Archive for December, 2009

The Dollar Bubble

[ Tags | bubble | dollar | gold | inflation ]

There’s nothing to thank China for.

[ Tags | crisis | Questions ]

Those who attentively observe the world economic news must have noticed how much the attitude to China has recently changed.

Only yesterday the world press teemed with articles forecasting China would save the world economy and take a leading position in the world. The former statement caused everybody’s enthusiasm while the latter was not so univocal and even seemed threatening for many. Now everything has radically changed. The connotation of the comments is not that pathetic, and more authors tend to impart negative color to this theme in their articles. China – from the savior of the world economy – has turned into its almost main threat. They report it quite in this key – the time-bomb.

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Why should I invest gold?

Recent studies have shown that over the past 50 years, the most profitable type of investment gold was. However, analysts argue that in the future gold will reveal their capabilities more in connection with not very strong position of the dollar and oil.

Banking consultants, who over the past few years have witnessed the irreparable damage that caused investors crisis, also speak of investment gold means to. Further still they strongly recommend to invest gold to keep holdings in positive rate. Its particular appeal of investing in gold obtained after the 2008 after depreciated investments in real estate have appeared. Yet it is real estate topped the lists of the most presentable of a stable enrichment. And, at a time when gold has continued to show steady growth up to 17%, real estate fell into negative. Thus future of gold perspective as real estate was became fuzzy. (more…)

Gold rush of mints

[ Tags | dollar | gold coins ]

Now the times of trouble have come for once secure dollar, and investors are seeking for a new safe haven. They chose gold to be their favourite, and the historical peaks of this yellow metal are being renewed almost every day. It’s upon the table, where there’s demand, there’s supply, and gold rush has now involved practically all world mints which began coining more gold coins.

The Royal Mint of the UK decided to get use of the growing demand for gold and, according to data obtained by Bloomberg News, quadrupled production of gold coins in the third quarter of this year.

During the period from June to September Great Britain has output 32,735.8 ounces from 7,500.2 ounces a year before (troy ounce is equal to 31.1 g). As data show, production has been more than tripled in the first nine months. Along with that silver coins output also rose, yet in the first nine months it has gained only about 31 percent, to 278, 38 ounces.

The USA, Austria and many other countries also began coining more coins. The US Mint more than doubled sales of American Eagle, in the first nine months to 954,000ounces. Muenze Oesterreich AG, the Austrian mint, the world’s largest marketer of pure gold coins, sold 1.9 million ounces of gold so far in 2009, said its President Kurt Meyer.

It’s remarkable that it’s not only state organizations that show an interest in gold. Harrods Ltd., the London department store, began selling gold bars and coins in October, for the first time since 1834.

Why do we need a blog about gold?

In the business world, everyone is paid in two coins: cash and experience. Take the experience first; the cash will come later

Harold Geneen

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Dubai and the world’s problems

[ Tags | crisis | dollar | dubai ]

The growth of new bubbles in different world economy sectors had scarcely stirred up the expert community as the old bubble at once rose to the surface. Dubai World state-owned corporation asked for restructuring of its debts and all the world considered it to be an actual declaration of default of not the corporation only but of the Dubai Emirate in whole.

No wonder this story goes as it does. It’s an open secret that the real estate market in Dubai has long been declined. Moreover, for everybody Dubai has become an ideal sample of bursting bubble. Thus, if anybody supposed that the money he had lent to Dubai and buried it in their ambitious projects would someday come back out of the blue to the creditors, he was surely a thoughtless and inadequate person.

But the problem is not only with Dubai. This spring IMF has estimated the world financial system toxic assets at $4 trillion. To our mind their estimate is understated but that’s not the point. The point is that today only $1.5-1.75 assets are written off whereas the rest is just waiting its turn and all the events concerning Dubai are just minor but quite remarkable episode of an impending drama. But in fact everybody has suddenly forgotten about toxic assets and changed for the green shoots which without fail have become full-grown bubbles promising a new series of toxic assets.

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Is it worth to buy gold bullion?

First of all let’s decide what gold bullion means to us and to economics itself. That’s not a piece of metal. It’s a marketable activity to buy and sell. When you decide to buy bullion you should have full information about market trends. When gold prices rise, you should use the common practice and wait for some time with to buy bullion or some gold bars. At this time you can switch to the dollar, as it enters the phase of activity. A time comes easily fall in the value of gold, and when should buy gold bullion. (more…)

“Silver to beat Gold”

IT’S NOW 25 years since Peter Grandich found himself working as a stockbroker, paving the way to launching his Grandich Letter, then his blog with www.agoracom.com, and soon his book – coming out in 2010 – Confessions of a Wall Street Whiz Kid.

