Tuesday, March 31, 2009
"Gold rises first day in three as dollar weakens"
Author: Moming Zhou
Main Points: The gold price increased today for the first time in three on Wall Street, climbing $7.10 to $922.60 an ounce. Not coincidentally, the dollar had a rough day.
"Gold is supported by weakness in the dollar today and expected dollar weakness in the coming months as the Federal Reserve's balance sheet deteriorates further and U.S. budget deficits and the national debt rise very significantly," said Mark O'Byrne, executive director at Gold and Silver Investments.
Gold's modest rise was held back by a strong day for riskier stocks. Investors with low confidence in the market will buy up gold; when their confidence rises, they'll abandon it for riskier plays.
Although gold rose 4.3% in the first quarter of 2009, it is also down 2.1% for the month of March -- the first drop in five months. The price of gold is now down approximately $80 since spiking over $1,000 an ounce on February 20.
Analysis: The fact that gold did go up on a day that riskier stocks did well shows that, while investor confidence is rising we're far from being out of the economic storm. Keep one foot in the golden door while dabbling in some higher risk opportunities.
CASH4GOLD INVITED TO PARTICIPATE IN FLORIDA TREND MAGAZINE "TOP PRIVATE COMPANIES" SPECIAL JUNE ISSUE
March 30, 2009 – Pompano Beach, FL – Cash4Gold, America's #1 buyer of precious metals direct from the general public, has been invited to be considered for inclusion in the Top Private Companies list compiled annually by Florida Trend, a business publication in the state of Florida.
"We're honored to be contacted by Florida Trend about appearing on their list of Florida's top private companies," said Cash4Gold co-founder and CEO Jeff Aronson, one of America's leading experts in precious metals refining. "This is a great distinction for Cash4Gold, which has, in less than three years, become the largest buyer of gold directly from consumers in America. Despite these difficult economic times, we're proud to be growing as a company and employing more than 320 people in the great state of Florida. And in just a few weeks, we will be moving into a state-of-the art headquarters with a security system that will rival Fort Knox."
As a direct-to-consumer refinery, Cash4Gold is an important resource for people looking to monetize old jewelry or scrap gold that might not otherwise be delivering any benefit. Cash4Gold.com provides a private, satisfaction-guaranteed service that has helped hundreds of thousands of people by paying out millions of dollars for scrap gold.
Honors like this distinction are not new to Cash4Gold. Its predecessor and former parent company Albar Precious Metals was recognized twice by the prestigious Inc. magazine when it appeared on the "Inc. 500" list of fastest growing companies in both 2006 and 2007. Albar also appeared as part of Entrepreneur magazine's "Hot 500" in 2007.
Cash4Gold.com is proud to deliver unmatched customer service and stands behind its 100 percent customer satisfaction guarantee. In a typical week, Cash4Gold processes more than 15,000 packages from customers around the country. With close to 800,000 successfully completed transactions, Cash4Gold has clearly tapped into an unmet need, creating an avenue for millions of dollars to flow into the American economy.
Cash4Gold, which is located in Pompano Beach, Florida, has revolutionized the refining industry with innovations in logistics, marketing and customer service. Founder Jeff Aronson started Albar Precious Metals, Cash4Gold's parent company, in 2001. Cash4Gold was started by Aronson and President Howard Mofshin and was spun off from Albar in April, 2007. Earlier this year, Cash4Gold became the first direct response company to advertise on the Super Bowl. Its humorous spot, featuring Ed McMahon and MC Hammer, introduced millions of Americans to its popular service and was labeled a huge success by experts in the advertising industry. For more information, please visit Cash4Gold.com or call 1-877-GOLD590.
Florida Company Plans to Mint New Global Currency Featuring Likeness of Comedy Central’s Stephen Colbert
FOR IMMEDIATE RELEASE
Pompano Beach, FL – April 1, 2009 -- Cash4Gold, the nation's #1 buyer of precious metals direct from consumers, has unveiled an ambitious and self-serving plan to mint a new global currency known as The Colbert. The company hopes to present its proposal to Treasury Secretary Timothy Geithner this week.
