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Macro-Economics and the Future Price of Gold

The future price of gold will likely reflect a wide variety of prospective developments.  That's what makes gold so interesting . . . and so difficult to predict. The intensity of private-sector demand in China, India, and elsewhere in Asia is high on my list of gold-price influencers. Similarly, the magnitude of net central-bank reserve acquisitions will almost certainly play an important role. So too could the unfolding economic and political situation in Europe. Alternatively, gold prices may wind up hinging most of all on some black swan or unpredictable event in the ...

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A Brief Note on CENTRAL BANK GOLD

Gold is a now seen as a bargain by some central-bank reserve managers who are buying more at low price levels -- but don't expect central-bank gold demand to quickly send the price sharply higher. Russia and China have very likely been scale-down buyers in recent days. Both have been buying with some regularity for the past few years. It's now in their best interest to acquire as much as they can at low price levels but avoiding quantities large enough to send prices quickly higher. Buying to hold for and bequeath to future generations -- and, importantly, to advance their own strategic ...

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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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GOLD: FOLLOW THE MAN IN THE STREET . . . AND IN THE SOUK

Gold is inching closer to an upside breakout building good technical support between US$1650 and US$1690.  Sooner or later $1700 will become the new floor instead of the old ceiling. In the short run, the institutional speculators and trading desks at the big banks and hedge funds are making good money trading the range based on technical trading models and the latest bit of news -- economic or political -- out of Washington. At the same time, most professional gold watchers in the U.S. and Europe seem to have their eyes focused on prospective Fed policy and fiscal policy disarray in ...

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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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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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