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Wednesday
Jun242009

Kinross Gold: John Paulson has 4.5% stake

Kinross Gold Chart 25 jun 09.JPG


Chart courtesy of Stockcharts

The de-leveraging that occurred last fall was largely attributed to the hedge funds running for cover however, not all the hedge funds have disappeared as John Paulson demonstrated by taking a 4.5% stake in Kinross Gold Corporation (KGC).

John Paulson 25 jun 09.JPG

The billionaire manager also has a large stake in Anglogold Ashanti, Gold Fields, Market Vectors Gold Miners ETF and SPDR Gold EFT in which he has 31.5 million shares or 8.6%. ETFs are not our cup of tea but the point is that this hedge fund has put a large amount cash into this sector of the market. At the end of March, SPDR Gold, the biggest gold-related exchange-traded fund, was the biggest U.S. holding that Paulson has publicly disclosed, according to FactSet Research Systems Inc. Now, should the other surviving hedge funds decide to follow Paulson & Company and make acquisitions in the gold sector then gold producers such as Kinross Gold could find themselves the center of attention. Hedge-fund manager John Paulson made the news with his well-timed moves against the sub-prime housing market. You can read more on MarketWatch in an article by Moming Zhou.

Taking a quick look at the above chart we can see that the MACD black line is close to crossing over the red line in an upward movement which would be positive for the stock and is sometimes referred to as the golden crossover. We can also see just how much Kinross has oscillated over the last few months. In a way this sort of movement bodes well for shareholders as the upside movement should be excellent once our mistress Gold decides to take out $1000/oz barrier and head for record highs.



Kinross Gold Corporation trades on the Toronto stock Exchange under the symbol of ‘K’ and on the New York Exchange under the symbol of ‘KGC’ Kinross has a market capitalization of $12.70 billion, with average turnover of 6.21 million shares and closed today at $18.28.



Have a good one.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

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Tuesday
Jun232009

When is the Best Time to Buy Gold?

This is an interesting analysis of timing your gold purchases sent to us by Jeff Clark, Editor, BIG GOLD

I bet you don’t own enough gold.

Before you tell me I’m wrong, let me ask it this way...

If inflation returns, or even hyperinflation...
If the economic crisis persists and gets worse...
If uncertainty and fear continue, and chaos and rioting begin...
If stock markets languish or suffer another meltdown...
If the recovery spending of the world’s governments proves futile... 
If government interference in the economy continues to increase...
If the value of the U.S. dollar takes a major fall...
If world recovery from the current recession/depression takes years...
If you’re still wondering whether you have enough “safe” money...
...would you feel you own enough gold?

If all those things come to pass, I suspect many of us, including myself, would wish we had a few extra gold coins or bars stashed away.

So let’s assume you answered “No” to my question and need to add some ounces to your collection... is now a good time to buy?

The Best Time to Buy Gold?

Before glancing at the chart below, if you had to pick the month with the weakest average gold price, which would you select?

*
June weak for gold casey 24 jun 09.JPG


In our current 8-year bull market, June has seen the lowest return for gold. In other words, it’s been, on average, one of the best times to buy.

How does this compare to the bull market of the 1970s?


**

Summer was good buying time casey 24 jun 09.JPG



In the last great bull market, summer also was a good time to buy gold (although April was even better.)

What about gold stocks?


***

July and Oct Best time to Buy gold casey 24 jun 09.JPG

Since 2001, July and October have been the weakest months for gold stocks, as measured by the AMEX Gold Bugs Index, and the best times to buy.

However, keep in mind that these are price tendencies and not certainties. There were Junes when gold was up, and some Julys when gold stocks were up. Meaning, avoid using this chart for trading purposes or in anticipation of an immediate gain. Instead, use it to prepare for possible gold price weakness ahead. And if the weakness shows up, treat it as a buying opportunity and add to your holdings to position yourself for the next leg up in the bull market. Consider that this summer could be the last chance to buy gold for three figures.

