Gold and Silver Prices – Daily Outlook September 3

The prices gold and silver rose again during last week, and I suspect bullion rates will continue to rally during this week. The recent speech of Bernanke at Jackson Hole raised the expectations that another QE program is right around the corner. I still think Bernanke’s speech didn’t offer any insight as to the future steps of the FOMC. His main points in the speech weren’t much different than any of his recent speeches or testimonies.  As I have pointed out in the precious metals weekly outlook the main events of the week will revolve around the U.S manufacturing PMI, Mario Draghi’s speech and U.S non-farm payroll report. Today is a Holiday (Labor Day) in the U.S so the markets there will be closed.  On today’s agenda: Australian Retail Sales, GB Manufacturing PMI, EU Flash Manufacturing PMI and ECB President Draghi Speaks. 

Today
02:30 – Australian Retail Sales
09:30 – GB Manufacturing PMI
14:00 – Spanish Flash Manufacturing PMI
Tentative – ECB President Draghi Speaks

Tomorrow
05:30 – Reserve Bank of Australia – Cash Rate Statement
15:00 – U.S. ISM Manufacturing PMI
2:30 – Australian GDP Second Quarter 2012


Source; http://www.tradingnrg.com/silver-gold-prices-forecast-monday-september-3rd-2012/ 

BELILAH EMAS SEKARANG!!! WAHAI SAHABATKU

Assalamualaikum dan salam sejahtera,

Wahai para peminat emas, sekarang adalah waktu terbaik untuk melabur emas jika dibandingkan dengan naik-turunnya graf emas pada hari-hari yang lepas.

Pakar-pakar penganalisis emas telah membuat jangkaan bahawa emas akan melonjak kepada USD3000/aun sehingga USD5000/aun. Bayangkan jika benar-benar terjadi demikian!!!

Emas berada di tahap USD1692/aun dan beberapa hari yang lepas, emas jatuh ke USD1665/usd dari tahap tertinggi bulan Febuari USD1790/aun.

Emas pernah capai USD1920/aun pada Ogos tahun 2011, dan ini tidak mustahil ia akan kembali lagi bahkan lebih tinggi lagi.

BERTINDAKLAH SEKARANG!!!

Masa Terbaik!!! Jangan Tunggu Lagi Jika Ingin Melabur Emas!!!

Assalamualaikum dan salam sejahtera para sahabat emas,

Inilah masa terbaik!!! bagi yang baru nak menjinak dalam pelaburan emas fizikal. Anda tidak perlu tunggu emas jatuh ke tahap 20-30/usd baru nak melabur. Mengikut adat itu adalah mustahil terjadi.

Mulalah membeli emas dengan kecil-kecilan buat permulaan, saya sedia membantu.

Jam 18:38 graf telah melewati 1685.00/usd.

Gold:silver ratio to fall and potentially explosive move ahead for gold: Chen Lin

 The Gold Report: When you last spoke with The Gold Report in August, the gold:silver ratio was about 40:1. Today it's about 53:1. In August, you were looking for a lower gold:silver ratio that you thought would probably be more reasonable under the circumstances. Yet it seems to have gone the other direction. What do you think has happened here? Was silver drastically overpriced or not able to keep up with the gold?

Chen Lin: In the last interview, I was pretty evenly bidding between gold and silver. I don't have a particular preference. At that time, there were some major funds buying silver. Historically it has been lower-as low as 10:1 a very long time ago. But, right now, it's in a reasonable range. So, I'm not saying that one is overvalued and the other is undervalued. Silver has some industrial components to it while gold is mainly monetary. I'm personally looking for the gold:silver ratio to go lower over the long run. Right now, the financial crisis has pushed central banks to actually start buying more gold in the past quarter. So, that's probably keeping the gold price higher.

TGR: So, what you're saying is the European debt crisis is the thing that's really driving the gold price higher.

CL: Two or three of the central banks have put a historical amount of gold on their books, which tells you there's more focus on gold because of the European crisis.

TGR: What do you think is going to happen with metals prices if this Eurozone situation deteriorates further?

CL: That's a hard question. I think it's in the hands of the policymakers. When Greece said we're going to do the referendum and that Greece could be kicked out of the Eurozone, the Greek people were rushing to their banks to get the euro out. If the euro starts falling apart, I think gold could be one of the hard assets people in Europe will try to get their hands on. That could be very positive for gold. I can see Germany give in to the other euro countries and basically agree to use the European Central Bank to print money. That's probably the most likely outcome. That would delay the crisis and investors would focus on other countries such as Japan and the United States. Then Europe may quiet down a little bit. But, that would be very positive to gold as well. Gold can potentially have a very explosive move on the announcement.

TGR: You've had pretty spectacular performance since you started your portfolio with about $5,000. In August, it was down about 10% for the year. What's happened here in the last three or four months?

CL: It's been down between 10% and 15% so far, it has been quite flat this year. Considering that I own a lot of junior stocks, those stocks can be very volatile.

TGR: What are your expectations as far as market performance in the last weeks of the year? Then what happens next year with the precious metals and mining stocks?

CL: A lot depends on the European solution. I think the most likely result would be a massive money printing in the Eurozone. That would be very positive for gold. As far as gold mining, we have seen the general lack of capital in mining stocks. That's why I try to stay with companies with a strong cash flow. Many exploration companies and emerging producers are trading at very low valuation. Still, the market doesn't give them recognition. If we have any solutions in the Europe situation, these stocks can have a huge run.

TGR: Are there any other parting thoughts you might want to leave with our readers as far as how they should be playing this market?

CL: Gold stocks are extremely undervalued right now versus the gold price. I personally believe that gold will go much higher. How high will gold stocks go? I think this depends on market conditions. Gold stocks have two faces. One is related to gold. The other is related to the capital markets. Mining companies need to raise money to produce gold. It's a very capital-intensive industry. So, if the capital market doesn't improve, gold mining stocks may lag behind gold for some time. But, once we have some stabilization, I can see some extremely undervalued gold stocks out there. Another idea to think about is to try to follow what the majors like. Majors are flooded with cash and can afford to pay a reasonable market price for a property. So, I think it's probably a good time to follow the trades of the majors.

TGR: You've given us some good information and food for thought. Thanks for joining us today.

CL: Thanks for having me.

Source: http://www.mineweb.com/mineweb/view/mineweb/en/page103855?oid=140924&sn=Detail&pid=102055

PRECIOUS-Gold steady, eyes U.S. jobs data, EU meeting

* Market awaits Europe meeting next week
    * Spot palladium on course for biggest weekly gain in 3
years
    * Spot gold could fall to $1,722 - technicals
    * Coming up: U.S. nonfarm payrolls, November; 1330 GMT

 (Updates prices) 
    By Rujun Shen 
    SINGAPORE, Dec 2 (Reuters) - Spot gold was steady on
Friday, after the euphoria around a coordinated effort to inject
liquidity by central banks faded, ahead of a U.S. employment
report later today and a key euro zone summit next week. 
    The U.S. non-farm payrolls data is expected to show a pickup
in hiring in November, which could add to expectations of
stronger growth in the world's largest economy, just as
manufacturing data in the euro zone and much of Asia contracted
in November, pointing to a global slowdown.
   