The new golden coin features the likeness of bespectacled, multi-Emmy Award winning Comedy Central news personality Stephen Colbert on its face. The Colbert is minted at Cash4Gold’s Pompano Beach, FL headquarters using a proprietary gold-nickel-molybdenum alloy known as Truthinessium. It is inscribed "In God We Trust, Everyone Else Pays Cash."
"Stephen Colbert embodies a rare combination of publicity-hungry egomania and confidence-inspiring truthiness that makes him the perfect figurehead for the new global currency," said April Fulstay, Vice President of Comic Genius Relations, Cash4Gold.
Fox News' Bill O’Reilly, MSNBC’s Keith Olbermann, and PBS’ Jim Lehrer were each considered for the honor, but were passed over because the prototypes for their coins proved to be too volatile, brittle, and dull, respectively.
Cash4Gold.com is the #1 American buyer of precious metals including gold, silver and platinum from the general public, and one of the largest refiners of precious metals in the nation. Through an efficient and proprietary process, the company has revolutionized its industry with innovations in marketing, customer service, refining, and logistics. Hundreds of thousands of satisfied customers have received millions of dollars from Cash4Gold since its inception in 2007. Please visit www.Cash4Gold.com or call 1-877-GOLD590 for more information.
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Note to Editors: Cash4Gold executives are not really meeting with Treasury Secretary Geithner this week, nor is the company actually minting a new coin picturing Stephen Colbert. April Fool’s Day is upon us. Thank you for your interest in Cash4Gold. We’ve had our fun. Now let’s get back to work.
Monday, March 30, 2009
"RBC predicts 'significant volatility' in gold prices"
Author: Dorothy Kosich
Main Points: RBC Capital Markets is projecting an average price of $850 an ounce this year, $875 an ounce next year, and $900 an ounce long term. Given the price of gold has been hovering in the $900-$1,000 range this year, that means a correction is likely soon to be in order.
"As noted above, we expect significant volatility in the gold price, and we could see a trading range from $750/oz to $1,000/oz in 2009," RBC analysts said.
Analysis: In other words, this could be a good time to sell your gold since, at least according to RBC, the price isn't likely to get much higher.
Of course, RBC sees an average of $850 an ounce this year, but you'll also find other "experts" who project a high pushing $1,500 or even $2,000-plus an ounce.
"U.S. Markets Wrap: Stocks Drop Most in Three Weeks, Bonds Gain"
Author: Eric Martin
Main Points: Stock struggled, but the dollar climbed today on Wall Street. When the dollar climbs, the price of gold typically falls.
"The dollar strength has definitely weighed on gold," said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. "De-leveraging is hitting the market again. If stocks fail, we have the general specter of the next move down, and gold looks heavy."
Gold dropped $7.60 to finish at $917.70 an ounce.
Analysis: On Friday, we quoted an article on GoldPrice.org that projected a price approaching and potentially exceeding $3,000 an ounce. Of course, the one caveat was that if gold fell below $920 an ounce, all bets were off. Well, there you have it. Under $920 and GoldPrice is off the hook.
Cash4Gold started as a division of Albar Precious Metals. At that time, Cash4Gold founder Jeff Aronson was in the process of growing Albar into one of the most successful metal refineries in the nation, refining approximately 300,000 ounces of silver and 10,000 ounces of gold each week.
Over time, the public discovered how to use Cash4Gold to find value in their old gold. As a direct to consumer refinery, the company's success grew from the simplicity of its process. Cash4Gold customers package their gold items in the company's signature secure, insured and postage-paid envelope which is shipped to Cash4Gold's headquarters. Upon receipt, the company uses state-of-the-art methods to assess the value of the items in the package and promptly sends a check to the customer. If a customer is unsatisfied with the amount of the check, Cash4Gold returns the items in keeping with its 100% Customer Satisfaction Guarantee.
Eventually, Cash4Gold was spun off as a separate entity from Albar Precious Metals. As Cash4Gold became increasingly successful, Albar helped the new company to take the next step and Albar sold Cash4Gold the heavy machinery it needed to expand its operations and enjoy the benefits of being its own full service refinery.
