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A Quick Note on Gold Price Prospects

We are advising clients and subscribers to NicholsOnGold to expect another up-week for gold . . . driven largely by geopolitical anxiety over the conflict between Russia and Ukraine and the likely outcome of Sunday’s referendum on the future of Crimea. Gold is once again performing its historical function as a hedge and insurance policy against geopolitical risks and the vulnerability of other asset classes including equities and bonds.  Gold is also performing well vis-a-vis the dollar and most other currencies.   ...

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The Russian Bear – Bullish for Gold

So far, the gold market has largely ignored the East-West clash over Ukraine and control of Crimea. With gold recently trading mostly within the $1,340–to-$1,350 range, we’d guess the Ukraine/Crimea crisis has added no more than $10 or $15 an ounce to the yellow metal’s price.  But there is the potential for larger, more dramatic price movement in the weeks ahead. For the next few days, world financial markets will be anticipating the March 16th referendum in which Crimea will likely vote to secede from Ukraine and join the Russian Federation.  While this may already be reflected in the ...

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Russia Drives Gold

Russian saber-rattling sent gold over $1,350 an ounce earlier this week, its highest price in four months.  But, contrary to many press reports, it was neither safe-haven demand nor physical buying that fueled gold’s short-lived price advance. Instead, it was institutional speculators and short-term traders – among them the trading desks at some of the gold-dealing banks – who rushed reflexively to buy gold futures and other “paper gold” derivatives . . . and then sold quickly to take profits as the crisis seemed to abate.  Meanwhile, buyers in China and India, the two largest physical ...

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Easy Money – The Elixir of Gold

So far, 2014 has been a year of recovery for gold.  Trading recently near $1,320 an ounce, the metal is already up some 10 percent from its 2013 year-end price of $1,201.50 in the London bullion market. Gold’s improvement was apparently quite a surprise to many of the most prominent analysts and investors who, forecasting the price through a rear-view mirror, expected prices to head further south.  With gold possibly on a sustainable upswing, they are now busy jacking up their gold-price targets. Although gold has recovered smartly in recent weeks, an uninterrupted upswing to ...

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India Gold: Hot Curry on this Year’s Menu

In this “NicholsOnGold” commentary, we take a look at the gold-market situation and outlook for India, long the world’s biggest gold-importing country. The precipitous fall in gold imports during 2013 – from an annual rate of roughly 1000 tons per month early in the year to an annual rate of only 250 to 300 tons late in the year – was a powerful negative influence on the metal’s price in world markets during the past year, its impact on price being both physical (in terms of the overall global supply/demand situation) and psychological (in terms of investor sentiment). A relaxation of ...

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China’s Central Bank Buys Gold on the Sly

Bullish news may soon be coming out of China.  We hear that the country’s central bank will soon announce a substantial increase in its official gold holdings, bringing the total to some 2,710 tons at the end of last year. NicholsOnGold has long held the view that China’s central bank, the People’s Bank of China (the PBOC), has been surreptitiously adding to its official gold reserves. The PBOC reported in April 2009 that its official gold reserves stood at 1,054 tons – and it has not reported any increase in official gold reserves since that announcement nearly five years ago. Now, ...

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Gold, ETFs, the Fed, and Equity Valuations

Over the past year or two, as the broad equity indexes moved from one high to the next, institutional money – seeking higher quarterly returns – has been moving out of gold and into stocks. This institutional flight from gold by Western investors may have been the single-most important factor weighing on gold prices in the past couple of years – and it owes much to the introduction and popular acceptance of gold exchange-traded funds over the past decade. ...

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Gold This Week — Eyes on U.S. Monetary Policy

Precious metals and the broader financial markets continue to react to the latest economic news, both statistical and political, with traders and investors guessing how each new bit of information on the economy may affect the Fed’s decision – when and by how much – to cut back, or taper, its $85 billion per month bond-buying program. It has become the accepted wisdom of the markets that rosy economic prospects increase the odds that the central bank will choose to begin tapering sooner rather than later . . . and expectations of reduced monetary stimulus have been one of the key bearish ...

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The Volcker Rule: Implications for Gold & Silver

The Volcker Rule, banning the largest U.S. banks from engaging in speculative trading, has now been approved by the U.S. financial regulatory agencies – with important implications for gold and silver. The Rule, a provision of the 2010 Dodd-Frank Wall Street Reform Act, forthwith prohibits banks with federally insured deposits from trading activities undertaken for their own benefit. ...

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Gold Slumps as Wall Street Soars

With the Dow topping 16000 and the S&P500 index reaching 1800 – both psychologically important levels – gold continues to be an innocent victim of the frenzy on Wall Street. Trading around $1245 an ounce the metal’s price is off some 25 percent from the start of 2013 and is 35 percent below its September 2011 all-time high. Reflecting the super-stimulative monetary policies currently pursued by the U.S. Federal Reserve, the Bank of Japan, and the European Central Bank, U.S. and world equity markets are achieving new all-time highs as more and more investors jump on the stock-market ...

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