Gold’s Correction Seen As Healthy

Despite the recent fall back in the gold price all the structural imbalances in the global economic system remain in place and ever-growing Chinese and Indian demand could turn supply/demand forecasts on their head. Holdings in the SPDR Gold Trust remained unchanged. While holdings in the iShares Silver Trust, the world’s largest gold-backed exchange-traded fund, fell further to 10,526.70 tonnes, its lowest since November, spot gold gained 0.2 percent to $1,348.25 an ounce by 0341 GMT, but was on course for a third consecutive week of falls. U.S. gold edged up 0.1 percent to $1,347.8.

The recent downturn in gold and silver prices is a healthy correction that will not last long, traders and analysts said, a great time to buy.

“There’s some selling pressure still ongoing in the gold market,” said Yingxi Yu, an analyst at Barclays Capital. “But we still expect prices to venture into uncharted territory sometime this year. The macro environment still looks supportive for investment interest in gold.”

An improved economic outlook dampens gold’s safe-haven appeal, but inflation worries down the road will again drive investors to the precious metal, Yu said. Also weighing on sentiment, the CME Group, the parent of the Chicago Board of Trade, said it would hike requirement margins on gold futures by 11 percent, and silver futures by six percent.

The dollar index pared some gains from the previous session, as the euro held its ground with investors wary of getting too bearish on the common currency after a recent rally turned round sentiment.

The physical market in Asia remained buoyant, as jewelers, investors and bullion traders hunted for bargains after prices fell to nearly $100 below the record high of $1,430.95 hit on Dec 7. Chinese activity is expected to slow as the week-long Lunar New Year holiday in early February draws closer.

“Demand is still strong, with Thailand being the major buyer,” said a Singapore-based dealer. Considered a safe investment against economic and related crises, gold is and will be enjoying sustained growth in demand, even though its price remains at $1,346 per ounce it will go much higher, and may reach as high as $1,600 this year if not more. Resurgence in investment demand was propping up gold prices Monday. Gold for February delivery was adding $5.30 to $1,346.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,352.40 and as low as $1,340.70 while the spot gold price scooted $4.60 higher, according to Regal Assets gold index.

 

Source: http://goldcoinblogger.com

Invest in Silver or Gold? - Tony Richardson

From Genesis 2:11, gold is the first symbol of material wealth mentioned in the Bible, and throughout the Bible gold is referred to 25% more often than silver. It was primarily used to add aesthetic value to items in connection with deity and royalty. And from the Pharaohs of Egypt, to the Aztecs of Mexico, to the California Gold Rush – throughout time and throughout the world – gold has endured as the historic “currency of choice”.

Silver was used in similar ways as gold, but most commonly as a trade currency with a value far less than that of gold. At the height of Ancient Israel’s glory (about 640 BC), it is recorded, “All King Solomon’s goblets were gold, and all the household articles in the Palace of the Forest of Lebanon were pure gold. Nothing was made of silver, because silver was considered of little value in Solomon’s days.” (First Kings 10:21)

Silver is the most plentiful and least expensive of precious metals. In spite of this, from Ancient Turkey, to the Roman Empire, to the Incas of Peru, silver has been esteemed for its gleaming beauty, malleability and resistance to corrosion. Today, demand for silver comes primarily from three sources: industrial & decorative uses, photography, and jewelry & silverware.

Unfortunately, as you probably know, silver gets somewhat of a bad rap on the Street. Back in 2005, when silver was trading at around $7.50 per ounce, I heard an investment manager say, “You can buy an ounce of silver for the price of a tuna sandwich.” And more recently, someone commented, “Silver is gold’s crazy little brother” due to its notoriously volatile price. In silver-investor turnabout, that same ounce of silver now buys three tuna sandwiches – and a large bag of chips! Silver has risen some 360% since 2005. I guess that “crazy little brother” may not be so crazy after all.

As for gold, it has risen roughly 320% over the same period. Both silver and gold prices have gained on central-bank fiat-currency overprinting – namely, the Federal Reserves’ quantitative-easing campaigns.

But when we compare the likelihood of one – silver or gold – appreciating at a faster pace than the other, we must look at the basic law of supply and demand. Consider this:

1. Gold supplies expand at an annual rate of about 2%;
2. Demand grows at an offsetting rate of about 2%;
3. But, world population is growing at 1.13% annually;
4. Gold mining output is declining; and
5. Gold reserves are depleting 6% annually.

In the first quarter of 2010, Russia bought 26.6 metric tonnes of gold; the Philippines bought 9.6 tonnes in 2010; Kazakhstan 3.1 tonnes; India bought 200 tonnes from the IMF in November 2009; and in April 2009, China “admitted” to having added 454 tonnes to its reserves since 2003.

As for silver, according to the World Silver Survey 2010, silver supplies are keeping pace with global demand, and have done so consistently since 2000.

Conclusion: Silver has had a fantastic run over the past five years, but prices are likely to take a hit on signs of an improved economy, especially since there are no supply constraints. Gold prices, on the other hand, are poised to continue an upward trajectory on declining supply and rising demand, even on signs of an improved economy.

In any case, for the time being, central-bank overprinting and government-debt expansion mean both silver and gold investors may well enjoy nice gains over the coming years.

And one more thing regarding the future of gold: Revelation, the last Book of the New Testament, describes the future City of God – about the size of India – as being made of “pure gold”. Imagine that.

 

Source: http://www.financialsense.com

Gold Price Correction Consistent with Bull Market Continuity - James West

With technical indicators today suggesting gold could dip as low as US$1,322 an ounce in the current corrective phase, bears and bugs are deploying opinions in-line with their interests. The drop by nearly $100 in ten weeks is nothing new, nor is the strident tone growing in both camps. Its all consistent with the bull market in gold and silver that has been underway for the last decade.

In a pattern that is as clear as the four seasons, the tone in the media presages market sentiment, which segues into market action, then market re-action, classically followed by market price adjustments for over-reaction, which itself engenders a reversal of market sentiment, and a subsequent reversal in media tone. Metaphysical economic ping pong at its finest.

To detail and exact example would render this an unreadable article, because the micro-focus on step by step events could cause migraines. Far better to recognize the pattern from a 10,000 foot viewpoint without zeroing too closely on the details – you risk missing the core message and opportunity.

That is the classic problem with the mainstream financial press, which can only report what is happening right now. Drawing conclusions about future performance from current data departs the realm of journalism and enters that of opinion, and we know how common those are.

That being said, it is nothing short of remarkable how vast the quantity of high paid experts in vaunted positions yielding  astronomical pay are so consistently wrong, and yet retain their overpaid posts.

In an article published by Bloomberg on  October 23, 2006, after gold had lost 20% of its value after touching what at that point was a 26-year high of $732 an ounce. John Reade, a UBS analyst and one of the generally most incorrect predictors of metals prices in the last ten years stated then, “There seems little sign of investors and speculators wanting to rebuild long positions.”

Another analyst quoted, David Thurtell from BNP Paribas said, “`The inflation outlook is fairly benign. Investor demand will not be as strong as it has been.'' 