Don’t lose sight of where we are at this point in the recession – in an intermission in the bad economic news. When it becomes apparent that the good ole days aren’t coming back, sentiment – and markets – could move rapidly. And gold is one of the best forms of capital that can protect you in a financial Armageddon. That gold was up in 2008 is a reminder of its protective power.

How much gold should you have? Continue to accumulate physical gold until you can honestly say you don’t care how many dollars Ben Bernanke prints.  

Having physical gold in your possession is always a good idea in times of economic turmoil – there is no “uncertainty hedge” like it. But to actually make money, you should also look at premium gold stocks. Our current favorite has been so consistently successful that we call it “48 Karat Gold.” Click here to learn more.







Have a good one.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

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Monday
Jun222009

Yamana Gold Incorporated A Future Options Play

AUY Chart 23 jun 09.JPG

Chart courtesy of Stockcharts

As we can see from the above chart Yamana Gold Incorporated (AUY) has been severely sold off recently which could be present us with a future options play as and when gold moves higher. Many of the stocks in this sector have experienced a similar fall and all in a short time too, just shows what a volatile market sector this is.

The rally in the broader markets appears to be coming to an end as this week kicked off with the DOW falling 200 points to close at 8339 on the back of the lower forecast for global economic recovery released by the World Bank. As the markets retreated so did commodities with the prices of oil dropping to around $67 and gold losing around $11.00 to trade at $922/oz. The beneficiary here is the US Dollar which moved up 0.57% to close at 80.77. The dollar is trying to rally and has managed to move up about 2% this month and could get stronger if the main stream market continues to correct.

Yamana has recently been added to the The FTSE Gold Mines Index which reflects the progress that the company has made and will also give it a tad extra in terms of exposure to investment funds who would not normally venture outside of this index when considering the precious metals sector.

What we need to do now is watch for signals that this current shakeout in gold is over and then identify those quality stocks that have been even more oversold than the others in the pack and either acquire the stock or look for an options play on that particular stock. Similarly as we identified Randgold as an overbought stock and sold our holdings and then bought the PUT options in an attempt to profit from the sell off of Randgolds stock. This options play is up 66% since we purchased the PUTS recently.

So in conclusion don't fall asleep the investment environment is changing fast and the window of opportunity will only show itself for a short time. If you are long at the moment then hold tight as we still expect gold to rally to record levels before the year is out and are working to position ourselves with that in mind.




Yamana Gold Incorporated trades on the following Stock Exchanges:

AUY on the New York Stock Exchange
YRI on Toronto Stock Exchange
YAU on the London Stock Exchange, giving it global exposure to investors.

Yamana Gold has a market capitalization of $6.19 billion, a P/E ratio of 13.13, with 732.92 shares outstanding, has a 52 week high of $17.00 and 52 week low of $3.31 and closed today at $8.44.

Have a good one.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

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Friday
Jun192009

A Strategy to Protect Your Portfolio

HUI Chart 19 June 2009.JPG

With the HUI having risen from 280 to the 400 level at the beginning of June 2009 we took the view that it was time to take some action that would protect our portfolio. Gold was at $980/oz and the US Dollar was looking extremely oversold with the possibility of a bounce on the cards.

So there are a number of possible strategies that could be utilized such as sitting through a possible downturn in the HUI, taking some profits by selling a few shares across the board etc. Some cash on the side lines is always useful to enable us to take advantage of any dips that may present themselves. However we are in a precious metals bull market and both gold and silver could take off at any time and settle at much higher levels so there is the risk of not being in the market and missing out on those gains. So we examined our portfolio and found that one particular gold producer had been a star performer for us in that it had gained 82.44% in less then a year.

Further examination of this stock revealed that it was it was way ahead of the pack in that there was a yawning gap between the stock price and its 200dma, an aberration that we believe would rectify itself sooner or later. The stock had a relative strength reading of over '70' which suggests that it has gone as far it is going in the short term and its P/E ratio was well above 100, again a far higher reading than many other comparable stocks.

