Archive for Notes and Comments
Gold may have moved too high too soon . . . but whether or not the metal manages to recoup and hold onto recent gains near or above the $1000 an ounce level in the days immediately ahead . . . we are nevertheless looking for new highs (above $1032) in the closing months of the year with gold possibly at $1200 or $1300 before the New Year.
Key One: India
I’ve just returned from India, one of the most crucial markets for gold with a long history and big appetite for the yellow metal. What happens next for gold may depend most on the strength — or weakness — of Indian buying. And, Indian buying is both price sensitive and in sync with various holidays, festivals, and the wedding seasons. Read the rest of this article »
Filed under: Gold Briefs, Notes and Comments | American Precious Metals Advisors, China, gold, gold mining, India, Jeffrey Nichols, mine production, monetary policy, Sovereign Wealth Fund, U.S. dollar|No 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
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
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