CIBC World Markets analyst Stephen Bonnyman said at the time that it expected metals prices to remain volatile. "Barring a major contraction in global economic growth, we see little risk of collapse in metals prices but expect a gradual decline from existing levels," said analyst  in a note to investors.

CIBC revised its price outlook for gold for 2006 to $580 an ounce from $675 an ounce, while the price for silver was unchanged at $12 an ounce. 

Gold has corrected in price in excess of 20% no less than 46 times since the onset of the bull market in 2001. Each time, the analysts and money managers come marching out of the woodwork to proclaim and end to the bull market, only to be sent slinking back in silence as the price of gold powers to new highs.

What is most important in understanding the long term price direction of gold is not listening to analysts at banks whose opinion is a reflection, in general, of what has already happened as opposed to a thoughtful analysis of what is unfolding. It is the fundamental realities in the global economy that instigated the bull market in gold, and continues to drive it higher, in the macro sense.

The number one catalyst in the birth of the gold market was the broad perception that the U.S. was printing too much money relative to its GDP and tax base in order to finance its military and political ambitions in the middle east, where it has historically had a vested interest in maintaining instability thanks to that jurisdiction being the primary source of energy for the United States.

After World War 2, the U.S. learned that the most strategic resource in maintaining military superiority was control over fuel supply. From that point forward, it set about covertly destabilizing regimes in  jurisdictions where the political climate was not conducive to its own interests, i.e. continuous supply of relatively inexpensive oil. Venezuela, Saudi Arabia, Iran, Iraq and Egypt have all seen the history of their political leadership influenced by the machinations of the CIA.

What the U.S. discovered subsequent to that period was that it could not afford to finance a mult-faceted military presence without going deep into debt, which it then proceeded to do with the blessing of economists of the era who espoused deficit spending as the path to economic prosperity.

The fast-forward result is $14.7 trillion U.S. dollars in debt held by the rest of the world who can now ill afford to either buy more or sell any lest they cause a panic for the exits. The only reliable hedge against the U.S. dollar devaluation strategy now underway by the Americans is the monetary metals.

China, the biggest holder of U.S. debt, is acutely aware of this, and this is one of the reasons why it has become the biggest producer of gold in the world. It will foil America’s attempts to dominate the world with the dollar by replacing it with the yuan backed by gold and silver, platinum and palladium.

This fundamental reality has not altered one iota since manifesting itself in the early part of the last decade. If anything, the willingness of the U.S. to debase the value of its currency and impoverish its general population is seen to be increasing, as it purchases an average of $75 Billion of its own treasurys with its own checkbook, i.e. the Federal Reserve.

These corrective windows are opportunities for those seeking to preserve net worth to buy gold, and for speculators to accumulate gold, silver, platinum and palladium producers and explorers. 

The only global fundamental change that will alter the direction decisively of the price of monetary metals is a revaluation of the U.S. dollar on an official basis – a move for which the political power and moral integrity are both thoroughly absent.

I am not a gold bug. If the U.S. dollar were to be a correctly valued and unencumbered monetary unit, there would be no need to own gold and silver. But that is not the case, and so, in gold in silver we have no choice but to place our trust. For the long term, that will not change.

 

Source: http://www.financialsense.com

Gold vs The Dollar - Elizabeth Kraus

An inflow of U.S. dollars into the system wreaked havoc on higher-yielding currencies which became more attractive to foreign investors today. Brazil took the step last Friday of essentially trying to buy up dollars to eliminate some pressure on the real, but Thursday’s move is much more aggressive. Although countries like Brazil will have to hike a lot to really make a dent in the inflation picture, the move was pressuring gold. China might follow Brazil’s lead, although its path is a bit more shaky. As was disclosed Wednesday, China’s economy grew 10.3% in 2010 (9.8% in the fourth quarter), and consumer prices rose 4.6% in December vs. a year ago. All told, prices jumped 3.3% last year.

The inflation reading of 4.6% is slightly lower than the 5.1% increase in November, and it might take some pressure off the country to raise interest rates. But with a real interest rate of negative 1.85%, China may eventually decide it has no choice but to tighten its monetary policy further.

China hiked its interest rate by 25 basis points on Dec. 27 and it increased the amount of money banks must hold in their reserves on Friday, the seventh time in the past year. Currently the one-year deposit rate is 2.75%.

A negative real interest rate environment is great for gold buyers in that country as an investment into gold winds up being worth more.

The Currency Truth Can Be Found In Gold

While the turmoil in the economy since 2008 continues to worsen, gold has been representing a better indicator of whether the U.S. dollar is weak or strong. The price of gold doubled from around $700 in September 2007 to around almost $1,400 today. While the U.S. dollar price of gold used to be inverse of the U.S. Dollar Index, today, it is breaking free.

True state of currency today is priced in gold. Don’t look to the U.S. Dollar Index for answers.

Dollar Index Conceals the Real Weakness in U.S. Dollars

The matter of floating paper currencies, and the inability to measure dollar vs. gold properly in the current madness, is confusing. However one thing is very clear in viewing the long term financial market, if that piece of paper is the reserve asset of the entire financial world, we are all in very serious trouble, and are about to learn all about inflation in a most unsatisfactory manner. Congress might as well raise the national debt ceiling to $50 trillion, but they’ll not cure their own disease. The unions and lobbyists will see to it. But, until that time comes, at least when the water starts coming onto the deck of the boat, what will the premium to buy gold and silver be? Today one can buy gold and silver at low premiums. They are the life preserver needed to keep one’s portfolio afloat.

Commentators on CNBC and elsewhere talk about the U.S. dollar being weak or strong, and reference the U.S. Dollar Index being up or down as their source. But to really understand what the U.S. Dollar Index actually represents, in reality, it is simply a camouflage meant to conceal the real weakness of the U.S. dollar.

CNBC keeps the U.S. Dollar Index figures hidden from public view. They don’t include it as part of their scrolling data that one sees at the top of their daily broadcasts. And, CNBC does have the exchange ratios of the euro, yen and pound, but they don’t allow viewers to keep tabs on the U.S. Dollar Index itself.

It is so camouflaged, that, if the U.S. dollar, euro, yen and pound would be on a sinking ship yet anyone watching the U.S. Dollar Index as an indicator wouldn’t know the ship is sinking until the water started coming over the edges of the deck. It’s a covert act simile to Reed E. Slatkin, co-founder of Earth Link.com, who took $593 million from investors in one of the biggest Ponzi schemes in history–while investors’ bank statements showed their investments were safe and gaining interest.

To hold onto wealth today is to prepare for the sinking of the U.S. dollar ship. Today the waves are splashing on the deck. The wise are putting on their gold and silver life preservers and preparing to jump in the lifeboat when the time comes.

There will be some out there who will try to refute this analysis by pointing to the fact the price of gold languished for 20 years from 1980 to the year 2000. During this time period, there was no competition to the U.S. dollar. The dollar was king and equities were the place to be.

In the year 2000, the euro, after a down first year, offered up for the first time an alternative to the U.S. dollar. Subsequently, just as the euro and other currencies gained steam, ETFs became available where the average investor had easier access to gold than going to their local gold dealer. But many investors still choose to own physical gold and silver themselves and as a consequence, the U.S. Mint is working overtime to keep up with unprecedented demand.

