Advantages of Silver Over Gold

The average person can’t afford to buy gold, so it is most suitable for wealthy people for investment and central banks.

With silver being so much cheaper, the average person can go to his local coin dealer and buy some.

The advantages of silver over gold as an inflation hedge are numerous and need to be considered:

1. The silver market is much smaller, and it doesn’t take as much money moving into silver as an investment to move the market up. Silver has outperformed gold dramatically over the last few years, going from $3 an ounce to over $40 an ounce.
2. Silver is also a very important industrial metal with over 3,000 industrial uses.
3. The government has never seized silver, although they have seized gold. If that worries you (it doesn’t worry me much), you would feel safer with silver rather than gold.
4. The government actually has no stockpile of silver to unload. There is now more gold above ground than silver because of the silver industrial usage.
5. I look upon silver as money. Throughout history more silver has been used more for money than gold. Historically, silver coins became the common denominator for money in more places and more times than gold.

If you are wealthy and can afford to buy some gold, be my guest. I think you will do just fine. However, silver will outperform gold about three to one. When I receive income from my business, I set aside enough cash to take care of my normal business affairs because paper money is still a means of exchange, although it is no longer a store of value. As a means of exchange, you can conduct your normal affairs. If I have any left over, I go to my local coin dealer and buy silver.

What kind of silver should you buy?

There are American silver eagles, junk silver, and foreign silver coins that can be bought from any coin dealer, and they are also easy to sell. The price fluctuates not only daily, but hourly. So there is always a place you could sell it.

But why would you want to sell it if the government is still inflating the currency? Hang on to your silver.

How far will silver go? Darned if I know; that’s above my pay grade. All I know is that we are in a bull market, and we ain’t seen nothin yet.
I don’t expect it to retreat. When I buy silver, I am just buying another form of money that I believe will prevail over paper.

Where will you keep it? Any place that thieves won’t be able to find it or get to it. Concealment is probably the best strategy. I wouldn’t keep it in my bank safe-deposit box, just in case the government decided to change its position on silver. Right now, silver is just treated as another commodity.

The government is even manufacturing and selling silver coins. But they have no stockpile, so they have to buy on the open market just like you do.

There are more people in the world who can afford to buy some silver than can afford to buy gold; thus, smaller volume will move the market up and up, and up.

Who cares about that? I don’t care if it goes up. I won’t sell it any time soon. This bull market will not end until the world changes its attitudes towards paper money. There is no sign of that.

Some day you might want to give it to your children or build your estate for them to inherit it. They will thank you and call your name blessed.

By Howard Ruff
The Ruff Times

source: www.silverseek.com

PRECIOUS METALS: Weaker US Data Push Gold, Silver To New Records

NEW YORK (Dow Jones)--Gold and silver futures extended their unprecedented rally Thursday, with both metals finishing at record highs after data showed U.S. economic growth slowed while prices for gasoline and food rose.

The metals have gained for 10 out of the past 11 sessions, with Thursday's jump coming as investors sought a hedge against inflationary pressures as well as a safe place to park cash after separate data revealed U.S. jobless claims unexpectedly jumped.

Gold and silver were building on strength as the U.S. dollar fell on the back of assurances Wednesday by Federal Reserve Chairman Ben Bernanke that low interest rates will remain a feature of U.S. policy for an "extended period."

"The Fed gave gold and silver buyers a green light," said Michael Gross, a broker and futures analyst with OptionSellers.com. "You've seen investor euphoria today as they expect a lower dollar."

The most-actively traded gold contract, for June delivery, rose $14.10, or 0.9%, to settle at a record $1,531.20 a troy ounce on the Comex division of the New York Mercantile Exchange. Nearby May gold jumped $14.20, or 0.9%, to settle at a front-month record $1,530.80.

Silver posted another huge price swing, rising 3.4% as astonishing volatility continued while investors flocked to its relatively small market to take advantage of the metal's much lower price than sky-high gold. Front-month May silver, which is also the most-actively traded contract, surged $1.562 to settle at a record $47.520 a troy ounce.

Shortly after gold closed, the ICE Futures U.S. Dollar Index was down 0.4%. The weaker buck helped dollar-denominated gold and silver throughout their trading sessions by making them less expensive for foreign buyers, boosting demand.

Both metals have been supported for months by the combination of ultralow interest rates--which boost the allure of the noninterest-bearing metals--and Fed purchases of Treasurys to stimulate the economy. The extraordinarily easy monetary policy has caused some to believe the central bank won't be able to sop up extra liquidity in time to avoid problematic consumer- and producer-price increases over the longer term. Easy monetary policy has also helped spur gold and silver to records by encouraging speculators to pile into the precious metals.

In an unprecedented press conference Wednesday following a two-day meeting by the Federal Open Market Committee, Chairman Bernanke reiterated the Fed's decision to keep its low interest rates for the foreseeable future while maintaining its $600 billion bond buying program until completion in June.

Investors interpreted the announcements as indicating further weakness in the dollar and the prospect of higher-than-usual inflation, even though U.S. core inflation, which strips out food and energy prices, has been subdued.

That prompted aggressive buying in gold and silver, and investors kept up their purchases Thursday as government data showed U.S. gross domestic product, the value of all the goods and services produced, rose at an inflation-adjusted annual rate of 1.8% in the first quarter. That marked a significant slowdown from the economy's pace in the fourth quarter, when GDP rose by 3.1%, as higher energy and food prices pushed an inflation measure that's closely watched by the Fed up to 3.8% in the first quarter.

Meanwhile, the precious metals were also shining as a safe-haven play after government figures showed the number of idled U.S. workers filing new claims for unemployment benefits unexpectedly jumped last week, in the latest sign that the labor market remains weak.

Initial jobless claims increased by 25,000 to a seasonally adjusted 429,000 in the week ended April 23. Economists had forecast claims would fall by 8,000.

"The weaker GDP number and the weak jobs report are very indicative of an economy slowing down," said Sterling Smith, an analyst with Country Hedging. "This is creating the perception that we are going to see continued easy monetary policy in hopes of improving our economic performance."

Other precious metals also gained Thursday, with Nymex July platinum rising 1.1% and June palladium on the exchange advancing 2.3%.

Source: http://online.wsj.com

Will Asian Buyers Take Silver Over $100?

From King World News:

KWN’s London source has updated King World News on the massive Asian buyers which have been accumulating gold and silver. The London source stated, “$3 to $4 dollar days in silver will become common, from now on $2 days will be considered slow. There will be a great deal of volatility going forward, but more often than not silver will close near the highs.”

The London Source continues:

“Right now the silver shorts are being flushed out in Asian trading on light volume and we have options expiration ahead of us. 38,000 silver contracts are in the money and the question is how many will ask for delivery?

As I mentioned to you previously, the Asians have also been taking delivery of silver out of SLV and will continue to do so. You have to understand that these Asian buyers are planning to take delivery of all of the available phyiscal silver they can get their hands on and will continue doing so for the foreseeable future.

”read the rest...

Today Bloomberg also reported on increased interest from China, who recently set up new investment funds to invest in energy and precious metals:

Silver and gold surged to records in London on speculation that China will buy precious metals to diversify its foreign-exchange reserves.

China, with more than $3 trillion in reserves, plans set up new funds to invest in energy and precious metals, Century Weekly magazine reported, citing unidentified people. Silver for immediate delivery surged to a record $49.79 an ounce, and gold reached $1,518.32 an ounce.

“People are expecting China to be a major buyer of precious metals,” said Adam Klopfenstein, a senior strategist at Lind-Waldock in Chicago.

