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Sunday
Sep202009

Gold: Set To Make History

Gold Chart 21 September 2009.JPG

Last week ended with gold holding onto its gains and managing to stay above the psychological level of 1000/oz. It is especially good news as Friday was the day when various stock options, index options and futures contracts expired. This bewitching hour can have an effect on gold prices as the larger institutions try to avoid or at least minimize their loses.


Taking a quick look at the chart we can see the RSI has hit '70'and started to head lower, the MACD and the STO are also high which suggests that gold is overbought at the moment. Over the next few weeks gold could consolidate and indeed drift a little lower with the gold producers following the price down. Its a hard call to make but you may want to take some money off the table and lock in some of your profits. Its often said that micro analysis is near enough impossible to do and we agree with those sentiments but we do get asked these questions in our mail bag so we will give our 'take' on it, but it is only an opinion.

The next four weeks could be a drifty period with mainly sideways action taking us to the middle of October. From then on we expect gold prices to continue to improve right through until mid January 2010, establishing new all time highs along the way.

Our stance at moment is to sit tight as we feel its better to be in then out of this market and we don't want to be left at station if gold does suddenly explode and takes us by surprise. If your strategy is to take some profits then please stay on your toes and look for signs and indicators that will give you clues as to when this rally will resume.

Back on the 1st November 2006 we wrote the following:

So, the question is “Are you in position? Have you bought the gold stocks that you have been watching for such a long time?
Do it now. Don’t wait; you will not see $600.0 again!
01 November 2006


The time is fast approaching when we will be writing that you will not $1000/oz again!


Enjoy this sparkling day but don't go to sleep, the economic environment is changing at a fast pace so read as widely as you can to stay on top of events and build your portfolio in this sector in an orderly fashion.


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.
Thursday
Sep172009

Could China Push Gold to the Moon?

In this mornings mail bag we have this 'take' on gold by David Galland, Managing Director, Casey Research.

Inside sources have recently confirmed the Chinese government is actively promoting gold and silver investment to the masses.

Some analysts now contend that China can no longer afford to let the gold or silver price slump. The rationale behind that contention is that with the Chinese government now telling the general populace to buy precious metals, it would be highly problematic should gold and silver subsequently take a nose dive.

In many cases, what a government wants and what ultimately occurs can be wildly different, due to unintended consequences rarely foreseen by officialdom, and because once the masses get it into their heads to break one way or another, government’s desires are largely ignored.

“You shall not smoke marijuana,” says the government. “Roll me another,” says John Q. Public.

But in the case of gold, interestingly enough, the Chinese government has the means at its disposal to actually do something about prices. Namely, at $1,000 an ounce, the total value of all the gold ever mined comes to about $5 trillion.

Of that amount, less than $1 trillion is held in official reserves, the rest under mattresses, in jewelry and family heirlooms, and in various ETFs – GLD being the biggest, by far, holding about $34 billion worth of gold.

Against these totals, China has foreign reserves in excess of $2 trillion. In other words, more than enough to push the tiny gold market around in any way it wishes. Given that much of its reserves are now denominated in fragile U.S. dollars that it would sorely love to replace with something more tangible, and that China is the world’s largest gold producer, the country’s involvement with gold is something more than just a passing fancy.

Simply, there is a new gorilla in the room in global gold markets. The extent to which the broader market hasn’t yet figured this out is the extent to which you as an early mover can ultimately profit. Especially in the more leveraged gold stocks, which continue to be strong even as the broader markets show weakness.

That all of this comes before the dollar hits the wall it must hit, or before the inflation that is now baked in the cake arises, lends a lot of credibility to the idea that when the gold bubble begins to expand, it could reach all the way to the moon.

No need to chase gold at these levels, as opposed to buying on dips. But buy.

As mentioned above, gold stocks – especially those of the junior exploration variety – can provide an even greater upside than gold itself. As the subscribers of Casey’s International Speculator can confirm, double- and triple-digit gains within 12-24 months are nothing out of the ordinary. Click here to read more.