Investors who understand what’s really going on in the economy have been buying gold and silver. They know that Federal Reserve Notes have 40 short years of existence without gold backing. They know that changing the amount of FDIC coverage from $100,000 to $250,000 doesn’t mean their bank account is any more secure from their bank failing. They know congress will keep voting to raise the debt limit without making any real progress on cutting back. They have no choice but to raise it. They know the system is unsustainable in its present form, and no Gene will rescue them.

In conclusion, despite gold’s 10-year rally and mass media coverage, most investors and average people don’t have a clue about gold. In fact, they might be more apt to sell gold at high prices rather than buy it. Legendary investor Jim Rogers said recently at an event with 300 major international money managers that 76% of them had never owned gold.

 

Source: http://goldcoinblogger.com

Perak perkenal dinar emas, dirham untuk simpanan dan pelaburan

2011/01/26

IPOH: Dinar emas dan dirham perak yang akan dilancarkan oleh kerajaan negeri Perak pada penghujung bulan depan adalah dalam bentuk instrumen simpanan dan pelaburan dengan tujuan untuk memberi keuntungan kepada rakyat.

Pengerusi Goldnet International Sdn Bhd, Datuk Rais Hussin, berkata dinar emas dan dirham perak itu tidak akan digunakan sebagai mata wang seperti yang dilakukan kerajaan negeri Kelantan sebelum ini. 

"Goldnet International dan kerajaan negeri Perak akan mengambil peluang meneroka pengalaman luas Kuwait Finance House (KFH) yang sebelum ini telah menawarkan akaun emas di Malaysia," katanya dalam satu kenyataan di sini, hari ini.

Beliau berkata, dinar emas dan dirham perak itu akan dikeluarkan Goldnet International Sdn Bhd yang merupakan sebuah syarikat usahasama dengan Perbadanan Kemajuan Negeri Perak (PKNP).

Semalam, Pengerusi Jawatankuasa Pelajaran, Pengajian Tinggi, ICT, Sumber Manusia, Sains dan Teknologi negeri, Datuk Mohamad Zahir Khalid, berkata Perak sedang bekerjasama dengan KFH untuk memperkenalkan dinar emas dan dirham kerana institusi kewangan itu berpengalaman luas dalam aspek pengendalian berkenaan.

Beliau berkata, dengan memperkenalkan dinar emas dan dirham ia akan mempelbagaikan bentuk simpanan dan pelaburan kewangan rakyat.

Segala perincian, mekanisme serta bentuk dinar dan dirham berkenaan akan diumumkan pada pelancaran itu nanti, katanya. - BERNAMA

Sumber: www.bharian.com

America's Debt Crisis: Debt crosses $14 trillion mark

NEW YORK (CNNMoney) -- The amount of U.S. debt subject to the country's legal maximum has topped $14 trillion for the first time.

On Wednesday, the amount of debt subject to the cap hit $14.001 trillion at the close of trade, according to the daily Treasury statement released on Thursday.

That means the country is less than $300 billion away from the $14.294 trillion debt ceiling, which is a cap on how much the federal government can legally borrow.

The debt ceiling has become a focal point of the debate over spending and debt. Even though congressional leaders say the cap will be raised, Republicans are vowing to use the issue as leverage to force spending cuts.

The Treasury Department estimates that borrowing could reach the cap sometime between March 31 and May 16, according to a letter Treasury Secretary Timothy Geithner sent to Congress earlier this month.

Debt ceiling: Geithner won't let U.S. default

While Treasury has certain measures it can take to postpone a breach from occurring, Geithner said they would only last "several weeks."

He urged lawmakers to act soon to raise the ceiling, warning that failure to do so would be disastrous for the economy and for Americans.

Although the debt ceiling has never been reached -- so it's impossible to say definitively what would happen if it were -- budget and debt experts warn that no good can come of it.

Debt ceiling: What you need to know

If U.S. borrowing hits the ceiling and lawmakers fail to raise it, Treasury would be prohibited from borrowing more money. Barring immediate and draconian policy changes, the country would be unable to pay its bondholders or fund programs and benefits in full. That's because there wouldn't be enough tax revenue coming in to cover all of the country's bills.

Experts say the cascade effect would be crippling not only to the U.S. economy but very likely to economies and markets worldwide.

At a minimum, a default could pummel U.S. bonds, the dollar and U.S. investors' portfolios.

Source: http://money.cnn.com

Gold Outlook 2011: Irreversible Upward Pressures And The China Effect - Elizabeth Kraus

While the Portugal auction went with the yield actually falling in the secondary market, which is a strong result for a country that was projected to be on its deathbed, German GDP in the fourth quarter grew at the fastest pace in two decades… And, while the euro rallied on these two news items, the judge hearing the lawsuit by the GATA regarding price manipulation asked for the gold records that the Fed was trying desperately to keep from the public…which could end up being HUGE

But for the time being, to remain analytical and keeping it simple—to the news on gold— the outlook for gold and precious metals, the single one asset class that seems to continually out-perform all others year after year—has a double edged sword.

An appropriate simile is like one of those good news bad news jokes, you know the ones—your doctor phoned with some good news and some bad news. The good news is they will be naming a new incurable disease after you. The good news is that gold is rising in value; the bad news is—well nearly everything else about the economy.

The different mindsets about gold in Asia and South America, see gold as the protector of wealth, where in the West, we view gold as something akin to the grim reaper.

Reading hundreds of articles, talking to top International analysts, power breakers, gold investors…to be more clear on what our government, our banks and financial media tell us about money, which is what most of us will accept as our financial mindset or financial reality, I found, that if anyone doubts the power of government economic policy to shape mass economic reality, just look at how we have changed our attitudes towards debt, saving and economic value over the past 40 years. Our current debt based mindset began to form the day the US dollar, the worlds reserve currency, was removed from its final international peg with gold in 1971.

Inflation

So, while this year Mr. Bernanke’s $600 billion of quantitative easing debased the value of the $840 billion in US treasuries the Chinese hold, it also requires them to debase the Yuan which is pegged to the dollar. This begins to cause inflation, which is showing up in rising food prices. Vegetable prices, for example, have risen 20 percent in the past year. This past weekend, Middle East and South Asian’s are rioting, burning markets over the food inflation in those regions. As inflation rises currencies depreciate in value that creates higher universal debt, which means gold price will continue to rise.

In the meanwhile, from mid-week on, last week, until last night, the Chinese renminbi lost ground to the dollar (albeit in small moves)… But still, it was strange to see, given the renminbi’s moves for the last six years… All that changed last week, with the renminbi’s record-sized move stronger versus the dollar… The thing that amuses me about this move and its timing is that China’s Premier, Hu, will be visiting the US this week… So, no wonder the renminbi is back to gaining versus the dollar… The Chinese moved it lower versus the dollar for a few days, so that it could make news with a record-sized move higher versus the dollar! The boys and girls in Washington might not see this for what it is, but I do!

