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GOLD-MARKET INSANITY

Gold prices were driven insanely lower today -- not by market fundamentals or the latest readings on the U.S. and global economy -- but by technical and computer-driven program trading mainly in futures, forward, and options markets. If anything, this morning's U.S. economic indicators for retail sales, consumer sentiment, and well-behaved producer prices should have had a positive effect on gold prices. News of a weaker-than-expected economy -- particularly with inflation indicators subdued -- should shift expectations of future Federal Reserve monetary policy toward more, not less, ...

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FUELING GOLD’S FUTURE ASCENT

Gold has certainly taken a beating in recent days, giving up all of the gains attained during the Cyprus crisis -- and down nearly 20 percent from its all-time high back in September 2011. And, now having suffered two consecutive quarterly declines for the first time since early 2001, some analysts and investors are abandoning the yellow metal, proclaiming that gold's decade-long bull market has run its course. I'm no "gold bug" – but I couldn't disagree more . . . based on solid reasoning and objective analysis. Short-Term Shock Therapy What the gold market needs to move higher is a ...

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GOLD BEARS BEWARE

Gold bears have been a gleeful group of late, pointing to the recent decline in gold exchange-traded fund holdings as evidence of investor disinterest in the yellow metal.  Gold bears also see the market's rather lackluster performance over the past year and a half - and the failure of prices to move higher - as further evidence the decade-long bull market has run its course. Yes, gold has retreated some 20 percent from its September 2011 all-time high (near $1,924 an ounce) to its subsequent low (just over $1,520). Yes, Gold ETFs have seen some substantial and high-profile withdrawals in ...

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GOLD: Talking Points

In my view, there is a very high probability gold will surpass $2000 an ounce by year-end 2013 - and it could go much higher.  Moreover, by mid-decade, the metal's price could double or even triple from recent levels. Looking backward, gold is off some $250-$260 from its September 2011 all-time high of $1924 an ounce.  This is a decline of roughly 13 percent - in line with past bull-market corrections. In the weeks ahead, much depends on institutional speculators at the big banks and hedge funds.  In the past year or so, these large-scale players have made good money trading futures, ...

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Musings on Gold

I've been following gold professionally for some 40 years, ever since joining Citibank as an international economist back in 1973.  One of my early assignments was to write a report for senior management on the future role of gold in the world monetary system.  Gold had already risen from $35 an ounce in August 1971, when President Nixon ended the U.S. dollar’s official convertibility into gold, to $120 an ounce in mid-1973 when I joined Citibank as one of the most junior economists. Though I thought the price of gold could rise, if only because its price had been suppressed and private ...

GOLD IN AN UNCERTAIN WORLD

(Excerpts from my speech to the 7th annual CHINA GOLD & PRECIOUS METALS SUMMIT, Shanghai, China, December 5th through December 7th, 2012) Gold in recent months has been stuck in a trading range between $1675 and $1750 an ounce - disappointing many bullish investors and quite a few gold-market analysts (like myself) who had expected the yellow metal to be ending the year approaching - or even exceeding - its all-time high-water mark near $1924 recorded back in September of 2011. Recent attempts to rally higher have been thwarted by stepped-up speculative selling and softer physical ...

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The Fed Speaks . . . and Gold Listens

Gold rallied this past week, showing some of its old spunk, first breaking through overhead resistance around $1,625 an ounce . . . and then piercing through the $1,650 level on Wednesday's news from the Fed that more monetary stimulus could be in the cards. As in recent months, gold's price action has very much reflected buying and selling by institutional traders and speculators, driven by high-frequency program trading that rely heavily on momentum indicators and technical signals, as well as expectations of prospective U.S. monetary policy, Eurozone sentiment, and the latest move in the ...

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GOLD – Dark Clouds, Bright Skies

Disappointing news for the U.S. economy is good news for gold investors. Recent economic data show an economy that is "stuck in the mud," to quote Fed Chairman Ben Bernanke.  And, in response to signs of a slowing economy, the U.S. central bank is, sooner or later, likely to embark on another round of monetary easing. In fact, the recent gold-price rally that took the yellow metal back over the psychologically important $1,600 an ounce level reflects rising market expectations that the Fed will announce further economic stimulus following the July 31-August 1 Federal Open Market Committee ...

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GOLD: Still Waiting for the Fed

Gold shed more than $50 an ounce in a blink following last Wednesday’s news from the Federal Reserve that America’s central bank would not, at least not now, initiate another round of quantitative easing, opting instead for more muted monetary stimulus by extending its “Operation Twist” through year-end. Operation Twist, in which the Fed sells short-term U.S. Treasury securities from its portfolio and simultaneously purchases longer-dated Treasury notes and bonds, is intended to stimulate the economy by lowering medium- and long-term interest rates without actually speeding up growth in the ...

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Central Bank Gold

A recent survey of central-bank reserve managers predicted that the most significant change in their official reserve holdings over the next 10 years will be their intentional accumulation of gold. In fact, central-bank reserve managers are already moving in this direction, expanding their reported bullion reserves by 439.7 tons last year - the biggest annual increase in almost five decades . . . and this doesn't count significant purchases that remain unreported. Central banks, taking advantage of depressed market prices, were again big buyers of gold this past March according to ...