 

Source: http://www.wealthwire.com

Is gold rising because America is broke?

Gold prices shot up to a new record of $1,512.50 an ounce in New York late on Friday, posting a record weekly gain and maintaining a six-week winning streak.

While a lot of gold investors are laughing all the way to bank the world over, gold's super cycle rally could have ominous meanings for the Us economy.

Analysts have pointed out that gold's advance into what is termed as a super cycle does not bode well for the US economy.

A sustained gold and oil boom indicates that the dollar is slipping into grave danger and the economy closer to collapse, according to Daily Markets analyst Michael Snyder.

"... when these commodities go up in price it is a sign that the U.S. dollar is dying and that our country is getting closer to economic collapse," Snyder wrote recently.

He explained that when the gold and silver prices soar, it indicates that investors everywhere in the world are losing trust in the dollar and the U.S. government treasuries. And they seek out something they can trust more.

"The U.S. has been running trillion dollar deficits for several years now, and this has created a lot of new money." And he says the rest of the world is now seriously doubting the sustainability of U.S. government debt.

The factors that fuelled this unseemly gold rally are numerous, but the most prominent ones are panic over the state of fiscal stability in the U.S, a weak dollar, spiralling crisis in the Middle Eastern oil hub of and sustained uncertainty over European economic health, coupled with new sources of instability in Japan.

And among these it's dollar that is hurting the most. It’s no coincidence that dollar had fallen back to near-three-year lows against major currencies when precious commodity prices shot through the roof.

And the prospects for the dollar are bleaker in the months to come. Interest rates are at a record low and the Fed has still not looked like they are going to rise any time soon. Besides, the federal budget deficit puts added pressure on dollar, precipitating its possible fall towards the 2008 lows.

This is why analysts think the gold super rally is likely sustain well into the coming years. Analysts quoted by Reuters said they thought gold prices could touch $1,700 an ounce in 2015.

What the gold rally means to the dollar and the American people is obvious from the rush pawn shops see across the United States. "For many Americans struggling to make ends meet, the gold boom has meant a heart-breaking trip to the pawn shop, selling off jewellery to pay the bills," UK's Daily Mail wrote in an article.

"A lot of people don't want to sell their jewellery, but they have to ... It's their monthly mortgage payment or whatever the case is ... We hear a lot of sad stories," says Steven Bumb, part owner of Santa Cruz Pawn, according to the report. People also flock to gold parties where they can discreetly sell gold to meet their cash requirements.

High unemployment levels also drive people to the thriving wee -buy-your-gold markets across the country.

The commodity rally is not just limited to gold. Silver outperformed gold again in the last week, recording an 8.4 percent weekly gain as against gold's 1.5 percent gain. Silver prices hit another all-time peak of $46.69 an ounce.

The Standard Chartered bank report said gold prices could reach $2100 by 2014 per ounce and that as high a price as $5000 per ounce by the end of the decade is possible. The bank said gold prices are yet to hit the super cycle as demand from the emerging economies like China and India will scale to peak levels later in the current decade

Read more: http://www.ibtimes.com

Silver Projected To Hit $90 Before The End of 2011

While Paul Ryan’s proposal will do nothing to reduce health care cost but do the opposite, where individuals will have to carry a heavier burden, is not a “path to prosperity”, as the Ryan plan was titled. To summon up the words of the dean of progressive social policy, FDR who was asked his opinion of the platform of the American liberty League in 1935, which like the Ryan’s cabal, aimed to dismantle the New Deal under the guise of preserving individual rights and free enterprise, he told reporters, “say you shall love God and then forget your neighbor. For people who want to keep themselves free from starvation, keep a roof over their heads, lead decent lives, have proper educational standards, those are the concerns of the government.” Those are still the concerns of the government today, and to say we can’t afford them is an affront to the working people who built America today.But where ideals today lead us? Already a substantial percentage of the American people are feeling quite stressed, and they know, we are heading for some really difficult economic times– all the while looking to the government for personal bail outs. However, while this economy has millions of Americans feeling depressed, it is not the appropriate response, nor will it solve anything. Rather, once we understand just how bad our economic problems are, we should feel empowered, because then, we can start focusing on real solutions. And somebody really needs to start focusing on solutions because panic is starting to abound as already many top corporate insiders are selling off stock like there is no tomorrow. The biggest bond fund in the world, PIMCO, has been getting rid of all of their U.S. Treasuries. When Wall Street big shots starts freaking out you know that the hour is late. And, it certainly doesn’t help that the Middle East is in a state of chaos and that the Japanese economy is falling apart as a result of the recent disasters. So, in these uncertain times is where critics of investing in gold and silver really drive home … to own gold or silver to really save you, you might ask, is it really worth it? According to the Regal Assets analyst PIMCO is just another addition to the many who have been ditching U.S. Treasuries. “China has been unloading billions of dollars in U.S. Treasuries and will continue to unload as the dollar depletes in value” Regal Assets stated this morning in an interview.

In this economy, a lot of people have questions about silver and gold. As investors are turning to real “global currencies” such as gold, silver and oil, the answer suggests that paper currencies are not only becoming worthless, but rampant inflation is on the horizon, that says to analysts, gold and silver is the only safe haven…predicting that silver prices will reach as high as $100 in 2011 and $250 by 2015.

So, if one asks, is it worth it? Why is China buying like crazy! China’s silver consumption already accounts for 70% of the global total of industrial use, and its middle class isn’t even close to reaching its spending potential. But, China’s impact on the market isn’t the only thing catching the attention of silver analysts. As the global economy expands its size and reach… as technology advances… and as more ways to buy silver become available… as silver supplies have dwindled… more factors began affecting the price of silver more exclusively – for better or worse, which makes silver quickly gaining serious value in many highly profitable industries. Although it’s a less active and lower-volume market than gold, which means that purchases, even by individual investors, can make an impact on prices, 100 silvers buyers purchasing the same amount of metal as 100 gold buyers will have a bigger impact on the market. Think how much prices can spike when millions of Chinese investors flood the market with bids to purchase silver. Now, combine that with the global return of industrial silver demand.

Martin Hutchinson of Money Morning believes both silver and gold will continue climbing into 2011 and beyond. If enough investor momentum gains – and if China’s push for individual silver investment intensifies – he believes silver could peak past $100 in 2011. But that’s just the beginning. Silver could top out at $250 oz. in the next five years, as global mine production crawls in the face of increasing consumer and industrial demand. That’s an increase of more than 1,150% over current prices. Bear in mind that silver prices have been moving as fast if not faster than gold. So those who want to invest in silver better pull the trigger soon, or be prepared to watch from the sidelines as silver’s price explodes upward.

Matt Turner at Mitsubishi said this week, “one ounce of silver briefly rose above 40 of today’s US dollars per ounce in 1864, when the American Civil War neared its climax. In nominal dollars, the Hunt brothers’ multi-billion-dollar corner only saw it more highly priced on 5 trading days in January 1980. And while US investors waiting to buy silver are also still waiting for it to record a new intra-day high, it’s already broken new ground against the British pound and for most of the Eurozone, too.”

The cause? Gold investors have long tried to explain how metals are “telling us” something. “First warning” of the looming financial crisis, said Marc Faber in his Gloom, Boom & Doom Report of September ’07, was when “the price of gold more than doubled in nominal terms and against the Dow Jones Industrial Average [because of] ultra-expansionary US monetary policies with artificially low interest rates.” In which case, and with global interest rates further below zero today after inflation than at any time since 1980, what in the hell is silver telling us now?
“TIPS pay a lower rate of interest than regular Treasuries,” explained Bloomberg News when the yield offered by 5-year Treasury Inflation Protected Securities briefly dipped below zero (and $20 silver broke a 28-year high) back in March 2008. [That’s] because their principal rises in tandem with a version of the consumer price index which includes food and energy prices. Rising demand for TIPS [which pushes up prices and so pushes down the nominal yield] indicates investors expect the inflation adjustment to make up the difference.”