So we made the decision to sell our entire holdings of this stock and lock in the profits and weather the storm with the remainder of the portfolio. Having done that we decided that to utilize the cash with the purchase of PUT options on the very same stock with an expiry date of September 2009. September was chosen in order to allow enough time for this stock to pullback in response to a mini dollar rally and gold prices losing some ground.

The PUT contracts have now improved by 56.90% so this gain has helped to soften the losses registered by the other stocks. A similar strategy could also be applied to the silver sector when you see a similar situation developing it could be worth your while to give it some thought. It is a difficult call for us to make being gold bugs and placing a down bet in a bull market but as they say nothing goes up in a straight line and sometimes its a risk worth taking. If the gold market had continued to rise then this options trade would have lost money.


We can see from the chart below that the USD changed direction at the beginning of June when the technical indicators, particularly the RSI were suggesting that it was oversold.

usd chart 19 jun 09.JPG

The chart at the top of the page depicts the HUI peaking at the same time as the USD bottomed. Also note that the technical indicators were at the top of their respective ranges suggesting that stocks were overbought.


The movement that followed again suggests that the US Dollar and gold are still inversely correlated, however the time is coming when gold will move higher regardless of the dollars behaviour.

If this sort of thinking interests you then please drop by and take a look at our site where access to our portfolio is free, our newsletter is free and we publish every trade that we make. We also post our thoughts and analysis leading up to making a purchase or a disposal hopefully allowing our readership the time to understand what we are doing and why and also to make the necessary preparations to make the trade.




















Got a comment – then fire it in.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

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Wednesday
Jun172009

The Gold Storage Solution: Switzerland

safe 18 jun 09.JPG
We have previously stated that we are uncomfortable with business model of investing in a gold fund rightly or wrongly. However the question still remains of just how and where to store your physical gold securely. The following article lays out the case for Switzerland as a safe haven which we received today from Casey Research.




A BIG GOLD Special Report

At Casey Research, our task is to accurately forecast trends, do it early, and help investors profit from what we’ve found. Without claiming infallibility, we’ve gotten it right more often than not, and by distinctly profitable margins.

But research to anticipate what to expect is the easy part. It’s the when-to-expect-it-to-happen that’s tricky, and waiting for a predicted trend change or crisis sometimes can test our confidence. The crisis we warned about years ago is now here, and its arrival has altered many of the rules for investing.

If you’re reading this report, you probably followed our earlier advice and have accumulated a nice-size crisis insurance policy in the form of physical gold. Now you need to decide what to do with that stash of Midas cash. It may have been born in a corner of your sock drawer, but perhaps now it’s stress-testing an attic rafter. Unlike gold ETFs and mining shares resting digitally in your brokerage account, physical gold brings with it questions of space and place: how and where to store it.

As to the how, the most common methods for storing physical gold will be obvious to most investors: concealment, a home safe, or a bank safe deposit box. In BIG GOLD, we recommended using a home safe because 1) it keeps the gold under your immediate control, and 2) it eliminates any risk that storage at a bank carries: emergencies don’t schedule themselves bankers’ hours; if a “bank holiday” occurs, access to a safe deposit box will be lost when it’s needed most; and a court can order the seizure of its contents, or the IRS can freeze your assets.

So that’s it? A one-size-fits-all storage solution?


No, not quite.


As your gold holdings grow, or if you already own sizable weight or are considering a large purchase, keeping all your golden eggs in one steel-and-combination-lock basket may not be the right solution. As we encourage above, having some gold in your immediate control assures that you can see yourself and your family through any calamity. Now ask yourself: can I keep a secret and not discuss it with anyone? Loose lips can only lead to a late-night, ski-mask-clad, armed visitation. How about the “security” company that installed the safe – how tight are their lips?

