Archive for February, 2010
The snap-back in the U.S. dollar gold price this past week to $1,100 an ounce may mark the beginning of a new upward phase in the metal’s long-term bull market.
Neither the announcement of prospective IMF gold sales nor the U.S. Federal Reserve’s quarter-point rise in its discount rate had more than a fleeting affect on precious metals markets . . . and neither will derail gold’s ascent to new record highs later this year.
Gold’s own positive fundamentals, the high level of investor interest in key geographic markets, and global monetary economic developments promise to push the yellow metal higher from recent levels first to $1,150, then $1,200 - and I expect we’ll see gold touch $1,500 an ounce before year-end 2010.
It is noteworthy that as the greenback rose against the euro in recent days, gold’s dollar-denominated price still managed a healthy recovery. Perhaps this is the signal we’ve been expecting, the signal that gold can - and will - move higher even as the dollar is also advancing against the major Western industrial world currencies. Read the rest of this article »
Filed under: Gold Briefs | American Precious Metals Advisors, central banks, China, economics, economy, gold, gold investment, gold price, IMF, India, inflation, Jeffrey Nichols, monetary policy, money supply, sovereign risk, Sovereign Wealth Fund, U.S. dollar|No Comments
Regardless of the near-term prospects for gold, the long-term fundamentals promise substantial appreciation later this year and beyond. We remain firm in our conviction that gold prices will touch or surpass $1,500 in 2010 - and continue to move higher in subsequent years.
Opportunity Knocks
Gold at recent price levels offer investors and savers without a “core” position in the physical metal an opportunity to buy insurance against the very real possibility of future stock and bond market declines, accelerating inflation and a shrinking dollar, and turmoil in U.S. and world financial markets.
In contrast to what most “mainstream” economists believed only a few weeks ago, the industrial world economy is not improving. Instead, new cracks in the foundation are appearing. Moreover, as we have discussed in recent reports, the U.S. and other industrial economies will soon be heading into a “double dip” with declining business activity, declining consumer spending, declining employment, and declining equity markets.
This is a recipe for stagflation - a prolonged multi-year period of low growth with high inflation. And, as we saw in the decade of the 1970s, the coming stagflation will again be accompanied by a sustained and significant appreciation in the price of gold and its sister metals, silver and the PGMs, to levels that most cannot yet imagine.
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Filed under: Gold Briefs, Reports | American Precious Metals Advisors, central banks, China, economy, euro, European Central Bank, fiscal policy, gold, gold investment, gold price, IMF, India, inflation, Jeffrey Nichols, monetary policy, money supply, Secondary Supply, sovereign risk, U.S. dollar|No Comments
It’s now nearly two months since gold registered an all-time high of $1,227 an ounce, following a five-month run during which the metal rose more than $300 an ounce. From a long-term perspective, this is a remarkable 380 percent trough-to-peak gain from its early 2001 cyclical low point of $255.
Gold’s strength last year reflected a number of factors: (1) record worldwide private investment demand (thanks, in part, to rising inflation expectations, pent-up demand from China, and the popularity of new gold investment vehicles in various markets); (2) net official purchases (after two decades of net selling) as some central banks sought insurance against further devaluation of their dollar-denominated assets; and (3) at times, a weaker U.S. dollar.
Gold and the Dollar Continue Their Dance
Since then, mostly reflecting the “strengthening” U.S. dollar, the yellow metal eased off a bit, falling as low as $1,075 last week - a correction of some 12 percent - before bouncing back at the beginning of February.
The catalyst to dollar strength - measured against the euro, Europe’s common currency, or a basket of key currencies - has been heightened fear of sovereign debt default.
First it was doubts about Dubai-government guaranteed debt that rattled the markets and gave the dollar a boost.
More recently, market fears that Greece will be unable to meet its public debt obligations - and talk that Ireland, Portugal or Spain may follow - has pushed the euro to its lowest point in six months and the dollar to its highest level in five months against a basket of currencies.
It baffles me that so many foreign-exchange traders and institutional investors around the world think of the dollar as a “safe haven” at a time of currency-market turmoil and continued U.S. economic and financial market crisis. Just look at the facts:
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Filed under: Gold Briefs, Reports | American Precious Metals Advisors, China, economics, economy, fiscal policy, gold, gold investment, gold price, India, inflation, Jeffrey Nichols, monetary policy, money supply, Quantitative Easing, U.S. dollar|No Comments
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