What great expectations TIPS buyers must have of Uncle Sam’s “inflation adjustment” today! They’re buying 5-year index-linked bonds with a nominal yield of minus 0.6%, anticipating a full 2.8% per year fillip from Washington when compared with the annual yield now offered by conventional 5-year bonds. And what greater hopes still must the new rush of silver investment hold…rejecting TIPS in favor of metal, and breaking silver’s tight connection with both gold prices and TIPS yields. The point that broke silver higher – was right when Fed chairman Bernanke vowed to begin QE2 in summer last year. That a fast-growing nugget of the world’s private wealth is fearful of the result is clear. That silver looks a turbo-charged play is clearer still.

There’s no bull market like a silver bull market, in short – just ask the Hunt brothers ahead of their bankruptcy, eight years after their corner blew up with the big inflation-fueled 1970s’ bull market. Double-digit Fed interest rates popped the bubble back then (plus a good dose of anti-speculative action by regulators and the exchanges, otherwise known as “saving the system” of course. It was sparked in turn by the Hunt brothers’ own naked greed, otherwise known to them as “inflation protection”). The most recent time silver got hot, however, it took oil at $150 and then the Lehman Brothers’ collapse to do to GDP growth and commodity prices what central bankers wouldn’t dare. Because raising interest rates to double digits to kill a “speculative frenzy” wasn’t politically possible. Silver’s and gold’s Bull Run on inflation. Which is worth bearing in mind whether you’re quitting, holding, ignoring or looking to buy gold or silver today. Did anyone imagine gold at $1492.40 or silver at $42.40? Well there you are!

Source: http://goldcoinblogger.com

Five reasons why gold breached $1,500 an ounce

Gold breached the $1,500 an ounce threshold on Wednesday as gold's appeal as a shelter from risk increased.

Reuters reported that spot gold hit a high of $1,505.21 an ounce and was bid at $1,505.16 an ounce at 5:42 a.m. ET, against $1,493.90 late in New York on Tuesday.

The yellow metal hit a high of $1,500.70 an ounce in Hong Kong trade.

Gold's rise was also coupled with Silver hitting a 31-year high at $44.56 an ounce and was later bid at $44.51 against $43.89.

The increase in price of Gold and Silver seems inevitable now and analysts point out the following facts.

S&P's revision of America's credit rating:

Standard & Poor's recently threatened that it will downgrade United States AAA rating due to the high budget deficit. Reuters quoted Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, who said that the downgrade could result in "wholesale abandonment of dollar assets and would potentially destabilize the entire global economy."

In such a scenario, where dollar assets seem to be losing their sheen, gold shines as good store of value.

Fears of weakening dollar:

Bloomberg reported that the dollar slipped 0.8 percent against six major currencies trading at a 16-month low. The weakened dollar has lent support to gold prices. Reuters reported that weakness in dollar boosts gold's appeal as an alternative asset. Also US Federal Reserve and central banks across Europe have attempted to deal with the debt crisis by pumping more paper money which will further decline the value of currency and increase the value of gold and silver.

According to Daily Markets analyst Michael Snyder, a sustained increase in gold and oil indicates that the dollar is on the decline. Synder wrote: "... when these commodities go up in price it is a sign that the U.S. dollar is dying and that our country is getting closer to economic collapse." He further elaborates that gold and silver price hike indicates that investors are losing trust in dollar and US treasuries.

No alternative currency:

In spite of the trillion dollar deficit which has created a lot of new money, the US dollar has still been the reserve currency as there is no alternative currency. Tom Simons, a money market economist at Jefferies & Co. in New York, told Reuters: "One of the reasons why the U.S. dollar is still the reserve currency is the lack of other options, and in two years there may still be no other options."  In such a scenario, dollars' value is obviously eroding while gold and silver appear as more stable form of investments.

Higher Inflation:

Higher crude prices, which according to WSJ, are up 1 percent at $108.20 a barrel, tend to increase investments in gold as a hedge against oil-led inflation. Gold acts as good hedge against inflation, primarily when interest rates in most countries are low.

Bloomberg reported that the difference between yields on U.S. 10-year notes and Treasury Inflation Protected Securities and a trader's expectations for inflation widened to as much as 2.66 percentage points on April 20. The spread reached 2.67 percentage points on April 11, the most in three years.

Inflation concerns and higher consumer income in China and India are fuelling gold prices as well. Macquarie analyst Hayden Atkins told Reuters : "The theme of longer term higher inflation than we have seen in the last 10 years in China is a pretty solid view, so gold is going to be an asset class that is probably going to be more in favor in China than it has been in the past."

Decreasing investor faith in European Bonds:

Interest rate on Greek, Irish and Portuguese bonds increased on fears that some form default is imminent. Los Angeles Times reported that annualized yield on two-year Greek bonds soared to 20.72 percent on Tuesday, up from 16.42 percent a week earlier. Portuguese two-year-note yields are at 10.14 percent versus 9.05 percent a week ago. Irish two-year yields are at 9.69 percent versus 8.66 percent. This indicates that investors are no longer looking at bonds as safe havens and are thus turning to gold.

Gold and silver rally will continue as long as oil-led inflationary pressure caused by the Middle East crisis, weakening dollar and debt crisis deepens across the globe.

Source: http://uk.ibtimes.com

Gold strikes new record high

LONDON/SINGAPORE - Gold has rallied above $US1,500 an ounce for the first time, extending this week's record run as investors hedged growing inflation risks and bought into a broad commodities rally as the dollar slumped.

Mounting evidence of quickening inflation in major Asian economies such as China and India were echoed in Latin America on Wednesday, with Brazilian prices nearing a government ceiling and Mexico's yearly rate exceeding a key target.

The break-even rates on US Treasury Inflation-Protected Securities (TIPS), which measures investors' inflation expectations, rose for a second day.

A second day of deep losses for the dollar and rallies in oil and grain markets that fuelled further inflation concerns also buoyed bullion, which once again rose in tandem with riskier assets like equities as investors turned to gold as a store of value.

"The US government at this point of time has not corrected its fiscal imbalance, and the Federal Reserve continues to maintain exceedingly loose monetary policy, which has the risk of further debasing the dollar," Janney Montgomery Scott chief investment strategist Mark Luschini said.

Gold prices tend to rise with a declining dollar.

Spot gold rose to an all-time high of $US1,505.70 an ounce. It was last up 0.4 per cent at $US1,500.50 by 1931 GMT, having risen almost four per cent over the past eight days. The metal is set for its 11th successive quarterly gain.

While well below their inflation adjusted highs of more than $US2,200 struck in 1980 – when bullion prices spiked in response to the Soviet invasion of Afghanistan – gold has doubled since the lows of 2008 and risen six-fold since 2001.

Silver also surged above $US45 for the first time since 1980, when the Hunt Brothers of Texas cornered the silver market.

Gold has notched new records for four consecutive days, aided in large part by Monday's threat of a downgrade to the United States' triple-A credit rating.

"This is just a continuation of a longer-term move being driven by worldwide monetary policies and specifically here in the United States," Permanent Portfolio Funds portfolio manager Michael Cuggino said.

"Is the US debt ceiling going to be raised? If the debt ceiling is not raised, what happens to the US debt when it matures?" Mr Cuggino asked.

