Long term effects on the gold price could be spectacular

Long term effects on the gold price could be spectacular - Lawrence Williams - Mineweb

Some existing housing sales seem to be picking up in the U.S., some U.S job statistics suggest the rate of employment fall-off could be declining, Portugal managed to find buyers for its recent bond sale - are these all signals that the U.S. in particular, and the world in general are coming slowly but surely out of recession? The public, clutching at straws regains a little confidence. Markets rise, industrial metals surge in price and gold stutters and falls back. But maybe this is yet another false dawn and will lead to weeping and gnashing of teeth by the fall.

The structural problems underlying the West are still virtually all with us. Maybe they have eased a little, but we are still swimming in a sea of debt and, nastily, as if yet another fury is waiting in the wings to strike, the first signs of potentially high inflation to come are appearing after what has, in reality, to be described as a deflationary period. The banks hold vast mortgage related debt which is far less secure than it might appear in their books, and no-one ever seems to raise the spectre of possibly uncollectable credit card debt!

Printing money on the scale the U.S. and the Europeans have been doing HAS to lead to serious inflation - otherwise all economic theory (and logic) is bunk! But it isn't just inflation in the countries which are printing the money. The huge increases in the world's principal reserve currencies, the dollar, the euro and to a far lesser extent these days the pound sterling, is effectively exporting even greater inflationary pressures into the rapidly expanding third world economies. To a large extent that is why the Chinese are so unhappy with the U.S. Quantitative Easing programme and why it is leading to serious argumentative rhetoric between the two superpowers.

China, for example, is already seeing serious inflation developing and is slowly, but surely, tightening its internal finances in an effort to nip this in the bud - and that is partly why metals prices are in such a volatile stage at the moment with so much depending on ever-increasing Chinese demand to keep them rising - or at the least where they already are. Rapidly rising inflation in a country with 1.3 billion people is a major worry for a government intent on keeping the lid on any signs of potential unrest and tightening could lead to a slowdown.

And, as pointed out above, national and local debt problems and potential restructurings and defaults are not going to go away. For many the costs of servicing the huge debt build alone are close to, or greater than, their revenue-raising capabilities, let alone repaying the principal. Some defaults would seem inevitable. Governments, where they can, are just printing money to alleviate their own problems and are thus building up even greater problems ahead. Already the pressures to replace the dollar as the global reserve currency are beginning to build as it effectively devalues itself. Arguably the rise in the price of gold, in dollars, over the past 10 years, is in reality only a reflection of the fall in value of the greenback on the global front.

Interestingly many commentators who are now writing off gold are doing so on the basis that improving stock markets mean that investors are now taking their money out of gold and putting it into the general markets where they feel the returns may be better. The continuing ‘gold is in a bubble' brigade are also contributing to nervousness among the speculative element within the investment community - but they would do well to remember October 2008. It could happen again - this year even - with stocks decimated, fortunes lost, and even gold suffered as holders needed to sell anything that was liquid to cover their losses elsewhere. But gold regained its levels within a couple of months while many stocks are still not back up to their pre-crash levels over two years later. The smart investor will still continue to keep gold in the portfolio as insurance against any similar market crash.

But why sell gold because markets are improving anyway? Gold has been advancing for the past ten or eleven years regardless of whether the markets were rising or falling. Maybe the correlation between gold and inflation protection is not quite what some pundits make out, but overall it is probably a safer place to put one's money than stocks or banks.

And perhaps the best reason to hold gold is that that is what the Chinese and Indians do. Not that they are necessarily smarter individually than the Caucasians, but they have longer collective memories and know that gold has stood the test of time as a protector of wealth - and with their rapidly growing economies and huge growth of individual incomes as a result, more and more are buying gold. Between them, in the next five years or so, gold imports into India and China alone could account for 75% or even more of global mined gold production, let alone that into other Eastern and Middle Eastern nations with a propensity to hold gold against a rainy day. They are turning traditional gold supply/demand statistics on their head and on this point alone, the long term effect on the gold price could be spectacular even regardless of the structural horrors inherent in Western World economies. Take the two together and maybe some of the seemingly huge over the top predictions for the gold price may not seem quite so ridiculous after all.