Have a sparkling day.

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.







Wednesday
Sep162009

Gold-prices.biz portfolio Update 17 September 2009

Gold Chart 17 September 2009.JPG
Chart courtesy of Stockcharts

At the fifth attempt gold has managed to break through the psychological barrier of $1000/oz and currently stands at $1016.80/oz with silver trading at $17.45. As we can see from the above chart gold has now positioned itself for a 'pop' at its previous high of $1033/oz, should it manage to establish a new high then finally gold will be off to the races.


Our portfolio as been updated as follows:

Randgold Resources Limited (GOLD) On the 18th of June 2008 we bought Randgold Resources Limited for $37.65. This stock quickly rallied to $55.00 before being caught in the ensuing sector sell off to trade as low as $27.70, on the 28th May 2009 we sold our entire holding for an average price of $68.69 for a return of 82.44%. This is a quality gold producer so we waited patiently for a suitable entry point at cheaper price levels as per our post “Randgold: As Good as it gets” however we held out too long and missed the buying opportunity by being too tight, rats!

Agnico Eagle Mines (AEM) we originally paid $30.88 and it now stands at $31.15. On 31st January 2008 we reduced our exposure to this stock and sold about 50% of our holding for an average price of $63.27, locking in a profit of 104.8%. On the 24th July 2008 we bought again at $59.17 doubling our position with the average cost now standing at $45.03. Agnico Eagle closed at $71.27 on yesterday, a pleasing performance.

Kinross Gold (KGC) we originally acquired Kinross at $10.08, Kinross then went through a bit of a pull back so we signaled to our readers to “Add To Holdings” at those discounted levels of around $11.66. We also gave another ‘Kinross Gold BUY’ signal when we purchased more of this stock on the 20th August 2007 for $11.48. On 31st January 2008 we reduced our exposure to this stock when we sold about 50% of our holding for an average price of $21.96 locking in a profit of about 93.60%. On the 24th July 2008 we doubled our holding with a purchase at $18.28 giving us a new average purchase price of $14.50. Kinross closed on at $23.19 on Friday adding some more cheer to our week. We have high hopes for Kinross and it forms a major part of our core position.

Silverado Gold Mines (SLGLF) we bought at $0.08 and it now stands at $0.0185 up slightly from $0.013 at the last update. We are disappointed in the poor performance of this stock. The B.C. Securities Commission had issued a cease-trade order against the company, citing a host of filing deficiencies. On the 5th August 2008 this order was revoked the B.C. Securities Commission.

Silverado (OTCBB: SLGLF) has managed to arrange a line of credit of up to a staggering $US100 million as detailed in a news release by the company recently, which came as a surprise to us considering their recent performance. We are holding at the moment however we may scale back our holdings due to its lack of performance.

Yamana Gold Incorporated (AUY: NYSE) we paid $9.37 on 27 September 2006, and we bought again at $12.89 on the 7th December 2007 and so our average price moved up to $11.13. On 31st January 2008 we reduced our exposure to this stock and sold about 50% of our holding for an average price of $16.50 locking in a profit of about 49.41%. Then on the 3rd April 2008 we bought our Yamana position back at $14.43 in expectation of a bounce, which arrived on The 23rd May 2008, and we sold for $16.00. On the 11th July 2008 we bought again at a price of $14.95 taking our average purchase price up to $13.04. This stock closed at $11.38 yesterday, so we are looking for a significant increase in the stock price.


High River Gold Mines: (HRG: TSX) We bought this at $2.49 and we increased our position in the company on December 7th, 2007 and we are still holding on to it despite the wrangle of being acquired by others. HRG closed at $0.44 yesterday, which is double the price of the original offer.