With more than 700,000 successfully completed transactions, Cash4Gold is meeting the needs of hundreds of thousands of consumers thanks to the heavy machinery purchased from Albar Precious Metals.
Cash4Gold Founder Jeff Aronson started Albar Precious Metals, Cash4Gold's parent company, in 2001. In April, 2007, Aronson created Cash4Gold as a direct-to-consumer refinery and spun the company off from Albar. Today, Cash4Gold is headquartered in Florida and led by Jeff Aronson and President Howard Mofshin. Cash4Gold is one of the largest refiners of precious metals in the nation and it employs more than 350 people. Additionally, Cash4Gold is the most prolific purchaser of gold, silver and platinum from the general public. Cash4Gold is a fully-integrated company with a robust front-end customer service operation, as well as a marketing team and a back-end refinery. Cash4Gold's proprietary process has revolutionized refining with innovations in logistics, marketing and customer service. Since its inception, Cash4Gold has satisfied hundreds of thousands of customers by paying millions of dollars for their scrap gold. Cash4Gold has become known for its popular television and radio advertisements. For additional information about Cash4Gold, please visit Cash4Gold.com or call 1-877-GOLD590.
Friday, March 27, 2009
"Expect Significantly Higher Gold and Silver Prices Within 30 Days"
Author: Franklin Sanders
Main Points: Sanders urges investors to "keep on buying silver and gold," saying that once gold surpasses $1,000 an ounce it will rise rapidly.
"Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00..."
Analysis: Not a lot of detail here explaining WHY he expects gold to go so high, but it should be pointed out that his one caveat is that if gold falls below $920 an ounce then all bets are off.
"Silver and Gold"
Author: Eric Fry
Main Points: Here's another aggressive projection for gold.
"Dollar debasement will doubtless trigger inflation," says Byron King of Outstanding Investment. "Over time, this will cause a flight from paper currencies to gold. I've already predicted gold at $3,000 within 30 months. I've heard other gold analysts forecasting gold at $4,500 within three years. So there's a lot of room on the up-side."
Fry warns that there is plenty of unknown, and the price of gold may drop significantly before it rises.
Analysis: These aggressive projections seem to be rarer by the day, so it is surprising to find two in one day. The counter we've been hearing recently to a strong gold increase is the negative effect of a down economy on the gold jewelry industry.
"Gold Futures, Crude Oil Pull Back"
Author: Chris Nichols
Main Points: Gold fell $19 an ounce today to $923.20. Commodities in general had a rough day as the dollar rose against the Euro and Pound.
Analysis: Somewhat ironic that gold fell so close to $923.20, and the first article we covered today with an aggressive projection indicates such a rosy future may not happen if the price of gold falls below $920. Oh, so close.
Thursday, March 26, 2009
"Goldman Sachs: Gold prices to stay above $900"
Author: Tom Stundza
Main Points: After holding a $913 an ounce average during the first quarter, Goldman Sachs projects that gold will have a $930 an ounce average during the next two quarters and $950 in the final quarter.
"Should real interest rates move lower or buying by gold ETFs continue at its current torrid pace, however, the upside risk to prices would be significant," says a note from Goldman Sachs analysts to clients. Gold prices typically go up as a result of decreased real interest rates because it slows the rate of gold mine production.
Analysis: We continue to see more modest projections lately, particularly from the larger institutions like Goldman Sachs. As we investigated yesterday, though the weak economy helps gold on one hand, it also limits it because of the negative impact to the retail jewelry industry.
"Gold, other commodities up on renewed buying power"
Author: The Associated Press
Main Points: Following a few days market drops, gold for April delivery rose a modest $4.20 to $942.20 today. Stocks also rose.
Gold took a minor hit recently as there was renewed optimism on Wall Street. However, that doesn't mean investors are ready to abandon gold.
"The general view is 'Yeah, stock markets are looking good now, at least temporarily, but I'm also concerned about the economy in general,'" said Carlos Sanchez of CPM Group. "So everyone is perhaps going a little bit into everything, some stocks, some gold, some cash."