    News from Europe will continue to dominate sentiment.
Markets rallied earlier in the week after the world's major
central banks joined force to boost liquidity, but the momentum
quickly faded as investors realised that it could not solve
Europe's debt problems. 
    "The central banks' move reinforced the perception that
liquidity crunch is a big problem," said Hou Xinqiang, an
analyst at Jinrui Futures, adding that gold's property as a safe
haven has been overlooked in recent months and the gloom hanging
over the global economy is likely to suppress gold's sentiment. 
    "Liquidity is the focus of the market. Gold's appeal as a
safe haven may return only when liquidity improves and market
sentiment warms up." 
    Spot gold edged down 0.1 percent to $1,742.20 an
ounce by 0709 GMT, but is on course to rise 3.7 percent from a
week earlier, its biggest weekly gain in a month. 
    U.S. gold inched up 0.4 percent to $1,746.30. 
    Technical analysis suggested spot gold could drop to $1,722
during the day, said Reuters market analyst Wang Tao.
  
     
    Investors will closely watch the European Council summit
next week. The new head of the European Central Bank signalled
that it stood ready to act more aggressively to fight the debt
crisis if policymakers agree on much tighter budget controls in
the euro zone.  
    Supporting the sentiment in gold, South Korea's central bank
bought 15 tonnes of gold in November, following purchases of 25
tonnes in June and July, as central banks around the world,
especially in emerging economies, have aggressively bought
bullion over the past few months.  
    "It's not a surprise, as gold seems to be the only thing
central banks can buy to diversify their reserves as economic
problems seem to spread around the world," said Ronald Leung, a
physical dealer at Lee Cheong Gold Dealers. 
    Norilsk Nickel expects autocatalyst metal
palladium to be in a deficit in 2012 due to sharply lower
Russian supplies, the world's biggest palladium producer's
marketing chief said on Thursday.  
    Spot palladium gained 1.4 percent to $634.22, on
course for its biggest weekly gain since November 2008 with a
12.8 percent rise. 
     
    Precious metals prices 0709 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1742.20   -1.54   -0.09     22.74
  Spot Silver        32.78    0.06   +0.18      6.22
  Spot Platinum    1552.74   -2.51   -0.16    -12.15
  Spot Palladium    634.22    8.92   +1.43    -20.67
  TOCOM Gold       4372.00   10.00   +0.23     17.24        50146
  TOCOM Platinum   3923.00   21.00   +0.54    -16.46         8141
  TOCOM Silver       81.90    0.80   +0.99      1.11          370
  TOCOM Palladium  1601.00   66.00   +4.30    -23.65          311
  COMEX GOLD FEB2  1746.30    6.50   +0.37     22.86        11627
  COMEX SILVER MAR2  32.87    0.11   +0.32      6.22         1105
  Euro/Dollar       1.3462
  Dollar/Yen         77.78
  TOCOM prices in yen per gram. Spot prices in $ per ounce.
  COMEX gold and silver contracts show the most active months 

Source: http://www.reuters.com/article/2011/12/02/markets-precious-idUSL4E7N20BJ20111202 

Gold, Silver Shares Pare Gains, Bernanke Press Conference Begins

Gold and silver shares relinquished a portion of their gains as Fed Chairman Ben Bernanke began his post-FOMC press conference on Wednesday.

The Philadelphia Gold & Silver Index (XAU) climbed as much as 3.5% this morning, but was higher by just 1.4% this afternoon.  Notable advancers included XAU components Goldcorp (GG), Randgold Resources (GOLD), and Silver Standard Resources (SSRI) – which rose 2.0%, 3.0%, and 1.2%, respectively.

The sector largely followed the broader equity markets, with the Dow Jones Industrial Average up 161.66 points at 11,819.62 as of 2:40pm ET after earlier rising as much as 218.87 points to 11,876.83.

Source; http://www.goldalert.com/2011/11/gold-silver-shares-pare-gains-bernanke-press-conference-begins/

We expect gold prices to continue to recover over the balance of 2011

While many investment banks have lowered their gold price targets in recent weeks, Credit Suisse did the opposite.

The firm lifted its average 2012 estimate from $1,540 to $1,850 per ounce, and forecasted that the yellow metal will rebound from last month’s weakness over the remainder of 2011.

“Given that many of the factors that have underpinned the rapid increase — most importantly, fears of a global meltdown — remain in place, we expect gold prices to continue to recover over the balance of 2011,” analyst Tom Kendall wrote in a note to clients.

Looking out over the next several years, however, Kendall was not as bullish.  The Credit Suisse analyst predicted that gold prices will peak in the second half of 2012 and subsequently retreat – though not crash – in 2013.  His 2013 and 2014 targets are $1,790 and $1,425 per ounce, respectively.

Source; http://www.goldalert.com/2011/10/we-expect-gold-prices-to-continue-to-recover-over-the-balance-of-2011/

Beware the big bets, chase the safe havens, With big-bet strategy, the losses could be equally great

By Robert Powell, MarketWatch

BOSTON (MarketWatch) — Big bet or safe haven? At times like these, times that try one’s brokerage account, you would not be alone in thinking that those are the only two possible moves to make given current market conditions. 

And of the two choices, a chorus of institutional investors is suggesting that making a big bet right now just might be a big mistake for most average investors. 

“My advice would be don’t bet the house,” said Lubos Pastor, a finance professor at the University of Chicago. “Stock volatility is currently at more than double the normal levels, so we can expect large price moves, up or down, in the next few days. Not everyone is in a good position to stomach that volatility.” 

Others are singing the same tune. “My thoughts are very simple: big bets, either direction, are easy and dangerous,” said Rob Arnott, the chairman of Research Affiliates, LLC. “There are 2x and 3x ETFs, there are index puts, and there are stock index futures for shorting. All of these are a fast way to gain or lose money in a directional bet. I far prefer smaller bets, at most 25% of my net worth. Patience wins the marathon.” 

And David Stepherson, a CFA charterholder and the chief investment officer of Hardesty Capital Management, added more of the same: “My advice to investors wanting to make bigger bets is this: Be sure you are ready to lose a commensurate amount of money. Adding risk works both ways. Everyone wants to make a lot of money and not lose any. Quite simply, the more risk you take the more money you can lose. As volatility increases, the opportunities to place bigger bets are more abundant. There is nothing wrong with taking bigger bets. Just make sure you are right because the losses could be just as great.” 

And Lane Steinberger, a CFA charterholder and chief investment officer of Redwood Wealth Management, is yet another not fond of the big-bet approach. “I am not a big believer in ever taking big bets,” he said. “When people do this, they become gamblers, not investors.” 

And still others took more analytical approach to the question. For instance, Nathan Erickson, a CFA charterholder and portfolio manager at Miller/Russell & Associates, suggested that investors consider the odds of success for using the big bet approach. “In most cases they are slim, and the end result is actually gambling,” he said. 

Consider his analysis: There’s been 189 trading days through the end of September. Of that 189, 105 — using the Dow Jones Industrial Average as the proxy – were positive and 84 were negative. “So making a big bet on a particular day is roughly a 50/50 bet,” he said. “This sounds a bit like gambling.” 

Furthermore, to make a big bet, you either need a big move, or leverage, he said. So, “if you’re looking for a big move, say greater than 1 standard deviation of the first 189 days, you would need a move of over 144 points on the Dow in one direction or the other,” Erickson said. “So far this year that’s happened 19 times up and 23 times down. So now for your investment to be successful, you not only have to guess the direction correctly (50/50), but also the magnitude. The probability of getting both of these correct based on 2011 is about 5%. One would have better success making a big bet like this pay off on the roulette table in a casino.” 

To be sure, there are ways to use leverage so that you only have to guess direction, he said. For instance, Direxion Funds offers 2 times and 3 times leveraged ETFs, which are ideal for day trading. And, one could buy either the Direxion Russell 1000 Bullish 3X ETF BGU +6.86%  (3x the Russell 1000), or the Direxion Large Cap Bear 3X Shares ETF BGZ -6.89%  (3x the inverse of the Russell 1000), so that if they guess the direction right, the bet pays off triple, said Erickson. 

