Regrets and the Gold Price

Should you sell if your gold position is "losing money"...?

I HAD this conversation with my friend's son, says Jeff Clark, editor of Big Gold at Casey Research.

He's a bright but relatively young investor. He had purchased some gold based on some things I'd told his father. Shortly afterward, the price dropped hard. As you'll see, he was not very happy with my advice and said so in an email to me. So I called him...

Me: Sounds like you're upset.

My friend's son: Yeah, that's putting it mildly. What the hell am I supposed to do now?

Me: Because the Gold Price has dropped?

My friend's son: Yes! It's down 15% in a month! I thought you said this was going to be a good investment.

Me: It is. And it will be. You might even consider buying more here if you have the funds.

My friend's son: I have some other money, but why would I put it in gold? It's losing money.

Me: Because it's on sale. Because it's cheaper now than when you bought it. And especially because none of the reasons for buying it have gone away.

My friend's son: That doesn't mean it's going to go back up.

Me: As I told your dad, there are no guarantees, but I think it will have to go higher. Either way, it will hold its purchasing power over time. We're holding it as an alternate currency, a more sound form of money that can't be debased.

My friend's son: Yeah, well, my money just got debased, big time. It needs to go up 20% for me just to get back to even.

Me: Five years from now your Dollars will have lost at least 10% of their value, based just on current trends. There's a good chance it will lose more than that. And gold will probably rise more than 10% a year. At some point it''s likely to go into a bubble.

My friend's son: [silence.]

Me: Look, I know you're upset, but I'd hate to see you bail. This is one of the best investments we can make this decade.

My friend's son [relenting a little bit]: You really believe that.

Me: I can't promise you anything, but yes, I do.

My friend's son: And that's because you think inflation is coming.

Me: It's for a lot of reasons, and that's one of them. Inflation is virtually baked in the cake; the Dollar's long-term problems will be impractical to resolve; and the global economy is on high alert. This is exactly the kind of circumstances gold is for.

My friend's son: Then why is it falling?

Me: Institutions need cash and liquidity, and gold offers a bid. Besides, nothing goes up in a straight line, and gold had just run up 35%. It was time for a break.

My friend's son: So this big drop really doesn't worry you.

Me: It doesn't. I'm buying. In fact, I'll prove it to you – send me your gold and I'll buy it from you.

My friend's son: [Silence.]

Me: I know it doesn't feel good right now, and it may take some time for it to make another new high, but gold is too important not to own here. It's a long-term trade, so plan on holding it for a while. In fact, if it helps, just forget about the fact that you own it – go do something fun and have a beer at the pub.

My friend's son: [a little chuckle].

Me: I don't think you made a mistake buying at the price you did, in spite of it being lower now. Odds are high you'll be happy in a few years.

My friend's son: [pause] All right...

I'm glad my friend's son decided to hold on, because that conversation took place in June, 2006. He'd bought gold at around $700 and watched a month later as the price fell to as low as $567.

Gold ended up declining a total of 21% in just five weeks before bottoming, after a run-up of 35% (sound familiar?). And yes, it took over a year before it hit a new high.

Yet my friend's son – now older and wiser – wishes he could go back in time and make the same mistake again and Buy Gold at $700. His investment is sitting on more than a double, in spite of buying at a temporary peak.

I think that a few years from now we'll all wish we could go "back in time" and Buy Gold at $1,700. And I believe you'll still feel that way if gold falls to $1,500, as some writers are projecting.

I think this because circumstances now are worse – and hence more bullish for gold – than they were in 2006. Look at how much money we've printed (the monetary base now exceeds $2.6 trillion, a mind-boggling 200% increase since 2006). Look at the state of the global economy – highly vulnerable and propped up by governments. 

Consider the lingering and inescapable predicament of many European nations – scare tactics aside, how, exactly, will this be resolved in a healthy way? Ask yourself if the outlook for the US Dollar is out of the woods (roughly 10% of federal revenue goes solely to debt payments, a figure that is projected to triple). 

Explain how the reckless path of deficit spending will shift without causing some kind of major impact on the economy (history shows abject deficit spending leads to economic downfall, virtually without exception). Tell me how we avoid massive inflation, an outcome that seems so certain at this point that about the only way to avoid it would be a massive global meltdown – and even then, the Fed would surely print to oblivion.

Like I told my son's friend, nothing is guaranteed. But until real interest rates are positive again, government leaders instigate honest solutions to our debts and deficits, the global economy becomes an engine of growth, the sovereign debt issues in Europe are genuinely resolved, and global currencies – especially the US Dollar – are strong again, I'm Buying Gold.

Yes, there will be volatility. And yes, a short-term "solution" to what seems like certain default in Greece, for example, would cause some investors to sell gold. But like in the spring of 2006, these are temporary, short-term fixes only. For the tumult that is most likely ahead, there simply isn't any better currency protection than gold and silver.

Source; http://goldnews.bullionvault.com/gold_price_102820114

Gold Futures Post 6.8% Weekly Gain, Silver Surges 13.0%

Gold and silver futures ended a banner week on relatively quiet notes on Friday as financial markets digested yesterday’s euro zone agreement plan.

COMEX gold futures – per the December 2011 contract – settled lower by $0.50, or 0.03%, at $1,747.20 per ounce.  For the week, however, the yellow metal climbed 6.8%, marking one of its best five-day stretches in several years.

Not to be outdone, silver futures fared even better than gold, with a 13.0% gain this week.  On Friday COMEX silver for December 2011 delivery rose a modest $0.18, or 0.5%, to $35.29 per ounce.

This week’s rally in precious metals was fueled in part by weakness in the U.S. dollar, which posted considerable losses against many of the world’s leading currencies.  The euro fared particularly well versus the greenback, rising from near 1.38 at the start of the week to as high as 1.4241 yesterday.