Source: http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=119002&sn=Detail&pid=102055

Geopolitical Instability Is Positive Gain For GOLD

Geopolitical Instability Is Positive Gain For GOLD - Elizabeth Kraus - Gold Coin Blogger

“We may see gold prices pressured by the upcoming China data, but just for a session or two. The more important factor is still the United States,” said Hou Xinqiang, an analyst at Jinrui Futures.
Physical demand stayed robust, and bargain hunting was seen in the Asian market after prices dropped and spot supply remained tight, dealers said.
“Supply is quite tight, especially in Hong Kong, because there hasn’t been much scrap sold back to the market, as people are still bullish on prices,” said a Hong Kong-based dealer.

Major factors driving the price of gold

Is the high level of national debt in the US as well as the Eurozone! Essentially, these regions are either bankrupt or about to become bankrupt. And, as the levels of debt, in particular that of the US is so high, there is no other way to finance this debt apart from issuing new debt–the QE 1 & 2 paper anchors are pulling the debt further up. Unfortunately, this is nothing more then a Ponzi scheme and the eventual outcome could be a total collapse in the US dollar.

Judging by the recent bond auctions in Europe, perhaps some of the worst skeptics may be convinced that all is being solved, however, just because the recent bond auctions in Portugal, Spain and Italy were successful, it does not mean the sovereign debt crisis in the Eurozone has been resolved. This is merely a temporary reprieve for the euro and these countries, and during the course of this year, I am convinced that we are going to see a further deterioration of the debt crisis which will cause the euro to drop further. And, while this is happening, despite the current exuberance on Wall Street, the US dollar is also headed for further losses this year.

Investors in European bonds should prepare for losses, says Pimco co-CEO Mohammed El-Erian. Nonetheless, it’s an exciting time to be an investor, especially for those who keep a sharp eye for well-placed bond offerings.

The next factor influencing the gold price is the size of the US national debt. Although it is difficult to know how large the national debt of the US really is, most government figures tend to indicate that it currently is around $14 trillion. While the US economy was thriving, and unemployment was low, US Treasuries represented a great and safe investment. But, those times are over and now as the US economy is fragile and the US dollar looks precarious, US Treasuries with their low yields are not such an attractive bet for investors. And, during last year we saw the largest holder of US debt – the Chinese – reduce their exposure to US Treasuries. Now the US Federal Reserve has become the biggest holder of US government debt! Then, probably the second largest holder of US debt consists of a diverse group of government sponsored enterprises, brokers, savings bonds, corporate and personal trusts and estates. The Chinese are now the third largest holders of US debt with Japan taking the fourth slot. According to the Federal Reserve, mutual funds hold the fifth largest amount of US debt, followed by US state and local governments that have more than half a trillion invested in US debt. US Pension funds also hold around $500 billion in US debt.

With the very real possibility of a serious melt down in the US dollar and the euro, investors need to find a safe haven in order to protect their wealth that could be totally wiped out in the event that these currencies should collapse. And, historically, gold has been proven to be one of the best ways to preserve wealth. So, it is no wonder why the demand for gold from individual investors is increasing.

Another factor influencing price of gold is physical demand.

China is the worlds’ largest gold producer. Recently, the Chinese Ministry of Industry and Information Technology said that they expect China’s gold production for last year to be above 340 tons. Actual output for the first 11 months of the year, according to official figures, was 308.39 tons, up 9.2% on the same period in 2009. In 2009, China’s gold output was 319. 98 tons. This is now the 6th successive year in which the country has raised its gold output.

And, of course central bank buying has an influence on the gold market.

It is important to note that central banks have now become net buyers of gold instead of net sellers. During 2010 the central bank of Russia purchased between 500,000 to 700,000 ounces of gold each month bringing the total of gold now held in reserves to around 750 tons. And, no doubt we will see this action continue throughout 2011. And, it is believed that China intends to increase its gold holdings from the current level of around 1054 tons. Even if they doubled this amount, the percent of their reserves held in gold holdings would still be a fraction of their total reserves, now estimated at around 2.85 trillion, and still below the percentage levels currently held by most Western central banks.

