Posts Tagged commodities
GOLD PRICE NEWS – The gold price plunged Monday morning, sliding $39.65 to $1,672 per ounce. Investors shed long gold positions and investments tied to the gold price amid heightened worries that the continued refusal of the European Central Bank (ECB) to more aggressively aid Italy and Spain will lead to a fresh deflation episode. S&P 500 stock futures fell 13.30 to 1239.70 while oil sank $1.28 to $98.12 per barrel.
Today’s weakness in gold follows a string of low volatility days in the yellow metal. On Friday, the gold price inched higher by $4.04, or 0.2%, to $1,711.66 per ounce amid broad-based gains in commodities and weakness in the U.S. dollar. The spot price of gold traded in a relatively tight range and finished with modest gains after euro zone officials agreed to pursue a more stringent fiscal structure at the European Union summit. For the week, however, the gold price dropped 1.8% as precious metals continued to face headwinds from the hard line stance taken by ECB President Mario Draghi.
Silver followed gold lower this morning, falling $1.09 to $32.13 per ounce. Gold’s sister precious metal posted a more modest 1.1% loss last week. with today’s declines, the prices of gold and silver cut their gains this year to 17.8% and 0.8%, respectively.
Gold equities traded lower in sympathy with weak precious metals prices, continuing the downtrend that materialized last week. Despite the AMEX Gold Bugs Index (HUI) climbing 1.0% to 561.53 on Friday, the composite dipped 0.7% over the five-day stretch. On a year-to-date basis, the HUI is now lower by 2.1%. Notable decliners last week included Goldcorp (GG), Kinross Gold (KGC), and Royal Gold (RGLD) – which slid by 2.1%, 2.8%, and 1.1%, respectively.
Despite gold’s muted initial reaction to the outcome of the December 9 meeting of 27 European leaders, the yellow metal is facing heavy selling in the aftermath of the latest European summit. Officials were unable to achieve unanimous support for a new agreement on tighter fiscal regulations, although the group said it would pursue an intergovernmental treaty with the majority of member nations. in addition, the European nations agreed to provide the International Monetary Fund (IMF) with up to €200 billion in bilateral loans that could be utilized to provide financial support to fiscally strapped nations such as Portugal, Spain, and Italy.
David Mackie, a J.P. Morgan economist in London, commented that “It’s not the grand bargain some people had been hoping for. a door has been opened with the IMF channel, but some people may say that 200 billion euros is simply not enough.”
As for the impact on the gold price, analysts at Commerzbank argued in a note to clients that the lack of financial firepower emanating from the EU summit could present a headwind for the yellow metal in the shorter-term. Gold’s “latest relative weakness can be expected to prompt investors – who recently took a positive view of gold – to continue shedding their positions,” the firm wrote. “a possible price slide below $1,700 may thus accelerate a further slump.” However, Commerzbank also contended that “Despite these short-term tendencies, we do not believe gold’s long-term upwards trend to be under threat.”
While investors will continue to keep a close eye on Europe in the week ahead, Tuesday’s Federal Open Market Committee (FOMC) meeting could be a catalyst for the gold price and broader financial markets. while speculation has quieted over the past month that the Bernanke-led Federal Reserve will launch a third round of quantitative easing (QE3), any dovish comments could provide a tailwind for equities, commodities, and the price of gold. However, given the recent improvement in many U.S. economic data points – including employment, manufacturing, and consumer confidence – the majority of economists continue to see QE3 more likely occurring in 2012.
However, gold is not a consumer good – it’s not something people need to eat a certain amount of every day, so the physical quantity of gold per person in the world means less than it would for other commodities. Gold, we have long argued, is a “fear barometer” in today’s world. It’s valued, which means it has demand in inverse proportion to people’s confidence in other forms of money. So the fact that supply has kept up with population growth does not imply that supply has – or “should have” – kept up with demand… and we can see that it hasn’t in the price of gold. A major part of that is the return of investment demand, almost to levels we saw in 1980, as you can see in the chart below.
- Today, as in 1980, mine production and scrap are the major components – almost the only components – of supply. The disappearance of net disinvestment from the supply side of things is one of the more bullish similarities we see between now and 30 years ago.
- One major difference between the gold market today and in decades past is the geography of mine production. South Africa accounted for two-thirds of global gold production in 1970 and 55% in 1980. In 2010, not one country was responsible for more than 14% of world mining supply (with the leader being China, at 13%).
A similar shift has occurred with demand. In the 1980, it was mostly Western countries soaking up the gold trade, probably because that’s where most of the wealth that wanted to avoid inflation was. by 2000, when gold was held in the same esteem as certain other four-letter words, North America and Europe had almost left the field. Today, it’s become a truly global trade again, as you can see in the chart below.
Such decentralization has benefits: It creates flexibility and stability in the gold market. The market psychology is more diverse, making it more liquid and robust.
No Crunch Today – Crunch Tomorrow?
Your Casey Research metals team believes the supply of gold is going to tighten. Most companies have been forced to look in riskier jurisdictions and remote locations with poor infrastructure. Environmental and other regulations are multiplying and becoming more costly every year, and even in places where they are not, labor strikes and increases in taxes are taking their toll. Worldwide, mining becomes more complicated and expensive every year… and in some cases, not even worth trying. at the same time, big discoveries remain few and far between – and even when a discovery is made, it often takes up to ten years to reach production.
As they say, the low-hanging fruit has been picked: we do expect a supply crunch in the years ahead.