Source; http://www.goldalert.com/2011/10/gold-futures-post-6-8-weekly-gain-silver-surges-13-0/

Canadian stocks higher ahead of GDP report

SAN FRANCISCO (MarketWatch) — Canadian stocks edged higher Friday as investors digested the prior session’s sharp rally growing out of the euro-zone debt deal.

The benchmark S&P/TSX Composite Index CA:$ISPTX +0.43% added 54.07 points, or 0.4%, to settle at 12,519.51. On Thursday, the index jumped 2.3% to reach its highest close in seven weeks. 

The index gained 4.8% on the week, its biggest one-week percentage gain since July 2009. 

And the Canadian dollar was flat against its U.S. counterpart USDCAD -0.01%  by the end of North American trading, after weakening as much, after having soared to a five-week high on Thursday. One U.S. dollar recently purchased 99.17 Canadian cents, versus 99.12 late Thursday. 

Investors are looking ahead to Monday and Canada’s gross domestic product report, which will show the inflation-adjusted value of Canadian output for the month of August. Analysts are expecting 0.2% real GDP growth in August, compared with 0.3% growth in July. 

The metals and mining sector continued to march higher on Friday, led by base metals stocks. Shares of Ivanhoe Mines Ltd. CA:IVN +4.48%   IVN -1.18%  gained 4.5%, with First Quantum Minerals Ltd. CA:FM +4.80%  up 4.8%. 

In gold stocks, shares of Barrick Gold Corp. CA:ABX +3.89%   ABX +3.86%  and Goldcorp Inc. CA:G +3.82%   GG -0.70% , the two largest Canadian gold miners, both jumped nearly 4%. The companies this week reported better-than-expected third-quarter earnings on higher gold prices. 

Gold futures finished slightly lower on Friday, shedding 50 cents to settle at $1,747.20 an ounce on the New York Mercantile Exchange. The precious metal is up 6.8% for the week. Silver soared 13% on the week, and copper jumped 15%. 

Source; http://www.marketwatch.com/story/canadian-stocks-higher-ahead-of-gdp-report-2011-10-28

Gold Market To Watch For Economic Data In Busy Week

(Kitco News) - A busy week is shaping up for the gold market for next week, with several U.S. economic reports set for release and a few central bank meetings.

Market watchers will look to see if the recent strength of U.S. economic data continues and if there are any hints out of the U.S. Federal Reserve’s monetary policy meeting. Also next week, a new chief for the European Central Bank will be installed and he will give his first official comments to the world.

Gold saw a strong rally this week, so traders will look to see if the market can hold its gains or if it will succumb to profit taking. On Friday, gold saw a minor pullback as bulls sought to pocket some profits ahead of the weekend. 

On the week, December gold futures prices on the Comex division of the New York Mercantile Exchange settled at $1,747.20 an ounce, up 6.8% on the week. December silver settled at $35.2880 an ounce, up 13.1% on the week. 

In the Kitco News Gold Survey, out of 34 participants, 26 responded this week. Of those 26 participants, 19 see prices up, while five see prices down and two see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts.

Gold’s move over $1,700 was considered bullish by those looking for higher prices, and holding over that area will be important to keep the momentum going, several technical chart-based analysts said.

Also, analysts said as the markets get over their initial reaction to the European Union summit, they will revert back to their concerns about the world’s fiscal health overall. The dollar had strengthened up to the summit as a safe-haven buy, but many analyst expect in the short term that the dollar’s strength will be muted. That should benefit gold, said Jeffrey Nichols, senior economic adviser to Rosland Capital and managing director of American Precious Metals Advisors, who sees gold’s prices rising in the weeks ahead.

“If Europe’s debt crisis subsides, the dollar will no longer benefit from its safe-haven role. If it continues to worsen, investors, particularly in Europe, are likely to accelerate their rush into physical gold, buying bullion coins, small bars, and ETFs, as they did in mid-2010 when Euro-angst was, like now, at a feverish pitch. But, either way, as traditional physical demand continues to grow, especially in Asia and from central banks in that region and elsewhere, gold is increasingly going into stronger hands that are less likely to sell even at much higher prices,“ Nichols said.

That doesn’t mean in the short term that gold won’t fluctuate, he warned. “Short-term trading in derivative markets may, at times, produce a great deal of gold-price volatility but, in my book, it does not affect the long-term price trend. What governs the price of gold over the long term are the market’s real-world supply and demand fundamentals - and these have been decidedly bullish . . . and are becoming even more so.“

Rich DeFalco, president West Cooper Asset Management, said he’s more neutral on gold for next week, but with a bullish bias. “The EU news was a giant Band-Aid that they put on themselves…. In the grand scheme of things, not much has changed. Gold will continue to play a safe-haven role, but overall I don’t see a lot of movement,” he said.

What could support gold is if the ECB embarks on a quantitative easing-type program. “If the ECB starts printing money and buys the debt to absorb the losses, that would be supportive. But countries like Germany don’t like doing that,” DeFalco said.

FOMC, ECB MEETINGS NEXT WEEK

With the EU summit over, market participants will turn to the next meetings slated to take place. The Federal Open Market Committee will meet on Tuesday and Wednesday – Federal Reserve Chairman Ben Bernanke will speak following the meeting. No changes in policy are expected.

Jean-Claude Trichet steps down as the head of the European Central Bank next week and makes way for Mario Draghi, who takes helm and has his first news conference on Thursday.  The Group of 20 nations meets Nov 3-4.

Several analysts said what should keep the dollar under pressure for the short term – which is normally supportive for gold – is that U.S. economic data has “substantially surprised to the upside,” as Brown Brothers Harriman puts it. 

BNP Paribas said after a strong showing in third-quarter U.S. gross domestic product on Thursday, the appetite for riskier assets make continue next week. They point to the potential for better-than-expected data from Monday’s Chicago Purchasing Managers Index and Tuesday’s Institute for Supply Management manufacturing figures for October as catalysts, saying that the strong rebound seen in the Philly Fed index for October suggests this is plausible. 