Analysis: We have and will continue to see modest gains and losses for gold in the coming weeks, but given there is no magic pill for the economy you can expect the gold metal to retain its strength for the foreseeable future.
Wednesday, March 25, 2009
"Gold prices advance as investors buy on recent dip"
Author: The Associated Press
Main Points: After dropping two percent the past two days, gold for April delivery rose $12 to $938 an ounce today. The drop occurred when investors became more confident in riskier investments, but that doesn't mean they are abandoning gold.
"As much as things look better than they have over the past several weeks, that does not mean we're out of this recession yet," said David Meger, director of metals trading at Alaron. "And based on this premise, there is room for gold in people's portfolios."
Analysis: The increase today came largely as an adjustment as gold had previously dropped while being temporarily ignored. As Meger explains, the days of buying gold as a safe haven investment are far from over.
"Gold Price May Top Record on 21% Investor-Demand Rise, CPM Says "
Author: Millie Munshi
Main Points: In 2008, investor demand for gold increased 21%, a current record. However, research CPM expects that record to be quickly broken this year. They expect demand to rise from 43.3 million ounces in 2008 to 52.3 million ounces this year. That rise borders the record set last year.
Analysis: As has been documented before, supply needs to keep up with the increased demand. Old mines are closing and international banks are holding tight to their gold.
"Why The Gold Price Is Not Yet Soaring"
Author: Tim Iacono
Main Points: While gold has done relatively well of late, it is a bit surprising that its price remains in the mid $900s per ounce given the current environment. The country is embroiled in a financial crisis -- typically favors the price of gold. Recently, the Fed announced that it will buy print more money -- also favorable for the price of gold. So why is it still below the record set last year?
Among other explanations, one theory is that the increased demand for gold as an investment can't offset the evaporated demand for jewelry. During tough times, people buy less jewelry and will be less willing to spend lavishly on their gold items. Therefore, gold overall is relatively flat.
Analysis: We've covered this gently in the past, but it may help explain why many have conservative projections for gold. While inflation or deflation will help the price of gold, further difficulties with the economy will not help. They balance out, which partly explains why gold is such a stable investment. By definition, gold won't lose significant value, but counter forces keep it from rising swiftly as well.
Tuesday, March 24, 2009
"Gold looks good for years to come"
Author: Peter Koven
Main Points: As pointed out recently on this blog, experts who view the short and long term value of gold favorably currently outnumber those who think the price has peaked. Another example of such experts is J.P. Morgan analyst Steve Shepherd.
Driven largely by tough economic times, Shepherd points to gold as a safe haven investment. "We expect increased investment demand to make up for any losses from traditional jewellery markets in India, China and the Middle East to underpin gold prices," he said.
Two of the key factors for the demand in gold are declining mine production and central bank sales.
Analysis: The latter two factors were also pointed out in the Merrill-Lynch report from a couple of weeks back. Mines are aging and closing and banks are holding onto their gold. Since gold cannot be printed like cash, it can drop in supply -- thus raising the demand.
"Gold prices fall on move out of safe-haven assets"
Author: The Associated Press
Main Points: Gold for April delivery dropped $28.70 to $923.80 on Tuesday. This follows a huge rally for riskier investments on Wall Street, that results in a pull-out from the safe haven investments like gold. Wall Street took a modest hit today, but due to the fact that gold closes two hours early, a further adjustment to its price resulted today.
Analysis: Not surprisingly, the value of the dollar and price of oil have increased of late -- two factors that often behave in an inverse relationship. After rising nearly 8% last Thursday, gold has given back nearly half of its gain.
Monday, March 23, 2009
"Wall Street rally cramps demand for gold"
Author: Sara Lepro
Main Points: Following the Fed's decision to buy up bad mortgage debt, investors were willing to take on more risk today. The result is that gold, otherwise steady, dropped $3.70 to $952.50.
Analysis: This is a common theme. When investors get shaky, they turn to gold as a safe haven. When they get bold, they turn to higher risk/higher reward investments and move past gold.
"Does the gold price have further to rise?"
