$2,200 an ounce gold just around the corner
CIBC World Markets is turning more bullish on gold and silver and suggests it’s nearly time for investors to pounce on the sector to capture a seasonal bounce.
CIBC analysts, including Barry Cooper and Alec Kodatsky, believe that the further quantitative easing measures from the U.S. Federal Reserve is setting the stage for a continuation in the gold rally that subsided in mid-September.
“QE1 and QE2 were the drivers for gold price increases in the order of $20 to $30 (U.S.) per month,” the analysts wrote in a research note. “We expect that QE3 will offer something between these figures, although on a percentage basis the moves will not be as significant due to the higher
gold price.”
QE3, or the third round of quantitative easing, will consist of $40-billion per month of bond purchasing related to mortgage-backed securities. The Fed has not set an expiry date for the program, committed to seeing tangible signs of improvement first in the U.S. economy.
For 2013, CIBC kept its forecasts unchanged, expecting gold will average $2,000 an ounce and silver $35 an ounce.
But it now sees gold rising to an average of $2,200 for 2014 and silver to $38.
“The figures represent our view that prices are underpinned by the rising cost of supply, plus strong demand coming from both investor interest and Central Bank buying,” they said.
Gold has so far averaged $1,656 an ounce this year and silver $31.
That’s below CIBC’s average price forecast of $1,700 and $32.50 for this year, but the analysts believe its forecasts are obtainable considering seasonality trends. November and December represent the first and third strongest months, respectively, for bullion performance, driven by
increased jewelry demand ahead of Christmas. It also expects other factors to benefit gold and silver late this year, such as continued bailout concerns surrounding Spain and Greece, and a bounce back in Indian demand after a weak first half of this year.
“We are about to head into the strongest month for gold performance, and indeed in looking at the next four months, investors could capture 56 per cent of the annual gold gains and a whopping 66 per cent of the annual silver gains by holding the metals over the period November to
February,” they said.
“In contrast to the common belief that September is the strongest month for gold bullion, it is actually November that shapes up better, with December being the third best month for gold price responses over the past 10 years.”
Gold Settles Up at $1,753 on US Housing Starts
Gold inched up on Wednesday, partially recovering from sharp losses early in the week, in reaction to the dollar dropping for a second day and to a rise in U.S. housing starts.
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Anthony Bradshaw | Photographer's Choice RF | Getty Images |
The metal, a traditional inflation hedge, was also supported by economic optimism after Moody's affirmed Spain's investment-grade credit rating, allaying fears that the euro zone's fourth largest economy would be cut to a junk rating.
Gold fell to a one-month low on Monday after a string of recent strong U.S. data that called into question the extent of the Federal Reserve's latest bond-buying program to boost the economy.
"The recent correction in gold prices appears to be ending. We detected no fresh liquidation in the major gold-ETFs and increased emerging markets demand in the last couple of days,'' said HSBC metals analyst James Steel.
Spot gold [XAU= 1748.99 
1.80 (+0.1%) 
] edged up 0.2 percent at $1,750 an ounce, its second consecutive day gain. It had dropped almost 2 percent in the two previous sessions.
U.S. gold futures [GCCV1 1749.70 5.00 (+0.29%) ] settled up $6.70 an ounce at $1,753, with trading volume about 35 percent below its 30-day average, preliminary Reuters data showed.
Open interest in gold futures fell over 3 percent to 462,826 lots by Tuesday, CME data showed.
Gold Ends Firmer on More Short Covering, Bargain Hunting, Weaker U.S. Dollar
Comex gold prices ended the U.S. day session modestly higher Wednesday, supported by more bargain hunters stepping in to buy the recent dip in prices, and on some short covering. A weaker U.S. dollar index again prompted some buying interest in the precious metals Wednesday. Bulls
are working to regain upside technical momentum, but have more to do in the near term. December gold last traded up $5.20 at $1,751.50 an ounce. Spot gold was last quoted up $1.90 at $1,750.75. December Comex silver last traded up $0.271 at $33.23 an ounce.