BBH admitted that U.S. growth is still too slow to handle the excessive economic capacity, but given the gains in economic data and the potential for policy support from China regarding Europe, the dollar in the short term should be under pressure and risk appetite should gain ground. 

Friday brings the monthly unemployment figures, which can have a big impact on gold prices, too.

Source; http://www.kitco.com/reports/KitcoNews20111028DeC_metalsoutlook.html

Gold regains Rs 2,8000 mark

SRINAGAR, Oct 28: Gold regained the Rs 28,000 per 10 grams mark after a month by adding Rs 110 today, on brisk buying by stockists driven by firming global trend. Silver also surged by Rs 2,300 to Rs 58,300 per kg on increased offtake by industrial units and speculators.

Trading sentiment turned bullish as gold rallied in global markets as European leaders agreed on a plan to contain the region's debt crisis.

Gold in global markets, which normally sets the price trend on the domestic front, gained 0.5 per cent to USD 1,752.82 an ounce, the highest level since September 23. In addition, pick-up in demand driven by the festive season was another factor behind the rise in gold prices, traders said.

On the domestic front, gold of 99.9 and 99.5 per cent purity rose by Rs 110 each to Rs 28,000 and Rs 27,860 per 10 grams, respectively, while sovereigns held steady at Rs 22,200 per piece of eight grams. Similarly, silver ready spurted by Rs 2,300 to Rs 58,300 per kg and weekly-based delivery by Rs 2,280 to Rs 57,780 per kg.

However, silver coins maintained previous level of Rs 65,000 for buying and Rs 66,000 for selling of 100 pieces in limited deals

Source; http://www.kashmirtimes.com/news.aspx?ndid=20083

Gold Futures Climb, U.S. Dollar Pares Gains

Gold futures climbed above $1,700 per ounce on Friday amid ongoing concerns over the European sovereign debt crisis.

COMEX gold futures for December 2011 delivery – the most actively traded contract – settled higher by $23.10, or 1.4%, at $1,723.50 per ounce.  In doing so, gold futures extended their weekly gain to 5.3% – putting the yellow metal on pace for its best week since August 15-19.

Silver futures rallied alongside gold, with the COMEX December 2011 contract rising $0.24, or 0.7%, to $33.30 per ounce.

Precious metals extended their gains Wednesday afternoon as the U.S. Dollar Index (DXY) retreated from an intra-day high of 76.66  to hold onto only a fractional gain near 76.25.

Gold and silver shares moved higher as well, with the Philadelphia Gold & Silver Index up 1.1% at 197.65 this afternoon.

Source; http://www.goldalert.com/2011/10/gold-futures-climb-u-s-dollar-pares-gains/

Comex Gold Trades Steady-Firm As Recent Gains Consolidated

(Kitco News) - Comex December gold futures are trading steady to firmer Thursday morning as the market consolidates its recent strong gains. It’s a “risk-on” day in the market place Thursday, following the European Union leaders’ agreement on a debt mess fix. This has pulled some safe-haven demand away from the precious metals. December gold last traded up $2.90 at $1,726.40 an ounce. Spot gold last traded down $3.00 an ounce at $1,723.00. December Comex silver last traded up $0.40 at $33.71 an ounce.

The market place on Thursday has greeted with a “risk-on” attitude the 11th-hour agreement among EU leaders on a bailout package for Greece and other debt-strapped EU nations and financial institutions. World stock and commodity markets are rallying, which has pulled some safe-haven demand away from gold and silver. However, the EU debt mess has not just disappeared and the matter will likely re-emerge as a major market place concern at some point down the road. The safe-haven gold market has and will likely continue to garner at least some underlying investment demand from the ongoing EU debt crisis.

The U.S. dollar index is trading lower early Thursday and hit a fresh six-week low overnight. The dollar index remains in a short-term downtrend on the daily chart, and that’s an underlying bullish factor for the precious metals. Crude oil prices are sharply higher Thursday morning, and that’s also a bullish “outside market” force for the precious metals. 

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Chicago Fed Midwest manufacturing index, advance GDP, pending home sales and the Kansas City Fed manufacturing survey.

The London A.M. gold fixing was $1,708.00 versus the previous P.M. fixing of $1,715.00.

Technically, December gold futures prices hit another fresh four-week high overnight. Bulls have gained fresh upside near-term technical momentum. A four-week-old uptrend is in place on the daily bar chart. Bulls have the overall near-term technical advantage. Bulls' next upside technical objective is to produce a close above solid technical resistance at $1,750.00. Bears' next near-term downside price objective is closing prices below psychological support at $1,600.00. First resistance is seen at the overnight high of $1,731.50 and then at $1,750.00. First support is seen at the overnight low of $1,707.20 and then at $1,700.00. 

December silver futures bulls have upside near-term technical momentum. A four-week-old uptrend is in place on the daily bar chart. The silver bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is producing a close above technical resistance at $35.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $29.935. First resistance is seen at Wednesday’s high of $33.95 and then at $34.50. Next support is seen at the overnight low of $33.145 and then at Wednesday’s low of $32.905.

Source; http://www.kitco.com/reports/KitcoNews20111027JW_am.html

Gold Futures Rebound, Commodities Post Strong Gains

Gold futures rebounded on Monday from last week’s decline, with the COMEX December 2011 contract settling higher by $13.90, or 0.9%, at $1,650.00 per ounce.   The yellow metal reached an intra-day high of $1,663.30 per ounce at approximately 8:45am ET, but pared its gains as trading progressed.

Strength in gold futures was accompanied by a broad-based rally in the commodities complex.  Gold’s sister precious metal, silver, rose $0.32, or 1.1%, to $31.53 per ounce.  Cyclical commodities posted far greater gains, with crude oil climbing 4.4% to $91.27 per barrel and copper surging 7.0% to $3.45 per pound.