Author: MoneyhighStreet Staff
Main Points: Barclays Stockbrokers polled investors in early March for their appetite for investments and found that one third expected the price of gold to rise while another 20% expect gold to maintain its value. Of course, another third believes that the price of gold has hit its peak.
Analysis: On one hand, this means that more than 50% of investors believe it's a good time to buy gold. On the other, it shows just how uncertain investors are about the immediate future of the precious metal. We've reported several conflicting projections over the past few weeks, and it's becoming increasingly clear that no one is particularly sure what is going to happen.
Since then, several blogs have taken the original 2008 blog and attempted to spin it into a new story.
It used to be that when an anonymous person made false, defamatory and vicious claims, it was dismissed as a poison pen letter. Now that passes for discourse on the web. Almost every single claim that posting makes is false and malicious.
With that in mind, it is also important to take all accusations seriously, address them accurately, and ensure that the public is aware of the facts.
Let's take these one by one.
Claim: "1. The 'refiner's pack' that is used for you to put your jewelry is 'insured for UP TO 100 dollars,' according to how much they determine from a description from you, the worth of your items to be, NOT an actual fully researched appraisal."
The Truth: This is correct. Cash4Gold is not able to make an accurate appraisal until the material has been shipped and examined. The customers are encouraged to purchase more insurance at the post office if they feel their gold is worth more than $100.
Claim: "2. We receive your 'Refiner's Pack' within 3-4 days, BUT we are instructed to tell you that it takes '7-10 business days', for us to receive your pack, ALTHOUGH many times, your package has already arrived."
The Truth: At no time would a Cash4Gold customer service representative tell a customer that their pack had not yet arrived if it was in stock. It is common for any business to allow for 7-10 business days for shipping to set expectations. Of course, any package may and should arrive prior to that, and if a customer called about such a received package prior to the expiration of that 7-10 days, the rep would have record of that package that they would share with the customer.
Claim: "3. Your jewelry gets appraised by hand, a magnifying glass, a plastic container, a small weight pad, and a bottle of ORANGISH fluid, which your items are then determined a value for. Not million dollar equipment or specially trained jewelry experts. The company was temporarily closed recently due to health and code violations. I have witness testers being transported to Medical Centers, due to the testing department environment. There is literally a cloud of smoke in the air from acid and other testing material..."
The Truth: This is entirely false. The refinery and testing facility are A rated by OSHA for being a safe environment. All employees in these facilities are dressed in scrubs, the environment is clean and sterile, and the equipment is indeed state of the art. In the interests of full disclosure, an article will follow taking prospective customers on a virtual tour of these facilities.
Cash4Gold appraisers use three testing methods to verify the gold content of your material. A blog entry was recently written which describes this process in detail.
Claim: "4. Although the payment (check) for your item is dated within 24 hrs of testing your jewelry, we SOMETIMES DO NOT actually send out the check until up to 3-4 days later..."
The Truth: All checks are dated the day they are sent out. An audit was done and all 10 day periods began on the date the checks were sent. All of them. 100%.
Claim: "5. We do offer a 100% Satisfaction Guarantee or your jewelry returned, BUT THE CATCH IS, that the guarantee is to contact us within 10 DAYS from when your check is DATED. (This begins with the time it took for the accounts payables dept. to ISSUE the check and also including the TRANSIT TIME for you to receive your check in the mail... If you request (sign) for FAST CASH (direct deposit) you automatically WAIVE your rights to have your items returned, EVEN if you are not satisfied with amount of your deposit."
The Truth: Two items to address here. The 10 days does begin the day that the check is sent out. However, by law Cash4Gold must provide up to 12 days. The 10 days is indicated to encourage customers to have it taken care of quickly, but the 12 days is recognized. It should also be noted that the 12-day period stops once a customer contacts Cash4Gold, requesting that their material be returned. Their material is then held until the check is received back from the customer.
It is true that a customer waives the return policy if they select the FastCash method. However, this is clear on the FastCash promotional page. There is no fine print, it isn't at the bottom of the page, and it isn't hidden in a legal document. It clearly indicates in the middle of the promo: "**By using the Cash4Gold FastCash program, you agree that you waive the 10-day return policy for all material." Additionally, customers must submit a blank check and sign a form that clearly states that they are waiving this return policy. The customer signs up for this option because time is of the essence to them.