Further, keeping large amounts of gold in your possession exposes you to a latent threat: political risk. Or in ‘round the water cooler jargon, a “government gold grab.”

Think it won’t happen in the good ol’ U.S. of A.? Consider the surge of government pushiness over just the past six months. The U.S. government has usurped the free market by subsidizing entire industries and embarking on mega-dollar “stimulus” spending schemes, committing trillions to its efforts – money it doesn’t have and must borrow or print. With tax receipts falling off and government debt exploding, the government’s hunt for revenue could lead to increasingly desperate measures.

We’ve seen the 1933 black-and-white version of this script, in which the plot develops into a presidential diktat forcing delivery (confiscation) of gold owned by private citizens to the government in exchange for compensation at the price it finds most convenient. Will the temptation again prove too great? We don’t know. What we do know is that once the credits roll, it’s too late to start preparing.

So the final storage question must be confronted: where should your gold be stored?

Sending Out an SOS: Swiss Offshore Storage


One fundamental rule of investing that hasn’t changed is diversification, and the principle applies to the locations you choose for storing gold bullion. Follow the principle where it leads, and you find yourself thinking about “internationalizing” your gold by holding some of it in another country. But it should be the right country.

So exactly where is where?


The answer is the safest country with the most secure facilities: Switzerland. Yes, still Switzerland.

For our money, er, gold, we can’t think of a country with a stronger legacy of respect for private property. The country traces its formation back to 1291, and the first Swiss Confederation was formed in 1353. Complete independence came in 1648, when the Treaty of Westphalia recognized the final separation of Switzerland from the Habsburg Empire. Over the 361 years following the treaty, Switzerland has maintained its neutrality and shunned foreign military entanglements. Now that’s shock and awe.

The country’s domestic politics are characterized by stable, non-intrusive coalition governments. Such habitual civility, together with Switzerland’s long tradition of respect for individual privacy, has kept this small, largely alpine country atop the list of the world’s most trusted safe havens.


The Franc: Swiss Hit or Swiss Miss


The global financial and economic crisis has recently found its way into Eastern Europe, and the troubles brewing there center on the Swiss franc. The apparently dire situation led economist Arthur P. Schmidt to predict that Eastern Europe’s difficulties would pour over disastrously into Switzerland. His predictions grabbed the headlines and a bit of attention.

So, in keeping with the Casey, “Intensely Curious, Focused on Facts,” we dug behind the headlines. Here’s the big nothing we found.

Engaging in a carry-trade-like gamble, individuals and businesses in Poland, Ukraine, Croatia, Hungary, Latvia, and Belarus borrowed heavily in Swiss francs, attracted by low interest rates. They crossed their fingers for trouble-free repayment as, for a while, their currencies strengthened against the franc. But that strength didn’t last. The global economic slowdown hit Eastern Europe hard, and their currencies fell sharply against the Swiss franc, turning mortgages and other franc-denominated debts into horrible burdens. Said fingers are now doing a lot of pointing at who’s to blame. The size of the problem, according to Schmidt, is 230 billion Swiss francs (US$200 billion), and the difficulty of collecting on the loans supposedly threatens Swiss banks with huge losses that could bankrupt the country. Schmidt refers to Iceland’s recent national bankruptcy as a model.

We don’t blame him for trying, but the report incorrectly assumes that all the Swiss franc loans to Eastern Europe originated at Swiss banks. They didn’t. In fact, it’s Austria’s banks that have the greatest exposure to Eastern Europe. The day after the headlines, Credit Suisse released a report citing the latest figures from the Swiss National Bank that show Swiss bank loans to Eastern Europe totaled just SF33 billion (US$28.7B), or 6% of Switzerland’s GDP. In contrast, Iceland’s banks had lent over 1,000% of GDP.

Our conclusion: we see no evidence of an impending banking crisis or national bankruptcy in Switzerland. Heidi is safe.

