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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 Explained: A Brief Note on Recent Market Action

Gold's failure to sustain its recent price gains, gains achieved over the past few weeks, triggered a wave of computer-generated technical selling on Monday morning that, in minutes, knocked gold prices back down to psychologically important technical support levels just above $1300 an ounce. I do not subscribe to any of the various conspiracy theories to explain gold's latest tumble, even though the recent news and gold-market fundamentals suggest the yellow metal should be moving higher. (For more on this bullish view, see "Gold: Now is the Time," NicholsOnGold, July 2, 2014.) The ...

India Spicing Up the Gold Market

Readers of NicholsOnGold know we have long been of the view that robust Indian gold consumption in the years ahead would be an important pillar supporting significantly higher prices in the world marketplace. But since mid-2013, the Indian government’s anti-gold policies have put this scenario on a temporary hold as buyers within India have been reluctant to incur the high cost of the government’s punitive anti-gold policies. ...

Dark Pools, Program Trading and the Price of Gold

(This report first published and posted on May 15, 2013 — but is even more timely today!)   Day after day, gold trading has been, and continues to be, dominated by institutional trading in the “dark pools” where over-the-counter dealer and interbank activity goes largely unseen. Don’t under-estimate the influence of trading in the dark pools where “invisible” institutional trading can – in a flash – knock gold to the mat, leaving most gold-market participants and observers wondering what happened. Indeed, much of this activity in the interbank and dealer market goes unreported – but ...

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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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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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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Rosland Capital Review by Jeffrey Nichols – Trust is Necessary

You may have noticed elsewhere on this website, mention of Rosland Capital. Rosland is a retail dealer in gold and silver coins and investment bars . . . and they’ve been a client of mine for over five years. Officially, I’m “Senior Economic Advisor” to Rosland Capital. But my relationship with Rosland goes deeper than that. CEO and founder of Rosland, Marin Aleksov, has become a trusted friend and colleague. I’ve been in the gold business as an advisor, consultant, economist, and market researcher for over 40 years. My clients have included some of the biggest names in the gold world – ...

The Fed Tapers and Gold Topples

Surprised?  So am I, both by the Fed’s decision, announced this past Wednesday, to taper back its easy-money policies of the past year . . . and, even more so, by the subsequent fall in gold and silver prices. In fact, Federal Reserve Board Chairman Ben Bernanke surprised many investors, traders, and analysts, announcing the Fed would cut back its monthly asset purchases by a relatively modest $10 billion in January – and continue “in further measured steps” if the economic recovery stays on track. To understand my own expectations ahead of the Fed announcement, read my last commentary ...

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