While there are other factors such as high inflation and geopolitical instability, with the high levels of debt in the US as well as the Eurozone combined with very robust demand for physical gold from China and India, there is no doubt the price of gold is headed higher, and what we are experiencing at the moment will turn out to be another correction in this huge bull market.

Source: http://goldcoinblogger.com/geopolitical-instability-is-positive-gain-for-gold/#more-2673

Seven reasons for gold to hit $1700 or higher this year

Seven reasons for gold to hit $1700 or higher this year - Jeffrey Nichols - Mineweb

Gold's steep ascent continued in 2010, finishing the year in New York at $1,420.75. Though just shy of its all-time high of $1,432.50 registered on December 7^th, gold nevertheless advanced some 29.5 percent from the prior year's close and scored its tenth consecutive annual increase.

Despite a rocky start - with prices dipping briefly under $1,360 an ounce on January 7^th - 2011 promises to be another stellar year as the metal's bullish price drivers continue at full throttle.

I expect the price will very likely rise to the $1,700 level by year-end 2011. This would be a "modest" gain of "only" 19 percent from last year's closing price. And, with the right confluence of events, gold could quite possibly rise to $1,850 or higher by next New Year's Eve.

Over time and across currencies, bull markets in precious metals often last twenty years or more - so we should not be surprised to see the current decade-long advance continue for at least a few more years.

Indeed, I strongly believe gold will surpass $2,000 an ounce in the next few years . . . and I wouldn't be at all surprised to see gold reach $3,000 or higher at the next cyclical peak.

Gold prices are likely to remain volatile, registering big short-term swings both up and down. Although sizable intermittent price declines will lead some to question the bull market's staying power, the long-term trend, as noted above, will remain positive for years to come.

PHYSICAL DEMAND REMAINS FIRM

As we begin the New Year, physical demand in key world gold markets - especially China, India, and other Southeast Asian trading centers - has remained remarkably firm despite the record price levels prevailing in recent weeks.

In the past few years, each time gold prices reached for the big round numbers - $900, $1000, $1100, $1200, and $1300 - buying interest diminished and a return flow of price-sensitive old scrap weighed heavily on the market. But now, even with prices once again at or near all-time highs, physical demand remains remarkably strong and only limited quantities of old scrap are coming back to the market.

This suggests not only a continuing price appreciation and revaluation of gold - but also a mental re-evaluation and upward shift in expectations among many gold-market participants about the metal's future price.

If physical buying remains fairly firm - as I believe it will - we can expect that gold will soon advance to new all-time highs.

BULLISH PRICE DRIVERS

In brief, here are the seven fundamental reasons why gold's long-term outlook is rosy:

Number One: Inflation-producing U.S. monetary policies, irrational U.S. fiscal policies, little if any progress reversing growth in Federal debt, and a depreciating dollar overseas all promise rising inflation at home. Higher industrial and agricultural prices around the world and across currencies are a harbinger of things to come.

Number Two: No quick or easy solution to the Eurozone sovereign risk crisis, a widening economic schism across the continent, and possibly the demise of Europe's common currency, the euro, as it exists today.

Number Three: China's already huge and growing appetite for gold - both jewelry and investment - will continue in tandem with economic growth, rising personal incomes, worrisome inflation expectations, and pro-gold government policies.

Number Four: Rising long-term gold demand from India and other traditional Asian gold markets reflecting (as in China) growth in personal incomes and wealth, the maturation of local markets, and introduction of new gold investment vehicles and distribution channels.

Number Five: Increasing central-bank interest in gold will continue to underpin the market as countries (such as China and Russia) over weighted in U.S. dollar and euro currency reserves and under weighted in gold play catch-up - and as both the dollar and the euro continue to lose their appeal as official reserve assets.