Grandich tells The Gold Report in this interview that having been left behind in the big run-up in Gold Prices, silver’s time has come to steal the limelight for a while. But in the wider market, he’s alerting investors “to remove their bullish hats if they’re still wearing them.” As Peter’s motto goes, “It’s better to be a live chicken versus a dead duck…”

The Gold Report: When he was in China, President Obama said “It’s important to recognize if we keep on adding to the debt, even in the midst of this recovery, at some point people could lose confidence in the US economy in a way that could actually lead to a double-digit recession.” He went on to indicate that Congress or he would be considering some tax cuts, but also some fiscal spending to counteract the unemployment. Other than preparing the populace for another potential downturn, what’s wrong with this approach?

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Gold could push through $1,200 level if dollar continues to slide

[ Tags | Buy gold | Gold investment ]

The yellow metal is currently touching highs around $1,196 as waning worries of fallout from Dubai and the Australian rates decision diminish the greenback’s safe haven appeal

Author: Jan Harvey (Reuters)
LONDON (REUTERS) -

Gold hit record highs near $1,200 an ounce on Tuesday as dollar weakness fueled buying of the metal as an alternative asset, while investors speculating on more gains were cheered by its recovery from last week’s losses. Spot gold hit a peak of $1,198.70 an ounce and was bid at $1,192.15 an ounce at 1506 GMT, against $1,179.10 late in New York on Monday. Prices could push through the $1,200 an ounce level to new record highs if the dollar continued to weaken, analysts said. Significant downside risks to the price were unlikely to be seen before January, said Michael Lewis, head of commodities research at Deutsche Bank, with seasonal factors affecting the dollar likely to drive gold higher in the short term.

“We see $1.55 in the euro-dollar, so that is where we think the main catalyst is for new highs for gold,” he said. “There is normally quite a strong seasonal pattern in the dollar, (and that) will be driving a further rally in gold.” The dollar fell against a basket of six other currencies .DXY on Tuesday as waning worries about Dubai’s debt, Australia’s interest rate hike, and upbeat euro zone data dimmed the greenback’s safe-haven appeal.

The dollar also pared gains against the yen after comments from the Bank of Japan on monetary policy. Weakness in the U.S. unit boosts gold’s appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies. Ole Hansen, senior manager at Saxo Bank, said investors had been encouraged by the strength of gold’s recovery after it fell below $1,140 an ounce last week, with the fall being met with strong fund buying.

“Everyone was waiting for that correction, and the way gold recovered suggested there was a lot of buying lurking in the wings (among) people who missed the opportunity to get into the market in the first place,” said Hansen.

COMMODITIES FIRM
U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange also hit a record $1,200.50 an ounce and were later up $11.10 at $1,193.40.

Other commodity prices also firmed on the back of the weaker dollar, with base metals up and oil nearly 1.5% higher to above $78 a barrel. Gold tends to track crude prices, as the metal can be bought as a hedge against oil-led inflation. Elsewhere the world’s biggest gold miner, Barrick Gold Corp (ABX.TO), said on Tuesday it had completed the elimination of all of its gold hedges as planned. De-hedging has represented a significant source of demand in recent years.

In the physical market, the largest gold exchange-traded fund, the SPDR Gold Trust, said its holdings rose 2.134 tons to nearly 1,130 tons on Monday. Indian gold offtake abated on Tuesday as prices resumed their upward trend, after a modest pick-up in recent sessions when traders stocked up ahead of wedding demand. Sales of scrap persisted in other parts of Asia on Tuesday, cutting premiums, dealers said.  Analysts say they expect the gold market to continue taking support from fund and other investment demand, and further buying from central banks.

News in early November that India’s central bank had bought 200 tons of gold, followed by acquisitions by Russia, Sri Lanka and Mauritius, sparked a 13% price rise that month. Among other precious metals, spot silver was bid at $18.75 an ounce against $18.45. Platinum was at $1,470 an ounce against $1,452, while palladium was at $379 against $363.50.

How to sell gold?

Common articles simply show us how to start working with gold. They may show us current trends in buying gold or talk about position of this metal on market. But almost none of them help us to sell gold. Nevertheless it’s a more helpful skill than to orient in price of gold.

Buying gold investor is always interested in how profitable is to sell gold. And, as would be advantageous if the gold you buy sell gold is a more complex and comprehensive task. Price of gold depends on many factors. But to trace the major trends in the market it’s worth to focus on the dollar rate. The more expensive the estimated dollar is, the more chances for gold to go for a fall. Than you should bring a relevant sum for buying gold. Some stock analysts put on a parallel course of gold and the euro, but long experience has shown that there is no substance behind it. (more…)