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Gold-Price Weakness: More March Madness?

Frankly, I’ve been surprised by the recent decline in the price of gold.  I expected a stronger finish to the first quarter with gold prices somewhat higher – possibly even breaking out above the $1,400 an ounce level by the end of March. Instead, gold prices have softened considerably over the past couple of weeks – off nearly $100 an ounce from its mid-March highs and down three percent in just the past week.  On a more positive note, gold is still up 7.5 percent for the year to date. With gold now hovering around the 200-day moving average and short-term momentum now moving into ...

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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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Gold Mine Production: Who Cares?

Gold-mine output and production costs may mean a lot to gold miners and to investors in gold-mining equities, but should they mean a lot to the rest of us? Total global gold-mine output (primary supply) will make headlines this year, hitting a new record with “reported” annual production just over 3000 tons (about 96.5 million ounces). Actual mine production is probably somewhat higher taking into account unreported output from informal producers and under-reporting by China and possibly a few other countries. The continuing growth in worldwide mine production – even in the past year ...

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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: Audacious Expectations

It’s been a rough few years for gold investors – but despite the yellow metal’s fall from grace, I remain solidly bullish on gold’s long-term prospects.  In my book, the metal’s price will, more likely, reach $3,000 or even $5,000 an ounce in the years ahead than sink beneath $1,000 an ounce. That said – and despite gold’s recent resiliency – the short-term risks most certainly abound.  In other words, gold is not out of bear country just yet.  ...

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