However, even with this strategy it’s hard to generate a big payoff, said Erickson, who noted that the average daily return of the market (as measured by the DJIA) over 189 trading days is just 0.2%. “Guessing the direction right, a Direxion ETF would pay off on average 0.6%,” he said. “However if you guess the direction wrong and end up on average down 0.6%, you now need greater than 0.6% to get you back to even.” 

So, let’s say you not only guess wrong but also catch one of those more than one standard deviation days (more than 1.25% in either direction), you would end up losing 3.75%, he said. “If you keep your position in hopes of a reversal (which only happened 25% of the time where a down day was followed by an up day or vice versa), the loss compounds even more with leveraged ETFs and you end up needing to gain exponentially more to recover,” said he said.

Safe havens?

So if not big bets, perhaps a safe haven? To some institutional investors, the answer is yes. The hard part, however, is trying to figure out what’s a safe haven. 

“Cash is the obvious safe haven, especially since inflation is not a major issue at the moment, said Pastor. “I don’t view gold as a safe haven; the past couple of weeks have shown that gold is not immune to turbulence, and I expect more turbulence in gold given how expensive it is.” 

Cash is one safe haven, but there are others. “Cash and short-term bonds — less than one year to maturity — are probably the safest place in this environment,” said Stepherson. “The risk profile of just about every other major asset class, including gold, has increased dramatically.” 

And then there’s U.S. Treasuries and bank CDs, according to Steinberger, added this caveat. “As we have found out over the past couple of years, these are not necessarily safe havens any more,” he said. 

Said Erickson: “In terms of safe-haven investments, clearly U.S. Treasuries have continued to fulfill that role in the face of fear and uncertainty in global markets and economies. However, I think most people would agree that at the level Treasuries are at now, there is significant potential to lose money should widespread confidence return. The 10-year yield is below the dividend yield on the S&P 500, without the earnings upside.”

Erickson said another safe haven — given the strong balance sheets and earnings potential of corporations — might just be a short-term corporate bond fund or ETF such as the iShares Barclays 1-3 Year Credit Bond fund ETF CSJ -0.28% . Such should be stable in most environments, according to Erickson. “If rates go up, the constant maturing and reinvesting of portfolio holdings will allow the fund to track current yields as they invest in new issues at higher rates,” he said. “If rates continue to move down, the capital gain on the bonds will offset the loss in yield.” 

Erickson noted that the iShares Barclays 1-3 year ETF has a current yield of 2.08%, with a price range of returns between $103.60 and $105.25, less than 1.6% difference from highest to lowest price. 

Others, however, say there’s no safe haven better than a well-diversified portfolio. “My ‘safe haven’ is broad diversification, spanning a wide array of markets, paired with large allocations to low-volatility asset classes,” said Arnott. “I’d be looking to ramp up risk materially, only when investors are truly terrified. We’re not there yet.” 

Arnott is not alone in that sentiment. “A wise investor always spreads their money among different asset classes in fixed percentages and then reallocates back to those fixed percentages every year,” said Steinberger. “This approach is a proven strategy.”

 Source; http://www.marketwatch.com

5 reasons gold is headed for $3,000

 Recent dips are giving us another chance to get in on the great gold rush. The factors driving the metal higher -- broken governments and fragile economies -- aren't going away.

Is the next stop for gold $3,000 -- or $1,000?

With the precious metal seeing some weakness since posting an all-time high of more than $1,900 an ounce -- though it rebounded Tuesday to about $1,800 -- that's the critical question for anyone who caught gold's big run or who is wondering if it's too late to get in.

Few investments bring out more passion than gold does. The folks known as gold bugs never seem to think the price is high enough, while their critics have been waiting since $1,000 for the bugs to get their comeuppance.

But for the rest of us, the challenge is figuring out whether gold's move can go on. Analyzing that involves looking at the reasons gold has been on a tear, and whether they'll continue to be in play.

A careful look tells me $3,000 could indeed be in gold's future, making upcoming dips buying opportunities. Here's why I think gold is headed higher after a correction that could send gold down to $1,600 or lower -- and the best ways to buy in if you agree.

Why gold is heading on up

A $3,000 price tag would have seemed farfetched a decade ago, when the price was around $300, or even when gold first crossed $1,000 an ounce in 2009. But the political and economic uncertainty pushing gold higher isn't over, because debt and spending problems around the developed world look so entrenched.

JPMorgan Chase analyst Colin Fenton just predicted gold could spike to $2,500 an ounce over the next four months. And Tom Winmill, who manages the Midas Fund (MIDSX -2.59%), thinks gold could trade as high as $2,200 next year, largely due to national budget issues and economic uncertainty. Then in early 2013 after the U.S. presidential elections, an ongoing inability to deal with national spending and debt issues may push it even higher, he believes.

Winmilll won't put a number on how high a budget crisis at that point would drive gold. But think of it this way: To get to $3,000, it takes a spike of less than 30% from his projected 2012 high of $2,200. And as we've seen this year, a 30% spike in gold is not unusual when uncertainty drives investors to the perceived "safe haven" of gold. This year, gold rose from less than $1,400 an ounce to more than $1,900 an ounce, a move of greater than 30%.

Michael Brush

That makes $3,000 not just possible, but in reach.

Why I'm a believer

This isn't the first time I've made a prediction that befuddled the gold bears.

I've twice before published bullish outlooks for gold -- in a November 2007 column, "Why gold is going straight to $1,000," and in an April 2008 piece, "5 reasons gold is headed to $1,500." (Editor's note: Those columns are no longer available.)

Both times those targets felt distant, and both times I heard from the doubters -- mainly because in both cases gold had already seen a big run-up, and they thought it was already overpriced.

By now, those targets have been topped by wide margins. That doesn't mean I'll be right a third time. But there are still compelling reasons to think gold could go much higher.

"The long-term drivers for gold are still intact," says Brian Hicks, co-manager of U.S. Global Investors Global Resources Fund (PSPFX -3.38%, news), the top-performing Lipper global natural resources fund in 2010. "I don't believe it is in a bubble."

Here's a look at what will drive gold prices higher:

Driver No. 1: Fears of out-of-control governments

You know the litany by now. In the U.S. and Europe, excessive government promises and debt are creating a financial storm. There are no easy solutions. "I am not sure there is the political will to really address the problems," says Hicks. At some point, though, a more serious crisis will hit "and that is when you are going to see gold take off," he says.

And one of the solutions tried so far -- increasing the money supply to spur growth and tax revenue -- may well create lot of inflation, which is bullish for gold. "All of these factors create great conditions for gold, which people rightly or wrongly perceive to be a safe haven in uncertain times," says John Hathaway, the manager of the Tocqueville Gold (TGLDX -1.20%).

Driver No. 2: Negative interest rates

When the best you can do with your cash is pay someone to hold it -- as opposed to earning interest -- owning gold looks a lot more attractive. And with inflation at 2% or so, and U.S. Treasurys earning around that amount and money market funds earning far less, that's what we have right now. "Negative real interest rates (after inflation) are a big inducement for investors to look some other place to protect value. Gold is going to be one those places," says Hathaway.

Driver No. 3: Central bankers are buying again

Central banks, especially in South Korea, Thailand, Russia and Mexico, are buying gold again, adding to demand. By the middle of July, central banks had bought more gold this year than in all of last year, according to the World Gold Council. For the first time since the 1980s, central banks have been net buyers of gold for three years in a row, points out Deutsche Bank analyst Michael Lewis. And it's not over. "Central banks are likely to remain net purchasers of gold," says the council. Central bank demand could grow even more if China decides to replace dollar-denominated debt with gold as a hedge against a dollar that gets torpedoed by U.S. debt and economic problems. This is likely.