Number Six: The continuing reevaluation of gold as a legitimate investment class is prompting greater participation from both retail and institutional investors in the United States and Europe, coupled with new products and channels of distribution (especially the growing popularity of gold exchange-traded funds) will continue to make gold more convenient, more attractive, and more accessible to more investors around the world.

Number Seven: Little or no growth of aggregate world gold-mine production for at least the next five years - with gold-mining nations absorbing more of their own production to meet domestic demand for jewelry, investment, and additions to central bank reserves.

Source: http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=118399&sn=Detail&pid=102055

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Bagi yang ingin simpan emas pelaburan yang dibeli boleh simpan di Agro Bank, sangat murah. Hanya perlu dokumen berikut :

1) Salinan IC
2) Bayaran deposit RM80.00
3) Stamp duty RM10.00
4) Sewa tahunan serendah RM25.00 (ikut saiz)
5) Buka Akaun dgn Agro Bank (minima RM50.00 shj)

Total kos nak sewa save deposit RM165.00 shj.

Gold, silver other metals continue rise on European debt worries

NEW YORK: Gold and other metals continued a rally that began Monday as investors seemed increasingly worried that debt problems in Europe are mounting.

Metals were up across the board Tuesday. Investors appeared worried about debt auctions to be offered later in the week by Spain and Portugal, said Tom Pawlicki, commodities analyst with MF Global Research in Chicago.

Gold for February delivery rose $10.20 to settle at $1,384.30 an ounce. Silver followed, with March contracts rising 63.8 cents to settle at $29.499 an ounce. April platinum rose $25.20 to settle at $1,770.30 an ounce.

Industrial metals also rose. Copper for March delivery rose 8.45 cents to settle at $4.3490 a pound. Palladium for March delivery rose $34.10 to $783.75 an ounce.

The extent of Portugal's market problems will become clearer Wednesday, when the government auctions off 3-year and 9-year bonds. Poor demand or punishingly high interest rates at the auction would deepen worries about the region's financial woes.

Analysts think Portugal will raise the money, but at a heavy price. Spain is also holding a bond auction Thursday.

Corn was flat as soybean and wheat prices fell ahead of a USDA report to be released Wednesday showing updated crop production figures.

March wheat lost 7.75 cents to settle at $7.595 a bushel. Corn for March delivery was unchanged at $6.07 a bushel. Soybeans fell 23.5 cents to $13.57 a bushel.

Energy prices rose sharply after a presidential panel investigating the Gulf oil spill said the oil industry and the government need to do more to reduce the chances of another large-scale disaster.

The panel's recommendations included increasing the liability cap for damages when companies drill offshore; increasing budgets and training for the federal agency that regulates offshore drilling and lending more weight to federal scientific opinions in decisions about drilling.

The report led to speculation that the government might slow down production in the Gulf of Mexico, which would lead to higher prices.

Benchmark oil for February delivery rose $1.86 to settle at $91.11 a barrel on the New York Mercantile Exchange.

Heating oil fell 5.27 cents to $2.6088 a gallon, gasoline rose 2.41 cents to $2.4784 a gallon.

Natural gas rose 8.7 cents to $4.476 per 1,000 cubic feet. - AP

Latest business news from AP-Wire

The Star Online 12Jan2011

Gold Bull Market Will Continue in 2011

BCA Research: gold bull market will continue in 2011 - Barry Sergeant - MineWeb

JOHANNESBURG -

For many years, "gold bugs", a rare but widely scattered species, have led the charge in preaching the irresistible advantages of owning gold bullion, above all else, except for more gold bullion. As in the case of most commodities, the price of gold bullion has been on the rip, broadly speaking, for nearly a decade, rising nearly six fold to recent all time highs of just over USD 1,431/oz.

But in percentage terms, much the same can be said for most commodities. The past decade has been characterised by ferocious increases in demand for raw materials from developing nations, and a protracted bear market for the dollar. During the 2008 credit market crisis, however, gold bullion fell less (in percentage terms) than other commodities.