The White House and congressional leaders must agree on a deal on raising the $US14.3 trillion cap on borrowing in the next few weeks or the United States will be at risk of defaulting on its debt, which would have dire consequences both for the country and global markets.

Inflation pressure building

Signs of simmering inflation across the world underpin gold. The break-even rates on the expected new five-year US TIPS rose for a second day to 2.36 per cent, roughly one basis point higher than late Tuesday.

In Brazil, annual inflation sped dangerously near a government ceiling in the month to mid-April, while Mexico yearly inflation rate climbed above policymakers' target rate of 3.0 per cent as investors prepare for higher borrowing costs early next year.

Gold buying in the Asian countries is being fuelled by rising consumer incomes and higher inflation. Both China and India reported higher than expected inflation last week.

While gold investors in Western markets have been motivated chiefly by risk aversion in recent years, the precious metal is a much more deeply established asset in Asia, being bought in the form of bullion bars and coins. India and China are by far the world's biggest bullion consumers.

Dollar, credit rating in focus

The metal is expected to be underpinned by uncertainty over how the United States will adjust monetary policy after the Federal Reserve's $US600 billion government bond-buying program – known as quantitative easing – comes to an end in June.

If the S&P eventually cuts its long-term rating on the United States, it will weigh heavily on the US dollar, often used as a global reserve currency, and economic stability throughout the world - a perfect recipe for gold rally.

Gold has long been seen as the ultimate haven from risk. During the financial crisis that rattled markets in 2009 and 2010 it was heavily bought on that basis, but its rally has since taken on a momentum of its own, luring more and more speculators who have begun to view it as a one-way bet.

"Gold has been acting as a currency in its own right, and that is why we are up at $US1,500," Bank of Nova Scotia head of precious metals, Simon Weeks, said.

 

http://www.businessspectator.com.au

Emas Hong Kong catat rekod tertinggi

HONG KONG - Emas di Hong Kong mencatat jualan lebih AS$1,500 (RM4,522) satu auns (28.34 gram) semalam kerana para peniaga mencari pasaran selamat di tengah kebimbangan masalah ekonomi global.

Logam bernilai itu mencatat harga pada AS$1,500 hingga AS$1,501 (RM4,525) setiap satu auns beberapa hari selepas Standard & Poor's menurunkan hutang Amerika Syarikat (AS) dari negatif kepada stabil.

Harga emas di negara itu sebelum ini mencatat harga AS$1,495 (RM4,507) hingga AS$1,496 (RM4,510) satu auns

Para penganalisis menyatakan bahawa kesan kenaikan harga emas itu adalah akibat ketegangan yang sedang berlaku di Asia Barat, Afrika Utara dan zon Eropah serta kebimbangan hutang tinggi AS.

Sementara itu di London, harga emas turut melonjak melebihi AS$1,500 satu auns buat kali pertama semasa dolar AS berada dalam keadaan lemah selain kebimbangan inflasi tinggi dan hutang.

Keadaan itu menyebabkan para pelabur beralih kepada emas yang merupakan satu pelaburan yang selamat.

Harga emas mencecah AS$1,505.65 (RM4,539) satu auns di Pasaran Jongkong London sebelum diniagakan pada harga AS$1,503.60 (RM4,533) satu auns.

sumber: www.kosmo.com.my

Gold Pushes Towards $1500 As Global Markets Decline

It was only dollar strength that prevented gold from bursting through the $1500 an ounce level yesterday and any return to dollar weakness should see this next major psychological barrier breached.
Author: Lawrence Williams
LONDON - 
If it wasn't for dollar strength, which will have mitigated its price rise, gold would have burst through the $1500 psychological barrier yesterday - comfortably.  As it was it has been riding high in the mid $1490s - it reached a new record high of around $1498 in spot trading at one time - as a combination of economic factors in Europe and the U.S. and other politico-economic uncertainties have led a flight into precious metals yet again.  Further dollar strength saw a fall back to $1490 overnight, but it may not e long before we see the gold price's seemingly inexorable rise continuing to yet new highs.
The trigger for the main surge in the gold price was an announcement that S&P was downgrading its U.S. debt outlook although the overall triple A rating remained intact.  Coupled with further serious worries in Europe on the Irish and Greek economies in particular and the continuing adverse impact on the EU itself.  Coupled with the ongoing violence and revolution in the Middle East and North Africa - a malaise which appears as though it may be spreading to West Africa (Ivory Coast, Burkina Faso and now even Nigeria where religious and tribal tensions are springing up after the election).  With interest rates remaining effectively negative in most of the Western World, there is little reason not to hold gold - and now the largest gold ETF, SPDR Gold Trust, has reported a 1.5% increase in its gold holdings, after around three months of decline.
China too is seeing further tightening as Government attempts  to stave off ever-rising inflation continue - but the fear of rising prices is prevalent there regardless.  And now inflation fears are beginning to strike home in the West too.  Inflationary fears will keep interest rates negative and the oft-quoted reason not to own gold - the fact that it does not generate interest - remains irrelevant. 
With huge amounts of money being manufactured out of this air by governments and Central Banks, in theory to help stimulate depressed economies, monetary values are being devalued the whole time - and the only constant to devalue them against remains gold, the supply of which is mostly outside, so far, the realm of government control.
What we are also seeing at the moment is a pretty sharp decline in stock markets right across the globe.  Whether this is the precursor of another market crash - as in 2008 - is too early to say, but there are a number of respected commentators out there who believe stock markets are substantially overvalued at the moment and the recent bull run is at least due a correction.  If a major correction does occur then gold will likely be affected too as hard assets like gold may need to be sold for liquidity reasons.  But history suggests such a gold sell-off is likely to be shortlived and the yellow metal would regain its position and value very quickly.  Each time this happens it brings gold's investment strengths more and more to the fore in the minds of an ever-increasing number of investors (many of the really big investors like Soros and Paulson have been invested substantially in gold all along).
Industrial commodities too are seeing falls in price in US dollar terms, but much of this is greenback strength related.  With QE2, though the dollar remains inherently weak and it can't be too long before a resumption in dollar weakness boosts the gold price up through the $1500 level.  Whether industrial commodities rise too depends on whether the perceived recovery in the economies of the U.S. and Europe continue to gather steam, and Chinese tightening does not cut too significantly into that country's growth. 
Source: http://www.mineweb.com 