Driver No. 4: Gold supplies are limited

Mining adds only a small percentage to overall gold supplies above ground each year, so the supply is limited. Over the nine years through the end of last year, gold above ground grew at an annual rate of just 1.7% to an estimated 166.6 tons, according to my calculations using numbers from the World Gold Council. "There's so little physical gold, it just takes a small increase in demand to have a big impact on prices," says Hathaway.

Driver No. 5: Gold still looks cheap, by some measures

Unlike a stock, gold has no earnings or cash flow. So how do you decide if it's overvalued? By comparing its value to common benchmarks. And by several comparisons, gold still looks cheap.

Gold would have to hit $6,400 an ounce for it to match its value relative to the Standard & Poor's 500 Index ($INX +2.25%) when it was at highs in 1980, points out Lewis. And at current prices, gold's value relative to oil and copper is at around the historical average, says Lewis.

So, is this a buying opportunity?

Make no mistake, Hicks and other analysts think gold looks toppy, with the recent bouts of weakness indicating the start of a price correction that's not over.

Using technical signals like relative strength, a measure of how far an asset has moved in price compared to recent history, Michael Painchaud, of Market Profile Theorems, believes gold could correct -- fall in price -- for several months, taking the metal down to around $1,630 an ounce. That's its 50-day moving average, a common support level in corrections. A worst-case scenario would send gold down to its 200-day moving average, or just below $1,500 an ounce.

"Our technical indicators still show gold as being extremely overbought, or trading somewhere between the stratosphere and the ionosphere," agrees Fred Dickson, the chief investment strategist at Davidson Companies.

But if the gold bugs are right about the potential for a medium-term move up to the low $2,000 range and on toward $3,000, you should be buying on the correction. At the very least, given all the uncertainty, it pays to have around 10% of your overall portfolio in gold as a hedge, says Rachel Benepe, co-manager of the First Eagle Gold (SGGDX -0.91%). Any upcoming move down might be a good time to get it, if you don't have it already.

How to buy gold

So, how to get this exposure?

Any of the gold mutual funds mentioned in this column will do the trick. I've talked with managers at all of these funds over the years, and they've made good calls. So will the gold exchange-traded fund, SPDR Gold Shares (GLD -2.06%, news).

Hicks, at U.S. Global Investors Global Resources Fund, suggests mining stocks such as Newmont Mining (NEM -3.15%, news), Barrick Gold (ABX -3.46%, news) and Goldcorp (GG -3.92%, news). They should move up when gold prices head higher. And as blue-chip names in the sector, they should hold up better in any further pullbacks in the broader stock market caused by financial instability in Europe.

Benepe thinks mining companies with exposure to South Africa look cheap because fears about nationalization and political risk there are overblown. She cites Goldfield (GV +1.81%, news), and AngloGold Ashanti (AU -1.20%, news), in part because they both have a lot of exposure to mining outside of South Africa. For exposure to a blue-chip name with mines in countries with minimal political risk, she suggests Goldcorp, which operates in North America.

Winmill, at the Midas Fund, also likes Newmont Mining, as a high-quality, medium-cost producer with decent growth prospects, whose shares look cheap. And he suggests Eldorado Gold (EGO -3.58%, news), a high-quality mid-cap gold mining company whose production could double by 2015.

What I don't suggest, despite the barrage of advertisements from gloom-and-doomers like Glenn Beck, is that you buy actual gold as an investment. The reasons: It's hard to find a reputable dealer with a fair price. Plus you may have to pay to store your gold. "Owning physical (gold) is a dumb idea," says Hathaway, of the Tocqueville Gold Fund. "I don't recommend it."

But if you're in love with the idea of gold you can touch and hold, knock yourself out. Just try to avoid paying a big markup; that can wipe out any investment value.

Of course, the biggest risk to the bullish case for gold is that governments get their act together and come up with a credible way to deal with excessive spending and debt. But that's about as likely as finding a pot of gold at the end of a rainbow, respond the gold bugs.

They just might be right.

Source; http://money.msn.com

How to Protect Yourself and Your Family

 Your family should have your online 

passwords so they can have access to 

your digital assets after 

you're gone.

Gold and silver futures rise as stock markets drop Qatar fund reportedly plans gold-mining investments

 LONDON (MarketWatch) — Gold and silver futures both rose Monday as another round of worries about the euro-zone crisis and China’s economic outlook saw traders shun equity markets in favor of perceived safe-haven investments.

Gold for December delivery GC1Z +2.26%  rose $33.30, or 2.1%, to $1,655.60 an ounce in electronic trading on the Globex market. 

The December silver contract SI1Z +3.12%  was up 78 cents, or 2.6%, at $30.86 an ounce.. 

The gains came as stocks dropped across Europe and Asia, while U.S. stock-market futures also pointed to further selling on Wall Street. 

The pan-European Stoxx Europe 600 index XX:SXXP -1.60%  fell 1.9% to 221.85 in early trading on the news that Greece is set to miss its deficit target for the year. 

Analysts at Karvy Commodities Broking said both gold and silver are likely to remain volatile in the coming days as traders look for clues on both the global economy and the euro-zone debt crisis. 

“Any positive signs from the debt-beleaguered euro zone will cheer up investors, and money may flow out of gold into stocks and other asset classes,” the firm said in a note to clients. 

Over the weekend Qatar Holdings, a division of Qatar’s sovereign wealth fund, said it would pay $775 million for a stake in European Goldfields UK:EGU +20.72% , including providing $600 million to finance operations in Greece. 

The Daily Telegraph reported that the deal is part of a broader strategy at the sovereign wealth fund, under which it will spend up to $10 billion acquiring stakes in gold producers. 

The newspaper said that the fund wants to invest in a range of commodities, but that access to physical gold is its top priority. 

Source; http://www.marketwatch.com

Gold is STILL a buy

Gold has dropped in price to around $1,600 per ounce and suddenly some say that gold is no longer a commodity that investors should embrace. I say ridiculous. 

In times of panic, investors sell everything, even assets that have medium to long-term growth opportunities. The recent selling of gold was related to panic from hedge funds needing to raise money for redemptions as well as a tightening of margin requirements. This was not selling pressure based on any fundamental change in conditions or outlook. 

Gold still makes sense in investors' portfolios as a hedge against the fear and stagnation that very likely will occur over the next several years in the global economy. Affluence in China and India will continue to drive consumption, and despite the economic travails throughout the world, the desire for gold jewelry will continue to rise. 

Emerging markets that have long held their currency reserves in U.S. dollars and euros will continue to lose faith in the wisdom of politicians in more established economies. Emerging economies will replace these currency reserves with tangible assets they trust.....like gold. 

I am not advocating a portfolio strategy entirely invested in gold; a balanced view matters. Gold should be an important part of an overall allocation strategy. This tangible asset still makes sense as a hedge against headline risk and provides the opportunity to participate in fundamental developing demand issues for this precious metal. 

Let others panic. As Warren Buffett says: "Buy when investors are afraid." The gold correction is an opportunity. It's our view that sometime in the not-too-distant future, gold will reach $2,000 an ounce. When that happens, those that pronounced that the wisdom of investing in gold was over will likely rue their panicked calls to sell all. 

Source; http://www.marketwatch.com

$2,000 Gold Target Maintained, “Structural Problems” Persist

Bank of America Merrill Lynch maintained its 12-month gold price forecast of $2,000 per ounce despite the yellow metal’s weakness in recent weeks.

In a note to clients, the firm wrote that “It is worth noting that falling quotations were not accompanied by substantial outflows from physically backed exchange traded funds particularly in recent days.  Hence, the correction was not necessarily driven by a broad-based reassessment of fundamentals.”