Fronteer Developments Group (FRG) Fronteer was originally bought as both a uranium and gold play as FRG owns the lion’s share of Aurora Energy Resources making it a gold/uranium play. On the 24th September 2007 we sold 50% of this stock for an average price of $10.44, banking a profit of 122%. Fronteer is currently trading at US$4.63 up from US$3.51 recently, Our original purchase was made on the 15 July 2006 at around the $4.70 level, so we are sitting on a small loss at the moment. Fronteer Development Group Inc., has now acquired all of the remaining common shares of Aurora Energy Resources Inc. So this investment is well and truly a two pronged attack via both gold and uranium.

Options Trades:

We purchased the September $65.00 PUT contracts in Randgold Resources Limited (GOLD) in anticipation of a pullback for $5.00 per contract as Randgold looked vulnerable as the stock price had increased from $41.59 on 17th April 2009 to $70.93 today, an increase of 60% in two months, and the P/E ratio was standing at a large 148. Randgold fell quickly but then staged a mini recovery just to keep our nerves tingling. However we sold these contracts for $10.00 on Monday 13th July 2009 generating a profit of 100% in one Month. Other options trades during this period were Bancorp, a profit of 75% in one week, SKF sold at a loss of 56%, IAG for a profit of 10%, the second set of IAG options are still open but effectively dead in the water.

Trading decisions belong entirely to you as your circumstances are different from ours and we trade to suit our investment criteria and cash position.

Have a sparkling week and please feel free to share your comments with our readership.

Conventional wisdom suggests having 5% or so of your portfolio in precious metals with some commentators upping this figure to around the 15% mark. We however are far more cavalier in our approach to investment and only invest in the precious metals sector such is our enthusiasm for it. We currently have 85% invested and 15% in cash.


Have a sparkling day.

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.
Tuesday
Sep152009

Gold Going to $1500 – John Embry

John Embry of Sprott Asset Management.JPG


Gold going to $1500/oz, the opening statement as BNN talks gold with John Embry, chief investment strategist, Sprott Asset Management and in our humble opinion it is well worth your time to watch this clip, click here.

In Johns commentary he says that the silver fundamentals are better then those of gold and he expects silver to do better then gold despite being an avid gold bug. He also expresses some surprise at the amount of time Barrick Gold Corporation have taken to close their hedge book of nine million ounces of gold.

G20 are due to meet shortly so its not in their interest to have gold making extraordinary gains before the meeting as they will be telling the world that they have everything under control. Should gold move sharply higher then this could be embarrassing for them. It will be interesting to observe golds performance before the meeting and its performance after the meeting.

The meeting of the Group of 20 (G20) is planned to take place in the US city of Pittsburgh, which is scheduled for 24th and 25th September 2009.

As we write gold has just closed in New York at $1007.20 and silver has closed at $17.01, with green on the screens everywhere and the HUI up 12.67 to 432.34 you have good reason to smile so make it a big one!


The second half of this clip is an interview with Yale Simpson, executive chairman, Exeter Resource Corporation who have recently announced an incredibly large gold discovery, which you may also find interesting.

Have a sparkling day.

Your thoughts are of course most welcome, so please fire them 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.

Sunday
Sep132009

Gold at $1006.50, where’s $1033?

Gold chart 13 September 2009.JPG

On 11 September 2009 we wrote:

A further devaluation of the dollar is golds cue to make a record breaking move firstly to $1007 and then $1033 and above.

For a while gold popped up to $1011.90 before closing just below our target of $1007.00, nevertheless to close the week above the psychological level of $1000/oz is terrific news for bedraggled gold bugs.

As we see it we are about a year behind where we should be, our research and analysis concluded that gold would make new highs last year. We were wrong of course as we didn't see the massive amount of de-leveraging that was about to hit the market and turn everything to custard. Since then gold has stood tall and made a couple of runs at a $1000/oz only to retreat shortly afterwards.

