By Christine Kim
SEOUL, South Korea -- South Korea's central bank said on Wednesday it bought 14 tonnes of gold in November using its
foreign reserves in order to spread its portfolio risks, while releasing data showing total reserves rose after talk of
market intervention.
The Bank of Korea bought the gold for $780 million, the fourth purchase in about 1 1/2 years, lifting the proportion of
gold in its total foreign reserves to 1.2 percent from the previous 0.9 percent, it said in a statement.
"Gold is a physical, safe asset and allows" the country "to deal with changes in the international financial environment
more effectively," it said in a statement, without providing more details on the purchase.
The Bank of Korea now holds 84.4 tonnes of gold, valued at $3.76 billion in terms of purchase prices, up nearly six-fold
from 14.4 tonnes before June last year.
The Bank of Korea made its first gold purchase in more than a decade between June and July last year, joining some
central banks in diversifying their increasing foreign reserves away from the U.S. dollar and low-yielding government
bonds.
Official-sector buying has become a key factor supporting gold demand and prices in recent years.
South Korea's gold buying "points to stronger support for gold prices from central banks," said Philip Klapwijk, global
head of metals analytics at Thomson Reuters GFMS, a
metals consultancy. "If private-sector investment falters and prices dip, central banks' buying supports prices at
higher levels than if this demand were not present. It is a substantial additional source of demand for gold bullion."
Central banks around the world bought a total of 351.8 tonnes of gold in the first nine months of 2013, up 2 percent
from a year earlier, data from the World Gold Council showed.
In comparison, private-sector gold investment demand during the period dropped nearly 8 percent on the year to 1,139.3
tonnes, the data also showed.
Spot gold traded just below $1,700 an ounce on Wednesday, up more than 8 percent so far this year.
The Bank of Korea said it now expected its ranking among central banks around the world in terms of gold holdings to
rise to 36th from 40th.
Meanwhile, the central bank said foreign reserves rose by $2.6 billion last month to a record $326.09 billion, extending
its record-breaking streak to a fourth consecutive month. It attributed the increase to investment gains but the data
came after reports by traders of dollar-buying intervention by South Korean authorities during the month to curb the
won's rapid appreciation.
On Nov. 22 alone, currency traders estimated authorities bought up to $1 billion in the local currency market to temper
a stronger won, which hurts the competitiveness of South Korean exporters.
Central bank officials declined to comment on the talk of intervention.
South Korea, which had the world's seventh-largest foreign exchange reserves as of the end of October, held 91.7 percent
of its reserves in the form of securities.
Source: http://www.24hgold.com
Monday, December 10, 2012
Friday, November 9, 2012
Malaysia's Perak finds potential Gold sources
Malaysian State of Perak claimed to have identified several potential gold sources but refused to name it fearing any 'gold rush'.
According to a top official of the government, authorities would first need to determine whether the gold deposits had any commercial or considerable value.
He said Mineral and Geoscience Department will conduct further research at the spots and determine if there is any commercial value in them or if they only contain small amounts of gold.
Based on the preliminary report by a task force studying Perak's gold mining potential, the gold deposits could be commercially mined, he added.
Perak was also looking into refining the categorisation of minerals to facilitate the process of imposing royalty taxes on mining activities.
Perak had already increased its tax revenues from mining activities to about RM 30 mil this year through a royalty tax increase to 5% as compared to last year's revenue of less than RM 1mil.
Source: http://www.bullionstreet.com
Monday, October 22, 2012
How Gold can solve Europe's debt crisis
Central banks of the 17-nation euro currency union are sitting on more than 10,000 metric tons of gold.
Here's an idea that almost certainly wasn't discussed at Thursday night's European summit: using countries' gold reserves to lower the borrowing costs of euro-zone governments. Central banks of the 17-nation currency union are sitting on more than 10,000 metric tons of gold. At northward of $1,740 a troy ounce, that's a chunk of change. (There are 32,151 troy ounces in a metric ton.)
From the point of view of Europe's debt crisis, most of it is in the wrong place. Nearly a third of it belongs to Germany and almost a quarter of it is in France, neither of which is struggling with high debt-interest costs. For some countries burdened with debt—Spain, which holds 282 tons, Greece with 112 tons and Ireland with just six—their holdings are too small to make much of a difference.