And… One more thing on gold… It seems that with gold falling below $1,400, the demand for physical gold is more than what the suppliers can mint! Here’s another story from the GATA website…

“Demand for gold bullion has been unrelenting since gold’s price dropped below $1,400 an ounce. We cannot meet all the enquiries that we are getting,” said Nigel Moffatt, Treasurer of the Perth Mint, one of the world’s largest gold refiners and distributors. Demand for our coins and medallions is strong, but the biggest demand is coming from banks and traders looking for kilo bars.

All that demand, very little supply, and the price of gold remains below $1,400? I find that to be simply amazing! Don’t you? I mean, this falls under the great line “There’s no such thing as a ‘shortage,’ the item is simply in need of a price adjustment”…

Then there was this… Think China’s inflation is their problem alone? Guess again…

When garment buyers from New York show up next month at China’s annual trade shows to bargain over next autumn’s fashions, many will face sticker-shock. Though many Chinese are earning higher salaries, the government has become worried that rising inflation could lead to social unrest. “They’re going to go home with 35 percent less product than for the same dollars as last year,” particularly for fur coats and cotton sportswear, said Bennett Model, chief executive of Cassin, a Manhattan-based line of designer clothing. “The consumer will definitely see the price rise.”

Inflation has arrived in China as it coming to the US. This means the demand for gold will be rising high! And after last week’s release of crucial financial statistics by China’s central bank, few economists expect Beijing officials to be able to tame rising prices any time soon. Right now, the so-called “experts” believe that China’s inflation won’t be that big of a deal here in the US… I say there could not be a bigger fallacy.

 

Source: http://goldcoinblogger.com

Ordering Suspension during Chinese New Year

Due to the production shut down on 1st to 10th Feb 2011 for the celebration of Chinese New Year, we will suspend the products below from ordering effective from 1st to 10th Feb 2011, dealers and customers will not be able to make any order during this period. However, the products that not listed below will not be affected, dealers and customers can make order as usual.

Products to be suspended from ordering
1) Public Gold Bullion Bar 20g (Au 999.9)
2) Public Gold Bullion Bar 50g (Au 999.9)
3) Public Gold Bullion Bar 100g (Au 999.9)
4) Public Gold Coin 50g (Au 999.9)
5) Public Gold 1 Dinar 4.25g (Au 916)
6) Public Gold 5 Dinar 21.25g (Au 916)
7) Public Gold 10 Dinar 42.5g (Au 916)

Dealer Recruitment Drive II

Terms & Condition

• Purchase of 2 pieces of 250gm Gold Bar, automatically will become PG Authorized Priority Dealer to enjoy the 1.5% sales commission.
• This promotion is open for all PG Customer and Public Gold Authorized Dealer.
• Promotion period: 16th January 2011 to 30th April 2011.
• All transaction can be using Normal Payment Purchase or Easy Payment Purchase (Allowed for 6 months EPP payment method).
• All sales purchase must be in single receipt.
• Public Gold reserves the right at its absolute discretion to vary, delete or add to all or any of the Terms and Conditions herein from time to time and at any time without prior notice.

For more information or enquiries, please call Public Gold Customer Service line at 604-6449999 (Mondays to Fridays, 9am - 6pm, excluded public holidays).

Silver: From $30/oz to over $500 by 2020 - Jason Hommel

Silver: From $30/oz. to over $500 by 2020.  In under a minute, I can tell you why that price must happen, and likely when.  It seems to me that the public will one day wake up and start buying silver to protect from inflation.  Thus, long before, say 10-20% of people buy silver, at least 1% of the American public will buy silver.  We can calculate what might happen to the silver price when that happens.

The amount of money in US Banks is about $18 trillion.  1% of that is $180 billion.

Very little silver is left; it's mostly all been consumed, so most of what is available to buy is the annual new mine supply which is 700 million ounces.

$180 billion is $180,000 million.  Divide that by 700 million, and we get an implied price of $257 per ounce.  Do the math yourself.  I'll wait.

But that price would mean that there is no newly mined silver left over for any industrial use, and that nobody else outside of the USA could buy any of the world's newly mined silver.  Clearly that can't happen; those two groups would continue to buy silver, competing to buy, and driving up the price even more.

Thus, silver is very likely to be about $500/oz., by about the time that 1% of the American public wakes up and starts to buy silver.  That will be the very beginning of the bull market in silver, when measured by "popular demand" -- and at that price, silver would still be very unpopular.

Just remember these key facts, and don't let anyone, or even yourself, trick you out of this developing bull market in silver.  Don't try to time the peaks, don't wait for dips, just buy and hold real silver, not any kind of paper silver promise.

What kind of annual gains will that be?  Let's see, if silver goes from $30 to $500 in ten years, the compound interest rate calculator tells us that will be an average annual gain of 32.49%, which is about the same as what silver has done in the last seven years, from $4.15 to $30, which is a gain of about 32.66% per year, on average.

Oh, by the way, the 1980 high for silver was $50/oz.  That was when M3, money in the banks, was about $1.8 trillion.  Today, the monetary base has increased about ten times higher.  Thus, the true inflation adjusted peak for silver would be $500/oz.  That just further confirms this $500 estimate.

But there are many reasons why silver should surpass the former highs.

Key reasons to surpass the former 1980's peak:

1.  Silver is more scarce due to 30 more years of industrial consumption.
2.  Paper silver scams are more abundant.
3.  Baby Boomers will be retiring, cashing out stocks and draining pension plans that have not yet invested into silver, causing other investments to vastly under perform silver, making silver ever more attractive.
4.  More trend investors today will notice the silver bull market and continued gains in the silver price, and invest in it, and carry it to further highs.
5.  The US government and political leaders are spending like never before, and the people, even the world over, lack the political will to control government spending which will ruin all currencies.
6.  There are no "safe" currencies to run to, leaving gold and silver as the only alternatives; and gold and silver have been in bull markets in all major currencies for 10 years now.

I'm sure you can think of many other reasons, but that's enough for now.

So, the true skeptic may ask, "Yes, but this guy is a coin dealer, he's just pushing his product because he has plenty of silver he wants to dump.  Besides, what kind of argument will he come up with to sell silver after it hits $500/oz.?"

Let me answer this two part question.  Yes, I do have silver!  I have it, because I believe that the price will go up a lot, thus, it makes perfect sense for me to carry it as inventory.  I sell it, because few people are able to buy it in bulk like we can, so I use my own stash, and industry connections, to enable others to buy it.

But what will I say after silver hits $500/oz., or nears that price?

I'll say, "Obviously this bull market in silver is just getting started.  Only 1% of American public money is buying silver per year.  Just wait until at least 10% of US money is buying silver in a year, the price will be well over $2500 to $5000 per oz. for silver." 

But I would never make that argument now.  Too few people would believe me, and they would think I'm some kind of kook.  And people never do business with kooks.

And what will I say when silver nears $2000/oz.? 

I'll say, "Everyone knows it only costs 4 cents to print up a $100 bill, and everything returns to its intrinsic value.  But used paper, particularly smelly paper, is worth even less, which is useful only for things like lining the bottom of the cages of birds, or burning in the fireplace.  Thus, the price for silver will soon only be quoted in terms of gold, and certainly not quoted in terms of any kind of paper money at all."  But again, I'd never say that today, everyone would think I'm crazy.