Gold Hits Record, Silver Surges On Inflation Fear

(Reuters) - Gold rose 1 percent to a record and silver soared on Friday, as inflation worries amid a crude oil rally and a downgrade of Ireland's sovereign debt powered bullion to its fifth consecutive weekly gain.
Silver rose to its highest in 31 years on speculative buying and tight supplies, and as data showing rising U.S. consumer prices prompted investors to buy precious metals. Silver's outperformance over bullion sent the gold/silver ratio below 34 for the first time in nearly 30 years.
"People are buying gold and silver as a protection against inflation. If the Fed doesn't start raising rates, inflation is really going to hit hard and cripple the economy," said Miguel Perez-Santalla, vice president of sales at Heraeus Precious Metals Management.
Spot gold rose 0.9 percent to $1,485.70 an ounce by 3:28 p.m. EDT (1928 GMT), having hit a record $1,487.90. U.S. gold futures for June delivery settled up $13.60 at $1,486.
Gold remained far below its all-time inflation-adjusted high, estimated at almost $2,500 an ounce set in 1980, an era of Cold War tension, oil shocks and hyperinflation.
Silver gained 1.4 percent to $42.68, notching a third straight weekly gain. The gold-to-silver ratio -- showing the relative strength between the two metals -- fell to its lowest since the early 1980s.
In the week ended April 12, speculators in U.S. gold futures and options cut their net long positions from the highest level since October, and they reduced their silver bullish bets to the lowest since February, a report by the U.S. Commodity Futures Trading Commission showed.
The small rise in U.S. core inflation, and data showing moderation in long-term inflation expectations may be seen as vindication for Federal Reserve officials who have viewed the recent energy price spike as having a temporary effect.
"This should help to ease inflation concerns at the Fed. With food and energy cutting into consumer spending power, it's difficult for sellers of other goods and services to pass price increases through to the consumer," said Nigel Gault, chief U.S. economist at IHS Global Insight.
Gold prices have almost doubled since the Fed cut interest rates to the bone in 2008 in an attempt to shock the economy back to life after the worst financial crisis since the Great Depression.
A third straight daily gain in U.S. crude oil stoked inflation worries, as improving consumer confidence and industrial production boosted the outlook for oil demand.
EUROPEAN DEBT CRISIS EYED
Gold also drew support from safe-haven bids on worries over the euro zone financial crisis, after more talk that Greece may be set to restructure its debt and a Moody's downgrade of Ireland.
"The market has been reacting to (the credit issues in peripheral Europe) by looking for ways to protect themselves from these types of risks, and gold is seen as a way to do that," Deutsche Bank analyst Daniel Brebner said.
Brebner said gold would benefit if there were another bailout in Europe and if European Union monetary policy remained accommodative because of fiscal troubles in the bloc.
Among other precious metals, platinum eased 50 cents at $1,785.99 an ounce, while palladium gained 0.4 percent to $765.22.
Source: http://www.reuters.com

Silver Offers the Only Positive Return

When thinking about an investment, the best managers look for returns that beat what they perceive to be average.  In the long run, wealth is a relative measure—today, even the poorest people are wealthier than the richest people five hundred years ago, though we’d still say that today’s poor are poor.

 

Investments work along the same lines, with the simple concept being that an investment must have performance that is preferable to your current financial trajectory, and it must have a return that beats holding money in cash, as well as the negative returns incited by inflation.

 

Whether or not you are a current silver holder or not, ask yourself one simple question: what price would it take for you to sell your metals or buy government debt?  At what rate would it be favorable for you to invest your money in stocks, bonds or any other investment?

 

Now, take that number, which is likely quite high, and compare it to past performance of all the markets out there.  You can compare it to stocks, bonds, and commodities, and see simply which asset type has produced returns that you would see favorable.  It would be a safe bet to see that the returns and performance that you want out of your investment portfolio haven’t been found in stocks nor bonds for the past twenty years.

 

Silver Bubble is Not

 

For the individual investor, an exercise that looks into what he or she wants in an investment isn’t a daily happening, though it is for the institutional investor.  The markets measure just like wealth—you can do well, as long as the other guy doesn’t do as well as you do.

 

So when the hysteria of a bubble emerges, investors should ask bubble promoters where they should go from silver.  Should they buy stocks, which are priced as many as twenty years into the future?  Should silver investors pile into fixed-income investments and take home 4-5 percent per year?

 

It is here that we reach the end of such an argument.  Not only are the opportunities present in stocks and bonds weak, but they’re also offering returns that aren’t consistent with their risk profiles.  So why would you hold silver, if you wouldn’t own cash flowing stocks, bonds, or an assortment of mutual funds?  Because silver is the new cash.

 

Investors who have amassed massive positions in the metals markets are telling the market that the options aren’t exciting.  If you’ve only a small selection of underperforming bonds, underperforming and expensive stocks, or negative-return generating cash, is it really much surprise that you want an alternative?  Traditional investments have a best possible outcome of returns equal to a few percent per year, after inflation, and cash has a best possible outcome of negative returns each year.

 

The bubble isn’t in silver ownership, but in low rates and indebted economic institutions.  When investors hold commodities, they’re holding the new cash, and they are insulated from risk to a degree that everyone should appreciate.  Silver is “in a bubble” because the remaining opportunities are stuck in a rut.  At what point would silver investors swap their holdings for paper assets?  You might have to bring back Volcker to make that happen.

Source: http://news.silverseek.com

Gold Guru: What the Talking Heads Don't Understand

The price of gold has soared by nearly $1,200 in the last 10 years.

Today, it's around $1,450 an ounce. A decade ago, it was $260. That's a more-than-fivefold rise in the price of gold in a decade – which dwarfs the gains of the housing bubble of 2006.

So then… is gold finally in a bubble?

I checked in with former economics professor John Doody for his opinion…

John is uniquely qualified to answer – he understands economics as well as anyone, and he covers gold stocks in his newsletter called Gold Stock Analyst.

Here's John's take:

"It's amazing how the mainstream financial media continues to preach to investors that Gold is in a bubble. As if Gold must be doomed to failure by virtue of having been a great performer over the past decade.

"What the 'talking heads' can't seem to understand is that bubbles pop when prices lose all sense of reality, or when there's no one left to buy.

"Neither is the case with Gold, which is still far short of $2,300/oz, the inflation-adjusted previous high in January 1980."

John says gold is nothing like the last two bubbles we experienced… which were dot-coms and real estate.

"What powers Gold is not a fad investment such as the dotcoms," he says. "What does drive Gold is the basic human desire to protect the purchasing power of one's savings… The rise in Gold's price has coincided with the explosion of the total of US Government Debt and the Federal Reserve's balance sheet assets…

"It's not that gold has risen, but due to profligate economic policies the currencies have fallen. It's the same ounce, but what took just $260 to buy a decade ago now takes $1,450.

"The US Dollar's purchasing has fallen over 80% in the amount of Gold it can buy. The decline is similar in the other currencies. Viewed properly in this manner, Gold is not in a bubble; the world's currencies are falling versus Gold due to their excess supply."

John is right. The numbers I follow don't show gold in a bubble, either…

Gold trading is remarkably sanguine. The surveys of investors show they're not wildly bullish. And you don't see wild speculation in the gold futures contracts or in gold ETFs.

Gold stocks are cheap as well…

In his newsletter, John has the best indicator I know of to value gold stocks versus gold. At the beginning of April, gold stocks were 7% undervalued relative to their "fair value," based on the price of gold.

Let me ask you this… If gold were in a bubble, do you think any part of the gold market would be undervalued? I don't think so…

People know about gold now. It's no secret like it was a decade ago. But the actions of traders and investors tell us gold is not universally loved, yet.

I believe John Doody is right… Gold is not in a bubble today.

Trade accordingly.

Posted by Britannia Radio at 12:56

Source: http://britanniaradio.blogspot.com

Gold Prices Pop; Silver at 31-Year High

NEW YORK (TheStreet ) -- Gold prices popped higher Thursday as investors opted for gold over stocks on disappointing jobs data and mixed earnings in the U.S.

Gold for June delivery added $16.80 to settle at $1,472.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,475.20 while the spot gold price was rising more than $14, according to Kitco's gold index.

Silver prices jumped more than $1, currently trading at $41.69 an ounce, and are eyeing the $42 level as its next conquering point.

Gold and silver skyrocketed Thursday as investors bought gold instead of stocks after U.S. initial jobless claims rose by an unexpected 27,000 last week to 412,000 -- past the critical 400,000 mark. The jobs environment had been slowly improving so the number, along with stronger world-wide inflation and anxiety over earnings, led investors back into precious metals.