When we look at the chart we can see that the gap between the 200dma and gold prices was significant. For instance when gold is at $1000/oz and the 200dma is knocking around the $800/oz level we could say that the gap represents a 25% premium to the 200dma. This is not too bad a divergence but in our experience when that gap grows to the 50% mark then a correction is usually on the cards. As things stand right now gold is at $1006.50/oz and the 200dma is at $913.32/oz, so the gap is less than $100/oz or less then 10%, so we are fairly comfortable with it. We can also glean from the chart that the 50dma and the 200dma are moving north in parallel, which in our humble opinion lends support for gold prices to rise further. The RSI is now at 74.01 which is a tad too high for us, however this indicator can move sideways at this level for some time. Our preference would be for it to be at a lower level at this stage, but we cant always have perfection and have to make investment decisions based on what we have in front of us.

We are currently 85% 'in' with 15% in cash, so we will probably retain 5% of the cash for future opportunities and deploy the other 10% as and when a suitable opportunity presents itself. At the moment we are sitting on our hands waiting for gold to make a decisive break above its old high of $1033/oz, which in our opinion would signal that a much bigger rise for gold is on the cards.


In conclusion, hang on to your core position in precious metals regardless as it could be fairly volatile from now on in. This volatility will no doubt have a few dips to scare the socks off us so try and treat them as opportunities to pick up a few more of your favourite stocks or add to your physical position. We are also working on a few possible options trades which may be of interest to you and we will table them when the time is right.

Have a good week.

Your thoughts are of course most welcome, so please fire them 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.





Friday
Sep112009

What the Heck Is Going on with China?

China gold coin.JPG

A weekend read to keep you thinking by Doug Hornig, Sr. Editor, Casey’s Gold & Resource Report

That’s a question that Westerners have been asking for, oh, several millennia now. Or at least since Marco Polo aimed his ponies down the old Silk Road in 1271.

Now as then, China keeps its own counsel. We know what they want us to know, plus what we can surmise from rumor and reading between the lines. But lately, we’ve been able to add presumption to news and come up with something that looks very significant.

Specifically, there’s been a flood of tantalizing stories out of the East that, taken together, strongly suggest a growing preoccupation with a form of money that was ancient even in Signor Polo’s time. And it ain’t silk. It’s gold.

We already learned, back in April, that China has been salting away bullion for the previous six years, out of sight of international gold watchers. To the tune of 14.6 million ounces. Now the evidence suggests that that was merely the prologue.

Let’s take these tidbits one at a time:

Sovereign wealth fund dumping $$ for gold? This one is still at the rumor stage, but highly-respected website Mineweb.com is supporting it (http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=88400&sn=Detail). What we know for sure is that the country founded its primary sovereign wealth fund, China Investment Corporation (CIC), two years ago, with the stated aim of rapidly deploying some of its $1.5 trillion forex surpluses – $200 billion initially, with another $100 billion recently added to the kitty – into investment in non-Chinese enterprises. This it has been doing in spades, acquiring businesses around the globe. Extractive industries are among them, including Teck Corp., the diversified Canadian mining giant.

Might it also be buying up gold? We don’t know that for sure, but it seems likely. And, in addition, rumors sneaking off the mainland indicate that within the CIC, a lot of effort is being poured into prospective investment deals in the oil and precious metals sectors. The more it produces, the more it can keep.

The Chinese have made no secret of their disdain for current American economic policy and what they see as the inevitable destruction of the dollar. That they would be moving to diversify out of the greenback shocks precisely no one, and gold is one logical landing place for all those bucks. We suspect that’s exactly what is happening, behind the scenes as well as center stage.

Gold and silver pushed to the people. As recently as 2002, the private ownership of gold was prohibited in China. You could be jailed if caught with any in your possession. Beginning in 2009, in a stunning about-face, the central government removed all restrictions. In fact, as Mineweb and other sources report now it’s actively pushing folks to buy some personal metal, with China's Central Television, the main state-owned television company, running news programs cum infomercials, letting the public know just how easy it is to purchase gold and silver as an investment. 