Bank of America Merrill Lynch went on to say that ongoing “structural problems” in Europe and the U.S. were bullish for gold.  Furthermore, the firm predicted that negative real interest rates will remain in place for the foreseeable future in many of the world’s developed economies.

Source; http://www.goldalert.com

Fall in Gold & Silver Price Meets "Strong Momentum" in Asian Buying as Germany Votes "Too Little, Too Late" to Support Greece

Gold and Silver Prices gave back an early rally yet again in London trade Thursday lunchtime, trading at $1615 and $30.15 per ounce as Eurozone stock markets rose after the German parliament voted overwhelmingly in favor of extra financial support for Greece and other weaker member states.

The Euro re-touched Wednesday's highs above $1.37 on the currency market, while both German and Greek government bond prices rose, offering new buyers annual yields of 1.99% and 22.88% respectively.

Commodity markets were mixed, meantime, with industrial metals slipping as European Brent crude oil rose over 1% to $105 per barrel.

"The Double Top formation in gold remain our main technical focus," says the latest chart analysis from bullion-bank Scotia Mocatta.

"Only a close back above $1704 would remove the bearish outlook," it reckons, citing a "measured move objective" off this summer's peaks above $1900 per ounce down at $1488 per ounce.

The 8% and 17% drop in US Dollar gold and Silver Prices of the last week continues to jar, however, with the surge in physical investment demand reported by retail bar-and-coin dealers in both Europe and North America, as well as with extended delivery times in London's wholesale bullion markets.

"The blockage is logistical," said a senior precious-metals trader in London to BullionVault this morning, pointing to strong shipping demand from Swiss refineries wanting 400-oz London Gold Bars to convert into kilo-bars for European and especially Asian buyers.

Advanced bookings for silver shipments to China ahead of the New Year are also rising, he said.

"Current [gold] buying momentum is much stronger than the respective comparable period in 2009 and 2010," agrees today's note from Standard Bank's commodities team, "matching levels last seen in August 2010 and February 2011."

This surge in demand "is broad-based throughout Asia," says Standard, and "particularly strong" from India – where next month's Diwali festival is traditionally associated with strong gold jewelry demand – while sales of gold scrap from existing owners "have been sporadic rather than consistent."

On the US Gold Futures market, in contrast – where derivative contracts are typically settled in cash rather than metal – "We expect [this week] will show another and sharper decline in net speculative [demand]," says the latest Precious Metals Weekly from the VM Group for ABN Amro.

The falling Silver Price saw a 10% drop in speculators' "net long" position (of bullish minus bearish bets) even before last week's sell-off, according to VM's data, while as a proportion of all Comex Gold Futures contracts, the "net long" held by non-industry players fell from 40% at the start of August to barely 26% last week.

Yesterday saw the gross tonnage held to back shares in the SPDR Gold Trust – the world's largest Gold ETF – end unchanged at 1242 tonnes, down 0.8% from a week ago and 6% below its peak of June 2010. By value, however, the SPDR Gold Trust's holdings have swelled by more than 22% since then to reach some $64.5 billion today.

"The German parliament is voting for too little, too late," said Fredrik Erixon of the European Centre for International Political Economy in Brussels today, as the vote in Berlin saw strong parliamentary approval for an extra €88 billion in German support – some $118bn – for the European Financial Stability Fund.

Germany will now guarantee up to €211bn ($287bn) in so-called "bail out" loans to weaker member states. Some 40% of respondents to Bloomberg News' latest quarterly survey see at least one member state quitting the 17-nation currency bloc in the next year, and more than 1-in-3 respondents foresee a global recession sparked by the Eurozone's debt crisis.

"You suddenly have a crisis of confidence and trust that's impacting markets and could hurt economies," says one respondent, chief investment officer at Halkin Investments in London, Jean-Yves Chereau.

"Politicians need to move ahead pretty quickly."

Lack of political leadership is a key factor driving Gold Investment, said HSBC precious metals analyst James Steel last week at the London Bullion Market Association's conference in Montreal.

Gold's 10-year rise to date "shows that the political and financial systems the world lives by aren't working," agreed another LBMA Conference speaker, John Fallon of Peer Capital Management.

"Markets won't wait, they need a resolution now – within the next couple of weeks or months," says Barry Eichengreen, professor of economics and political science at the University of California at Berkeley, interviewed in the Washington Post.

"But [Europe's] structural reforms will require several years to complete."

Urging centralized banking control in Europe ahead of fiscal union – because "this is first and foremost a banking crisis" – currency-historian Eichengreen warns that "the costs of allowing or forcing a member state to exit the Euro area would be very, very high.

"If you think a Greek exit would be chaotic, the implications for the rest of the area would be chaos squared."

Source; http://goldnews.bullionvault.com

Apple sets event for new iPhone next week

Kita tengok teknologi terkini plak...

SAN FRANCISCO (MarketWatch) -- Apple Inc. sent out media invitations for a "special event" on Oct. 4 related to the iPhone. No further details were given related to the subject, though Wall Street widely expects the company to unveil its new update to the popular mobile phone at the event, with the actual product expected to go on sale later in the month. Apple AAPL +0.21% will hold the event at its headquarters in Cupertino, Calif., as opposed to its typical venue in San Francisco. Apple shares were up about 0.5% to $405.21 in midday trades on Tuesday.

Amazon debuts new tablet computer

Kita tengok perang 'Tablet' Kejap...

(Reuters) - Amazon.com Inc introduced its eagerly-awaited tablet computer on Wednesday with a $199 price tag, potentially cheap enough to compete with Apple Inc's iPad.

The Kindle Fire tablet has a 7-inch screen, free data storage over the Internet and a new browser called Amazon Silk. It expects shipments to start on November 15.

"These are premium products at non-premium prices," Chief Executive Jeff Bezos said. "We are going to sell millions of these."

It also introduced the Kindle Touch, an e-reader with no buttons and a touch screen starting at $99. It also cut the price of its basic Kindle e-reader to $79 from $99.

Amazon shares rose 3.2 percent in morning trading, while Barnes & Noble, maker of the Nook e-reader, dropped 6.2 percent. Apple shares dipped 0.5 percent to $401.49.

Analysts expected the tablet to be priced around $250, roughly half the price of Apple's dominant iPad, which starts at $499. The Nook Color e-reader costs $249.

Having its own tablet is important for Amazon because the company has amassed a mountain of digital goods and services that could be sold through such a device.

As the world's largest Internet retailer, a tablet might also encourage Amazon customers to shop online for physical products more often.

Breaking into the tablet market will be difficult. Companies including Hewlett Packard, Motorola Mobility, Samsung and Research in Motion, have each launched tablets but none have taken a bite out of Apple's lead.
Apple dominates the North American tablet market, with 80 percent of the 7.5 million units shipped during the second quarter of 2011, according to Strategy Analytics.

Source;  http://www.reuters.com/

Ready for If Money Dies?

The Greater Depression is on, says Doug Casey. Next up, a true Dollar crisis...

SHOULD DOLLAR-DUMPING turn from trickle to flood, watch out. Exploding prices – aka exorbitant inflation – will compound the problems we saw in 2007-2009. Catastrophe will come when everybody realizes that the Dollar is an "IOU nothing".

That's the big picture according to Casey Research chairman Doug Casey. An optimist at heart, however, Doug Casey identifies in this interview with The Gold Report some reasons to be hopeful...

The Gold Report: Are the US government's debt, plus the money creation since the financial crisis began, really explosive circumstances that will bring catastrophic results? Or will it just result in a huge, but manageable, hangover?