But two countries have enough gold to make a difference to their financing costs. Italy, which has flirted with unsustainably high borrowing costs, is sitting on the second-largest holding of gold reserves in Europe: 2,450 tons. The small economy of Portugal, which is in a bailout program after it lost access to affordable government finance, has reserves of 382 tons.
The idea is not to sell the stuff. Instead, the proposal is to bring down borrowing costs by using gold to guarantee the partial repayment of bonds to investors in case of a default. Italy's gold reserves would cover 24% of its estimated borrowing needs over the next two years and Portugal 30%. If the two countries could issue some unsecured debt at the same time, they could bridge an even longer period.
First, some perspective on an idea that could hypothetically help Italy to avoid asking its neighbors for a bailout and aid Portugal to regain access to the bond markets. It is not from a disinterested party: The World Gold Council exists to promote the use of gold on behalf of the world's gold miners.
It is not in the current mix of ideas being discussed by senior policy makers, though it has been the subject of presentations in Brussels, for example to European parliamentarians, and has been put forward by Romano Prodi, the former Italian prime minister.
Moreover, a continuation of the current bond-market respite—inspired by the European Central Bank's pledge to buy the bonds of governments that request an official credit line and meet the conditions attached—would render it of only academic interest.
There are precedents for using gold as security. Ansgar Belke, an economist at the University of Duisburg-Essen in Germany, points out that in the 1970s Italy and Portugal both used gold reserves as collateral for loans from other central banks and the Bank for International Settlements.
In a paper commissioned by the WGC, he calculates that gold bonds could cut Portugal's borrowing costs for five-year bonds from 10% to 6%, if a third of the bonds' face value was guaranteed in gold, and to 5%, if half was guaranteed.
Such bonds, he said, would "surely attract investors such as emerging-market governments and sovereign-wealth funds." Using gold to back government debt could not happen overnight. For one thing, the gold reserves are not in the government's coffers but in those of the national central banks.
Though the reserves in question are separate from the gold these countries have placed with the ECB, the governing council of the ECB must agree to any transfers of gold to governments. Second, national central banks in the euro zone are meant to be independent. A transfer of gold to the government raises questions, says Mr. Belke, about whether such transfers breach the prohibition on central banks providing monetary finance to governments.
Third, euro-zone central banks are among those world-wide that have agreed to limit their collective gold sales to 400 tons a year, an agreement that persists until 2014. It's not clear whether using gold as collateral would be considered inside or outside the scope of this agreement.
Mr. Belke points out that current ECB operations—providing finance to banks which then buy their own governments' debt, and the ECB's government-bond-buying operations—are also viewed by some as breaking the prohibition against monetary financing, objections that have not proved an obstacle to the operations' going ahead.
In another paper for the WGC, Andrew Lilico of Europe Economics, a London-based economics consultancy, says the use of gold-backed bonds wouldn't be a case of central banks gearing up the printing press to bail out their governments. "As a real asset, the use of gold as collateral is not inflationary, any more than would be the use of historic buildings or military equipment or islands or any other of the forms of collateral that have been proposed for distressed sovereigns," he argues.
Justin Knight, a European bond strategist at UBS, says some investment institutions might struggle to buy gold-backed bonds because they invest according to bond indexes, some of which include only unsecured debt. Other investors may have rules forbidding them from holding asset-backed securities. "Bonds would need to be issued under international, rather than domestic law, and one could envisage a situation in which bonds secured against gold held outside of the country… might be seen as more valuable than that held in a central bank's own vaults," he said.
source: http://www.bullionstreet.com
Monday, September 3, 2012
Gold hits 4-month high on Fed stimulus hopes, Spain
Reuters) - Gold rose 1 percent to a four-month high above $1,670 an ounce on Thursday, bolstered by hopes for a new round of U.S. monetary stimulus and news that Spain is negotiating conditions for a possible aid package.
Silver surged 2 percent and platinum group metals also climbed on supply concerns due to labor unrest in South Africa.
Precious metals received a boost after sources told Reuters Spain is in talks with the euro zone over conditions for international aid, even though the country has made no final decision to request a bailout.