Copper and oil received a particularly large boost from a key Chinese manufacturing report. The HSBC “flash” China Manufacturing Purchasing Managers’ Index rose to 51.1 in October from 49.9 in September.  The 50 level separates expansionary from contractionary activity.

Weakness in the U.S. dollar also helped lift commodities, as the euro advanced 0.6% to 1.3933 against the greenback this afternoon.

Source; http://www.goldalert.com/2011/10/gold-futures-rebound-commodities-post-strong-gains/

Canada stocks up on precious metals, EU hopes

SAN FRANCISCO (MarketWatch) — Canadian stocks followed global shares higher on Monday after progress in the euro-zone debt negotiations and Chinese manufacturing data lifted investor sentiment. 

The benchmark S&P/TSX Composite Index CA:$ISPTX +1.78%   gained 212.79 points, or 1.8%, at 12,162.28. This was the index’s highest close in nearly five weeks. 

European leaders said Sunday that discussions were progressing over European bank recapitalization, Greek debt restructuring and the euro-zone bailout fund. A final package of measures is expected at a second summit on Wednesday. Read more on the EU summit. 

 

Metals and mining stocks were up sharply, as gold futures tracked the rise in U.S. stocks. Shares of Teck Resources Ltd. CA:TCK.B +5.75%  added 5.8% while shares of First Quantum Minerals Ltd. CA:FM +11.51% jumped 11.5%. 

Among notable movers, shares of Silvercorp Metals Inc. CA:SVM +17.36% soared as high as 20.7% after the miner said an audit of the company’s accounting practices backed the company’s financial statements against recent fraud allegations. 

Precious metals followed U.S. stocks higher on Monday. Gold for December delivery GC1Z +1.08%  rose $16.20, or 1%, to settle at $1652.30 an ounce on the New York Mercantile Exchange. Silver added 1.5%, and copper jumped 7%. Read more on precious metals. 

 

Also boosting mining stocks, Chinese data on Monday showed manufacturing expanded to a five-month high in October, quelling fears of an extended contraction. Read more on the Chinese manufacturing data. 

 

Crude-oil futures also rallied on optimism, lifting Toronto’s energy sector. Shares of heavyweight Suncor Energy Inc. CA:SU +4.33%   SU -0.28%  gained 4.3%, with shares of Canadian Oil Sands Ltd. CA:COS +3.55%  adding 3.6%. 

Crude for December delivery CL1Z +4.83%  gained $3.87, or 4.4%, to finish at $91.27 a barrel on the New York Mercantile Exchange. Read more on oil. 

 

The Canadian dollar strengthened 0.6% against its U.S. counterpart USDCAD +0.05% , with one U.S. dollar recently purchasing 1.0029 Canadian, versus 1.0088 late Friday. The loonie has rebounded nearly 6% against the greenback since the Canadian currency depreciated to a one-year low on Oct. 4. 

On Tuesday, the Bank of Canada will convene to announce its quarterly interest rate decision. Analysts largely expect the central bank to keep the key rate unchanged at 1%. 

“We continue to believe that the BoC is unlikely to cut its policy rates and that such a change would require a dramatic weakening of the global economy and a strong tightening of global financial conditions,” wrote analysts at Nomura Global Economics, adding that domestic factors like high consumer debt and housing prices will limit the bank’s willingness to slash rates. 

Source; http://www.marketwatch.com/story/canada-stocks-up-on-precious-metals-eu-hopes-2011-10-24

Gold bugs bruised but buoyant (again)

NEW YORK (MarketWatch) — Another tough week for gold bugs. But they’ve survived tough weeks before in this decade-long bull market. And now they see vindication in unexpected quarters. 

Although the December gold contract GC1Z +1.06%  did reach a three-week high of $1,696.80 in Asian hours early last Monday morning, bouts of selling had slashed over $90 off by Thursday. A rally on Friday enabled December gold to close down $70.10, or 4.3%, on the week at $1,636. 

Gold shares did much worse. The NYSE Arca Gold Bugs Index XX:HUI +1.73%  showing a weekly loss of 6.88%, a retreat from the edge of an upside breakout above the post-September decline trend a week ago. ( See Oct. 3 column. ) 

Overall, this action was something of a triumph for the respected, institutionally oriented service, The Gartman Letter. It cut half of its large gold position very early on Tuesday, blaming poor momentum and expectations of forced selling, possibly from distressed hedge funds. It thus avoided much of the decline. Goldbug websites promptly started muttering that the invariably well-informed Dennis Gartman had been told something. 

In fact, this week saw unprecedented commentary from unusual sources on gold’s behavior. Most astonishing of these: a column in Saturday’s London Financial Times by U.S. Editor Gillian Tett. She actually attended the fall meeting of old-line Gold Bug outfit, the Committee for Monetary Research and Education (CMRE), on Thursday and listened to the speech by radical gold bug Gold Anti-Trust Action (Gata) Committee leader Chris Powell. 

She wrote: “I think … it would be foolish simply to deride or ignore Gata. … Some of its points have at least a grain of truth. Even if you find it hard to believe that central bankers would be dastardly enough to create a plot — or competent enough to do what Gata claims — the fact is that global commodity markets are pretty murky, central banks are often opaque and Western rhetoric about ‘free’ markets is often hypocritical.” (Read article, “Is there a shadowy plot behind gold?” ) 

I say “ah ha!” to this. I’ve been writing about the gold conspiracy theory on Market Watch since I started here 2002. (Greatly to the credit of the MW editors — other employers balked). For example, see my Nov. 11, 2002, column. 

 

Almost equally astonishing for those who know the gold world: the suggestion by veteran gold-fund manager John Hathaway in an interview on King News that “you kind of have to wonder if the government in Europe or the European Central Bank didn’t want gold to be on the defensive because of all of these announcements about a lending facility. ... The last thing they want is for gold to be rocketing in the face of that.” 