Doug Casey: Both, but in sequence. One thing that's for sure is that although the epicenter of this crisis will be the US, it's going to have truly worldwide effects. The US Dollar is the de jure national currency of at least three other countries, and the de facto national currency of about 50 others. The main US export for many years has been paper Dollars; in exchange, the nice foreigners send us Mercedes cars, Sony electronics, cocaine, coffee – and about everything you see on Walmart shelves. It has been a one-way street for several decades, a free ride – but the party's over.

Nobody knows the numbers for sure, but foreign central banks, and individuals outside the US, own US Dollars to the tune of something like $6 or $7 trillion. Especially during the recent crisis, the Fed created trillions more Dollars to bail out the big financial institutions. At some point, foreign Dollar holders will start dumping them; they are starting to realize this is like a game of Old Maid, with the Dollar being the Old Maid card. I don't know what will set it off, but the markets are already very nervous about it. This nervousness is demonstrated in gold having hit $1,900 an ounce, copper at all-time highs, oil at $100 a barrel – the boom in commodity prices.

Some countries are already trying to get out of Dollars, but it could become a panic if the selling goes from a trickle to a flood. So, yes, it's a time bomb waiting to go off, or maybe a landmine waiting to be stepped on. If a theatre catches fire and one person runs out, soon everybody rushes toward the door and they all get trampled. It's a very serious situation.

TGR: If panic erupts on the US Dollar, would products manufactured in the US become super-cheap or super-expensive?

Doug Casey: They would become super-cheap. Everybody says that devaluing the Dollar will stimulate US industry because the products will become cheaper and foreigners will buy them. This is a huge canard everybody repeats and nobody thinks about. Yes, it is true for a while, but if devaluation were the key to prosperity, Zimbabwe should be the most prosperous country in the world as it has already collapsed its currency.

A strong currency is essential for a strong economy. Sure, a strong currency can hurt exporters for a while. But, a strong currency encourages manufacturers to invest in technology, and become more efficient. It rewards savings and results in the growth of capital that's critical for prosperity. A strong currency allows businessmen to buy foreign companies and technologies at bargain prices. It results in a high standard of living for the country, and yields social stability as a bonus. The idea that decreasing the value of currency to stimulate exports is a short-lived, stupid and counterproductive solution to the problem. People seem to forget that while the German currency was rising about sixfold from its level of 1971, and the Japanese Yen about fourfold, those countries became the world's greatest export economies. It didn't happen despite a strong currency, but in large measure because of it.

TGR: Given that the US is the world's biggest consuming nation, wouldn't fleeing the Dollar create a big consumer vacuum in the international community? Doesn't the rest of the world want to keep up the high level of exports to these US consumers?

Doug Casey: That's exactly why the US is in such trouble; it's idiotically focused on consumption, while only production can create prosperity. The world doesn't need to stimulate consumption. This is another canard, because everybody has an infinite desire for goods and services. I know for myself, I'd like not just a car, but 10 Ferraris, a couple of Gulfstreams and 10 houses around the world. So, by myself, I have an infinite desire for goods and services. Multiply that by 7 billion other people. The only way to gratify those desires is by producing enough to trade with other people to give you what you want. When so-called "economists" think the problem is that we don't have enough consumption, that shows that the profession itself is bankrupt. It's actually quite embarrassing.

TGR: But other countries currently produce enough of what the US wants. With US Dollars, that trade won't look good on their side eventually.

Doug Casey: The problem is the US doesn't produce enough in return. The US has been lucky to have a currency that has, so far, been accepted by everybody. But when everybody realizes that the Dollar is an "IOU nothing" on the part of a bankrupt government and a society that doesn't really produce anything anymore, it's going to create a worldwide catastrophe. Those $7 trillion held by foreigners are going to become instant hot potatoes.

TGR: Considering what you said a moment ago, that the world doesn't need to stimulate consumption, you must find some irony in the Obama administration's plan to stimulate consumption again in the US as a way to spur some economic growth.

Doug Casey: I'm afraid that after being counseled by the fools that surround him, Obama talking about economics is like the blind leading the doubly dismembered. They want to spend $450 billion trying to create new jobs – but these are government jobs, where you have people digging holes during the day and filling them up at night to create the appearance of employment. No government has any idea what the market really wants and needs. There should be zero government involvement in this. The government cannot and should not even try to create jobs. If Obama wants to stimulate the economy, he can decrease the size of the government. I would say a 90% reduction would be a good starting figure.

TGR: But that will create even more unemployment. That's one of the big concerns. States laying off employees could increase unemployment even more.

Doug Casey: It is wonderful that states are starting to lay off employees. Once they lose their state jobs, which suck wealth from taxpayers, maybe those people can find real, productive jobs providing goods and services that people actually want and will pay for voluntarily. So I'd argue that getting rid of state employees is essential to a sound recovery plan.

TGR: You warned early on in the 2008-2009 economic crisis that it would really be more of a hurricane. In the last year or so, we've been in the eye of the hurricane and there's more turmoil to come. Will the other side of the storm be worse than the first? And given the recent economic news, do you think we have moved out of that eye?

Doug Casey: Yes, I think we are moving out of the eye and going into the other side of the storm. This storm will be much more severe because we haven't solved any of the problems that caused the hurricane in the first place. The fact that governments all over the world have created trillions of currency units has only aggravated those problems. Now, I expect exploding prices to compound the problems that we saw back in 2007, 2008 and 2009. That will devastate the prudent people in society who saved money. They saved it in the form of currency, and wiping out their savings will be catastrophic.

TGR: Will this affect only North America and Europe?

Doug Casey: Mostly North America and Europe, but it's going to be very serious in Japan, too. It could be even more disastrous in China. The Chinese real estate market bubble is very inflated, driven by the lending of Chinese banks that won't be able to recover their loans. They will all go bankrupt, taking out the Chinese populace's savings with them. At the same time, those who own real estate will find it worth vastly less than what they paid for it. Those problems will create social disruptions in China, leading to riots, perhaps even revolution, and who-knows-what. The fallout is going to be terrible.

TGR: Many pundits and economists still project growth in China, albeit at a lower rate, and anticipate further expansion of the middle class.

Doug Casey: The 21st century will be the Chinese century, but the distortions and misallocations of capital that have occurred over the last 30 years – notwithstanding the truly phenomenal progress the country has made – are serious and have to be washed out. I am a huge bull on China for lots of reasons, but I am bullish for the long run. I think it is going to go through the meat grinder over the next 10 years. I don't know how it will come out; maybe China will break up into five or six different countries. Actually, that would be a good thing. Most of the world's nation-states are artificially constructed and too big to be manageable as political entities.

TGR: Your outlook on China fits right in with something you've been saying for years – about this being the "Greater Depression," which is also the topic of your upcoming presentation at the sold-out Casey Research/Sprott Inc. "When Money Dies" summit next month in Phoenix. Your opening general session talk is entitled, "The Greater Depression Is Now". We are now four years into it, based on your 2007 start date.

Doug Casey: Actually, depending on how long a historical scale you look at, you could say that, for the working class in the US anyway, the depression started in the early 1970s. After inflation, after taxes, their take-home pay hasn't risen in real terms for 40 years. But the definition of a depression that I use is "a period of time during which most people's standard of living drops significantly."

Net savings shows that you're living within your means and putting aside capital for the future. In the US, people have been living above their means for many years – that is what debt is all about. Debt means that you are borrowing against future production, which is exactly what the US has been doing.

TGR: So, how long will this Greater Depression last?