[To read the full report and learn all about Swiss specialist depositories, click here.

Got a comment – then fire it in.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.







Monday
Jun152009

Randgold Resources Limited Options Trade Up 41% in 5 Days

Randgold Chart 16 jun 09.JPG


Chart courtesy of Stockcharts

The September $65.00 PUT contracts in Randgold Resources Limited (GOLD) that we purchased on the 11th June 2009 for $5.00 per contract have continued to improve and closed at $7.20 today up 41% in 5 days.

Randgold fell again $1.62 or 2.39% to close at $66.05 as we can see on the above chart.

Randgolds fall today was on the back of falling gold prices and a rising dollar to the benefit of our PUT contracts. The technical indicators appear to have peaked and are heading south so its a case of so far so good.



Randgold Resources (GOLD) was downgraded today by analysts at BMO Capital Markets,the brokerage reduced GOLD to Market Perform from Outperform.




Also note that instrumental in giving the dollar a boost was this remark by Russian Finance Minister Alexei Kudrin:

NEW YORK, June 15 (Reuters) - The U.S. dollar rose broadly on Monday after Russia expressed confidence in the greenback as the world's reserve currency, while concerns about the euro zone economy undermined the euro.


The single European currency fell below $1.38 to its lowest level in more than three weeks after the European Central Bank said euro zone banks will probably need to write down another $283 billion.

Speaking on the sidelines of a Group of Eight finance ministers meeting in Italy, Russian Finance Minister Alexei Kudrin said the dollar's role as the world's main reserve currency is unlikely to change in the near future.

The comments followed statements from a top Russian central bank official last week that it would cut the share of U.S. Treasuries in its reserves. But Kudrin's comments alleviated concerns that major emerging market countries may be diversifying away from the dollar ahead of a summit of leaders of Brazil, Russia, India and China (BRIC) in Russia on Tuesday.



Gold itself closed at $928.00 registering a fall of $10.00 on the day adding more downward pressure on the precious metal producers.

Randgold Resources Limited trades on the NASDAQ under the symbol of GOLD and on the London Stock Exchange under the symbol of RRS.
Have a sparkling day.

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Sunday
Jun142009

Healthcare seen as a drag on the American Economy

Cost of Soc Security casey 15 jun 09.JPG


As we can see from the above chart the picture looks like mission impossible for Americans looking for a healthy future, as portrayed by Bud Conrad, Editor, The Casey Report

Healthcare is the biggest segment of our economy. In the debate over who should pay for what or, increasingly, for whom, most people don't stop to understand just how large a portion of our society's money is dedicated to healthcare.

For some perspective, as a share of GDP, the U.S. spends about twice that of other advanced nations. This is an important reason why the U.S. is increasingly uncompetitive in global manufacturing. It is, for instance, the most important factor (besides poor management) that General Motors and Chrysler are going bankrupt.

Going forward, the situation is guaranteed to get worse. The Obama administration is committed to major reform to cover the 40 million people not now covered by insurance. Once everyone has insurance, with many paying nothing at all for coverage, patients won't care what it costs, and the system will quickly spin out of control.

And it's already out of control. I recently spent one day in the hospital due to a broken arm, which cost on the order of $100,000. Remarkably, that eye-opening amount still doesn't include the ambulance, the doctors, the x-rays, the CT scans, or the anesthesiologist. I'm still getting bills. The system is far more broken than is widely understood, unless you have had a recent bad experience.

Total Expenditure Casey 15 jun 09.JPG



Projections for healthcare are particularly problematic because of the demographics of so many people born just after World War II. Soon, there will be less than three people in the workforce for each retired person. That will result in huge taxes on the few workers to supply the expensive end-of-life medical care for the retirees (and it is in the latter years where medical expenses really begin to rack up).