Hathaway has historically steered clear of this controversy. 

Readers are probably more interested in whether money is to be made in gold in the reasonably near term. Here the sentiment indicators are unusually clear — and positive. 

On Friday evening, the Hulbert Gold Newsletter Sentiment Indicator (HGNSI) turned in a second day at negative 13%. Previously this year, there have been three pairs of days in negative territory — although never this low. All were associated with important bottoms. 

The HGNSI has not actually been lower since gold’s emergence from the late 2008 crash. (The all-time low, many years ago: negative 31.25%.) 

MarketVane’s Bullish Consensus for gold, a much more volatile indicator, slipped to 64% on Thursday. This was also the low after the September slump. In the January break, the low was 62%. 

Of course, if there really is a determined and powerful seller out there, recovery may be delayed. But the radical gold-bug website LeMetropoleCafe was reporting very high gold premiums in India on Friday morning, and very positive comments on import prospects from Indian gold-market sources (the peak buying season in India is starting now). 

The website remarks that holding the gold price down here will take a lot of physical supply. 

Counter-intuitively, could a calming of the Euro crisis — and consequent reduction of Official-Sector jealousy of alternatives — take the pressure off gold? 

Source; http://www.marketwatch.com/story/gold-bugs-bruised-but-buoyant-again-2011-10-24

Gold Futures Cut Weekly Loss to 2.8%

Gold futures rebounded Friday to snap a four-day losing streak amid a broad-based rally on Wall Street.  COMEX gold for December 2011 delivery – the most actively traded contract – settled higher by $23.20, or 1.4%, at $1,636.10 per ounce.

In doing so, the gold futures cut their weekly loss to $46.90, or 2.8%.  However, on a month-to-date basis the yellow metal remains higher by 0.9% and by 15.3% year-to-date.

Silver futures climbed higher as well on Friday, by $0.91, or 3.0%, to $31.19 per ounce.  With the advance, gold’s sister precious metal reduced its weekly loss to 3.0%.  However, silver remains higher by 4.2% in October and by 0.8% in 2011.

Today’s strength in precious metals was bolstered by weakness in the U.S. dollar, particularly against the euro and yen. The euro zone currency rose 0.6% to 1.3863 against the dollar as European policymakers began a six-day stretch of meetings to formulate a more robust plan to combat the sovereign debt crisis.  Against the yen, the dollar tumbled to 75.78, a new all-time low.

Source; http://www.goldalert.com/2011/10/gold-futures-cut-weekly-loss-to-2-8/

All Eyes On Europe Next Week

(Kitco News) - European news will continue to dominate headlines and provide direction for the precious metals markets, as two meetings will be held by policy makers regarding the on-going sovereign debt crisis there.

That means all markets- gold included – will be held hostage by the news that comes out and that could mean some market players may be on the sidelines. If there is some optimism that talks are progressing to an outcome, prices for all markets could rise, analysts said.

“There is little doubt that this weekend’s first of two summit meetings is likely to be the main events over the few days.  As such, we expect markets to remain jittery and for price action to remain choppy, given the difficulties policy makers have in solving the eurozone debt crisis,” said analysts at Brown Brothers Harriman.

On the week, December gold futures prices on the Comex division of the New York Mercantile Exchange settled at $1,636.10 an ounce, down 2.79% on the week. December silver settled at $31.193 an ounce, down 3.05% on the week.

In the Kitco News Gold Survey, out of 34 participants, 24 responded this week. Of those 24 participants, 11 see prices up, while 10 see prices down and three see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts.

Originally there was to be one summit, on Sunday, but a second summit was added, for Wednesday. Initially markets fell sharply on Thursday when it appeared that the Sunday meeting would not be enough to tackle the issue. But Commerzbank said once the “shock at the virtual deferral of the summit has now raised new hopes that a solution will be found after all.”

Brown Brothers Harriman said market expectations are likely to be influenced by three potential outcomes, barring the expansion of the European Financial Stability Facility. One, a program to recapitialize European banks could be announced. Second is an increase in the size of the haircut on Greek government debt – BBH said write-downs could be in the range of 40-60%. Third, policy makers could speed up the operation of the European Stability Mechanism, which would replace the EFSF and deal with orderly defaults.

“While we think these measures would likely be a step in the right direction, we suspect that the solutions are unlikely to provide closure for the markets and thus we expect the markets to be disappointed in the outcome,” BBH said, which could put pressure on the euro as a result. 

Because so much is riding on the outcome of the meetings, many market watchers are suggesting that investors be cautious ahead of the euro summit.

Indeed, some have suggested the lack of uncertainty regarding Europe (and to a degree the political wrangling in the U.S.) is leading to many people being on the sidelines until some clarity is reached.

Alan Bush, senior financial futures analyst at Archer Financial Services, said anytime political decisions can affect how markets operate it’s best to stay on the sidelines. 

Charles Nedoss, senior market strategist with Olympus Futures, expressed optimism that something constructive would come out of the confabs and that will support gold prices. “I think they’ll pull something together. We’ve had rhetoric, but we actually need to see that they’re doing something,” he said.

There has been a lot of chatter about debt-laden European nations to use their gold reserves to reduce budget deficits, and Michael Lewis, head of commodities research at Deutsche Bank, said in the past gold was useful for European governments as the European Monetary Union was formed. But Lewis said he doesn’t see gold being used in the current crisis.

“Gold holdings are still in the possession of national governments but are ring-fenced from the authorities by the eurosystem. Moreover in terms of valuation euro area gold holdings represent little more than 6% of public debt outstanding,” he said.

Robin Bhar, senior metals analyst at Credit Agricole – CIB, said gold has been under pressure amid doubts about its true safe-haven appeal and selling to free up cash. What’s limited severe downside pressure currently is physical buying on dips. If good news comes out of the eurozone summits, then a rally in the euro should push gold prices up. This should also “outweigh any selling due to a diminished ‘fear’ factor and its role as an anti-risk asset,” he said.