George Gero, senior vice president at RBC Capital Markets, says that the gold/silver ratio now around 35 and dollar gyrations are keeping metals in rally mode. "Higher short term rates in ECB and elsewhere have not deterred investors, Goldman Sachs thinking crude may be fully priced now also not deterred investors ... so silver and gold are now possible joint performers with ... support at $1,425 for gold [and] $40 for silver."

Gold almost touched its record intra-day high of $1,478 an ounce. When it does, the move will most likely bring even more technical traders back into the market -- the "hot" money that is typically responsible for big price swings -- making the next target for gold at $1,500 an ounce.

Silver is traded in a smaller market and subject to even more speculative buying. Since September of 2010 on QE2 rumors, silver has risen 110%, but its recent climb has many experts wondering if the "poor man's gold" is overbought.

The "safe haven bids or monetary related bids that floated to silver heavily during February and March, if that froth comes out you could have a reversion to a better mien," says Jon Nadler, senior analyst at Kitco.com. Nadler thinks silver should be between $25-$30.

Nadler argues that the U.S. commitment to tackling its budget deficit, underscored by President Obama's speech Wednesday, will support the U.S. dollar and weigh on commodities. The U.S. dollar index, however, was down 0.33% to $74.71 on the rough jobs data.

But for Friday the story will really be about inflation. Producer prices in the U.S. rose 0.7% in March, weaker than expected, while the core reading came in slightly hotter at 0.3%. Inflation in March is supposed to rise to 2.6% and a higher reading Friday could trigger another gold rally as investors bet the Federal Reserve won't raise rates fast enough to fight rising prices.

Gold is typically favored during times of inflation, despite the fact that gold and CPI prices are only negatively correlated 12% of the time, according to data from the S&P. The idea is that inflation makes paper money worth less and gold more valuable.

At the end of 1949 through the first month of 1950, gold rallied 9.5% while inflation hit 10%. From 1974 through 1980, gold rallied 334% as inflation climbed to 14%. Gold is up more than 33% since the beginning of 2010, when inflation talk ramped up.

Gold has been shrugging off rate hikes, the only anecdote to inflation, but Nadler thinks it will take a while for tighter monetary policies to hurt the market. "It's a process. You have to look at how [these] measures take affect going into the second half of this year." Nadler thinks starting in 2012 central banks will raise rates consistently and aggressively.

Also paving the road for higher gold and silver prices Thursday is general market uncertainty. Investors seem to be hesitant after a solid earnings report. JPMorgan(JPM_) originally led markets higher Wednesday but the positive news couldn't sustain the rally. Investors are even more cautious on Google(GOOG_) and Bank of America(BAC_), reporting Thursday and Friday, respectively. In Europe, there are further worries that Greece might need to restructure its debt making gold more attractive as a safe haven asset.

Gold mining stocks, a risky but potentially profitable way to buy gold, were popping. Kinross Gold(KGC_) was adding 0.77% to $15.65 while Goldcorp(GG_) was up 2.36% at $53.98.

Other gold stocks, Agnico-Eagle(AEN_) and Eldorado Gold(EGO_) were trading at $65.71 and $17.84, respectively.

NovaGold(NG_) is up 2.72% to $13.21 after the company announced the results of its preliminary economic assessment for its Ambler property, which contains 28.9 tons of indicated and inferred resources of copper and zinc. Jim Cramer also mentioned this stock positively on Mad Money Wednesday .

Coeur D'Alene Mines(CDE_) was tanking more than 7% on a report that Bolivia will seek to expropriate mines, previously sold by other governments. This move would affect Coeur's San Bartolome silver mine which produced 6.7 million ounces of silver in 2010.

When asked to comment, spokesman for the company, Tony Ebersole, said that the property rights were not "the subject of expropriation. We operate in a mine where title already belongs to the State and backed by Supreme Decree." Ebersole said that production was operating as usual. Worse case scenario, Coeur has political risk insurance policies that covers expropriation.

Source: http://www.thestreet.com/

The reason silver has been rising faster than gold

Analysis of the different advance which has occurred in the silver price vis-à-vis gold in the past few months where the former has substantially outperformed the latter.

Author: Julian Phillips

Silver is breaking new records at around $40 and gold is touching new highs of close to $1,460.   Looking back, over the past few years we have seen gold rise from around $312 to $1,460 a rise of 4.68 times and silver from around $6 to $40 a rise of 6.67 times.  

But this does not give a clear picture, so we went back over the last year and what did we see?   Since early 2009, gold has moved from $900 to  $1,460, a respectable 62%.  Over the same period silver has moved from $10 to nearly $40 a remarkable 400%. Why the difference in relative performance?

Both metals have moved as money.   Gold and silver Exchange Traded Funds have attracted massive investments in the developed world where trust in the monetary system is far higher than it is in the emerging world.   But it was the underlying gold and silver that attracted investors.   Waning confidence in the value of paper currencies gave way to demand for precious metals as a store of value retainers for investors.  

Gold and silver have substantial differences as value retainers which help us to identify why the two metals have differed so much in performance.   

·         Gold is and has always been the ‘senior' monetary metal held by Central Banks as money until 1971 and after that as a valuable reserve asset in the vaults of central banks.

·         Silver was rejected as money and as a reserve asset by the mid-fifties, despite it being treated as money throughout the ages before that.

·         Both gold and silver have been attacked as money through ‘official' sales from the seventies until last year.   But gold was sold to undermine the reality that it is money.   Silver was sold out from reserves almost completely by central banks discarding it as money, completely.

·         Apart from a brief period when Egypt was at its height and supplies of silver less than those of gold, gold has always been in far shorter supply than silver and considered far more valuable than silver.

·         Silver in the past few decades has been seen as a commodity, mined mainly as a by-product of base metal mining, with only 30% mined in a pure silver mine.

·         Most silver is consumed whereas gold is not, which will continue to be the case until less expensive substitutes are found.  This will only happen at far higher prices still.

GOLD AS AN INVESTMENT

Gold has always been the precious metal of choice for wealthy individuals, institutions and central banks.   It has never been abandoned as such.   Even when "Official" selling was at its peak, central banks sold only what they thought was sufficient to add credibility to the paper currency they were pushing to the centre of the system, first to add credibility to the dollar then after 1999 to the euro.   With those tasks completed, Central Banks are now either holders or buyers of gold.  

The amount sold in most cases was around 20%, but in the case of the uninspired then-Chancellor Brown of the U.K.'s case, half of Britain's reserves were sold.   The largest holders of gold sold none or only small amounts.   So while it was underpriced and we believe still is, did not see its price ‘crushed' completely.  

The path back to investment acceptance is a slow one and a long one with most of the journey still to come.   We believe that we are on the brink of major changes in price levels in 2011 and beyond.

SILVER AS AN INVESTMENT

Silver had not really been an investment metal until 2004 and not a significant one until 2009.  

It was a commodity metal in so short a supply that the Hunt brothers of Texas felt they could corner the market.   In 1979, they took the silver price from its high of $8 an ounce [it had doubled since it stood at $4 an ounce in the mid- 1970s' already] to $50 an ounce by the early 1980's.  It then fell all the way back to $5 an ounce thereafter as the Hunt Brothers found they were unable to sell the silver until prices had fallen back to those levels where they stayed until October 2003.   Until 2009, it was relegated to the sidelines as an investment metal.

It started to regain popularity as an investment metal because it began to be considered as "poor man's gold" as the gold price rose out of reach of the poorer investment classes.  

For instance, in India until its middle classes began to grow substantially, 70% of all gold bought was bought by the agricultural sector, whose income was directly related to the quality of the monsoon rains.   When profits were good, they found their way into property and into gold,   As the price rose, the quantity of gold available to such people fell. Then  $1,500 bought five ounces of gold, but with gold at $1,460, it only buys just over 1 ounce of gold.