Oops.  Too late for me.  But it's not too late for you to buy some silver!

=====

I strongly advise you to take possession of real gold and silver, at anywhere near today's prices, while you still can.   The fundamentals indicate rising prices for decades to come, and a major price spike can happen at any time.

 

Source: http://news.silverseek.com

Gold Could Possibly Bounce Next Week - Allen Sykora and Debbie Carlson

(Kitco News) - After spending the first two weeks of the year weaker, gold prices could be ready for a bounce, especially if the markets return to worrying about European debt.

February gold futures prices settled at $1,360.50 an ounce on the Comex division of the New York Mercantile Exchange, down 0.6% on the week. March silver futures settled at $28.32 an ounce, a fall of 1.2% on the week.

Several successful bond auctions this week by economically shaky southern European countries – Portugal, Spain and Italy – temporarily eased some of the fears about sovereign debt among peripheral nations. That took away some of the safe-haven demand for gold, said Adam Klopfenstein, senior market strategist with Lind-Waldock. Further asset allocation as investors finished rebalancing commodity indexes also caused some movement out of gold.

China’s central bank announced a rise in the reserve-ratio requirement, due to take effect on Jan. 20, which also pressured prices on Friday.

But once the impact of the Chinese move fades, the market could start worrying again about the longer-term European structural debt problems. This is likely to become a background factor offering support again, Klopfenstein said.

“That’s going to give gold more flight-to-quality buzz. I think gold is going to approach $1,400 next week,” Klopfenstein said. “Anything from there will be based on market momentum. But I do think we’re going to have a strong rally next week.”

He described this week’s European bond auctions as “delaying the inevitable,” or further crises.

“Until we get a clear resolution of the European debt situation…that will be in the backdrop,” Klopfenstein said. “And as long as that is the case, gold will be well supported. I don’t expect a major drop below $1,350.”

Spencer Patton, president and founder of Steel Vine Investments, also doesn’t see the European debt situation going away anytime soon. “There’s never been an unsuccessful auction in the past, but rates are still too high to be sustainable. Even in countries that got bailed out, auctions are successful, but rates are unsustainable to float debt,” Patton said.

Charles Nedoss, senior market strategist with Olympus Futures, looks for gold to bounce next week on technical-chart factors, since the market is range-bound but currently closer to support underneath the market than the resistance above. Furthermore, he said the dollar index looks technically negative, and further declines would be supportive for gold.

February gold has been turned back lately from chart resistance at the 10-, 20- and 50-day moving averages, which all lie roughly in the area from $1,384.50 to $1,388.50, he said.

But at the same time, the metal is showing signs of holding support on the basis of a weekly chart, Nedoss said. This includes last week’s $1,352.70 low, which roughly coincides with the 20-week moving average around $1,350.

“I think we’re starting to get to the low end of the range here and start to work higher next week,” Nedoss said, although there might be a “fight” once it gets back to the daily moving averages currently in the $1,380s. “I think eventually – maybe not next week but over the course of the next couple of weeks – we’ll take those levels out and we’ll see the dollar (index) take out the 79.00 level.”

Patton is keeping an eye on a possible head-and-shoulders formation on February gold charts. He said it’s not a perfect technical chart pattern, but he points to two left shoulder tops from October and November, the head being the high from early December and the right shoulder the late-December/early-January highs.

The neckline of that asymmetrical pattern comes in around $1,360. If that is broken, Patton said prices could fall to $1,300. Beneath that level trendline support is at $1,280.

Those would be good buying opportunities, if prices fell that far, and he expects buying to come in if a break like that occurred.

Silver’s short-term outlook is a little more tenuous, he said.  Currently it’s holding above chart support around the $28.20 to $28 area.

“I’m more concerned about silver than I am about gold. The charts seem to suggest a topping pattern – maybe it’s a window into gold,” he said.

Patton said support for silver does not come in until around $25, a level where it broke out of resistance. That means silver could fall further if downward momentum were to pick up. Trendline support comes in at $21. “Silver is more volatile than gold and it could fall another 10% - I think it could test $25,” he said. “If it does, it would be a good buying opportunity.”

 

Source: http://www.kitco.com

Silver still one of the best performing assets this decade

Silver had a truly spectacular year, in 2010. The price increased from $15 an ounce to just over $31 an ounce, an increase of a whopping 106% in US dollars. And, no matter what currency you look at the price of silver increased anywhere from 60% to as much as 266% (Venezuela Bolivas). Since the bull market in silver began in 2003, the price has increased by as much as 775%. If we use the same example I used to illustrate the gains in gold, then an investment of $100,000 in silver would now be worth around $700,000! By comparison, over a ten year period, an investment of $100,000 in gold would now be worth $560,000 and an investment in bonds yielding say 8% per annum over a ten year period would be worth approximately $216,000. You don't have to be rocket scientist to see which investment has been the best performer.

Even though I have continually urged investors to allocate some of their funds to silver since the price was trading just above $6 an ounce in 2004,  many of these individuals, have preferred to remain in equities, funds, money market and bonds. But, when the price of silver broke above $30 an ounce, many of these same individuals asked if it is now too late to enter the market. While I cannot explain the psychological imprint of these investors, I have seen this behavior many times over the last 30 years or so. These types of investors invariably seem to need the validation of their bankers, stock brokers, accountants etc., before making a decision. Yet, their advisers usually have no knowledge about these markets and are therefore not really qualified to render any advice on their potential or lack thereof.  Then, by the time these investors realize that they have missed out on some major gains, and decide to enter the market, they deliberate waiting for a pull-back that never seems to come. And then, out of pure frustration, they finally enter the market, but only when it is close to peaking.  My point is very simple. Don't make this mistake regarding silver. Despite the massive gains we have seen in the last ten years, this market is still far from peaking and still offers investors huge potential.

As I have already mentioned many investors, who have already missed out on some stellar returns, are now asking if they should enter the market at the current levels. And, as I have alluded to many times in the past, it depends on whether you are a trader who takes a short-term view or an investor who has a long-term time horizon.   If you are a trader, I cannot predict the short-term moves, but if you are an investor I believe that the current pull-back in prices will not last very long and offers a wonderful opportunity to buy some silver. In the long run if you buy now and even if the market pulls back say another $3 an ounce, this is not going to have a major impact on your investment if the price goes to as high as $125 an ounce in a few years' time.

I believe that we will see the price of silver trade at $45 an ounce before the end of the year. On this basis, if you are able to buy at current levels of say around $29 an ounce and my analysis is correct, a return of 55% in 12 months' time is nothing to be laughed at. But, over the next coming years, I sincerely believe that we are going to see prices trade at several multiples of the current price.      

TECHNICAL ANALYSIS

 As the price of silver pulls back towards the medium-term 50 day MA, I believe that we will see prices supported at this level. That being the case, these dips offer more buying opportunities.

 

Source: http://www.mineweb.com

Gold Is Promising For 2011

Gold rose above $1,420 an ounce coming into 2011 within 1 percent of its record high, and silver and palladium hit multi-year peaks, driven by pent-up demand on the first trading day of 2011.