Bullion consolidated its breakout above a four-month trading range and technical resistance at the 150-day and 200-day moving averages. However, gold's relative strength index suggests the market might be slightly overbought following its seventh consecutive day of gains. (r.reuters.com/xub32t)
The move higher came amid already-bullish market sentiment, with Wednesday's minutes from the U.S. Federal Reserve's August meeting showing policymakers were ready to deliver more stimulus "fairly soon" unless the economy improves considerably.
"This is the first insight we've gotten in the marketplace to think that the Fed is committed to this new stimulus program, and that's the catalyst you need to break out of the range," said Jeffrey Sherman, commodities portfolio manager at DoubleLine Capital LP, which has over $40 billion in assets under management.
Spot gold gained 0.9 percent to $1,668.70 an ounce by 2:25 p.m. EDT (1825 GMT), having risen 3.5 percent so far this week.
That put gold on track to post its largest monthly rise since January's 11 percent increase.
U.S. gold futures for December delivery settled up $32.30 at $1,672.80 an ounce. Trading volume looked set to challenge its highest in almost a month, preliminary Reuters data showed.
Silver rose 2.2 percent to $30.49 an ounce.
Bullion broke ranks with U.S. equities, which fell after the number of Americans filing new claims for jobless benefits unexpectedly increased, and after St. Louis Federal Reserve President James Bullard played down the odds of imminent easing.
WEAKNESS SEEN IF FED DISAPPOINTS
Bullion is now up nearly 7 percent year to date, still below the 15 percent in January when the Fed signaled it might use more stimulus and would keep interest rates near zero until at least 2014.
"Market expectations on monetary easing might be too high and that could lead to pullbacks," said Nicolas Berge, a trader at Geneva-based hedge fund Absolute Capital Group which invests in commodities futures and currencies.
Gold's breakout above its downward trend confirms the potential start of a longer-term bull market, Berge said.
Bullion held in top exchange-traded funds monitored by Reuters hit a record by Wednesday's close, having risen by more than 600,000 ounces this week so far, marking the largest weekly rise since early February.
Gold investors also monitored news that Citi Private Bank deciding it will withdraw up to $500 million from long-time gold bull and prominent hedge fund manager John Paulson's flagship Advantage funds, which held some gold investments.
In platinum group metals (PGM), ETF Securities said that its U.S. PGM exchange-traded products added nearly $50 million in new assets in the last week due to supply worries following deadly violence and work stoppage in South African mines.
Platinum rose 0.4 percent to $1,536.75 an ounce and palladium was up 3.5 percent at $650.75 an ounce.
Source: http://www.reuters.com
Silver surged 2 percent and platinum group metals also climbed on supply concerns due to labor unrest in South Africa.
Precious metals received a boost after sources told Reuters Spain is in talks with the euro zone over conditions for international aid, even though the country has made no final decision to request a bailout.
Bullion consolidated its breakout above a four-month trading range and technical resistance at the 150-day and 200-day moving averages. However, gold's relative strength index suggests the market might be slightly overbought following its seventh consecutive day of gains. (r.reuters.com/xub32t)
The move higher came amid already-bullish market sentiment, with Wednesday's minutes from the U.S. Federal Reserve's August meeting showing policymakers were ready to deliver more stimulus "fairly soon" unless the economy improves considerably.
"This is the first insight we've gotten in the marketplace to think that the Fed is committed to this new stimulus program, and that's the catalyst you need to break out of the range," said Jeffrey Sherman, commodities portfolio manager at DoubleLine Capital LP, which has over $40 billion in assets under management.
Spot gold gained 0.9 percent to $1,668.70 an ounce by 2:25 p.m. EDT (1825 GMT), having risen 3.5 percent so far this week.
That put gold on track to post its largest monthly rise since January's 11 percent increase.
U.S. gold futures for December delivery settled up $32.30 at $1,672.80 an ounce. Trading volume looked set to challenge its highest in almost a month, preliminary Reuters data showed.
Silver rose 2.2 percent to $30.49 an ounce.
Bullion broke ranks with U.S. equities, which fell after the number of Americans filing new claims for jobless benefits unexpectedly increased, and after St. Louis Federal Reserve President James Bullard played down the odds of imminent easing.
WEAKNESS SEEN IF FED DISAPPOINTS
Bullion is now up nearly 7 percent year to date, still below the 15 percent in January when the Fed signaled it might use more stimulus and would keep interest rates near zero until at least 2014.