The industrial metals are trapped by the news flow, too, with silver, copper and the platinum group metals rallying or falling based on the macroeconomic or currency developments, Bhar said, which makes it difficult to hold positions, especially in the base metals.

TECHNICAL CHARTS LOOK BEARISH

Bhar said looking at technical charts for gold, the metal “remains in trouble” on a daily and weekly basis. He pointed out that on the weekly charts, the cash market is “persistently” closing below the weekly base line, which comes in at $1,691.30.

Barclays Capital technical analysts echoed the bearish outlook for gold, too. “We look for gold to break below support near $1,580 to confirm a test of our $1,550/1530 target area,” they said.

Olympus Futures’ Nedoss said a lot of moving averages are beginning to converge in gold. The 10-day moving average for December gold futures is around $1,660, with the 100-day at $1,661. “We need to close above those levels early next week,” he said.

By Debbie Carlson of Kitco News dcarlson@kitco.com

Source; www.kitco.com/reports/KitcoNews20111021DeC_outlook.html

Gold Price Retreats, Not “Technically Healthy?”

GOLD PRICE NEWS – The gold price retreated $19.48 to $1,621.18 per ounce Thursday as weakness in precious metals continued this morning.  The spot price of gold fell to as low as $1,606.90 in overnight trading, but pared its losses as the U.S. dollar turned lower against a basket of foreign currencies.  Silver prices fell as well, by $0.56, or 1.8%, to $30.69 per ounce.

The gold price showed a muted reaction to the weekly U.S. jobless claims report, which at 403,000 met the median estimate among economists.  Equity markets in Europe were lower across the board, but U.S. exchanges nevertheless looked to open modestly higher – with S&P futures up 5.75 points at 1,212.25.

On Wednesday the gold price dropped $17.18 to $1,640.67 per ounce amid a renewed batch of weakness in the broader financial markets.  The 1.1% slide in the price of gold was fueled by a rebound in the U.S. dollar as investors pared positions in the commodities complex.  The gold price only inched lower in morning trading, but extended its losses following the release of the Federal Reserve’s latest Beige Book.  In addition, reports that Germany and France remain at odds over how to expand the European Financial Stability Fund (EFSF) helped weigh on the gold market.

Silver posted a considerably larger loss than the gold price, as it retreated $1.02, or 3.2%, to $31.03 per ounce.  With its decline, the price of silver cut its year-to-date gain to a paltry 0.3%.  Cyclical commodities tumbled as well, with copper off 3.9% at $3.23 per pound and crude oil sliding 2.6% to $86.05 per barrel.

As for gold shares, a combination of weakness in the gold price and the broader equity markets put substantial pressure on the sector.  The AMEX Gold Bugs Index (HUI), a composite of the world’s largest gold producers, sunk 5.8% to 513.18.  The benchmark indices posted more moderate losses – with the Dow Jones Industrial Average (DJIA) falling 0.6% to 11,504.62 and the S&P 500 Index sinking 1.3% to 1,209.88.

Notable gold stocks moving lower included Barrick Gold (ABX) and Kinross Gold (KGC), which dropped 4.9% and 7.1%, respectively.  However, those losses paled in comparison to Agnico-Eagle Mines (AEM), which plunged 18.6% to $46.51 per share after the Canadian-based gold producer announced the suspension of mining operations and gold production at its Goldex Mine in Quebec.  Agnico-Eagle reported that the suspension stemmed from a ground stability issue, and that it will write-off its entire investment in Goldex.

Wednesday’s release of the Fed’s Beige Book – a recap of economic activity across the United States – contained few surprises for investors.  The Bernanke-led Fed noted that economic growth continued to slow in recent months, with particular weakness in residential and commercial real estate, as well as in the labor market.  In light of the deteriorating economic climate, speculation has arisen that the Fed may further expand its suite of accommodative monetary policies at the next Fed meeting on November 1-2.

Despite the heightened volatility in financial markets in recent weeks, the gold price has largely traded between $1,600 and $1,700, and remains 15.7% below its $1,922.20 all-time high.  Commenting on the gold market, analysts at Commerzbank wrote in a note to clients that “The price of gold has not really profited from the growing uncertainty,” in recent weeks.  Instead, the yellow metal has headed lower alongside assets viewed as relatively risky and has traded inversely to the U.S. dollar.

Dennis Gartman, the long-time commodities investor and publisher of The Gartman Letter, offered a similar but more cautious perspective on the gold price.  “Given the severity of the break in mid-September, if the gold market was still technically healthy it should have bounced sharply back, regaining that which it had lost rather swiftly,” he wrote.  “Taking twice or three times as long to regain only a third or so of what had been lost seemed at least awkward and at worst bearish,” Gartman contended.

Source; http://www.goldalert.com/2011/10/gold-price-retreats-not-%E2%80%9Ctechnically-healthy%E2%80%9D/

Technical Signs Say Gold’s Fall May Continue

Gold prices, down 14 percent since touching a record in September, are poised for more losses, according to technical analysis by Steel Vine Investments LLC. 

Bullion’s advance from the Sept. 26 low of $1,535 an ounce to a high of $1,696.80 on Oct. 17 created a so-called bear flag pattern where price movements resemble an inverted flag, according to Spencer Patton, the Chicago-based chief investment officer for Steel Vine. 

The metal’s plunge from a record $1,923.70 on Sept. 6 to the low on Sept. 26 created the so-called flag pole. Losses in the past three sessions signal the completion of the pattern, and that prices will resume their decline, Patton said. Gold may drop to $1,550 by the first week of November, he said. 

“The market has decisively broken out of this pattern,” Patton said in a telephone interview yesterday. “Gold looks weak in the near term.” 

Yesterday, gold futures for December delivery fell 0.4 percent to settle at $1,647 on the Comex in New York. The precious metal has slumped 2.1 percent this week after retreating 11 percent last month, the most since October 2008. 