While a firm dollar is limiting gains, expectations for more bad news on euro zone debt, concerns over potential inflation in developing economies and an increased focus on the U.S. deficit are set to maintain surging demand for gold, analysts said.

Pradeep Unni, senior analyst at Richcomm Global Services in Dubai, said fresh highs in gold were “likely” this year after the metal was becalmed over the Christmas holidays, with an initial target seen at $1,455-$1,480.

“Gold (steps) into the New Year with all its current fundamentals intact…. sovereign debt risk, macro uncertainty, concerns over currency stability, medium-term inflation fears as the U.S. Federal Reserve implements Quantitative Easing II, geopolitical tensions and low interest rates.”

Spot gold was bid at $1,420.40 an ounce at 1035 GMT (6:35 a.m. ET), against $1,419.45 late in New York on Friday. The precious metal hit a record $1,430.95 an ounce in December. European trade is expected to remain quiet, with London still on holiday.

U.S. gold futures for February delivery eased 40 cents an ounce to $1,421.00.

Bruce Krasting, former hedge fund manager predicts, that “volatility is going up across the board. If you have the stomach for the swings that are coming across all markets there is a ton of money to be made; balls and timing are all that are necessary.

Gold will be higher a year from now but off its peak. At some time in the fall, gold will be near 1,800 and the New York Times will do a front-page story that gold is on its way to 2,000. That will be the high point of the year.” So watch out you skeptics…cause spot silver has already risen to 30 year peak of 30.72 an ounce higher with our short positioned, Copper right behind as one of the oldest metals used in the development of civilization.

And, copper will continue to rise. This metal will benefit as the poor man’s gold. Why buy an ounce of something for $1,600 when you can have a whole pound of something else for only $5? The logic is compelling only because there is no logic. Increasingly, it will become understood that money does not hold value, but gold, silver and copper does and will.

These three metals remind me of the parable about the three men and the elephant, who had never seen an elephant before and were blindfolded, then asked to describe the new animal based on what they could perceive by touch. One man felt the trunk and said “It seems to be a large snake.” The second man felt the side of the elephant and said “It seems to be built like a wall.” The third man felt a leg and said “It seems to be built like a tree.” Neither had the ‘big picture,’ “As the central banks stimulate their economies for 2011, the ‘big picture’ will be revealed”,” says Regal Assets, “as it will only add fuel to the fire of the growing anxiety over rising inflation, and again bode well for gold.

Gold as a Reserve Currency

“Combining the fundamental factors discussed here and technical signals,” said Krasting, “the euro could break below $1.25 or even $1.20 sometime this year, which could drive gold up towards $1,600 levels. It is worth noting that gold priced in Euros has risen more than 38% so far in 2010, reaching a new record high above €34,475 per kilo, far outpacing gold’s nominal price gain (in dollars) of around 28%.”

“So in a way, gold is treated almost like a second reserve currency, replacing the Euro, and you would have gotten a better return getting into gold via the Euro. If the US dollar shows strength then gold will go to $2000/ounce. If the US dollar shows weakness it will go to $3000/ounce. It clearly points the way to invest, is in gold, which is the safest investment for 2011,” he added.

So, to recap, with the QE2, unemployment, foreclosures, geopolitical chaos and huge global inflation that will all contribute to a strong physical demand for gold, one needs to peak in on silver, which is already inching towards its 30-year peak supported by the strength in industrial metals such as copper. “Copper prices have been very firm, supporting silver as well as palladium,” added Regal Assets, “and that short-covering in silver also helped push prices higher. We expect silver to trade in the range of $30 to $35 this year, with $40 as a potential target. Buying silver isn’t just a way to back up your investments in the New Year. It’s now a profit play, too. And you could be earning real gains with the other precious metal alongside gold. The silver market is small. But the profits aren’t. You can turn silver into golden gains!” Call Regal Assets today, and you’ll have a great year!

 

Source: http://goldcoinblogger.com

2010 Gold, Silver, Platinum, and Palladium Price Performance

 

Precious metals delivered another year of strong performance, with double digit percentage gains for gold, silver, platinum, and palladium.

Palladium led the pack with an increase of 96.77% for the year. The metal is now at a nine year high, with gains attributed to the dwindling stockpiles in Russia amidst increased demand for use within catalytic converters in gasoline powered automobiles. As recently as December 2008, the price of palladium was $164 per ounce, compared to this year's closing price of $791.

Silver had an impressive year with a gain of more than 80%, outperforming gold's rise of 27.74%. With the price of silver moving up faster than gold, the gold-silver ratio continues to contract. This ratio indicates the number of ounces of silver necessary to purchase one ounce of gold. At the start of the year, the ratio was 64.98. At the close of the year, the ratio is 46.04.

The table below shows the last available London Fix prices from 2009, today's London AM Fix price, the change, and percentage change.

2010 Precious Metals Price Performance

	Dec 31, 2009	Dec 31, 2010	Change	Percent
Gold	$1,104.00	$1,410.25	$306.25	27.74%
Silver	16.99	30.63	13.64	80.28%
Platinum	1,466.00	1,731.00	265.00	18.08%
Palladium	402.00	791.00	389.00	96.77%

Although palladium and silver outshone gold this year, gold continues its impressive streak of consecutive annual gains. The price of gold has recorded an annual gain each year since 2001. During the ten year period, the price of gold has risen more than fourfold from $272 per ounce to $1,410.

Source: http://goldandsilverblog.com

Brazilian Gold Mine Robbed

It seems that the current interest in physically backed gold is not limited to investment markets. Last week, it was  reported that a British Colombian gold firm was the victim of an armed robbery. The company in question was the Luna Gold Corp, and their Aurizona Mine in Brazil was attacked early Wednesday morning. The robbery did not result in any employee injuries, but approximately 1,500 ounces--$2 million worth—of gold were successful stolen.

The Target

The Luna Gold Corp identifies itself as a “gold mining and exploration company engaged in the exploration and development of gold deposits and advanced stage gold exploration projects in Brazil.” Currently, their attention is focused on the site that was robbed—the Aurizona gold mine. This mine is only in its initial stages of production and the company anticipates an eventual annual production of 60,000 ounces a year.

The surrounding areas are believed to be home to other major gold deposits as well, but that is highly speculative at the moment. Unfortunately, the mine is also relatively isolated—located as it is between the two cities of Sao Luis and Belem in Maranhao state.

The Fallout

That isolation rendered the facility vulnerable to the robbers, who gained access to the site and escaped without being caught. More importantly, they escaped without harming anyone.

The company’s statement touched upon this and other fallout from the event, saying “The safety and welfare of our employees is our highest priority and we will ensure that those involved receive appropriate support and counseling. Theft in this manner is disturbing and regrettable. The company is co-operating with authorities and will update the market when information becomes available."

As for the loss, Luna Gold Corp will be filing a claim with insurance while the Maranhao Police continue to investigate the incident.

Source: http://goldandsilverblog.com

Looking for a Top in Gold

Investors and analysts alike are looking at the record prices of gold last year and trying to predict the future. Last year the price of gold rose by more than 27%, contributing to an increase of more than 400% over the past decade.