"Market expectations on monetary easing might be too high and that could lead to pullbacks," said Nicolas Berge, a trader at Geneva-based hedge fund Absolute Capital Group which invests in commodities futures and currencies.
Gold's breakout above its downward trend confirms the potential start of a longer-term bull market, Berge said.
Bullion held in top exchange-traded funds monitored by Reuters hit a record by Wednesday's close, having risen by more than 600,000 ounces this week so far, marking the largest weekly rise since early February.
Gold investors also monitored news that Citi Private Bank deciding it will withdraw up to $500 million from long-time gold bull and prominent hedge fund manager John Paulson's flagship Advantage funds, which held some gold investments.
In platinum group metals (PGM), ETF Securities said that its U.S. PGM exchange-traded products added nearly $50 million in new assets in the last week due to supply worries following deadly violence and work stoppage in South African mines.
Platinum rose 0.4 percent to $1,536.75 an ounce and palladium was up 3.5 percent at $650.75 an ounce.
Source: http://www.reuters.com
Monday, August 27, 2012
Silver to hit $50 by end of 2012
NEW YORK (Commodity Online): Silver prices likely to reach $50 an ounce and gold prices to bounce back to $1900 levels, said Stephen Smith, managing member of Smith McKenna, LLC.
According to Smith, the precious metal boom that was cut short in 2011 could be making a strong comeback in late 2012 and over the next few years.
The metal to keep a watchful eye on is silver. Analysts and precious metal experts are in harmony on predictions of silver surpassing $50/oz. and gold edging above $1,900/oz by as early as year end.
Investing in silver ahead of the future outlook for both the global economy and manufacturing sector could prove to be very rewarding. 2011 marked the end to a bullish few years which made a lot of people very wealthy.
While gold is still expensive, silver is the commodity that investors should be paying special attention to. Silver in relation to gold is priced substantially lower; it's undervalued and is expected to respond bullishly over the next few years.
Those who don't currently invest in silver should at least be gathering all the information they can. Current precious metal investors have already shifted their support and focus on the white metal amid global cues and its exceptional properties with continuing limited supply. In short, precious metals should be a part of everyone's investment portfolio; it's all about diversification.
"Most people miss out on precious metal market booms and investing in silver because of uncertainty and lack of information. Potential wealth creation is all about the long term outlook with the right position and knowledge," Stephen Smith added.
Silver has both usage as an industrial metal and value as a precious commodity; making it sensitive to the economic outlook and global manufacturing. Silver has large ties and demand in the pharma industry, solar panel production and electronics.Limited bullion supply, increased demand and global easing could send the price of silver into the clouds.
As a society we're just not as educated on precious metals as an investment source. The banking industry and Wall Street want to remain in the spotlight, but they often have their own hidden agendas. According to Smith, "Silver could perform stronger and be a better investment vehicle than your IRA/401k."
Tuesday's Q2 2012 Euro GDP report showed expected economist predictions with little impact on the silver market.Analysts are still expecting further easing amid high interest rates, debt crises, budget cuts, and limited spending. Money printing and easing could once again send precious silver and gold on a wild ride to new highs.
Silver was seen around $28/oz last week with analysts holding to their notions of silver sitting on the cusp of a strong rebound.There's a reason why investors are currently shifting their focus and doing their homework on precious silver. Its value ratio to gold is heavily skewed and stimulus efforts and economic rebounding could prove to be the recipe that silver has been patiently waiting for.
Silver is a historical form of currency and store of value. Precious metals are a physical asset meaning they are not manufactured but rather limited in supply, making their value exceptionally strong. Owning physical silver is one of the keys to investing in the white metal, staying away from ETFs, Futures and Options.
Source: http://www.commodityonline.com
According to Smith, the precious metal boom that was cut short in 2011 could be making a strong comeback in late 2012 and over the next few years.
The metal to keep a watchful eye on is silver. Analysts and precious metal experts are in harmony on predictions of silver surpassing $50/oz. and gold edging above $1,900/oz by as early as year end.
Investing in silver ahead of the future outlook for both the global economy and manufacturing sector could prove to be very rewarding. 2011 marked the end to a bullish few years which made a lot of people very wealthy.
While gold is still expensive, silver is the commodity that investors should be paying special attention to. Silver in relation to gold is priced substantially lower; it's undervalued and is expected to respond bullishly over the next few years.