In India, precious metals are used in commercial transactions so the divisibility of silver relative to gold was far greater and more flexible.   It also remained affordable in larger quantities.   After all, now one ounce of gold buys 36.5 ounces of silver.   So, silver remains affordable far lower down the economic ladder than gold does.   It therefore can attract a far wider market than gold does currently at retail levels.   Bearing in mind that precious metals are attracting a huge and growing market in the emerging parts of the world, the demand, as a wealth protector, at the retail end of the market is expanding rapidly.

CATCH-UP

It would therefore be wrong to still categorize silver as a monetary metal.   Its day will come, but not until its price is much higher and not until paper currencies have lost considerably more credibility than at present.  

The most difficult part of silver's rise as a wealth protector has been from October 2004 to October 2008, from when its price moved from $5 an ounce to a peak of over $20 an ounce then to fall back to than less $10 an ounce before taking off on its current path.  The fall coincided with the onset of the ‘credit-crunch.

All the while,  demand from the photographic sector has waned.   More importantly, the uses of silver have morphed from discretionary demand to a need.   Even in a downturn, the demand for silver will remain strong as its uses are considered vital now.

So as a non-monetary, more volatile precious metal, its future then was far cloudier than now.   The transition from those days to ‘poor man's gold was its re-birth as an investment metal.   While we believe it has now returned as such to stay, it still has a lot of catching up to do.   By catching up we mean that it still has to return to the concept fully, that it is a lower category investment metal respected from institutions [eventually by central banks] as well as the retail end of the market.  

Gold is already at that point.   This does not mean that the gold price has reached a ceiling of any kind.   It does mean that the gold price will rise relative to the value of currencies from now on with its metallic qualities being far in the background.   Silver is still a long way off from that point.

Source: http://www.mineweb.com

Lonjakan harga emas

LONDON - Harga emas dunia diramal meningkat sebanyak 13 peratus pada tahun ini menjadikan harga logam itu mencecah sehingga AS$1,600 (RM4,840) bagi satu auns (28.3 gram).

Kenaikan itu berterusan sejak 2001 didorong oleh kebimbangan terhadap inflasi yang tinggi dan kadar faedah global yang rendah.

"Kami tidak akan terkejut jika melihat harga emas melepasi AS$1,600 sebelum hujung tahun ini," kata Pengerusi Eksekutif firma penyelidikan GFMS Ltd., Philip Klapwijk dalam laporan terbarunya yang disiarkan semalam.

Ramalan itu tidak berubah daripada jangkaan awal yang dikeluarkan pada Januari lalu selepas harga emas mencatat harga tertinggi dalam sejarah iaitu AS$1,478.18 (RM4,472.23) bagi setiap auns di London pada Isnin lalu.

"Para pelabur terus bimbang mengenai inflasi dan kerajaan-kerajaan dilihat kurang berminat untuk mengetatkan polisi kewangan. Kedudukan kewangan kerajaan juga menjadi alasan kenapa pelabur kekal fokus terhadap pasaran emas.

"Penerimaan kenaikan harga oleh para pengguna akan membantu meningkatkan permintaan terhadap barang kemas selain menyediakan platform kukuh untuk pelabur menaikkan harga emas menjadi lebih tinggi," kata Klapwijk.

source: www.kosmo.com.my

Gold and silver fever grips investors

When Jean-Claude Trichet announced a quarter-point jump in interest rates this week, gold and silver prices dipped as the European Central Bank chief emphasised his inflation-fighting focus.

But the two well-known inflation hedges were only temporarily dented by the tough talk; on Friday silver pushed above $40 a troy ounce for the first time since 1980 and gold pushed to a new all-time high in nominal terms at $1,474.19.

The metals’ rallies have clear links to rising fears about inflation. But recent predictions for silver to hit $50 and gold to breach $1,500 are based on more than just these fears.

“Both markets actually have surplus supply. Demand for both is good – particularly industrial demand for silver – but this isn’t enough to absorb all the supply,” says Suki Cooper, precious metals analyst at Barclays Capital. “That leaves the rest down to investor demand.”

Investors have indeed been piling in. Holdings of gold to back exchange-traded funds – the popular way for retail investors to gain exposure – jumped 19.9 tonnes on Thursday alone in the biggest single inflow since late January, according to Barclays. On the same day, holdings of silver jumped 42 tonnes to another record at 15,554 tonnes.

Interest itself has been triggered by a range of factors, not least geopolitical tensions. After a weak January, prices of the metals spiked higher in February when the unrest that toppled governments in Tunisia and then Egypt sent investors scrambling for havens.

During the financial crisis, investor fear manifested itself in strong demand for physical holdings. In spite of recent turmoil, there has not been the same scramble to buy physical supplies this time round.

“The fear factor is not as key right now,” says Osvaldo Canavosio, a hedge fund analyst at Man Investments in New York. “At the height of the financial crisis, in precious metals there was a bit of a panic to hold physical.”

Yet the haven buyers were out in force again on Friday, watchers said, as investors braced for a potential shutdown of the US government if last-ditch talks between Republicans and Democrats fail to reach agreement.

Retail investors are showing particular interest in silver coins in many countries, including the US. Last month the Utah state legislature passed a bill accepting US gold and silver coins as legal tender and other states are considering similar legislation in a direct rebuke to the Federal Reserve and its ultra-loose monetary policy.

“Utah has crossed the Rubicon, others are likely to follow suit,” says Daniel Brebner at Deutsche Bank.

Analysts and investors now see $1,500 gold and $50 silver as likely to be breached in the coming months, as the potential for looser monetary policy for longer in the US weighs on the dollar.

Commodities, including gold and silver, are typically priced in dollars so a weaker dollar boosts raw materials prices. The euro hit a 14-month high of $1.4443 against the dollar on Friday. Some gold bugs are even betting on a third round of quantitative easing, dubbed QE3, by the Federal Reserve, after its current scheme ends in June.

“Expectations that QE2 could be followed by QE3 are higher in the gold market than in other markets,” says Edel Tully, precious metals strategist at UBS.

This could leave gold investors setting themselves up for disappointment. “I would expect gold to march to $1,500 sooner rather than later,” says Ms Tully. “Towards the end of this quarter gold could hit a stumbling block if QE2 ends.”

An end to QE would tighten US monetary policy but it would be a small step compared with the inflationary impact of soaring oil and food prices, which have pushed real US interest rates – nominal rates minus inflation – to negative levels, analysts say.

“Gold is ultimately dependent upon real rates, which are a function of both inflation expectations and monetary policy,” says Jeffrey Currie, head of commodities research at Goldman Sachs, which forecasts gold will hit $1,625 by the end of the year. “A top in gold prices will only become apparent when the risks of sovereign default are behind us with a clear and successful exit of the stimulus we’ve seen over the last few years.”

Negative real rates are not just a US issue; the same is true in China – where demand for bullion is skyrocketing, bankers say.

“The cost of carry [the difference between interest on deposits and non-interest bearing gold] is zero,” says Walter de Wet, head of commodities research at Standard Bank. “It incentivises money to be invested in assets.”

Analysts are, however, less confident on silver, whose move higher has been so dramatic that many believe a sharp correction could soon be on the cards.

“I’m less convinced we’re going to remain so high, if only because we’re expecting a generous increase in mine supply,” says James Steel, commodities analyst at HSBC. “Short-term, we could go higher, but it’s increasingly vulnerable to a correction.”

Source: http://www.ft.com

Silver Is Getting Too Popular…Right?