The bear flag pattern is signaled after a break occurs below a rising trading range. 

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. 

Source; http://www.bloomberg.com/news/2011-09-29/gold-fibonacci-signaling-rebound-from-september-slump-technical-analysis.html

Gold Extends Slide, U.S. Dollar Rallies after Beige Book

Gold futures extended their losses and the U.S. dollar rebounded against a basket of foreign currencies after Wednesday afternoon’s release of the latest Fed Beige Book.

COMEX gold futures – per the December 2011 contract – settled lower by $5.80, or 0.4%, at $1,647.00 per ounce. However, in electronic trading following the COMEX close the yellow metal dropped to $1,641.00 per ounce.

Gold’s sell-off coincided with a rebound in the U.S. Dollar Index (DXY), which recaptured the large majority of its earlier losses to trade down by just 0.1% at 77.091 this afternoon.  The euro currency, which had been higher by as much as 0.8% at 1.3869 against the greenback, turned lower by 0.1% to 1.3741.

Silver futures followed the yellow metal southward, dropping $0.77, or 2.4%, to $31.07 per ounce, amid weakness in precious metals and the broader commodities complex.

While the Fed’s Beige Book largely did not provide any surprising details about the state of the U.S. economy, traders used its release as an excuse to take profits following yesterday’s rally in stocks and commodities.  With many dollar-denominated asset classes moving into negative territory, the greenback invariably bounced back from its earlier losses.

Source; http://www.goldalert.com/2011/10/gold-extends-slide-u-s-dollar-rallies-after-beige-book/

Gold Price Sinks after Hot Inflation Report

GOLD PRICE NEWS – The gold price sunk $23.98 to $1,646.54 per ounce Tuesday morning after a key reading on U.S. inflation came in substantially above expectations.  The price of gold hovered near $1,660 in overnight trading, but dropped to as low as $1,634.90 after the Labor Department reported that the Producer Price Index (PPI) rose 0.8% on a seasonally adjusted basis.  The gain was noticeably above the 0.4% consensus estimate among economists, and marked the largest monthly increase since April of this year.

The higher than expected reading on inflation gave traders a key reason to sell investments tied to the gold price, as higher inflationary risks are likely to reduce the likelihood of further monetary easing from the Federal Reserve.  The core PPI rate, which excludes food and energy costs, came in at 0.2%, above the 0.1% rise expected by economists.  The U.S. dollar inched higher against a basket of foreign currencies following the PPI data, which also helped to pressure the price of gold.

Yesterday the gold price began the week with a modest sell-off, falling $8.57, or 0.5%, to $1,672.31 per ounce.  The price of gold came under pressure amid strength in the U.S. dollar and broad-based liquidation on Wall Street.  The SPDR Gold Trust (GLD), the world’s largest gold ETF and a proxy for the gold price, settled lower by $0.78, or 0.5%, at $162.62 per share.

Silver headed south in concert with the gold price, by $0.34, or 1.1%, to $31.86 per ounce.  Cyclical commodities also finished firmly in negative territory.  Copper futures slid 2.0% to $3.34 per pound and crude oil fell 0.5% to $86.38 per barrel.

Precious metals equities fared considerably worse than gold and silver prices on yesterday, as significant selling pressure engulfed all sectors of the U.S. equity markets.  The Philadelphia Gold & Silver Index (XAU) tumbled 2.5% to 192.83, while the S&P 500 Index retreated 1.9% to 1,200.86.  Among gold mining companies, notable decliners included Goldcorp (GG) and Kinross Gold (KGC).  GG closed down by 2.8% at $47.02 per share, while KGC dropped 2.5% to $14.27 per share.

Yesterday’s weakness in the gold price and broader financial markets was fueled by a fresh batch of sovereign debt concerns in Europe.  Although European policymakers vowed to develop more comprehensive plans at this past weekend’s G-20 meeting, comments from Germany on Monday dampened those expectations.

Steffen Seibert, a spokesman for German Chancellor Angela Merkel, stated that while an enhanced set of measures will be agreed upon at the European Union summit on October 23, the benefits of such plans will take quite some time to materialize.  The measures discussed are “important steps on a long journey,” Seibert contended, “a journey that will certainly continue well into next year.”

Investors used the comments, along with last week’s rebound in stocks and commodities, as sufficient reasons to liquidate positions on Monday.  As for the gold price specifically, UBS analyst Edel Tully wrote in a report to clients that “Too much uncertainty remains in the market with questions over issues such as guarantees of European sovereign debt, a Greek default and debt sustainability.”

However, Tully went on to offer a more neutral short-term outlook on the price of gold.  Although “there is no rush to buy gold here, it is equally clear that investors who are long the yellow metal are not willing to let go of holdings either,” she contended.

Source; http://www.goldalert.com/2011/10/gold-price-sinks-after-hot-inflation-report/

Gold futures drop by nearly $40 an ounce

Broad-based selloff finds silver making biggest percentage pullback

 SAN FRANCISCO (MarketWatch) — Gold futures dropped by nearly $40 an ounce Tuesday, as a growth slowdown in China’s economy during the third quarter pushed the metal below some key technical levels, triggering additional selling.

“It looks like liquidation by frustrated longs following gold’s inability to push higher and back into the $1,700s as might have been expected bearing in mind the deep ongoing concerns with the economy,” said Ross Norman, chief executive at London-based bullion brokers Sharps Pixley. 

Gold for December delivery GC1Z -2.27%  declined $36.20, or 2.2%, to stand lately at $1,640.40 an ounce on the Comex division of the New York Mercantile Exchange. The contract, which had traded earlier as low as $1,628.20, fell $6.40 on Monday.

“It’s a technical trade,” said Charles Nedoss, senior market strategist at Olympus Futures. The market “breached a slew of major moving averages” — namely, the 10-day average at $1,660.50, the 100-day average at $1,658.10 and the 20-day average at $1,658.10. 