Claim: "6. You generally receive your check around the '7th-10th' business day, AND majority of the time Customers are outraged when they lay eyes on the amount of their check. Some Customer's even receive a check for 0.01 cents."
The Truth: As stated in the response to #5, the 10 day (which is actually 12) period begins on the day the check is sent. Mail can take up to 7-10 days for delivery, but in most cases it is much less. Even if the mail were to take 7-10 days, the customer has a full 12 days to contact Cash4Gold to ask for their material to be returned.
Regarding the amount of payment received, it all depends on what is sent. Cash4Gold receives many items that are of little or no value -- whether known or unknown to the customer. Additionally, the only value to Cash4Gold is in the material's gold content. Since the company is a full service refinery, the material is melted down -- craftsmanship does not add value.
In an effort to educate the consumer, a blog entry was written explaining some of the misconceptions about the appraisal process. Some consumers have been misinformed about the true value of their jewelry.
If a customer is unhappy with their check, they have every right to ask for their material back. They can request by phone or e-mail. More than 93% of customers accept the check.
Claim: "7. There have been times when we have received your package and MISPLACED or LOST it at the facility. We CLAIM to not have received the items and even try to convince you that it was lost in the hands of USPS..."
The Truth: Cash4Gold has established a high tech tracking program to follow all received packages. While packages do get lost in the mail, it would be extremely rare. At no point would a Cash4Gold employee claim that a package was lost in the mail if it was known to be in the facility.
Claim: "8. ...We issue low checks just to have you call us back if you are smart enough to realize that you just got scammed. For the smart one's we are paid to offer u a bonus up to 3x the original amount of your check and you accept. For ex: Sally Smith receives a check for $27.86... Now Sally Smith calls the cust srvc dept... and offer you a total amount of $53.20 which is a little under double the amount of your original check; in which case if you accept, the cust srvc rep makes a 15.00 bonus off of your transaction. If the customer service rep offers you under triple the amount of your orig check, he/she makes 10.oo in bonuses.
The Truth: Cash4Gold customer service representatives have received bonuses, but they are based on the number of calls, abandon rate and customer satisfaction.
Claim: "9. If you accept the offer, the deal is done, and you are told that the call is recorded (which most of the time, the record button does not work, or the box if full.)..."
The Truth: This is not true. All phone calls are recorded.
Claim: "10. If you only want the items that we do not find of any value back, you have to pay 10.00 shipping and handling fee to have your own items returned, which varies. Although it is listed under the terms and conditions, this charge varies from a 10.00-15.00 charge to NO charge, reason being, UNSURE."
The Truth: While Cash4Gold did charge for returns at one point, most returns are now done at no cost to the customer. Of course, given the range of material that may be returned, the company does reserve the right to charge if necessary.
In Conclusion: While the company is open to suggestions on improving its service, the accusations lobbed in the anonymous posting are false and defamatory and should be removed immediately from any site that has chosen to post them.
Friday, March 20, 2009
"Gold Falls in New York as Dollar Rebounds; Silver Advances "
Author: Pham-Duy Nguyen
Main Points: The dollar rose today for the first time in nine sessions. As has generally been the case until this year, gold took an opposite turn. It is expected that the inverse correlation will become more commonplace once again when the Fed follows through on its promise of buying up bad debt.
"The dollar has always been one of the most important drivers for the gold market," said Frank Lesh, a trader at FuturePath Trading LLC. "The dollar is oversold. If the dollar comes under pressure next week, gold can climb to $1,000 an ounce."
The price of gold hardly took a "dive," falling a mere $2.60 to $956.20.
Analysis: Considering the astronomical leap a day ago, a minor correction shouldn't be considered much of a surprise. A rise back to $1,000 in the near future is a distinct possibility.
"Barclays lifts 2009 gold price view to $940/oz"
Author: Jan Harvey
Main Points: Barclays Capital increased it's projected average gold price for 2009 to $940 an ounce from $920. The change is driven by fears of inflation and a further weakening dollar.