Those who don't currently invest in silver should at least be gathering all the information they can. Current precious metal investors have already shifted their support and focus on the white metal amid global cues and its exceptional properties with continuing limited supply. In short, precious metals should be a part of everyone's investment portfolio; it's all about diversification.
"Most people miss out on precious metal market booms and investing in silver because of uncertainty and lack of information. Potential wealth creation is all about the long term outlook with the right position and knowledge," Stephen Smith added.
Silver has both usage as an industrial metal and value as a precious commodity; making it sensitive to the economic outlook and global manufacturing. Silver has large ties and demand in the pharma industry, solar panel production and electronics.Limited bullion supply, increased demand and global easing could send the price of silver into the clouds.
As a society we're just not as educated on precious metals as an investment source. The banking industry and Wall Street want to remain in the spotlight, but they often have their own hidden agendas. According to Smith, "Silver could perform stronger and be a better investment vehicle than your IRA/401k."
Tuesday's Q2 2012 Euro GDP report showed expected economist predictions with little impact on the silver market.Analysts are still expecting further easing amid high interest rates, debt crises, budget cuts, and limited spending. Money printing and easing could once again send precious silver and gold on a wild ride to new highs.
Silver was seen around $28/oz last week with analysts holding to their notions of silver sitting on the cusp of a strong rebound.There's a reason why investors are currently shifting their focus and doing their homework on precious silver. Its value ratio to gold is heavily skewed and stimulus efforts and economic rebounding could prove to be the recipe that silver has been patiently waiting for.
Silver is a historical form of currency and store of value. Precious metals are a physical asset meaning they are not manufactured but rather limited in supply, making their value exceptionally strong. Owning physical silver is one of the keys to investing in the white metal, staying away from ETFs, Futures and Options.
Source: http://www.commodityonline.com
Thursday, August 2, 2012
Silver Price Psychology
People have a natural tendency to seek and understand value. The currently dominant baby boomer generation has a speculative mindset with regard to investment. The relatively frugal generation that lived through the first great depression is now fading in influence, along with their collective memory of harder times.
Both professional and individual traders tend to chase momentum, with pros often using technical analysis to justify market movements and their positioning in the market. Individual investors also listen to professionals talking their book, rather than to more objective experts.
Silver Prices Spikes
Nevertheless, in the silver market, any significant spike higher tends to feed on itself. This is not only due to speculative buying momentum, but also due to short covering buying as the truly limited supply of physical silver exerts its upward influence on the metal’s price.
While inevitable does not imply imminent, the longer the current price suppression paradigm lasts in the silver market, the tighter the spring becomes coiled, and the higher will be the price’s ultimate release upward.
Understanding Silver’s Value
The main point here is that silver’s intrinsic value is currently understood and accepted by only the few who got into the market early. Those who get into it once the inevitable rally has started will be buying on impulse or out of fear, only rationalizing their investment after the fact.
Some might believe that silver’s price spiking higher will suddenly and magically bring out all of the physical silver ever mined throughout history, including the billions of ounces currently sequestered in technological components, silverware and jewelry.
While some recovery of metallic silver from these recycling sources is likely, the most probable outcome will be an increasing scarcity of physical silver that will fail to meet the growing demand.
Although the masses might be manipulated into seeing spiking silver prices as a selling opportunity before the ‘inevitable’ crash — perhaps because 16 ounces of silver historically could buy one ounce of gold — the likelihood remains that silver’s price will ultimately rise both in U.S. dollar terms and relative to the price of gold.
For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals visit http://www.silver-coin-investor.com
source: silverseek.com
Wednesday, July 18, 2012
Gold Prices To Be Higher Next Year, U.S. Dollar Dramatically
Gold prices should be higher next year, but corn and the U.S. dollar should see dramatic gains, said an influential newsletter editor.
Dennis Gartman, editor of the newsletter, The Gartman Letter, said he’s most bullish on corn and the “English-speaking” currencies, including the U.S. dollar, but also the Canadian, Australian and New Zealand dollar, plus the British pound.
Gartman wouldn’t give a specific forecast for gold, only to say that he expected prices to be higher than they currently are a year from now, but not “demonstratively so.”