This bubble was predicted and a government trust fund was set up. Unfortunately, as is typically the case, the government couldn't keep its hands off the money, and so it has already been spent. The outlook is not good. In fact, in just over 10 years from now – by 2020 – the demands on the government for Social Security and Medicare will get so high that they cannot be met. And it gets worse from there.


It's a safe bet, based on history, that the government will once again try to print its way out of the problem – but all that will do is further destroy the dollar and drive interest rates up even more. Just to be clear, this is not just about a government program gone awry, but as much or even more so a demographic problem – which makes it all the more intractable.

Don’t wait to be saved by the government; take your life – and your asset protection – in your own hands. For example, by playing one of the most obvious and inevitable trends and Bud Conrad’s favorite investment for 2009. Click here to read the full report.


Have a sparkling day.

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To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

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Friday
Jun122009

Randgold Resources Limited Options Trade Up 25% in a Day

Randgold Chart 13 jun 09.JPG

Chart courtesy of Stockcharts


The September $65.00 PUT contracts in Randgold Resources Limited (GOLD) that we purchased on the 11th June 2009 for $5.00 per contract have got off to a good start by gaining 25% to close at $6.30 today. Randgold tumbled yesterday losing 4.60% to close at $67.67.

On the 28th May 2009 we sold our entire holding of Randgold for an average price of $68.69 for a return of 82.44% as the company appeared to be overbought at the time. This stock still looked overbought to us so we sort to capitalize on the situation further via the purchase of PUTS which expire in September.

A correction of around $10.00 should see these options double in price and thats the target we hope to hit. If a 25% profit in a day or so is good enough for you then by all means take it, there is nothing wrong with taking small quick profits along the way.

Now while we are sweating and you are having a little chuckle at our exploits we can tell you right now that we may buy again early next week so watch this space.

Taking a quick look at the above chart we can see what appears to be an aberration in the performance of this particular selection of stocks. If this aberration remains in place then we will lose money on this options trade, however if the profit takers decide to cash up then Randgold could correct quickly.

Gold itself closed at $938.30 registering a fall of $16.20 on the day adding more downward pressure on the precious metal producers.

Randgold Resources Limited trades on the NASDAQ under the symbol of GOLD and on the London Stock Exchange under the symbol of RRS.

Have a sparkling day.

Got a comment – then fire it in.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

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Randgold logo.JPG
Thursday
Jun112009

Randgold Resources Limited Options Trade

Randgold Chart 12 jun 09.JPG

Chart courtesy of Stockcharts


Today we purchased the September $65.00 PUT contracts in Randgold Resources Limited (GOLD) in anticipation of a pullback for $5.00 per contract. Randgold now looks vulnerable as the stock price has increased from $41.59 on 17th April 2009 to $70.93 today, an increase of 60% in two months. The P/E ratio is 148 which is massive when compared with Yamana (AUY) at 15 or Goldcorp (GG) at 17 and Newmont (NEM) at 31.

The yawning gap between the stock price and the 200dma suggests that this aberration will cannot remain as is and either the the average has to move up or the stock price has to move down in order to return to the 'norm'. A correction of around $10.00 should see these options double in price and thats what we are gunning for.

We are using Randgold as the vehicle to protect our portfolio and consider the purchase of a few PUTS to be an insurance against a possible sell off in this sector. These contracts should increase in value should the gold producing sector take a bit of a plunge. If the sector makes gains then the PUTS will fall in value but the fall will be compensated for by the gain in the value of the portfolio.

To place a down bet in a bull market is a hard call to make so go gently with this one. If we can get the oscillations right then it may be a case of moving swiftly to lock in profits and then considering CALL options for a possible short term bounce.

On the 28th May 2009 we sold our entire holding of Randgold for an average price of $68.69 for a return of 82.44% as the company appeared to be overbought at the time.







You can now sit back and watch us sweat as this is a tricky time to trade these stocks.


Randgold Resources Limited trades on the NASDAQ under the symbol of GOLD and on the London Stock Exchange under the symbol of RRS.