Doug Casey: It doesn't have to last long at all. It could be quite brief if the US government, which is basically the root cause, retrenches vastly in size and defaults on the national debt, which is essentially an enormous mortgage, an albatross around the neck of the next several generations of Americans. The debt will be defaulted on one way or another, almost certainly through inflation. I simply advocate an honest, overt default; that would serve to punish those who, by lending to the government, have financed its depredations. Distortions and misallocations of capital that have been cranked into the economy for many years need to be liquidated. It could be unpleasant but brief. The government is likely to do just the opposite, however. It will try to prop it up further and make it worse – compounding the problem by expanding the wars. So, it could last a very long time. In that sense, I'm not optimistic at all. I think there is little cause for optimism.

On the other hand, I'm generally optimistic for the future. There are only two causes for optimism. First, smart individuals all over the world continue, as individuals, to produce more than they consume and try to save the difference. That will build capital, which is of critical importance. They should just save by holding paper currency. Second, expanding and compounding technology will increase the standard of living. Remember that there are more scientists and engineers alive today than have lived in all previous history combined. Those two factors countervail the government stupidity around us. Whether they will be overwhelmed and washed away by a tsunami of statism and collectivism, I don't know.

TGR: You say that the US government is the root cause of this problem. Isn't that putting too much blame for a worldwide problem on one nation?

Doug Casey: The institution of government itself is the problem, and the problem is metastasizing like a cancer all over the world. But, sad to say, the US is the most serious offender because it is currently both the most powerful and the most aggressive nation-state. It has been greatly abetted by the fact that the US currency has been accepted globally. The US Dollar is, in effect, the reserve that backs all the other currencies in the world. That is why the US government has been the most destructive from an economic point of view. Furthermore, military spending – which in the US equals that of all the other militaries in the world combined – is purely destructive. It serves no useful economic purpose at all. The military is no longer "defending" anything – least of all liberty. It's actively creating enemies and provoking conflict. So, yes, I think the US government is actually the most dangerous force roaming the world today.

TGR: Do you see that changing after the next election?

Doug Casey: No. I think the chances of Obama being reelected are high, simply because more than half of Americans are big net recipients of state largesse. The US has turned into a larger version of Argentina politically, where the electorate is effectively bribed to vote for the biggest thief. It is likely to turn out much worse than Argentina, however. Unlike the Argentines, the US government is fairly efficient. And, unlike Argentina, the US is rapidly turning into a police state.

Electing a Republican might be even worse, though. With the exception of Ron Paul and Gary Johnson, the potential Republican candidates absolutely make my skin crawl. So, no, there is no help on the horizon. The US government is spending about $1.5 trillion more this year than it takes in, and it is not going to cut that. In fact, foolish spending to bail things out will increase. And, worse than that, the Fed has artificially suppressed interest rates for three years. Interest accounts for roughly 2% of $15 trillion official national debt, or $300 billion per year. As interest rates inevitably rise, that interest amount will grow. At 12% – and I'm afraid they'll have to go even higher than that – it would add another $1.5 trillion just in interest payments.

I absolutely see no way out without a collapse of the US currency and a total reordering of the US economy.

TGR: When Money Dies, the title of your summit, implies some return to a gold standard. How do you see that playing out?

Doug Casey: Nothing is certain, but when the Dollar disappears – and it's going to reach its intrinsic value soon – what are people going to use as money? Will we gin up another fiat currency like the Euro? The Euro is likely to fail before the Dollar. My suspicion is that people will want to go back to gold. It's not because gold is anything magical, but simply the one of the 92 naturally occurring elements that – for the same reasons that make aluminum good for planes and iron good for steel girders – is most useful as money. In fact, the reason that gold has risen as high as it has is that the central banks of third-world countries – places that don't have large gold reserves, such as China, India, Korea, Russia, even Mexico – have been buying the stuff in size.

TGR: The concept of going to a gold standard seems impossible in the sense that there is only so much gold above ground – 6 billion ounces? Maybe $11 trillion worth? But it's only a fraction of the US GDP. Even with gold at $2,000 an ounce, that leaves an immense gap. In that scenario, how do you convert to a gold standard?

Doug Casey: In terms of today's Dollars, gold should probably be a lot higher than it is. I don't know what the number will be, because a lot of those Dollars will disappear in bankruptcies; they will dry up and blow away. It's like a real estate development that was worth $1 billion on somebody's books; when it fails, that's $1 billion destroyed. It's a question of the battle of inflation (with the government creating Dollars to prop things up) against deflation (where businesses fail and wipe out Dollars). But put it this way: the US Government reports it owns about 265 million ounces. Its liabilities to foreigners alone are at least $6 trillion. If they were to be redeemed for a fixed amount, that would require roughly $22,000/oz. gold. And that doesn't count Dollars in the US itself.

I'm a bargain hunter and a bottom fisher, and bought most of my gold at vastly lower prices. But I think gold is going much higher because most people still barely even know that the stuff exists. As inflation picks up, they are going to want to get rid of these Dollars – but what other monetary commodity can they turn to? So, gold is going higher. I'm still accumulating gold.

TGR: You said that the storm as we emerge from the eye of the hurricane will be worse than it was on the other side. If they don't own gold, how do investors protect themselves?

Doug Casey: It's very hard to be an investor in today's world because an investor is someone who allocates capital in a way to create new wealth. That is not easy in today's highly taxed and regulated economy. It's late in the day, but not too late, to Buy Gold, silver and other commodities. Productive assets are good to own. Of course, the easiest way to buy most productive assets is through the shares of publicly traded companies, but the stock market is quite overvalued in my opinion, so that's not the best option right now.

In addition to trying to build personal holdings of gold and, to a lesser degree, silver, I think people should learn to be speculators. This is not to be confused with gamblers, who rely on random chances. Speculators position themselves to take advantage of politically caused distortions in the marketplace. In a true free market society, you would see very few speculators because there would be few such distortions. But regulations, taxes and currency inflations are likely to keep markets very volatile. Good speculators will position themselves to take advantage of bubbles, and identify bubbles that have been blown to their maximum and are about to deflate.

Government actions are going to force people to become speculators, whether they like it or not. Most won't like it, and very few will be good at it.

TGR: What bubbles might speculators look to exploit?

Doug Casey: I'd say the world's biggest bubble is real estate in China, but real estate bubbles are just starting to deflate elsewhere, too – in Australia and Canada, for example. It's relatively hard to short real estate, of course. Shorting bank stocks is an indirect way to play it. I'd say bonds are the short sale of the century. They're going to be destroyed. Bonds pose a triple threat to capital because:

• Interest rates are artificially low, and as interest rates rise – which they must – bonds will fall;
• Bonds are denominated in currencies, and most currencies, let's say Dollars, are going to lose a lot of value;
• The credit risk of most bonds, certainly those issued by governments, is high.

On the long side, mining stocks are very cheap relative to the price of gold right now. I'd say there's an excellent chance of a bubble being ignited in gold mining stocks, especially the small ones; in fact, I'd put my finger on that as likely being the easiest way to make a killing.

TGR: Technology was one of the two areas of optimism you mentioned earlier. Do you see a bubble forming there?

Doug Casey: You have a point, but I'm not sure you can talk about technology stocks as a whole; technology is too variegated, too vast a field. Although, I've long been a huge believer in nanotech, which is likely to change the world as we know it. With gold stocks, however, you can jump into a discrete universe, that's likely to become a mania.

TGR: Thank you for the tips, Doug, and as always, for your thoughtful insights.

Source; http://goldnews.bullionvault.com

Gold traders take note: This year, Diwali begins on Oct. 26

The cruelest month for gold

Commentary: October, not September, typically bad for gold

 CHAPEL HILL, N.C. (MarketWatch) — Brace yourself, gold traders: October is right around the corner.