“I really don’t like to put numbers on things. If you say gold is going to $2,100 and it goes to $2,085, I’m telling you, you taken to the rack because you missed it. The best that you can do in this business is to get the direction right…. If you get the direction right 45% of the time you’re going to beat everybody else,” he said.
Gartman spoke to Kitco News Thursday on the sidelines of the Executives’ Club of Chicago’s Annual Economic Outlook.
He said gold is still in a bull market, but right now he is holding a neutral stance. “There are only three positions you can take in a bull market: really long, long and neutral. Right now I think neutral is the place to be,” he said.
Gartman is famous for trading gold in currencies other than the dollar, which gold is denominated in. He frequently trades gold in euro and yen terms. To do so he has said that buys gold and simultaneously sells the other currency, trying best to match equal dollar sums on both sides of the trade.
“Too many people have thought of gold as being an anti-dollar trade. If it is, by buying it in euro terms, I’ve effectively hedged out the dollar risk. Quite honestly under most circumstances – not all – but on days that gold would get whacked, then the euro would get whacked. That has allowed me to breathe on down days in gold,” he said.
He told the audience at the Executive’s Club outlook panel that other markets he’s bullish on are corn, coal – both thermal and metallurgical – and dollars, whether U.S., Canadian, Australian and New Zealand, but did not elaborate.
He added that the U.S. dollar will be “dramatically higher” by next year and said it will remain as the world’s reserve currency, saying it’s “idiocy” not to think so. He said the U.S. military superiority guarantees that dominance. “No one else comes close to the U.S. defense capability,” he said.
He’s also very bullish stock markets, both U.S. and other stock markets, saying that the amount of fiscal stimulus via quantitative easing by the Federal Reserve and ultra-low interest rates in many other countries will benefit equities. When the moderator of the panel asked what his forecast for the Dow Jones Industrial Average would be in a year’s time, he said 16,500. It is now around 12,350.
He also told the Executive’s Club audience that he has no love for “gold bugs,” saying that they remind him of Ted Kaczynski, a recluse survivalist who was known as the “Unabomber” for his letter bombs than spanned 20 years. Gold bugs, he said, have their gold holdings, “dried food, water and live up in caves.”
Gold is “nothing more than another currency. It’s the second reserve currency,” he told the audience.
He’s bearish on the euro overall, but given the rise Friday in the single currency, he said in his newsletter Friday he is standing aside for now.
In the Kitco News interview he said with West Texas Intermediate crude oil at $105 a barrel, the type of oil traded at the New York Mercantile Exchange, that it brings an “awful lot” of new drilling, but he is not “overtly bullish” on energy.
Gartman wouldn’t say if he was shorting any particular trade or market, but he said he would avoid European stocks on the balance, and would prefer to own U.S., Canadian or Australian equities.
CONSIDERS HIMSELF A TECHNICAL TRADER
Regarding his trading technique, he told Kitco News that he considers himself to be 55% a technical trader and 45% a fundamentalist. “The first thing I do is look at a chart. I want to buy things that are going up. I spend weekends leafing through charts to find things that are interesting,” he said. “Do I approach things from a fundamental view first? No, not really. I find that to be a great waste of time. I’ll find out the fundamentals later. If I find a chart that looks bullish, I’ll go find out the fundamentals of whatever it is and if I can understand the bullish fundamentals, if they make sense to me, then I’ll trade.”
He said he trades “a lot” of stocks, but he doesn’t talk about it because of regulatory limitations.
He recommended to those who are new to the market to understand technical analysis before they get started. “I don’t think you can be a ‘trader/investor’ without having some cursory knowledge of technical matters. I do find that people who get esoteric about … chats … I find those people really don’t really very well. Keep it simple,” he said.
He said his job is to be the “liberal arts major of the capital markets,” saying that he knows a little bit about the different markets.
“Grain guys don’t know anything about foreign exchange. Foreign exchange guys don’t know anything about oil. Oil guys don’t know anything about grains. My job is to, one, trade them all and two, be the liberal arts major of the capital markets. Do I know more about the grains than a grain guy does? Oh, God, no. But I know more than a bond guy does,” he said.
Source:http://www.forbes.com
Dennis Gartman, editor of the newsletter, The Gartman Letter, said he’s most bullish on corn and the “English-speaking” currencies, including the U.S. dollar, but also the Canadian, Australian and New Zealand dollar, plus the British pound.