It truly is as simple as can be, because every bank sells gold and silver bullion bars in four different sizes to individuals. (Try to find the same the next time you make the trek down to Wells Fargo.) Mining companies are reportedly encouraging employees to convert some of their wages to gold on payday. Gold is traded in some form 24 hours a day. And paper proxies for the metal are also soaring in popularity.

There are persistent rumors that the export of silver has already been banned. Gold could be next.

Thus China, which only yesterday was the lowest per-capita consumer of gold in the world, is bidding to become the biggest. Some analysts believe it will pass India – the top dog since forever – as early as 2010. Clearly, the government believes the country is strengthened if everyone who can holds some hard currency.

All this suggests a mania in the making, and only in the formative stage. Imagine if hundreds of millions of new consumers climb on that particular bandwagon…

China repatriates its bullion. Meanwhile, in early September numerous sources (see, e.g.: http://www.marketwatch.com/story/hong-kong-recalls-gold-reserves-from-london-2009-09-03) reported an announcement that Hong Kong is pulling all its physical gold holdings from depositories in London and transferring them to a newly built, high-security depository at the city's airport.

That means the government is backing the promotion of Hong Kong to a more formidable status as a Swiss-style, regional trading hub for bullion, at the same time as it reduces London's role as a key settlement and storage center.

Press reports cited government officials as saying that marketing efforts will be launched to convince Asian central banks to transfer their gold reserves to the Hong Kong facility. Outreach will also be made to commodity exchanges, banks, precious metals refiners and ETF providers.
There can be little doubt this signals that the Chinese government fully recognizes the importance of gold in a time of crisis, and that the most prudent plan involves keeping its stores close at hand.

China threatens to “just walk away.” In one of the year’s most intriguing developments, commodity and derivative markets were thrown into a tizzy on Monday, August 31, by the worldwide circulation of a story published two days earlier in Caijing magazine (and reported by Reuters here: http://www.marketwatch.com/story/hong-kong-recalls-gold-reserves-from-london-2009-09-03).

According to the Caijing article, a spokesperson for China’s state-owned Assets Supervision and Administration Commission – the regulator and nominal shareholder for state-owned enterprises (SOEs) – told six foreign banks that SOEs reserve the right to default on contracts.
Say what?

Maybe the commission has been paying attention to the “just walk away” forfeiture movement that blossomed among American homeowners whose overall debt on their properties far exceeded the assessed value.

Small wonder there was panic in trading houses that hold a lot of Chinese paper. They hope any problems will be worked out short of a default. In fact, “It's [only] a handful of companies who are being encouraged by regulators to ‘re-negotiate’,” says one banking source. “It's outrageous, but it's China, so everyone is treading very carefully.” Very carefully.
Nevertheless, in addition to tangible losses, those potentially affected fear the establishment of a dangerous precedent, one that could lead to utter chaos in the enormous, tangled world of derivatives.

And there is one other, albeit highly speculative, possibility. Some major entities – we don’t know who, due to the opaque nature of international gold trading – have huge, perhaps quite concentrated short positions in the metal, both on the COMEX and OTC market. Is one of them China, acting through American intermediary banks?

A short position in precious metals means that the initiator of that position is obligated to deliver physical gold or silver if the buyer (who holds the long end) wants it. Suppose China is one of the big shorts. Suppose it’s been playing the market in order to buy at what it sees as bargain prices. Now suppose a gold rally induces it to just walk away from all those obligations to deliver. Who’s going to force it to make good? Guess what, no one has a gun large enough.
Granted, it’s an outlandish scenario. But impossible? No. Beijing has shown nothing but indifference to what others think of it. And if the dollar does crap out as the world’s reserve currency, there’s nothing to say that China won’t see its self-interest as lying in a completely new direction.

Conclusion. Gold, and the companies that produce it, have enjoyed a brisk runup of late, as the metal mounts yet another assault on the beckoning, symbolic $1,000 level. How much of this can be traced to what China has done, is doing, or may yet do?

We don’t know, but we suspect it’s not entirely coincidental. All rumor and speculation aside, as China clearly turns more and more bullish on gold, so will everyone else.

