Wednesday, March 4, 2009

Today in Gold: Wednesday, March 4

Each weekday, Cash4Gold will troll through the web's gold banter and post some of the bigger or more interesting stories. Following is a run-down of today's features:

"Expert: Start Investing in Gold Now"
Author: Anoma Srisukkasem

Main Points: The market is uncertain and the rallying of the dollar has hurt gold. That said, Srisukkasem believes that gold, though it may continue to drop for a while, will rise again and approach $1,000 per ounce "over the next few months as investors turn back to the safe haven in their portfolio for fear of another round of global economic crisis."

The immediate response may be to wait for gold to continue to drop before investing -- particularly since the expectation appears to be an additional drop. However, this just goes to show that experts appear to be more confident in the long term prospects of gold than in the assertion that the price of gold hasn't ended its descent.

"Gold Halts its Losing Streak"
Author: Bloomberg Staff

Main Points: Gold didn't move much, but it did rise $1.10 to $914.70 an ounce as of 11:21 am. Experts reiterate that investors flock to gold during times of instability, and it will only be a matter of weeks until gold again rises above $1,000 per ounce.

Analysis: The lack of good news about gold during the past seven sessions doesn't appear to affect investors. They are unwavering in their support, and the $1,000 milestone is mentioned regularly as a real possibility.

"Good Chance that Silver and Gold Prices Bottomed Today" (Tuesday)
Author: Franklin Sanders
Website: www.

Main Points: Gold dropped another $26.10 and silver fell 35.50 cents on Tuesday, but Sanders believes the two metals have bottomed out. Gold's low on Tuesday was $904.50, and it was around that level that it started to shoot up to near record numbers recently. Or… if it does drop below $904, it won't drop below $880.

Analysis: Want evidence that experts really aren't sure what's going to happen? Read this article. Sanders is confident that gold will rise again, but first says that the price has bottomed out before essentially saying that if it hasn't it won't drop below $880. In other words, who knows?

"Inflation or Deflation in 2009: Which will be positive for gold?"
Author: Daniel Sacks

Main Points: Sacks believes that whether we encounter inflation or deflation, gold will prosper. He says that gold has generally done well during periods of inflation and deflation. "Gold appears to be benefiting both from being the traditional hedge for inflation hawks (some of whom are now beginning to worry about the risk of hyperinflation) and from the mistrust of some investors towards cash assets and government obligations during the current financial crisis. It would probably only require a minority of investors to believe that they need to continue to allocate more towards gold to have a significant price impact."

Analysis: Just goes to show you, good or bad gold has respect in the market. It's safe.

"Gold Prices Look Bullish Despite Recent Pullback"
Author: Neils Christensen

Main Points: Gold prices have been hanging around $910, which some experts say is a sign that prices could begin to move higher. According to Ashraf Laidi, chief market strategist for CMC Markets, the fact that central banks continue to cut interest rates is also a good sign for gold. "Only a breach below 888-887, will cast serious doubt on the current bull run," he said. Other experts interviewed by Christensen agreed that the current level is a good time to buy.

Analysis: Gold may have fallen since those $1,000 levels, but the overall trend has been positive and the longterm prospects are good.

Weak Investment Demand Hurting Gold Prices
Author: Neils Christensen

Main Points: Jon Nader, an investment products analyst from Kitco, says that dropping investment in gold and growing inventories from scrap sellers are dragging down prices. Margin call concerns could also be the cause of a lack of activity. "The math is simple, yet compelling," he said. "For every panic-driven latecomer to the gold party, there were two price savvy holders willing to let go of the metal due to expectations of lower prices." Long term, experts remain bullish, but many investors are waiting for gold to drop a bit more before jumping back in.

Analysis: The problem Nader points out is interesting. Investors are losing money on non-gold investments, so need to sell gold for margin calls. Meanwhile, other skittish investors got in when gold was high, and are also selling. Therefore, more are selling than buying, causing the price to drop.

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