Another year of double digit gains in the gold price has many experts considering whether prices will continue their upward trajectory, or whether there are warning signs for a potential top. The predictions are as varied as their sources:

1. According to Goldman Sachs, gold will top in 2012 at $1,750 an ounce.
2. John Nadler at Kitco.com predicts that gold will cap by the end of 2011.
3. The CEO of U.S. Gold, Rob McEwen believes that the market is “a third of the way” to a mania.
4. Jim Rodgers estimates that the long bull market in gold will result in a huge bubble for the commodities market as a whole—and he thinks we’re halfway there already.
5. Scott Redler at T3Live.com predicts that if the price gap is truly filled, gold will stay range bound between $1,320 and $1,400 for a time before mustering up a bigger rally.

Everyone is eying the market and trying to decide what it is going to do next so that they can react accordingly. Surprisingly though, most investors do not own their own gold and have never owned it.

According to The Street, you’re much more likely to see people selling gold than buying it. Still, the media excitement about gold prices, not to mention the prices themselves, is generating new investors. The SPDR Gold Shares added 155 tons this year, for example. Longtime investors are waiting for the day when everyone jumps on the bandwagon, resulting in the gold bubble they’re currently trying to predict.

Source: http://goldandsilverblog.com

China 2010 gold output seen above 340 tons

BEIJING (Commodity Online) : China, the world's largest gold producer expects its gold production in 2010 above 340 tons, according to the Chinese Ministry of Industry and Information Technology.

Actual gold output for the first 11 months of the year, according to official figures, was 308.39 tones, up 9.2% on the same period in 2009.

In 2009, China's gold output was 319. 980 tones. This is now the 6th successive year in which the country has raised its gold output.

China also imported 209.7 tonnes of gold in the first 10 months of 2010 - up a massive 500% on the previous year's imports over the same period.

Analysts said China's overall gold consumption, a figure reached by adding mine output to imports, in 2010 could reach close to 600 tones or more - equivalent to around a quarter of global mine production.

China is seen as needing to raise its Central Bank gold reserves to percentage levels near those of major Western countries, which would absorb a substantial amount of the precious metal, but is also seen as being extremely cautious about releasing data on any reserves rise.

In some analysts' views this is because an overt increase in China's gold reserves would have the effect of stimulating substantial price increases in the yellow metal.

All in all this makes China a very substantial player in the global gold market with the capability of controlling the gold price if it so wants to given the trillions of dollars in its reserves.

It is currently gaining ground on India as the world's biggest importer of gold and many think China will surpass India in this respect over the next couple of years - particularly given the Indian nervousness about buying into a rising gold price, a factor which does not seem to be impacting the Chinese investor so far.

Meanwhile, China National Gold Group Corp, the country's largest gold producer, said its operating profit in 2010 reached 3.2 billion yuan ($471 million), more than five times the amount in 2006.

By the end of 2010, the company's reserves of gold resources reached 1,300 tons, up from 275 tons in 2006. Copper reserves reached 8 million tons, up from 1.25 million tons in 2006 while molybdenum reserves increased to 1.4 million tons from 200,000 tons in 2006.

Source: http://www.commodityonline.com

The Collapse Of Price Fixing Will Keep Silver Prices Rising

Reliable market estimates suggest that there around two billion ounces of gold held above ground in bullion, and only one billion ounces of silver.

Over time there has been far more silver mined than gold, say around 45 billion ounces, but it has almost all been consumed by industry. Much more of the five million ounces of gold mined by mankind remains.

Undervaluation

At current prices then the total silver market is worth $30.6 billion and gold $2.8 trillion. Any investor ought to spot the undervaluation there. That is what happens when a commodity trades at a lower price than three decades ago.

It is as though silver has been kept in some kind of communist, controlled economy. And indeed, that essentially is what happened after the 1980 silver price crash. Several banks colluded to keep the silver price locked down and in a world of its own, trading silver to profit their own books.

Earlier this year the bank’s position finally became untenable. Regulators began to publicly acknowledge a legion of complaints from investors and found them impossible to deny any longer. And the banks, fearing action largely liquidated their short positions over the quiet summer months.

Price fundamentals change

Silver prices have jumped from $17 to $30 since then. However, while this kind of price spike is always vulnerable to sudden corrections, there is a change in price fundamentals here.

The real lesson is that the artificial price fixing regime is over. Communism has collapsed and price controls are off. The logic is actually for very much higher market prices, not a retracement as some now expect.

History shows that once price fixing regimes collapse prices quickly inflate, and they then never go back to former levels. The gold rush of the 2000s is going to be nothing to the silver rush of the 2010s.

The silver market is incredibly small to absorb the scale of investment likely to come its way as other asset classes lose their appeal thanks to rising inflation and interest rates. For the gold-to-silver price ratio to get back to its historic average then silver prices must treble; and that will be on top of the rise to come by following the gold price up and up.

Market psychology

And while precious metals have been growing in investor appeal for the past decade, there has been nothing yet like the over confidence of the late phase of an investment bubble. We saw that in dot-com stocks and later in residential housing.

At the moment many investors in gold do so out of fear and with little enthusiasm, and they hardly touch silver. Only when the broad masses get the bug and greed over powers this market will it be time to get out. That hardly seems to be the case right now.

Source: http://news.silverseek.com

Gold, Dollar, Euro & China: Four to tango in 2011

 

Love of Gold – A Chinese Tradition The surge in China gold demand seems to have befuddled some including Richard Daughty (aka The Mogambo Guru) at The Daily Reckoning who wrote “…there is nothing about Chinese trusting gold for the last few thousand years or so.”

Well, let me set the record straight here. The Chinese, like many other Asian countries, have a tradition of reserving and investing in gold for thousands of years. Gold and real estate are typically the top two investment choices mainly due to a distrust of paper instruments resulting from much turmoil throughout the region’s history.

It is mostly this propensity, the clear present danger of an escalating inflation, and rising tensions at neighboring Korea, that are behind the rising gold demand in China

Gold = Financial Competitiveness
What’s more telling is that according to People’s Daily Online, in August, six China ministries, including the People's Bank of China, and the China Securities Regulatory Commission, jointly issued a notice to promote the gold market and positively connected the future development of the gold market with the competitiveness of financial markets.

China is already the world’s top gold producer, but has remained somewhat muted in the global gold market. Now, with the expanding of the Chinese gold market (China just approved its first gold mutual fund on Nov. 29), the increasing investment demand from the Chinese government and / or individual investors will become a major force influencing the world gold market.

China Can’t Save the Euro
According to data from the Bank for International Settlements (BIS), German and French banks have the largest debt exposure to Ireland and the southern rim of euro zone in the second quarter--so, the European debt crisis most likely will not evolve into a global contagion as many have feared.

Nevertheless, due to the single currency union’s inherent structural weakness, EU has not been able to agree on any meaningful system-wide measures to combat the debt crisis. As such, EU’s country-by-country, crisis-by-crisis approach is only adding market volatility, and further derailing the region. And not even China’s pledge of its $2.7trillion overseas investment fund as European debt rescue could thwart market’s pessimism about the euro.