"Plans for further quantitative easing by the United States has seen the dollar nosedive," the bank said in a note. "In that environment, gold will shine, and we have revised our price forecast higher."
Analysis: This is in line with another recent conservative projection alteration by Citigroup. Given that the price of gold is currently hovering around $950 and economic conditions are expected to decline (thus favoring the price of gold), wouldn't a more aggressive stance make sense?
"A gold bubble may well be coming our way"
Author: Martin Hutchinson
Main Points: The record price of gold occurred in 1980. At $875, the price would actually be closer to $2,300 in today's dollars. That price was driven largely by inflation -- a slow inflation during the 1970s.
However, today's prospects for inflation are different -- expectations are that it will occur quickly, not gradually.
"Including the Fed’s March 18 announcement of further monetary stimulus, monetary and fiscal policies in the US and globally are far more inflationary than in the 1970s. Consequently, there’s a real threat that if inflation returns, it will do so violently."
Analysis: Potentially good for the price of gold, bad for the dollar. This article also attempts to debunk the notion we've previously visited about gold having "irrational" value -- the value is real, particularly as a hedge.
Stai appeared on ESPN First Take to talk about the happy reunion with his ring. You can view the video here.
As Cash4Gold pointed out repeatedly to Good Morning America, the company has serious concerns about how the show conducted its price comparisons (i.e. sending different goods to different outlets as opposed to the same jewelry, comparing prices that might be offered by a pawn shop or jewelry store v.s. a mail-in refiner, etc.)
As part of Cash4Gold’s ongoing effort to educate consumers, this very blog has addressed the question of appraisals. We have pointed out that appraisals of jewelry are different from melt value, and that appraisals often have a dubious relationship to the real market value of goods that consumers can expect from gold-buying companies.
The most important aspect of the Good Morning America story is that it clearly illustrated that consumers have a choice in the market place. As CEO Jeff Aronson pointed out, Cash4Gold provides consumers with the unique opportunity to utilize the top-notch service that makes Cash4Gold the leader in its industry.
For consumers who want secure, fast, convenient, simple and confidential transactions, Cash4Gold is an excellent option, as evidenced by the nearly 800,000 transactions that the company has already conducted.
Cash4Gold continues to pride itself on its tireless commitment to customer service excellence, and it stands by its 100 percent satisfaction guarantee. Ninety-three percent of its customers accept Cash4Gold’s offers, but everyone has the option of turning them down and having their goods returned to them.
Thursday, March 19, 2009
"Commodities Jump on Inflation Concerns; Silver, Gold, Oil Surge"
Author: Millie Munshi
Main Points: The Federal Reserve's announcement that it may buy more than $1 Trillion in mortgage debt increased inflation concerns. The result: Commodities surged as a hedge against inflation.
Frank McGhee, the head dealer at Integrated Brokerage Services LLC, projects a bright future for gold and other precious metals as a result of the Fed's move. "We’ve got a massive increase in the Fed’s balance sheet, and the markets are taking it to be both inflationary and as devaluing the dollar," he said. "This reinforces the potential for hyperinflation, which would drive commodity prices higher."
So how far did gold rise? As of 12:55 pm ET, gold for April delivery was up $66.50, or 7.5%, to $955.60. This is the biggest jump since September.
Analysis: As reported yesterday, the price of gold dropped below $900 yesterday, but after hours trading indicated an expected rising price today. That clearly played out, and then some.
These are somewhat expected actions from the Fed, and it's an apparent consensus that inflation and/or a further declining economy are in the near future -- at least this year. This is an environment that greatly benefits the value of gold. This is why it is perplexing that there remain some considerably conservative projections on gold -- including the $900 average for 2009 (which was increased) that was reported yesterday.
Wednesday, March 18, 2009
"Citigroup Increases Gold Price Forecast on Investment Demand"
Author: Glenys Sim
Main Points: Expecting that the government stimulus will result in inflation (favorable for gold), Citigroup increased their projected average price of gold for 2009 to $856 an ounce, up from their original $825 projection. They also increased their 2010 projected average to $925, up from $900.
