Archive for March, 2009
Although gold remains vulnerable in the short term, the risk/reward ratio increasingly favors the long side — and we are advocating more aggressive investment purchases should gold again dip below $900 an ounce.
Even if the metal first weakens, the overall picture is looking a little brighter and, before long, we could see the gold move to a somewhat higher trading range.
Importantly, the selling of old jewelry and other gold-bearing items in many global markets abated when prices recently dropped briefly below $900. And, more recently, even with prices trading in the $920 to $940 range, the quantity of recycled metal returning to the market is diminishing.
Scrap Update
India, in years past, has been the single-largest gold-consuming nation with annual imports often over 600 tons (19.3 million ounces). But so far this year, India has imported virtual no gold and may have briefly become a small net exporter — some in the form of old coins that may be exported legally . . . and some in the form of melted scrap that may not be legally exported but is smuggled by high-speed boats across the Arabian Sea to Dubai and other Arabian Gulf ports.
On a positive note, however, our friends in the Mumbai gold trade expect imports will soon resume, as the traditional festivals and wedding seasonals turn more hospitable to gold demand. Nevertheless, imports, which fell to roughly 400 tons last year, may amount to no more than 200 to 250 tons this year as much of the local demand for investment-grade jewelry will be met by local supplies from recycled metal.
Read the rest of this article »
Filed under: Gold Briefs | American Precious Metals Advisors, gold, gold investment, gold price, India, Jeffrey Nichols, scrap, Secondary Supply, Turkey|3 Comments
China and Russia are agitating for a demotion of the dollar in the world monetary system with a new “super-sovereign” basket of currencies, possibly even including gold as the Russian’s have suggested, gaining stature as the new lynchpin.
Though such talk may hearten the advocates of gold, the possibility of any sudden change in the world monetary system seems remote, if only because no alternative can provide the, necessarily very large and very liquid capital markets necessary to accommodate reinvestment of reserve assets now held in U.S. dollars.
And, for all their talk, the Chinese, the Russians, and the Europeans would not welcome the revaluation of their currencies (and loss of exports) that would accompany any move away from the dollar.
Whether or not there is much discussion of a new international monetary order at this week’s meeting of the Group of Twenty, the topic will surely come up again and again in the months and years ahead . . . and, if it gains traction, gold could be a surprising beneficiary.
Filed under: Gold Briefs, Notes and Comments | American Precious Metals Advisors, central banks, China, gold, gold standard, IMF, Jeffrey Nichols, Russia, SDR, U.S. dollar|1 Comment
This week’s news from the U.S. Federal Reserve promising massive quantitative easing in the months ahead greatly increases our confidence in the long-term bullish outlook for gold and silver. Since the first recorded use of currency by King Croesus some 2,500 years ago, there has NEVER been a rapid increase in the supply of money that has not, within a few years, been followed by an acceleration of inflation. Why should the current experience be any different!!
Our forecast that gold will reach a cyclical high over $2500 and silver will exceed $50 an ounce in the next few years looks increasingly more likely with each step taken by the U.S. central bank and other economic policymakers to jump-start the economy.
Where Next for Gold
Does this mean that gold will suddenly be moving to new historic highs?
Gold prices had been softening in recent days, dropping as low as $883 in world markets and looked vulnerable to further price erosion just before the Fed announcement. Then, a rush of buying and much short covering in a thin market took the price quickly up to $954 before it settled back a bit. In next day trading, gold seems to have defined a $950 to $960 trading range — but it wouldn’t surprise me to see it slip $10 or $15 lower in the days ahead.
Importantly, the latest price action now leaves gold in a much stronger technical position with well-fortified support under the market in the $880 to $900 range. There’s a good chance we will never again see gold below these levels.
What of the upside? Longer term — as I have been writing in these pages for over a year — we are going to see gold more than double and silver more than triple.
Read the rest of this article »
Filed under: Gold Briefs | American Precious Metals Advisors, China, economics, economy, gold investment, gold price, India, inflation, Jeffrey Nichols, monetary policy, money supply, U.S. dollar|No Comments
Gold’s tumble in recent days, now about 9.5 percent from its late-February high just briefly over $1000 an ounce, is no surprise to readers of NicholsOnGold.com. Although we remain bullish for the long-term and foresee more than a doubling of the gold price in the next few years, the immediate picture is less rosy . . . and the yellow metal remains vulnerable to further short-term selling.
A number of factors have contributed to gold’s decline in the past week and may remain influential in the weeks ahead:
•   First and foremost, the market has had to absorb an absolutely fantastic flow of old scrap. Record high prices in local currencies around the world — with a little help from falling incomes and rising unemployment — has prompted millions of people to cash in their old gold jewelry. The story in India, historically the world’s largest national gold market, often absorbing 700 to 800 tons a year, has been well told in the media — but people everywhere are cashing in their old gold jewelry. Even here in the United States, homemakers and working women are holding gold parties where they and their friends sell unwanted jewelry to itinerant scrap buyers.
What matters are prices in local currencies. Indian rupee prices, for example, are at historically high levels — so the impulse to sell is stronger than one might imagine from a U.S. dollar perspective . . . and this picture is similar in many countries throughout Asia, the Middle East, and Europe.
Read the rest of this article »
Filed under: Gold Briefs, Notes and Comments | American Precious Metals Advisors, economics, economy, ETFs, Exchange-Traded Funds, gold, gold investment, gold price, inflation, Jeffrey Nichols, monetary policy, money supply, U.S. dollar|No Comments
||
