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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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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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Gold This Week — Eyes on U.S. Monetary Policy

Precious metals and the broader financial markets continue to react to the latest economic news, both statistical and political, with traders and investors guessing how each new bit of information on the economy may affect the Fed’s decision – when and by how much – to cut back, or taper, its $85 billion per month bond-buying program. It has become the accepted wisdom of the markets that rosy economic prospects increase the odds that the central bank will choose to begin tapering sooner rather than later . . . and expectations of reduced monetary stimulus have been one of the key bearish ...

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Gold Slumps as Wall Street Soars

With the Dow topping 16000 and the S&P500 index reaching 1800 – both psychologically important levels – gold continues to be an innocent victim of the frenzy on Wall Street. Trading around $1245 an ounce the metal’s price is off some 25 percent from the start of 2013 and is 35 percent below its September 2011 all-time high. Reflecting the super-stimulative monetary policies currently pursued by the U.S. Federal Reserve, the Bank of Japan, and the European Central Bank, U.S. and world equity markets are achieving new all-time highs as more and more investors jump on the stock-market ...

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Tapered Expectations

Long constrained between $1,180 and $1,300 an ounce, gold has finally broken out on the upside, only to find itself trading within a new, albeit higher, range. Gold now enjoys a "floor" of solid support at $1,300 with initial support kicking in around $1,340. On the upside, initial resistance kicks in around $1,385 and continues up to the psychologically important $1,400 level - but, as outlined below, this "ceiling" could prove vulnerable in the weeks ahead. ...

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Gold Market Update

Although continued “uncertainty” and “caution” remain the gold market’s watchwords, the odds favor further gold-price recovery in the weeks and months ahead -- despite continuing attempts by large-scale speculators and institutional traders,  driven by computer models and momentum indicators, to knock gold prices lower. For the moment, we believe gold prices are still in a “bottoming phase” and may have more work, technically speaking, around recent levels before breaking through overhead resistance and moving substantially higher.   ...

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Suffering Gold

Gold continues to suffer under a cloud of bearish expectations.  Its price has been trending lower for some 20 months now - and, at recent lows, it is off some 30 percent from the September 2011 all-time high of $1924. A growing number of investors, analysts, and journalists are already writing obituaries for the decade-long bull market and foresee only a grim future for the yellow metal.  These naysayers, most prominently economist Nouriel Roubini who gained some renown for predicting the financial-market debacle of 2008, point to a number factors to support their bearish ...

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Captive Gold: A Quick Note on the Current Market

For now, gold remains captive to the flow of U.S. and global economic indicators and prospects . . . especially those that may influence Federal Reserve monetary policy. With the U.S. economy far from a satisfactory and self-sustaining recovery, the news is likely to become increasingly positive for gold -- with diminishing expectations of imminent "tapering" (that is scaling back the Fed's monthly bond-buying program) eventually replaced with talk of additional monetary stimulus of one sort or another. Home in the Range At the moment, however, gold appears range-bound between $1370 and ...

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GOLD: A Quick Note on Fed Policy

Gold prices moved higher this morning in anticipation of Fed Chairman Bernanke's testimony today before the Joint Economic Committee. Recent speeches by other Fed officials in the past few days suggest the Fed will leave the door open to stepped-up quantitative easing should the economy falters or if inflation remains below target. Any talk of more QE from Bernanke this morning could give gold enough juice to re-test overhead resistance around $1400 . . . and possibly move higher. See my recent posts on NicholsOnGold.com for more on Fed policy and the economy. ...

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Fed Speak: Implications for Gold

This week's gold-price action reflects a market once again range bound, searching for direction in an uncertain economic environment.  For sure, the risks of further gold-price retreat remain high.  Much depends on the market's sense of prospective Federal Reserve policies. This Wednesday the financial markets will be listening carefully to the latest Fed speak on monetary policy and the economy for clues. First off, the FMOC will be releasing the minutes of its April policy-setting meeting -- always an interesting document to Fed watchers who, like the Greek oracles, look for meaning in ...

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