Buying interest in the precious metals were somewhat limited Wednesday by a very strong U.S. housing starts report. The housing report follows recent U.S. economic data that has shown improvement in the U.S. economy. This has been a negative for the precious metals because it leads to
notions the U.S. Federal Reserve will begin to turn off its monetary policy stimulus spigot that has been turned open wide the past four years.
In overnight news, Asian and European stock markets rose Wednesday, partly due to Moody’s latest announcement that it has left Spain’s credit rating unchanged. Many had feared the ratings agency would lower Spain’s credit rating to junk status. Meantime, reports said Spain is moving closer to formally asking the European Union for further financial assistance. Spanish bond yields fell to six-month lows overnight. The Euro currency on Wednesday was boosted following those developments.
Also overnight the German government cut its economic growth forecast for 2013, while slightly raising its projection for growth this year. Germany’s economy minister said the European Union debt crisis is dampening economic growth in Europe. He forecast German economic growth at
1% in 2013, a downward revision from the 1.6% growth forecast the government had issued earlier. Germany’s 2012 economic growth rate was pegged at 0.8%, from a 0.7% rate predicted earlier.
The market place is awaiting key events on Thursday. China is expected to issue its third-quarter gross domestic product data, while the EU leaders summit begins Thursday.
This week is “LME week” in London, whereby the London Metals Exchange hosts a series of meetings and events. Many major world metals traders will spend the week in London.
The U.S. dollar index is traded solidly lower again Wednesday. The U.S. dollar bears have the solid overall near-term technical advantage and have gained fresh downside momentum this week. Meantime, Nymex crude oil prices are slightly lower late Tuesday, pressured by a bearish weekly
DOE weekly storage report. Crude oil bulls and bears are on a level near-term technical playing field. These two key “outside markets” will continue to have a significant daily influence on gold and silver prices.
Next Dollar Gold Target: $2,400 by Mid-2013
by Adrian Ash - Bullion Vault
October 8th, 2012
Wholesale US dollar gold prices slipped 0.4% from new 11-month highs in London trade Friday morning, dipping beneath $1,790 per ounce as European stock markets crept higher.
Wholesale silver bullion prices eased back below $35.00 per ounce – but also held 1.1% up for the week – as commodities held flat and major-economy government bonds ticked lower.
The Euro currency held above $1.30 despite a sharp drop in Germany's industrial orders data.
Latest US jobs market data were due just ahead of the start of New York trade, with analysts expecting on average a rise of 113,000 last month from August.
"The labor market needs to improve for QE3 to end and, if it does not improve as the Fed wants, other [monetary policy] measures will be introduced," reckons Standard Bank strategist Steven Barrow.
"If the third round of quantitative easing leads to further weakness of the US dollar, [other] central banks may be prompted to switch more cash reserves into gold," says Evy Hambro, co-manager of the UK's giant Blackrock Gold & General mining-stock fund.
The chart of dollar gold prices, says a new report from Hambro's team, "has turned decidedly bullish with the 50-day moving average rising above the 200-day moving average.
"The last time this happened was in February 2009...shortly after the implementation of QE1. Then, gold was $900 and never looked back. Should we witness a similar rally, prices would be taken to $2,400 by midsummer next year."
Bank analysts and trading desks today cited "further support" for gold prices from geopolitical tension over fighting on the Syria-Turkey border, plus the fast-spreading industrial unrest in South Africa – world #6 for gold mining output.
Japan's Toyota Motor Corp. said workers would return today to its Durban plant after it granted the 5.4% pay rise demanded during 4 days of wildcat stoppages.
Read the original article here
Patience Pays as Gold Prices Probably Set to Rise
NEW YORK (TheStreet) -- Gold has been in a consolidation mode since mid-September, trading in a range from 1,760 on the low side to just under 1,800 on the high.
With all the recent interest in gold, I thought it fitting to address this market. After all, it makes sense that a lot of people would want to get involved in the yellow metal.