The apparent extra sheen that gold offers some investors tends to heighten the possibility - in the eyes of the same investors - that the metal's price could rise infinitely. Senseless as the idea may seem, it has created endless debate over such a possibility. For doubters, the Bank Credit Analyst, a (thankfully) independent, Canada-based, research group, has published an update on the outlook for the yellow metal, and concludes with the hands-on notion that "the gold bull market will continue in 2011".

The gold bull market, BCA Research argues, "has been driven by the potential inflationary implications of current large fiscal deficits and central banks that are prepared to stop at nothing to prevent deflation.

"It may be several years before developed-world real interest rates return to the norms of earlier decades, especially in the US. In this environment, gold will continue to be an excellent insurance policy and should continue to fare well when measured against the major currencies".

Short-term interest rates in the developed world are at historic lows - below 1%, for instance, in the US, Japan, Britain and Canada, and just above 1% across the Eurozone.

In his launch essay for 2011, Bill Gross, MD of PIMCO, the world's biggest bond fund, based in the US, argues that "one of the consequences of perpetual trillion dollar deficits is the need to finance them, and at attractively low interest rates for as long as possible".

Gross says that annual (US) budget deficits in the trillions of dollars "add a like amount to the stock of outstanding dollars, resulting in currency depreciation, higher import inflation, and a degradation of dollar based assets in global financial markets. We become less, not more wealthy, losing our heads while we ‘hold on firmly and go on with (our) business'!"

The reference to dollar based assets has particular implications for commodities, given that most are quoted, and traded, in dollars. Thus the six fold increase in gold bullion prices over the past decade, which refers to dollar prices, will necessarily translate to different returns in other currencies. Returns for dollar gold bullion have not matched, for instance, those measured in yen or Euros.

Currently, the Federal Reserve, the US central bank, is both holding short term interest rates near zero, and, as Gross puts it, "engaging in Ponzi like Quantitative Easing II purchases of longer dated Treasuries in the open market". The combination, argues Gross, "offers bondholders about as an attractive situation as the one facing a male praying mantis: zero percent interest rates if you stay in cash, or probable principal losses if you take durational risk by buying 5 and 10 year maturities".

Eventually, as reflationary policies take hold, long-term bondholders, as Gross puts it, "lose their heads (and a portion of their principal as well), as yields rise to reflect higher future inflation. Bondholders' metaphorical warning: don't go near those longer term bonds you fool'."

Back to gold bullion, BCA Research argues that it is hard to make the case that gold is currently "a crowded trade". Many institutional and retail investors agree with the gold bull case but have been slow to act, argues BCA Research, "even as their faith in conventional stocks and bonds has ebbed. Indeed, based on investor meetings and anecdotal evidence, we estimate that the average portfolio allocation to gold is around 1%.

"This suggests that there is plenty of pent-up demand which could still flow into gold and related shares. True, the gold bull market will proceed in installments, not a straight line. It would not be a surprise to see gold suffer occasional selloffs of perhaps a few hundred dollars at a time during 2011.

"We would broadly view these selloffs as opportunities to boost core holdings. The bottom line is that gold is a potential mania candidate and expect good returns in this metal in 2011".

Source: http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=117892&sn=Detail&pid=102055

MASA YANG BAIK UNTUK BELI EMAS

International Forecaster January 2011 (#3) - Gold, Silver, Economy + More - Bob Chapman - Gold Seek

Bob Chapman, The International Forecaster

Gold has become again the world reserve currency. It is just that few realize the transition has already taken place. For the past 11 years every major currency has fallen in value versus gold from 13 to 20 percent annually. Versus silver, the figures range from 17 to 25 percent. This is a clear-cut ominous trend of a flight away from all currencies to gold and silver and quite a flight to safety. This movement by worldwide investors cannot be ignored. There obviously are many people that see what we see and in that process are dumping currencies for gold and silver related assets. Unfortunately, Americans are far behind in these changes with only 2% of the population participating. Ladies and gentlemen the second stage of the gold and silver bull market has just begun. Prices have fallen from their highs, what a great time to buy.

Source: http://news.goldseek.com/InternationalForecaster/1294594200.php