation concerns were key to gold’s strong performance in 2005, but it was unlikely to repeat itself this year, given Standard Chartered’s forecasts of lower oil prices.
Central bank diversification is likely to support the gold price in the medium to long term, but there are only tentative signs of diversification activity at the moment.
“Russia notably entered the market in a significant way over the past year, and it is likely that other oil producers have or will follow suit,” said Hendon.
The World Gold Council (WGC) estimates that Russia bought 8.7 tonnes of gold from August to October last year.
Some Middle East producers, most notably the United Arab Emirates (UAE), have indicated that they intend to diversify their investments. China could also become a significant gold buyer as its current gold reserves stand at 1.2% of total reserves.
Although the diversification trend will provide general support for prices, it is likely to occur at a gradual pace that would not drive the gold price higher during periods of dollar weakness in 2007.
The bearish outlook for the US dollar is supportive of the gold price in 2008 and beyond.
Henton said gold mining supply
will continue to struggle this year, but the movement of above ground stocks, particularly stocks held by central banks, will have a greater bearing on the gold price.
Total gold supply was down 13% year on year in 2006 and mine supply fell by 2%.
Sales from European banks under the Central Bank Gold Agreement (CBGA) are on track to be around the 500 tonnes agreement level for the year, which runs from September to September. This is up on the 2005/6 year when signatories disposed of 395 tonnes, indicating that banks have a bullish view on prices.
Consumers are progressively raising the acceptable price for gold, which seems to have settled around the US$ 580-590/ounce level for now. This level proved a floor to prices when investment demand eased in the third quarter of last year.
However, this position could have changed in the fourth quarter of 2006 as speculative positioning on gold, driven by dollar weakness, picked up.
Henton said the fate of the US dollar would dominate investment demand over the next year. Inflation, the other key driver of investment demand in the recent past, would be less key this year as crude oil prices should moderate.
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Bullion Prices, Hang Tight
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