We are now in the midst of our third round of quantitative easing, better known as QE3. Central banks around the globe have taken an "accommodative" stance when it comes to monetary policy. Just yesterday, in fact, China pumped additional liquidity into the banking system. The European Central Bank has said it is willing to make unlimited bond purchases of member countries in trouble. We have a national debt that becomes more and more staggering by the day, a number so large that I do not personally see how it could ever be repaid without debasement of the dollar. The list goes on and on.
One can make a compelling case for gold to go considerably higher. But will it? Markets do not always act as we think they should. This is no secret. When it comes to markets and trading, my goal is to make money -- not to be "right." I think that one has to let the market lead the way, and not try to be calling tops or bottoms. Leave ego out of the equation and eventually the market will tip its hand. I believe that someday soon that is precisely what gold will do.
So far, the strong band of resistance from 1,790-1,800 has kept this market in check. What makes this test a little more interesting is how the market has behaved here as it has stalled out.
On previous tests of this area -- going back to November and February/March of 2011 -- the market sold off a good degree following these failed tests. As a matter of fact, the market sold off both times to the tune of over a $200 decline. This time is different -- so far. And although the market has pulled back, the pullbacks continue to be shallow in nature. The market is building a cluster of closes just under this resistance area.
In effect, the market is setting the stage for either a powerful move higher through resistance, a move I think could run a few hundred dollars to the upside, or the rally is coming to an end, in which case it is only a matter of time before this market sees a pretty nasty drop once everyone starts to liquidate. The fact is we just don't know right now. That makes sitting on the sidelines a great choice.
I still favor the upside because the longer-term trend is up. Volatility in gold options has come in from recent levels, and for those who feel we are going to see a big run either way in this market, buying options seems like a much better idea than it did a few weeks ago. Patience is key. Wait out the market.
If you are looking for long options positions, make sure you are using options that give you enough time to be right (at least 60 days until expiration). There are a ton of different ways to try to play this market. As always, feel free to contact me for details on potential trade setups. And remember, patience is key!
Fight the Fed by Owning Gold
Americans may finally be waking up to the realization that their best defense against more than 20 years of Fed mismanagement is a shiny yellow metal.
These days there is no shortage of chatter about the Federal Reserve's latest round of quantitative easing (aka QE3), and I detect there is a small, yet growing, level of dissatisfaction with the Fed's policies. It seems that savers have finally begun to find their voice -- somewhat in light of the fact that their money is slowly being stolen by the Fed's money printing.
From the stock bubble of the late 1990s, to the even bigger and more devastating housing bubble, to its recent policy of guaranteeing inflation and offering little reward to savers, the Fed has eviscerated the middle class and made poor people poorer.
Though it could be argued that people with wealth have benefited, that is not something that they necessarily asked for (excluding the Wall Street banksters). In sum, the Fed is a devastatingly powerful organization, and it is hellbent on a path of continued destruction.
What brings up this rant is that a reader of my daily column (at www.fleckensteincapital.com; subscription required) recently asked me, where is the outrage about all of the above, and other unintended consequences I haven't mentioned?
That is a very good question. As noted, there seems to be a little bit of backlash brewing, but given the damage that has been inflicted on this country and on other places where central (planning) bankers loom large, it is damn little.
Time to stop turning the other check
I was incensed with the policies of Alan Greenspan, beginning in the mid-1990s, as readers of my columns can attest, and I would say my anger crested with the 2008 mania, when I wrote my book, "Greenspan's Bubbles: the Age of Ignorance at the Federal Reserve."
I had expected after the stock market bubble that the Fed would be forced to behave, but that was naïve and incorrect. Still, I felt certain after the second debilitating, debt-laced bubble that folks would demand more of the Fed (though I did know how it would respond, with stimulus, which is why I closed my short-only fund in early 2009). Thus, it has been disappointing to me that there hasn't been more outrage on the part of the masses.
Granted, the Fed may seem like an obscure subject, but it really isn't that hard to figure out who the main culprit is. Many others besides myself have written about it for many years now.
This is not to say that we have a functioning Congress; we don't. But had the policies of the Fed not been what they were for the past 20 years, we could never have gotten this far off the rails, nor could so many promises have been made that will be broken regarding prospective health care and retirement benefits.