And it is the worst month of the calendar for gold.

To be sure, most gold traders already have their hands full dealing with September, which has been a sobering one for the yellow metal. Even after Tuesday’s 3.6% rally, bullion is down 10% for the month. 

They probably can’t wait for the month to be over. 

But consider October’s track record. Over the last three decades, the London PM Fixing Price in U.S. dollars terms has lost an average of 0.9% during October. That compares to a 0.6% gain in all other months. That difference of 1.5 percentage points is statistically significant. 

(By the way, I didn’t go back further in the historical record because it was only in the mid 1970s that it became legal for U.S. citizens to own gold.)

 What accounts for gold’s seasonal weakness? One theory focuses on gold’s historical tendency to move inversely to stocks. Since October is often when stocks hit a tradable low and begin a strong rally, that’s when money tends to flow out of gold into stocks. 

Though this theory doesn’t fit the facts perfectly, it at least is consistent with what tends to happen in September, a month that on average is bad for stocks. And, sure enough, it tends to be a good one for gold. In fact, just as September is the worst month of the calendar for stocks, it is the best one for bullion. 

One place where the theory starts to break down is in November and December, which tend to be strong ones for both gold and stocks. But, according to a study from Ned Davis Research, there are other seasonal factors that may help to explain gold’s strength in those later months. 

Those other factors trace to jewelry demand in India. Ned Davis senior equity analyst John LaForge explains that, even with all the speculative interest in investing in gold, “roughly 50% of gold demand still comes from jewelry. Over half of this comes from India and China. While China is fast becoming a large player in the jewelry market, India has been the primary driver for years.” 

And it turns out that Indian demand for gold follows a seasonal pattern of its own. One period in which it begins to pick up is around Diwali, a five-day festival which begins at some point during the mid-October-to-mid-November time frame. Furthermore, this is when many Indian couples schedule their weddings. 

LaForge analyzed gold’s price behavior in the month before and after the last 10 Diwali festivals, and found that gold typically carves out some sort of a tradable low right around the start of Diwali. 

Gold traders take note: This year, Diwali begins on Oct. 26. 

Source;  http://www.marketwatch.com

Tough Going for Gold, and It's Looking Tougher

October is the worst calendar month on average for gold, according to MarketWatch columnist Mark Hulbert, who says there are some seasonal winds blowing against the yellow metal. But watch for those weddings and festivals in India. Laura Mandaro reports.

See; http://www.marketwatch.com/video/asset/tough-going-for-gold-and-it-looking-tougher/144936E6-464E-435B-82B5-E0FA0DB55027

Source; http://www.marketwatch.com

Operation Twist – Dumber than Dumb

The Fed's new move will do little good, and could make things a whole lot worse... 

OPERATION TWIST is a plan so dumb you have to have to Ph.D. to believe it will do any good. Quantitative easing was dumb enough. This is dumber, writes Chris Mayer for the Daily Reckoning.

The Federal Reserve will buy $400 billion of long-dated Treasuries, financed by selling bonds with three years to go or less. The idea is to try to drive long-term rates lower, which the Fed thinks will help the mortgage market.

The Fed unveiled its crackpot scheme on Wednesday and the market quickly registered a firm opinion, as you see in the daily chart of the S&P500:

 

Yesterday was no better, with the stock market ending the day deeply in the red.

Aren't you glad we have the Federal Reserve to run to our rescue? What's the old saying, "with friends like these..."?

The market tanked presumably because of the Federal Reserve's gloomy prognosis for the economy. Housing is "depressed." (Yup, we knew that.) Unemployment will remain "elevated." (Unfortunately, not so for central bankers and their legion of economists). Growth "remains slow." (With the private sector under siege, it's amazing we've done as well as we have.)

Why people still take the Fed's forecasts seriously is beyond me. Here is an organization that has been behind on calling every turn and yet investors still parse Fed statements as if going over the words uttered by a prophet. I can only chalk up such foolishness to a persistent belief in oracles.

But back to Operation Dumber. It won't work. It will make things worse, much worse, than they would've been. Let's look at the handiwork of the Fed's playbook so far.

So far, we've had 33 months of near zero interest rates. And the Fed has purchased $2.3 trillion worth of debt in two rounds of "quantitative easing."

And...what?

The economy, by the Fed's own admission, is in poor shape. So, as if possessed with a kind of insanity, the Fed says "Let's do more of the same." And hence, Operation Dumber was born. Another $400 billion down the tubes. The economy won't go anywhere.

First, it's doubtful that lower long-term interest rates will push mortgage rates much lower. Mortgage rates have not fallen in step with the ten-year treasury as it often does. Investors are drawing a line. You have to remember, to make a mortgage, someone has to be willing to hold the paper. The market is saying that 3-4% is about the floor.

Think of it this way: If the Fed could drop interest rates to zero, do you think mortgage rates would follow? There has to be some profit for the lender, some incentive for the investor.

Second, I don't think lower rates will help much, because much of the US mortgage market is in trouble. 

Five years into the housing meltdown, 28% of US mortgages are underwater. That is, the amount owed is more than the home is worth. About 7% are delinquent, and 10% have been foreclosed on. That's 45% of the country's mortgages in some state of trouble.

So, low interest rates are not going to help the mortgages that are underwater. Those people can't refinance. They need to put more money in their homes or they need to walk away and let the bank deal with the problem. Ditto the rest of the troubled mortgage market.

This is, of course, the market's solution, which government people and debtors abhor. They'd rather take it out of the savers and the old people. Yeah, let's stiff grandma. She's trying to live off her life's savings by putting her money in bank CDs to earn next to nothing. Let's make it tougher on her.

People are so eager to talk about the good of low interest rates, they forget about the bad. But the consequences are wide-reaching. Besides making it tough on savers, a climate of low-interest rates will force people to take greater risks in an effort to make something on their money.

Artificially low interest rates also send false signals to markets. It distorts pricing patterns and so will bring about a lot of mistakes that will only become apparent later. (Think housing, where artificially inflated housing prices and easy money led to a huge but phony boom in housing, the extent of which we see clearly now and are still suffering from).

What about the banks? The initial read in the papers is that this will be bad for banks. It will make lending less profitable by squeezing the difference between long-term and short-term rates — a source of bank profits.

But, thinking about it differently, Operation Dumber is just another gift for the banks. QB Partners' Paul Brodsky and Lee Quaintance wrote in a letter to shareholders yesterday: "This is a move to help recapitalize banks under the guise of supporting the housing market... This is all about the banks income statements."

How so? Well, QB explains that the Fed will basically buy long-duration Treasury paper from the Banks, handing them nice gains on those securities. (Remember, as rates fall, the value of the paper goes up. So banks have big gains in long-duration Treasuries). Banks get an increase in short-duration Treasuries. Net-net, they are in a less vulnerable position and will show a boost in profits.

Regardless of all that, it seems clear to me that Operation Dumber will have little positive effect on the economy. At some point, we will learn that the only way out of this economic morass is to face the painful, yet common sense adjustments, needed. It's really simple. People need to save more money, pay down debts and spend less. The nation needs to get its financial house in order. The mistakes of the prior boom need to be liquidated.

If the Feds and the government would get out of the way, we'd have a quick recession and get on with life. Instead, here we are: nearly 5 years after the bubble popped, 33 months of zero interest policy and trillions of Dollars of wasted government "stimulus" spending and Fed money printing — and still suffering from high unemployment and little economic growth.

So, what to do?

As investors, you stand pat. Or you use the opportunity to pick-up a few things. As I've said before, the time to prepare for times like now is before they happen. I don't know what the market will do from here. No one does.

Source; http://goldnews.bullionvault.com