Gartman wouldn’t give a specific forecast for gold, only to say that he expected prices to be higher than they currently are a year from now, but not “demonstratively so.”
“I really don’t like to put numbers on things. If you say gold is going to $2,100 and it goes to $2,085, I’m telling you, you taken to the rack because you missed it. The best that you can do in this business is to get the direction right…. If you get the direction right 45% of the time you’re going to beat everybody else,” he said.
Gartman spoke to Kitco News Thursday on the sidelines of the Executives’ Club of Chicago’s Annual Economic Outlook.
He said gold is still in a bull market, but right now he is holding a neutral stance. “There are only three positions you can take in a bull market: really long, long and neutral. Right now I think neutral is the place to be,” he said.
Gartman is famous for trading gold in currencies other than the dollar, which gold is denominated in. He frequently trades gold in euro and yen terms. To do so he has said that buys gold and simultaneously sells the other currency, trying best to match equal dollar sums on both sides of the trade.
“Too many people have thought of gold as being an anti-dollar trade. If it is, by buying it in euro terms, I’ve effectively hedged out the dollar risk. Quite honestly under most circumstances – not all – but on days that gold would get whacked, then the euro would get whacked. That has allowed me to breathe on down days in gold,” he said.
He told the audience at the Executive’s Club outlook panel that other markets he’s bullish on are corn, coal – both thermal and metallurgical – and dollars, whether U.S., Canadian, Australian and New Zealand, but did not elaborate.
He added that the U.S. dollar will be “dramatically higher” by next year and said it will remain as the world’s reserve currency, saying it’s “idiocy” not to think so. He said the U.S. military superiority guarantees that dominance. “No one else comes close to the U.S. defense capability,” he said.
He’s also very bullish stock markets, both U.S. and other stock markets, saying that the amount of fiscal stimulus via quantitative easing by the Federal Reserve and ultra-low interest rates in many other countries will benefit equities. When the moderator of the panel asked what his forecast for the Dow Jones Industrial Average would be in a year’s time, he said 16,500. It is now around 12,350.
He also told the Executive’s Club audience that he has no love for “gold bugs,” saying that they remind him of Ted Kaczynski, a recluse survivalist who was known as the “Unabomber” for his letter bombs than spanned 20 years. Gold bugs, he said, have their gold holdings, “dried food, water and live up in caves.”
Gold is “nothing more than another currency. It’s the second reserve currency,” he told the audience.
He’s bearish on the euro overall, but given the rise Friday in the single currency, he said in his newsletter Friday he is standing aside for now.
In the Kitco News interview he said with West Texas Intermediate crude oil at $105 a barrel, the type of oil traded at the New York Mercantile Exchange, that it brings an “awful lot” of new drilling, but he is not “overtly bullish” on energy.
Gartman wouldn’t say if he was shorting any particular trade or market, but he said he would avoid European stocks on the balance, and would prefer to own U.S., Canadian or Australian equities.
CONSIDERS HIMSELF A TECHNICAL TRADER
Regarding his trading technique, he told Kitco News that he considers himself to be 55% a technical trader and 45% a fundamentalist. “The first thing I do is look at a chart. I want to buy things that are going up. I spend weekends leafing through charts to find things that are interesting,” he said. “Do I approach things from a fundamental view first? No, not really. I find that to be a great waste of time. I’ll find out the fundamentals later. If I find a chart that looks bullish, I’ll go find out the fundamentals of whatever it is and if I can understand the bullish fundamentals, if they make sense to me, then I’ll trade.”
He said he trades “a lot” of stocks, but he doesn’t talk about it because of regulatory limitations.
He recommended to those who are new to the market to understand technical analysis before they get started. “I don’t think you can be a ‘trader/investor’ without having some cursory knowledge of technical matters. I do find that people who get esoteric about … chats … I find those people really don’t really very well. Keep it simple,” he said.
He said his job is to be the “liberal arts major of the capital markets,” saying that he knows a little bit about the different markets.
“Grain guys don’t know anything about foreign exchange. Foreign exchange guys don’t know anything about oil. Oil guys don’t know anything about grains. My job is to, one, trade them all and two, be the liberal arts major of the capital markets. Do I know more about the grains than a grain guy does? Oh, God, no. But I know more than a bond guy does,” he said.
Source:http://www.forbes.com
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