Nedoss said he does not see “hard support” until the $1,600 level. 

Recent strength in the U.S. dollar also likely added pressure to gold prices. 

The dollar index DXY +0.26% , which measures the greenback against a basket of six other currencies, rose to 77.472 from 77.162 late Monday. 

A stronger dollar is usually negative for gold and other commodities as it renders them more expensive to holders of other currencies, weakening their investment appeal. 

For now, “although physical demand [for gold] is solid, this is has not been joined by significant increases in safe-haven flows into the [exchange-traded funds],” said Norman, in emailed comments. “This is puzzling and it would appear that gold is presently failing to reflect the high degree of risk currently in the market.” 

Still, China’s third-quarter economic performance “was a hindrance and slowdown in growth somewhat uninflationary,” said George Gero, precious metals strategist at RBC Capital Markets, in emailed comments. 

China’s gross domestic product grew in the third quarter at a slightly weaker pace than had been expected, data showed earlier Tuesday. GDP for the three months rose 9.1% from a year earlier, easing from the second quarter’s comparable 9.5% growth pace, the National Bureau of Statistics reported. Read more about China’s GDP. 

 

Against this backdrop, other metals saw sharp declines, with silver posting the largest drop. 

December silver SI1Z -2.36%  shed 69 cents, or 2.2%, to $31.14 an ounce, while December copper HG1Z -1.58%  lost 6 cents, or 1.7%, to $3.32 a pound. 

December palladium PA1Z -1.14%  declined $7.90, or 1.3%, to $608.90 an ounce. January platinum PL2F -1.37%  traded down $20.40, or 1.3%, at $1,531.40 an ounce.

Source; http://www.marketwatch.com/story/gold-futures-drop-by-more-than-40-an-ounce-2011-10-18

France’s AAA Credit Rating at Risk, Moody’s Warns

France is at risk of losing its coveted AAA credit rating, according to Moody’s Investors Service.

The rating agency published a report noting that it may issue a negative outlook on the French sovereign debt rating in the next three months if the costs of providing financial assistance to other euro zone nations and/or banks places France’s budget in a precarious position.  A negative outlook would indicate that France’s credit rating is at risk of a downgrade in the coming years.

In a statement, Moody’s warned that “The deterioration in debt metrics and the potential for further contingent liabilities to emerge are exerting pressure on the stable outlook of the government’s Aaa debt rating.”

Moody’s also noted that France’s debt metrics are now among the worst of its Aaa peers, although they are still supported by favorable “debt affordability,” or a relatively low interest burden when compared to the level of government revenues.

The warning by Moody’s stands in stark contrast to Standard & Poor’s and Fitch – the world’s other two major ratings agencies – which each reaffirmed France’s’ AAA rating in August and have not since published any additional reports.

Following the release of the report, French bonds tumbled, with the spread between French and German 10-year bonds reaching a new all-time high of 111 basis points.  The euro currency also retreated, by 0.4% to 1.3681 against the U.S. dollar.

Joseph Capurso, a currency strategist at Commonwealth Bank of Australia, commented that “Europe’s problems are going to take years to resolve.  One meeting is not going to fix it. Reality is setting in this week, and that’s going to see euro long positions being cut.”

Source; http://www.goldalert.com/2011/10/frances-aaa-credit-rating-at-risk-moodys-warns/

Bank of America Reverses Loss on Accounting Gain

Bank of America reversed a loss in the third quarter from a year ago, due to an accounting gain and a pretax gain on asset sales, figures released Tuesday showed.

The bank [BAC  6.03    -0.16  (-2.58%) ] reported earnings per share of 56 cents excluding items. Analysts had forecast earnings of 19 cents per share for the third quarter but it was unclear if the two figures were comparable.

Its revenue during this period was $28.7 billion, against forecasts of $25.94 billion.



 Source; http://www.cnbc.com /id/44931257

GOLDMAN REPORTS HUGE LOSS, FAR WORSE THAN EXPECTED

GOLDMAN earnings are out, and the company has lost $.84 per share, and it has missed revenue big time.

Analysts had expected losses of just $.11/share.

Revenue has fallen well short of expectations.

The full announcement is here and highlights are below.

Pretty much all the numbers look pretty bad.

Also it's pretty rough from a compensation perspective:

The accrual for compensation and benefits expenses (including salaries, estimated year-end discretionary compensation, amortization of equity awards and other items such as benefits) was $1.58 billion for the third quarter of 2011, a 59% decline compared with the third quarter of 2010. The ratio of compensation and benefits to net revenues for the first nine months of 2011 was 44.0%. Total staff levels decreased 4% compared with the end of the second quarter of 2011.

This table shows the big declines in trading and banking revenue.

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Source; http://www.businessinsider.com/goldman-reports-huge-loss-2011-10

PRECIOUS-Gold slides as macro worries lift dollar

LONDON, Oct 18 (Reuters) - Gold fell on Tuesday after evidence of slowing Chinese growth and mounting worries over the euro zone following a warning from a ratings agency over France's triple-A credit rating weighed on the commodities complex and boosted the dollar.

Moody's Investor Services warned France's top-notch credit rating could be at risk if the cost of bailing out banks in the euro zone's second-largest economy stretches its budget too much, while a reading of German business confidence fell to its lowest in nearly three years this month.

The Chinese economy expanded at its slowest pace in two years in the third quarter of this year, which compounded fears that growth in the emerging world may be insufficient to offset slowing developed economies in Europe and the United States.

Adding to the anxiety over the euro zone ahead of a key summit on Oct. 23, German finance minister Wolfgang Schaeuble doused optimism over the ability of EU leaders to find a lasting solution to the debt crisis at the meeting, which further curbed investor appetite for risk.

Source; http://af.reuters.com/article/metalsNews/idAFL5E7LI0UG20111018