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Think Long-Term

Although I expect gold prices to rise sharply by the end of the year, possibly even testing its all-time high near $1924 an ounce, I’m the first to admit that short-term forecasts are highly uncertain. I’m much more confident about the long-term prospects for gold. Indeed, looking out towards the end of the decade and beyond, I believe the metal’s price will rise to a multiple of the currently prevailing price. ...

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The Dollar Reigns Supreme . . . But For How Long?

Having failed in its attempt earlier this month to move above $1,300 an ounce, gold is once again looking for sustainable support under the technically and psychologically important $1,200 level. How quickly things can change in world financial markets: Just a few weeks ago it looked like gold might break-out on the upside on the back of bullish geopolitical and global economic developments – and establish a new floor price around $1,300 an ounce. But, having failed in its attempt to move up, we now wonder (along with what must be a majority of gold-market analysts and participants) if gold ...

GOLD: Sound & Fury . . . But What’s It All Mean?

Gold-price volatility so far this year has been a reflection of short-term speculative activity by a relatively small group of hedge funds and other institutional traders taking relatively large positions in “paper” markets.   In paper markets, no physical gold actually changes hands.  Instead, trading of futures and forward contracts, as well as other IOUs between large dealers and traders, governs much of the short-term day-to-day (and even more so much of the intraday) price fluctuations. Meanwhile, “physical" demand continues to grow over time — with buying from the gold-friendly ...

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Gold: Any Day Now . . .

Any day now, gold could find itself in a sustainable long-term uptrend – or not. What remains true is that near-term gold-price prospects remain uncertain with the continuing possibility of sizeable price moves in either – or even both – directions. What also remains true is the high probability that the yellow metal’s price will be considerably higher at this time next year – with a sustainable long-term upswing already underway. ...

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Gold: Short-Term Risk vs. Long-Term Opportunity

Autumn has been a cruel season for gold investors. In contrast to some anticipated seasonal bump up, the yellow metal’s price has been driven lower by bearish technical indicators and excessive negative sentiment among a small number of large-scale institutional speculators – bullion banks, hedge funds, program traders and the like – trading mostly in futures and over-the-counter “paper” markets for very short-term gains while remaining indifferent to the metal's long-term bullish fundamentals. Despite this dismal performance and continuing bearishness among many traders, gold should still ...

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GOLD — Confounded by the Machines and Dark Pools

Gold continues to confound, dropping another $25 an ounce this morning as technical and computer-driven program trading triggers selling on U.S. derivative markets, all despite favorable fundamentals and what should be seen as favorable economic and geopolitical developments. Gold Lower Despite Bullish News This morning's dispatches from India and China, the two biggest gold-consuming nations, report that demand in these markets continues unabated . . . and coin dealers report still-strong retail demand for bullion coins and small bars in the Western markets. News from the Middle East -- ...

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Monetary Policies Favorable for Gold-Price Recovery

Global financial markets will be taking their cues from U.S. Federal Reserve and European central bank policy meetings to be held by the Fed on Tuesday and Wednesday and by the European Central Bank (the ECB) on Thursday. The consensus among economists who pay attention to these things suggests there won't be any significant change in Fed policy . . . but, in contrast, there is a strong belief that the ECB will cut European interest rates from their already record low levels. ECB Expectations The ECB has seen a disappointing string of European economic data over the past several weeks. ...

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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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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 ...

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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