To thine own wealth be true
I must admit I have become somewhat desensitized to the Fed's views, because I reached the point of outrage early on and exorcised my own demons to some degree with my book. But nonetheless, that is no excuse for those people who are being harmed. Americans need to stand up and insist that the Fed desist from its insane policies and demand sound money. (Thursday's Wall Street Journal op-ed by Sean Fieler, "Easy Money Is Punishing the Middle Class," was a fine step in that direction.)
Is that likely to happen soon? Unfortunately, no, since it would also require members of Congress to care about the country instead of their own careers. So in the near term at least, this is probably also a naïve hope on my part.
Thus, until the world's bond markets or average Americans demand sanity, all we can do is protect ourselves from the policies of the irresponsible, incompetent and, to some degree, egotistical madmen by owning gold.
GLD to world: You have a new friend request
On that subject, I think it is worth pointing out that the idea of gold as a currency or portfolio diversification asset may be in the process of going mainstream, with the catalyst being European Central Bank President Mario Draghi's ongoing transformation into Fed Chairman Ben Bernanke, even as the Fed goes nuts with money printing.
Read the rest of this story from MSN Money here
Gold Gains in New York as Price Slump Prompts Purchases
Gold rose in New York on speculation investors will boost demand after the metal's drop to an almost two-week low. Silver gained for the first time this week, Bloomberg reported.
Prices fell to US$1,738.30 an ounce yesterday, the lowest price since Sept. 13, on signs Europe's economy is still worsening. The Shanghai Composite of shares rallied 2.6% on speculation China may take more steps to boost growth. Gold is heading for the best quarterly gain in two years as the U.S., Europe and Japan announced quantitative easing.
The futures for December delivery advanced 0.3% to $1,758.40 an ounce by 7.50 a.m. on the Comex in New York. Prices are up 9.6% this quarter, 4.2% this month and 12% this year.
Prices in New York on Sept. 21 climbed to a six-month high of $1,790 an ounce.
Read More
Gold Rises on China Stimulus Talk, Euro Fear
Gold rose more than 1 percent on Thursday, on track for its biggest daily gain in two weeks, on hopes for additional monetary stimulus from China and as fresh austerity steps in Spain renewed fears over the euro zone.
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Anthony Bradshaw | Getty Images |
Bullion extended early gains after Spain announced new measures to cut spending for its 2013 budget and to establish an independent authority to oversee its deficit-slashing promises.
Gold priced in euro terms surged over 1 percent to a record, highlighting the metal's traditional safe-haven appeal especially among Europeans in times of economic uncertainty.
"The gold market is a market that reflects concerns. There is speculation that China will engage in additional stimulus measures,'' said Bill O'Neill, partner at commodity investment firm LOGIC Advisors.
The metal gained further after news that China's central bank had injected a record amount of cash this week. The move stoked talk that China may take steps to boost the country's weak stock market, sparking a global equities rally.
Spot gold [XAU= 1777.10 25.51 (+1.46%) ] rose 1.4 percent to $1,776 an ounce, set to snap three consecutive days of losses. Gold is within striking distance of this year's high at $1,790.30, set on Feb. 29.
U.S. gold futures [GCCV1 1775.90 25.20 (+1.44%) ] traded up 1.5 percent an ounce at $1,776, with volume in line to surpass its 30-day average, preliminary Reuters data showed.
Gold Sets Records in Euros and Francs on Currency Concern
Bloomberg News
Gold Sets Records in Euros and Francs on Currency Concern
Gold climbed to a record priced in euros and Swiss francs on concern that central banks’ moves to boost economies will devalue currencies, spurring demand for the metal as an alternative investment.
Bullion for immediate delivery in London reached 1,379.32 euros an ounce and has rallied 14 percent this year, data compiled by Bloomberg show. Gold priced in dollars rose 13 percent this year to $1,771.30 by 4:49 p.m. local time and is trading 7.8 percent below the all-time high set in September 2011. The commodity set a record 1,667.18 Swiss francs today and peaked in Indian rupees earlier this month.