Hopefully you have already secured your share of physical gold and silver before the masses start a run on them. Another of our favorite gold-related investments for 2009 – with even more potential upside than the yellow metal – is a company that has delivered reliable returns throughout the last year… even at a time when the Dow and S&P were tanking. Thus we call it “48 Karat Gold.” Learn more here.



Have a sparkling day.

Your thoughts are of course most welcome.

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.


Thursday
Sep102009

Gold to Punch its Weight

USD Chart 11 Sep 09.JPG


As we can see from the above chart the US Dollar is doing an impression of a Walt Disney Cat sliding down a smooth wall into the great unknown. The two mice, gold and silver look on in anticipation of a bigger fall. We are at a critical juncture whereby gold needs to punch its weight and go through $1033 level demonstrating that it is really going places.

Silver appears to be anticipating golds upward move and is performing very well indeed as seen by the ever reducing ratio of gold to silver, which currently stands at 59 down from around 85.



The HUI is also on the move and now stands at 418.86 up from 310 just a couple months ago. The gold and silver producers have been lagging behind the metals for some time but now appear to have seen the light as demonstrated by the sudden spike upwards in stock prices and the dramatic increase in the volumes of shares traded, which bodes well for the future.

Back to the US Dollar, we can see that the RSI is at 33.68 so there is still room for it to fall further. A further devaluation of the dollar is golds cue to make a record breaking move firstly to $1007 and then $1033 and above.

Once the new high has been made the Internet will propel the news to all corners of the planet. The speed of communication is one of the key differences between this bull market and the one of the early eighties. In 1980 it could take three days for The Wall Street Journal to get to our office in Den Haag, the capital city of The Netherlands. Today you can sit on a beach with a laptop and know what is going in New York, London, Sydney and Stockton-on-Tees. We can also trade at the press of a button, these two factors will add to the increase in volatility as trigger happy traders do their best to maximize profits.

The day will soon be upon us when gold moves $100/oz in a single trading session, so you have been warned. If you are in deep and of a nervous disposition try decaf.

Taking a quick look at the silver prices chart we can see just how well silver has performed recently. The 50dma and the 200dma are moving in parallel in a northerly direction adding support to silvers progress. A spanner in the works could be the RSI which is nudging '80' and suggests that silver is now overbought. However both gold and silver are now a 'dollar' play and should the dollar fall then the charts will be sidelined by the fundamental issues, albeit for a short time period.

Silver chart 11 sep 09.JPG


The chart for gold prices is similar to that of silver as we can see, so we now wait in great expectancy of a major move north.

Gold chart 11 Sep 09.JPG

Have a sparkling day.

Your thoughts are of course most welcome.

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.






















Wednesday
Sep092009

Gold Outlook: Price Explosion or Downturn

Gold Explosion 10 sep 09.JPG

This is a snippet of an interview by Andrew Mickey, Chief Investment Strategist of Q1 Publishing with John Embrey the chief investment strategist at Sprott Asset Management, regarded as one of the world’s leading gold experts.

Andrew Mickey: Let’s switch our gears for a moment here to gold and silver…right at this point, everyone is focusing on the long, long term, say 10 years, 15 years out.

John Embry: I’m focusing on the next two months and I think we are going to have an explosion in the price of gold.

Andrew Mickey: Do you see a specific catalyst?

John Embry: One of the great factors is sentiment right now - the sentiment that you just mentioned. There is currently considerable apathy towards gold and silver. However, demand is exploding on the investment side, for the simple reason that people can see, with each passing day, that the currencies are going to be significantly debased.
You've got enormous government financing requirements over the next 12 months. Where is the money going to come from? A lot will be created out of – thin air and, that’s going to result in a huge volume of new currency.

I see the demand from the investment side alone just overwhelming supply. And on the other side you’ve got diminishing supply.

The central banks are running out. And you can see this with the central bank sales each year. The European central banks can sell up to 500 tons a year, they are not selling anything near that.