It’s tempting to try to make an argument based on future constraints in gold supply and some of the interesting similarities between past and present conditions in that supply – they seem to point to a gold mania ahead. but it’s the demand side that dominates the price of gold. Whether a shortage of gold supply from production occurs or not, demand for gold is more flexible than supply overall.
Gold is a monetary metal. If confidence in paper money evaporates the way we think it will, the flight to the safe haven of gold could swamp any conceivable glut in supply. We’ve no crystal ball to tell us when it will start, but we definitely see a mania coming.
And another question arises: Now that gold demand and supply are dispersed across the globe, where will the mania start? US? Europe? How about China, India, or Malaysia? things could really start cooking with no immediately evident cause in the West at all.
Regardless of when or where the mania starts, our advice is to make sure your personal gold reserves are in place.
[As profitable as owning gold looks to be, an anomaly in the markets is making gold stocks even more attractive. but not just any gold miners… certain qualities make specific stocks the best bets. Learn what they are and how to get in on the action yourself.]
The answer to the first question is yes, those commercials are ridiculous. The answer to the second question, though, is also yes. more and more people every day are coming to the newfound understanding that the government is not going to handle their investments for them – at least not well, and that by finding reputable coin dealers they can invest in one of the most stable commodities that’s ever existed in this country.
The time has come when people are returning to the mindset of previous generations who knew that their money was best protected when it was in their hands. My great grandfather was notorious for burying money in coffee cans in his garden, but he was also smart enough to have invested in silver when everyone else was throwing their money into the stock market. while those people were rushing to the bank to withdraw cash for their broker, he was carrying his coffee can to one of the coin dealers in town.
It wasn’t until the stock market crashed in 1929 that people started to realize my great grandpa wasn’t such an oddball after all; in fact, he was pretty smart.
MANY OPTIONS ARE AVAILABLE TODAY
Today, there are so many more coin dealers around than there were back then and, while that makes things more convenient, it also means that we have to be far more careful about knowing who we are doing business with. A simple search on eBay for the phrase silver coins brought up nearly 30,000 results
While it is tempting to jump on board the silver rush immediately, it is important to first educate yourself on what it means to invest in silver and how to go about doing so in a careful and responsible way that will protect your finances, your investments, and your family for years to come. My e-guide, A Guide to Silver Coin Investing, was written with first time silver coin investors in mind and you can download it at absolutely no cost or obligation.
Credit Suisse Gold Bars Insure against Financial Fraud of Fiat Funny Money whereas a significant majority of commodities are used and exhausted, gold just sticks around. this persistence of gold over time actually indirectly factors into the price of Credit Suisse gold bars. See, gold taken from the Earth has simply changed forms and almost all of it can be procured to this day, thus we have about all that we’ve ever had. And thus we shouldn’t be impressed that the buying ability has been uniform. What oscillates is the paper money. As a result, it’s not odd to experience an epiphany and notice that fake currencies waver, for that’s what the FOREX markets are all about. And they rise and fall with regards to gold as they strengthen and weaken. the Credit Suisse gold bars havenâ€™t changed, but the worth of the currency youâ€™re buying them with has due to the sovereign debt problems, creditworthiness of the issuing nation, and so on. Across time, if paper money was tied to gold in a way that was honest, the price of gold was really rather unwavering. Undoubtedly, the relationship between the two upheld the ratio. By contrast, bliterating the union between the two nullified the only lifeline the paper had to any account of worth, and the downward spiral of paper money, and its expiration of value relative to gold, set in. this is why gold ETF funds are such a hit. I once learned about the account of how many ounces of gold it took to obtain a home 50 years ago. Proving the stableness of gold, you’ll witness that the similar amount of gold could achieve the identical thing in this day and age! What’s blurring the matter is the fact that inflation mixes up all the numbers so the money changers can extract monetary assets from the masses without consequence. Gold is in point of fact the anti-venom. when the people hold gold, we quash the bleeding and can later swap our gold into extra paper currency, as need be, than if we had stayed in paper money from the get-go. this is the answer for thwarting inflation. Credit Suisse Gold Bars Offer A great Escapeâ€¦ for Now If the citizens look at the circumstances honestly, there’s no dodging from the determination that countries are looking at large fiscal tragedies that bode well for gold. There are great amounts of people who want to find employment, but simply have been unable to ascertain legitimate employment. There is revolt among people groups that have been oppressed over history. A big quantity of individuals who have never thought twice about food are presently beginning to be distressed. Inflation is already giving rise to issues in notable ways, and hyperinflation is predicted as the citizens are coming to a decision between gas for the vehicle and food at home. Trade deficits have world leaders competing to consume the value of their money. Short term gains are only overtaken by long term catastrophe. No matter what the price of Credit Suisse gold bars is nowadays, I’m positive it will be very much higher next year. If, for whatever reason you are fond of your country’s currency, then it would nonetheless make sense to hoard gold. take the part you don’t need right now and set it in gold so you may obtain back still more failing currency later on! you will give up purchasing power to the extent that you hold onto funny money, therefore the superior thing you may do for your relatives is swap some of your wealth into something like gold that will accumulate the treasure and shield you with regards to inflation. Getting your hands on some price of Credit Suisse gold bars is only going to get harder. A lot of individuals have maintained transport may take weeks or months, as storehouses are in short supply already. It may reasonably be the best monetary determination you’ve ever made. I just recommend you make it before the price of Credit Suisse gold bars goes up yet again, meaning you just lost yet more of the value of your paper money!
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this entry was posted on Thursday, December 1st, 2011 at 7:57 pm and is filed under . you can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.