Have a sparkling day.

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To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

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For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Randgold logo.JPG













Tuesday
Jun092009

Tupperware and ATMs– Gold Goes Mainstream

gold picture - Casey 10 jun 09.JPG

In todays mailbag we have this article from By Jeff Clarke, Editor, BIG GOLD for your enjoyment and entertainment.

Are we there yet? Are we there yet? We gold bugs are like little kids on a trip to the zoo; we just can’t wait to get there. “There” being the elusive point in time when the gold mania (no, make that Gold Mania) hits and everyone and their cat will want to invest in the yellow metal. Which of course will propel its price to dizzying heights. $1,500… $2,000… $5,000 an ounce – the sky’s the limit. At least that’s how the theory goes.

But it’s not just a theory anymore: in the past year, we’ve been seeing unmistakable signs that gold indeed may be going mainstream.

For example, we have always said that when the Mania phase of this gold bull market really got underway, mobs would break down the doors of pawn shops and coin dealers in order to get their fill of the yellow metal.

While most pawn shops’ doors are still intact, that trend seems to have already begun. In August 2008, the U.S. Mint temporarily suspended sales of the one-ounce American Gold Eagle and in September of the American Buffalo coin, because it couldn’t keep up with customer demand.

In December, bullion dealers from Johannesburg to New York City were starting to run out of gold coins when investors caught in the economic downturn scrambled to get into safe-haven assets. The sudden “gold rush” was so extreme that large coin dealers posted disclaimers on their websites that their customers should expect delivery times of a month or more.

According to the World Gold Council, in the first quarter of 2009, “the biggest source of growth in demand for gold was investment. Identifiable investment demand reached 595.9 tonnes in Q1, up 248% from 171.3 tonnes in Q1 2008.”

At the same time, there is a counter-trend in motion: cash-strapped Americans are selling their scrap gold like there’s no tomorrow. All over the country, housewives throw Tupperware-style parties to sell their gold jewelry by the ounce, often at a steep discount to market price. And businesses like cash4gold.com – which, by the way, we do not recommend – are popping up like mushrooms after a summer rain.

But even Joe the Plumber may soon be enticed to turn from seller to buyer. Even if he never sets foot into a coin store, he’ll be able to get his share of gold – in easily affordable, and portable, slices. And he won’t have to look any further than his nearest airport, bus or railway station.

A German company has come up with a brand-new marketing concept for the yellow metal: shop for gold while you wait.

Asset management company TG-Gold-Super-Markt is planning to set up 500 ATMs at strategic locations all over Germany. The machines will distribute one-gram (0.0353 oz) mini-bars of gold, about the size and thickness of a child’s fingernail. The tiny gold pieces will cost 31 euros – around US$44 – which includes a hefty 30% markup to spot.

Thomas Geissler, chief executive of TG-Gold-Super-Markt, told Reuters that this new way of selling bullion “is an appetizer for a strategic investment in precious metals. Gold is an asset everyone should have, between 5 and 15 of your liquid assets in physical gold.”

Even though Geissler admitted that “In absolute numbers, the demand for physical gold is still tiny,” he sees a very bright future for the yellow metal. “[In] relative terms, the growth is explosive,” he noted, “inquiries have been doubling every six months.”

Are gold ATMs the go-to “gold mine” of the future? While we wouldn’t necessarily bet on it, Geissler is. And the fact that he thinks it a lucrative enough business to set them up is no doubt encouraging. It’s moves like these that we think we’ll see more of as gold becomes increasingly popular. The countdown for the moon shot is on.

As you may know, the BIG GOLD editors go even further than Thomas Geissler: we recommend that you hold up to 33% of your overall portfolio in physical gold, 33% in cash, and 33% in select investments. One of those investments may be one you’ve never heard of before. Yet it has given our subscribers 54% returns in 2008 – at the same time the common stock market was plummeting. Read our brand-new report here.







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