And lastly, all the eastern central banks that are jammed with US dollars are talking about diversifying into other assets, one of which is gold.

Central banks have been major suppliers of gold to fill the gap in the market for years. That's coming to an end. At the same time mine supply continues to plummet. So I will be shocked if gold is not dramatically higher in the next three or four months.


The above is a bullish view which we pretty much concur with, however the bearish view can be summed up by this snippet from Ronald Rosen of The Rosen Market Timing Letter

Sorry to remind you folks, but a bull market goes up on rising volume and rising open interest. A correction in a bull market goes down on declining volume and declining open interest. The A, B, C multi-month correction in gold and silver is being accomplished with declining volume and declining open interest. The final C wave down will begin soon.

The same data but two totally different interpretations of just where gold is headed. The next three months or so are certainly going to be interesting and most probably volatile so hang onto your core position and go gently when trying to trade the short term moves of gold prices.

Have a good one.



Your thoughts are of course most welcome.

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.

Wednesday
Sep092009

Is the Fun for Gold Just Beginning?


In this mornings mail bag we have this article from Jeff Clark, Senior Editor, Casey’s Gold & Resource Report which we hope you find interesting.

You likely heard that the Central Bank Gold Agreement was extended by the signatory banks last month. This is the agreement where central banks around the world agree to limit sales and to do so in an orderly fashion so as to not disrupt prices.

While most writers focused on the fact that the agreement set a lower limit (400 tonnes per year, down from 500) – clearly a bullish indicator – I think there’s a more obvious fact many are overlooking that’s even more bullish.

In the first two 5-year agreements, CBGA signatories sold 4,000 tonnes of gold, or approximately 141 million ounces. This is an incredible amount of gold to dump on the market; it’s equivalent to almost two entire years of global production. Based on an average gold selling price over those 10 years of $600, this equals approximately $84.6 billion of gold.

This amount of sales should’ve had a hugely depressing effect on such a small market. After all, the gold market is smaller than the market cap of Walmart. If I had asked you in advance of those sales to estimate the price of gold once all the metal had hit the market, you probably would have said it would have lost half its value from its $252 levels (when the selling started), or more. In other words, a price around $125 per ounce.

But what happened during those 10 years? The gold price soared, rising from a 1999 low of $252 to its current price of $950, close to a quadruple. I wonder what the price would be if central banks had been hoarding gold, like us, instead of selling it?

Now that the CBGA has agreed to sell even less gold, the depressing effect sales have on the price will lessen. Add in the fact that sentiment among central banks is shifting from anti-gold to pro-gold, and I think it won’t be long before $1,000 is the new floor of the gold price and not the ceiling.

Yes, the fun is just beginning.

And while gold is likely to move up, gold-related investments – such as large-cap gold producers and near-producers – can give you even more of an upside. One of our current favorites is a stock that has been providing steady gains over the last year, even during times when the Dow and S&P dropped off a cliff… that’s why we call it “48 Karat Gold.” Learn more about it here.



Your thoughts are of course most welcome.

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Tuesday
Sep082009

Gold Pushes Above the $1000 Mark

Kitco Gold Chart 08 Sep 09.JPG
Charts coutesey of Kitco.com

The above chart shows gold pushing above the $1000/oz mark in Hong Kong prior to the opening of the London trading session. With New York closed for Labour Day yesterday, traders could be returning to their trading desks today to see gold in a rampant mood.

Silver has also joined in the fun as the chart below indicates:

Kitco Silver Chart 08 Sep 09.JPG


Could be one of those weeks where we have to hang on to our hats as the action unfolds in an explosive manner. Speculation runs riot in times like these so it is important to try and stay calm as the volatility increases.

Today will not be the same as the bull run of the eighties when news of increases in gold prices traveled around the globe at a leisurely pace. These days all eyes are on the price changes as they happen, sticky fingers on the buy or sell button as investors and traders look to make a buck.

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.

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.