Spain – Too Big To Bail?
Multiple rating agencies already put Portugal, Spain and Greece on future downgrade watch, while Italy is another highly indebted euro member persistently coming up in market chatters.

Deutsche Bank AG has pegged Portugal as the next seeking a bailout after Greece and Ireland, while Spain is a hidden debt bomb dubbed as “too big to bail” since the size of Spain’s economy (about $1.4 trillion, with 20% jobless rate) is twice that of Greece, Ireland and Portugal combined.

Moody's estimated Spain may have to raise €170 billion from the markets next year, not including the amount banks may need to recapitalize. Bank of England, meanwhile, is not instilling much confidence either by forecasting a possible return to recession in 2011, adding that further quantitative easing may be used, if an "external shock" hits the economy.

Expect A Full-on Assault on Euro
All this is not to say other EU members are in good financial and fiscal fitness either . So, if you think the series of down-grades and rising concerns on euro zone countries' debt has worked against the euro this year, expect a fresh new round of downgrades--over debt or growth prospect—to bring about a full-on assault on Euro next year, particularly when you see Spain come up in headlines.

Trouble in Euro should boost Gold while providing support to the Dollar (i.e. the dog with fewer fleas.), which is the scenario that would play out in 2011.

Global Inflation Spike
Inflation is already running rampant in countries like China, Russia and India, mostly driven by food shortages. In Beijing, for example, food costs soared nearly 12% year-on-year in November. Now, on the heel of U.S. Federal Reserve’s QE2 announcement in Nov, more monetary easing could be expected from central banks to stimulate their economies in 2011. This will only add fuel to the fire of the growing anxiety over rising inflation, and again bode well for gold.

Gold As a Reserve Currency
The shiny yellow metal is headed for a 10th straight annual gain. But with excess liquidity distorting everything, the typical trend and regression analysis will not work any more.

Nonetheless, combining the fundamental factors discussed here and technical signals, I believe Euro could break below $1.25 or even $1.20 sometimes next year, and could be as early as the first half. This could drive gold upwards towards the $1,600 levels. U.S. Dollar and Treasury would gain support as safe haven, which could push the bond yield down.

Furthermore, it is worth noting that Gold priced in Euros has risen more than 38% so far in 2010, reaching a new record high above €34,475 per kilo, far outpacing the Gold’s nominal price gain (in dollar) of around 28%.

So, in a way, gold is treated almost like a second reserve currency replacing the Euro, and you would have gotten a better return getting into gold via Euro. 

Source: www. commodityonline.com

Marc Faber: Gold, Silver prices to soar in 2011

LONDON (Commodity Online): Global investing legend Marc Faber says exposure of investors to gold and silver compared to other commodities is very low. Therefore, price of gold and silver can go to higher levels in 2011 thanks to the low investor base for these precious metals.

Faber who is the publisher and editor of the famous Gloom, Boom, and Doom report, says gold and silver continue to be under-owned, despite the fact that the prices of these two precious metals have been zooming in the last one year.

Here is Faber's outlook for 2011 on gold, silver, other commodities, emerging markets, bonds and equity markets:

Commodities: Faber likes energy companies since the long-term trend in oil is up, as supply fails to keep up with surging demand from emerging markets. Notes that emerging markets have surpassed the developed world in oil consumption and that this trend should keep demand strong for the foreseeable future. Faber likes the majors like Exxon, Hess, and even Chesapeake as natural gas is too cheap on an inflation adjusted basis. Continuing the energy theme, coal and uranium stocks should be gradually accumulated on weakness as the world looks for alternative sources of reliable energy. Peabody on the coal side and Cameco for uranium should outperform over the next few years.

Gold and Silver: Faber reiterates his favorable opinion on gold and silver. Doubts they are currently in a bubble as some analysts postulate. Faber notes that investor exposure is very low when you look you compare it to the world's financial wealth, meaning that gold and silver are still under-owned and have room to run.

Equity Markets: Faber believes a correction is imminent for the stock market as bullish sentiment (AAII sentiment) nears record levels and mutual fund cash positions remain very low. Furthermore, the latest upward move in stocks has occurred on declining volume, which is usually bearish from a technical point of view. The correction should occur in January. That being said, you should be buying into the correction as it represents a good buying opportunity. Faber prefers energy companies and speculative stocks such as home builders and even AIG. He goes on to say that the third year of a Presidential cycle is very good for speculative stocks versus traditional blue chip value plays.

Emerging Markets: While he is very bullish long-term on emerging markets, investors should avoid (or at least lighten up on) emerging market stocks right now. They should only be bought on corrections which would represent favorable entry levels. Overall, Faber thinks the SP 500 will outperform emerging markets in 2011. The only emerging market that looks attractive right now is Vietnam (VNM).

Bond Market: Reiterates his bearish long-term view on US Treasuries, but notes that they are currently oversold and could be a good trade at this point (TLT). But this would only be a short-term bounce as rates have likely bottomed and higher inflation will erode future returns.

Japan Equities: While everyone is still bearish on Japan, Faber likes Japanese equities and thinks they have the potential for more upside. In particular, he likes Japanese financials such as Nomura and Mizuho Financial.

 

Source: http://www.commodityonline.com

Silver Will Shine Again: Astrological Prediction

AHMEDABAD (Commodity Online): Year 2011 is the year for Bullion and Base Metals according to to Lt Col Ajay Jain, Financial Astrologer who makes daily predictions. At the same time he also bets for Agri Commodities which can give better returns, if handled well without political interferences.

Stars suggest that Silver is supposed to best investment in 2011. 32 year target for silver is Rs 80000 per kg while Silver may fluctuate between 48000 to 49000 levels by end of year 2011.

He elaborates that year 2011 is represented by planet Moon. Referring to astro economics he predicts high volatility in Currencies and Bullion.

He forecasts dismal outlook for European stocks while US and Asian markets are in for a major upsurge.

But post May 2011, there are high chances of geo-political flare up, especially in the Middle-East. Saturn, Mars ,Sun and Mercury are making special astrological yoga which may bring tension at Global levels, according to Jain.

Around 26th Jan, Saturn will turn retrograded in Virgo. This will create lots of confusion and misunderstanding among world leaders. Last week of Jan 2011 to March 2011 will be most difficult for world peace specially UK, USA, Middle East, India, Pakistan.

India, Japan and US are the three countries that will steal the limelight for the year 2011.

Year 2011 will be very important for India and Asia since as per star India will play major roll in world politics with help of USA and Japan. However, Euro will loose its shine against USD.

While in the Indian capital market, most positive sectors wil be banking, infrastructure, cement, education, health and pharma, heavy engineering, metal, automobile, tyre.

India's GDP is expected to between 9% to 9.5 during year 2011. Astro-Economics suggests that India is going to bring great revolutions in field of power, infrastructure, educations, technical educations, health and sports. Rajasthan, West Bengal, Bihar, Gujarat and Tamil Nadu tops the list of states that will benefit immensely in 2011.

Bad news is that India may have more television channels much to the surprise of already fed up audience and loss making investors.

 

Source: http://www.commodityonline.com