It’s no secret that the silver market is red hot. As I write, silver American Eagles and Canadian Maple Leafs are sold out at their respective mints. Buying in India has gone through the roof, especially noteworthy among a people with a strong historical preference for gold. Demand in China continues unabated. Silver stocks have screamed upward.

So, as an investor looking to maximize my profit, I have a natural question: is the silver trade getting too crowded, meaning we’re near the top? Have the masses finally joined the party such that we should consider exiting? After all, it’s not a profit until you take it, and you definitely want to sell near the top.

There are several ways to measure how crowded the silver market might be. I prefer to look strictly at the big picture and not get caught up in the weeds. This means I’m looking for signs of market exhaustion or the masses rushing in. Nothing says “peak” more than an investment everyone is buying.

At $35 silver, all exchange-traded funds backed by the metal amount to $20.7 billion. You can see how this compares to some popular stocks. All silver ETFs combined are less than a quarter of the market cap of McDonald’s. They’re about 10% of GE, a company that still hasn’t recovered from the ’08 meltdown. Exxon Mobil is more than 20 times bigger. And this isn’t even apples-to-apples, as I’m comparing the entire silver ETF market to a few individual stocks.

This is even more interesting when you consider that it’s the ETFs where most of the public – especially those that are new to the market – first invest in silver. So while the metal has doubled in the past seven months, total investment in the funds is still far beneath many popular blue-chip stocks.

Okay, maybe all this money is instead going into silver mining stocks. How does the market cap of the silver industry compare to other industries?

While you fetch your magnifying glass, I’ll tell you thatthe market cap of the silver industry is $73.1 billion. It barely registers when compared to a number of other industries I picked mostly at random. The dying newspaper industry is over 26 times bigger. Drug manufacturers are 213 times larger. Heck, even the gold market is 19 times greater. And here’s the fun one: the market cap of the entire silver market, with all its record-setting prices and stock-screaming highs, represents just one-third of one percent of the oil and gas industry.

To be fair, there are a number of sectors that are smaller than silver. Radio broadcasters ($43.2B), video stores ($10.9B), and sporting goods stores ($2.5B) have puny market caps, too. But then again, who's buying DVDs or baseball mitts to protect their wealth from a coming inflation?

Silver hardly resembles the picture of an investment that is too crowded.

I’m not saying one should rush to buy silver right now. After all, it has doubled in seven months. Unless this is the beginning of the mania, prudence would certainly be called for at this juncture. The price will always ebb and flow in a bull market, and an ebb is overdue.

The question, of course, is from what price level it occurs. What if a correction doesn’t ensue until, say, a month from now, and the price falls back to… where it is now? I remember some articles in January that insisted silver would fall to as low as $22, and, well, they’re still waiting and have in the meantime missed out on some huge gains. For silver to fall back to $22 now would require a 40% drop; not impossible, but I wouldn’t hold my breath.

Fixating on market timing takes your focus off the ultimate goal. In my opinion, instead of worrying about what will happen next week or even next month, focus on how many ounces you have, and then buy at regular intervals until you reach your desired allocation. This has the added benefit of smoothing out your cost basis. And don’t forget to buy more as your assets and income increase.

This is a market where you'll want to be well ahead of the pack. Someday in the not-too-distant future, average investors will be tripping over themselves to join in. That will make the market caps of our silver investments look more like some of the others in the charts above. And that will do wonderful things to our portfolio.

Source: http://www.activistpost.com/

Gold To Hit $1,500 & Silver $50 As Early As Summertime

If true prosperity is the result of acting on confused information, as the old adage goes, “a fool and his money are soon parted,” the behavioral research data tells us that the bankers, the politicians and Wall Street are more likely to represent the perfect opportunity to do just that. But the brutal reality is, that with all the turmoil within the Middle East, disasters in Japan, the massive infusion of newly-printed currencies, the devaluation of the US dollar, while were to swallow how great the US income data is, and that “Gold pares loss after U.S. spending income data,” it’s a great opportunity to purchase gold and silver as a safe haven and protection hedge before it hits new heights as early as this summer!It was recently discovered that the magnetic properties of gold nanoparticles are the subject of a new benefit for gold. “Unexpected magnetism in gold nanostructures: Making gold even more attractive,” by Professor Simon Trudel, University of Calgary, explains the cause of the unexpected magnetism in gold and explores how these properties could lead to potential applications in catalysis, medicine and data storage. “The possibility of chemically turning on magnetism in gold nanostructures is a unique feature. One can envisage how gold based sensors could be designed whereby detection of a substance could lead to the onset of magnetism. Such sensors might be used in medical testing for example.”

So whilst gold has a long and fascinating history in technology, new research continues to open up stirring and innovative applications for the metal as its unexpected magnetism demonstrates cutting-edge developments. With such great developing news in gold, it is an additional exciting times for the metal ahead in the hand today. And, while I’m a great believer in the American entrepreneurial spirit, in fact, the U.S. economy stands or falls on our ability to provide enough space to allow small folks to have big-time dreams too, when times get ruff and difficult, some little folks might end up under the bus – along with their dreams. Therefore, to remain abreast of the geopolitical unrests and rising inflation fears, as it continues to bombard the world, to see great new research in gold, it is necessary to look and see how the trend in the metal is reaching new highs in esteem, a respect that will subdue those heavier concerns on the road ahead.

There’s a distinct possibility the U.S. stock market could plunge as much as 6,000 points if the U.S. continues to rack up record amounts of debt, causing the dollar to lose its reserve currency status, says Daily Ticker favorite Howard Davidowitz, and that “the dollar has never been at greater risk,” he says, being confident that if Washington doesn’t cool its spending habits, interest rates will spike and inflation will soar. Look at the value of the dollar, and the crisis is already brewing, with foreigners and sovereign nations diversifying away from dollar-denominated assets, he says. What’s an investor to do in this scenario but buy hard assets, he suggests. Davidowitz says investors should own physical gold, silver and diamonds. He also thinks land is a winning bet, even suggesting young adults buy and work farmland. “I think investment in farmland with water on it is a great investment. Finance will be less important,” in the future, he says, but gold, most important. Amidst the cacophony of news bulletins, the autocratic rule that has dominated the Middle East for decades and continues to unravel the volatility in the global oil markets points toward another overriding concern: How can we maintain an oil-flow balance in the face of such escalating uncertainty as oil prices are posting their highest levels? And will continue to do so! To combat the bad to good news: There isn’t any stopping silver! Traders favor the gray metal as being a risk aversion play because it is seen as being less expensive option says Ron Fricke president of Regal Assets. One only need to look at the record higher investment within the iShares Silver Trust, the world’s biggest silver-backed exchange-traded fund, silver has had an incredible run, up 84% in 2010 and up another 20% Y.T.D. so far in 2011.

All in all, we can anticipate that gold will hit $1,500 and silver to hit $50 extremely quickly, perhaps as early as this summer time, says Gold News…”Now could be an excellent time to make investments in gold and silver.” Gold has yo-yo’d very little. It broke upward the resistance at $1,440/oz after many failed attempts. “After having reached the new all-time high, however, Gold has sharply fallen of $20 ca, then coming back to the support at $1,431/oz and corrected some more on Monday.” But, while the Libyan crisis stays tense with NATO now in charge of policing the no-fly zone, whilst the planet continues to warily view the specific situation at Japan’s Fukushima nuclear plant, with the European sovereign financial debt problem rising once more with Portugal most likely needing help, the intermediate and long-term view for gold is bullish, but that does not imply the metal cannot consider a little step back for investors buy.

Source: http://goldcoinblogger.com