Bullion, typically priced in dollars, is extending 11 consecutive annual gains as the Federal Reserve announced a third round of quantitative easing and as central banks from Europe to China to Japan also pledged more action this month. Nations from South Korea to Kazakhstan are boosting their gold reserves and metal held in bullion-backed exchange-traded products rose to a record 2,551.9 metric tons valued at $145.3 billion on Sept. 25, data compiled by Bloomberg show.
“Central banks are weakening their currencies to boost their economies and gold is a beneficiary,” Matthew Turner, a precious metals strategist at Mitsubishi Corp. (8058) International (Europe) in London, said today by phone. “The story of weak currencies and strong gold is back in play and it’s not just the dollar, it’s all currencies.”
Gold Seen Luring Wealthy as Central Bankers Expand Stimulus
More high-net-worth individuals are seeking to buy gold to protect their wealth from the risk of rising inflation after central banks boosted stimulus, according to Deutsche Bank AG’s asset and wealth-management unit.
“Gold has historically been considered to be a store of value and an inflation hedge and increasingly it is being utilized as a monetary instrument,” said Mark Smallwood, head of Asia-Pacific wealth-management solutions. “There is a growing interest among our clients to gain exposure,” he said, with an increased preference for physical holdings.
Gold is in the 12th year of a bull run, 13.5 percent higher this year, as investors seek to hedge against weaker currencies and the threat of rising consumer prices. Holdings in gold- backed exchange-traded products expanded to an all-time high yesterday, and Bank of America Corp. and Deutsche Bank are among banks forecasting that the price will rally to a record.
“With the movements by the central banks globally in the last few weeks, there is considerable investor concern as to the long-term effects of the liquidity infusions,” Smallwood said by phone from Guilin, China yesterday. “As a result of that, private clients are concerned about the possible future effects of inflation and the means of hedging that risk.”
Immediate-delivery gold reached $1,779.50 an ounce on Sept. 19, the highest price since February, after central banks took further steps to bolster their economies hurt by Europe’s debt crisis. The metal, which reached a record $1,921.15 on Sept. 6, 2011, gained 0.4 percent to $1,774.85 at 5:30 p.m. in Singapore.
Central Banks
The Bank of Japan said Sept. 19 it will expand a fund that buys assets following the U.S. Federal Reserve’s announcement last week of a third round of so-called quantitative easing, or QE, by buying $40 billion of mortgage-backed securities a month. China’s government has approved infrastructure plans to support the second-largest economy and the European Central Bank gave details this month of a program to buy debt of member states.
“For our ultra-high-net-worth clients, and a growing number of our high-net-worth clients who have significant liquidity, they are becoming increasingly concerned to have at least some of their exposure to this asset class in the form of allocated physical bullion itself, rather than the indirect exposure that an over-the-counter product offers,” he said.
Deutsche Bank clients can store gold in Malca-Amit Global Ltd.’s vault at the Singapore FreePort, Smallwood said. Malca Amit, which holds assets for banks and individuals, is doubling its space in Singapore, the company said in February.
Record Forecasts
Gold will climb to $2,400 by the end of 2014 if the Fed’s latest easing lasts until then, Bank of America said Sept. 18. Prices will exceed $2,000 in the first half of next year, Deutsche Bank wrote that day. The Fed said its purchases would last until it sees a “sustained improvement” in the economy.
The difference in yield between 10-year notes and same- maturity Treasury Inflation Protected Securities, a gauge of expectations for U.S. consumer prices, reached 2.73 percentage points on Sept. 17, the most since May 2006. Prices rose 0.6 percent in August, the Labor Department reported Sept. 14.
Billionaire investors George Soros and John Paulson increased their stakes in the SPDR Gold Trust, the biggest gold- backed exchange-traded product, in the second quarter, filings showed, while central banks from Russia to South Korea are also adding bullion to reserves. Central banks may purchase close to 500 tons this year after becoming net buyers in 2009, according to the World Gold Council.
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