Analysis: This is rather safe and conservative compared to many more favorable projections. Given gold is already hovering above $900 and projections have been for further declining economic conditions, the numbers would seem a bit low. It would seem they are suggesting that at some time between now and deflation gold will take a dive.
"Is Gold Really the Safest Investment?"
Author: Ari J. Officer
Main Points: Time covers some of the common themes we've seen about why when gold has value, but they also take a different approach by questioning if the fact gold has value is even rational.
"At such high prices, gold ceases to have much practical use. There is no theoretical rationale why anyone should even want to invest in it. Gold has value only because we believe it is valuable. It is a collective hallucination."
Interestingly, the article then goes on to explain why gold has tread water of late and hasn't gone up further than it has. It is holding value, and because of that investors are selling it to cover other losses.
Analysis: Interesting point about the idea that gold has value is a hallucination. And true. But the perception that gold has value isn't going away. If it did, currency would collapse completely.
"Gold prices tumble as stocks extend rally"
Author: Associated Press
Main Points: Gold took a big hit today, falling $27.70 to $889.90 an ounce. This is the lowest gold prices have been since the end of January, although there are reports that prices were rising in after hours trading.
News that the Federal Reserve plans to buy long-term Treasurys helped continue the rally on stocks. Demand for gold has suffered as a result of growing optimism with the economy, encouraging investors to take more risks and move money out of safe havens like gold.
Analysis: The last time gold dropped below $900, it was a brief stay. It's interesting how the $900 and $1,000 barriers act as both an attractive and repellent force. Once gold starts rising, it's drawn to $1,000 -- but quickly falls once it breaks the number. Same for when it drops below $900. We'll see if that trend continues, but early reports make it seem as though gold will rally on Thursday.
Tuesday, March 17, 2009
"Gold the Only Credible Currency"
Author: Kishori Krishnan
Main Points: BGF Equities analyst Warwick Grigor credits the rising gold price to the failure of other currencies. He claims that the US dollar is overpriced and confidence in other currencies is low. "The only alternative currency is gold; that is why we are seeing the gold price rising. Gold is the only credible currency right now."
On the other hand, "Gloom, Boom & Doom" author Marc Faber sees a scenario where gold could soon test the $700 an ounce mark. Although US markets have rallied, he expects a collapse by the year's end. "We went down following March 2008 peak from over $ 1,000 per ounce to less than $700 per ounce, and now we bounce back and will have a lot of volatility. Gold is relatively expensive compared to industrial commodities."
Analysis: Faber's calling card is doom and gloom, so take his comments with a grain of salt. Although trends are not entirely reliable during this financial crisis, it's interesting that he predicts a market collapse in concurrence with the drop of the gold price -- which goes against the theory of most analysts that gold will rise as the economy suffers.
"Commodities: Crude Oil Higher, Gold Slips"
Author: Chris Nichols
Main Points: The price of gold dropped a dollar to $915.80 an ounce, while oil rose $1.77. Gold has typically had an inverse relationship to oil, the dollar, and economic confidence in general.
Analysis: For the most part, gold was flat today, and has been recently. Gold rose to $910.70 last Wednesday after falling below $900 an ounce, and has spent the past week navigating around the current figure.
Monday, March 16, 2009
"The Trends Favor Gold"
Author: Lawrence Roulston
Main Points: Roulston sites several factors that favor the long-term value of gold: 1) Safe haven investment in gold has created a physical shortage; 2) for the first time in almost thirty years, is looked upon favorably, yet the price is not yet indicative; historical refusal of international banks to sell their gold and thus limiting the market may soon change; gold mines are aging, closing, and thus limiting the supply.
Analysis: So what does this all mean? We'll let Roulston answer that: "There are many reasons to believe the gold price will go higher, perhaps a lot higher. But, not necessarily right away. In fact, gold has a nasty habit of dropping back after it makes a big move. Shareholders of [mining] companies that find new deposits will be richly rewarded."
"Gold prices clipped by early advance on Street"
Author: Associated Press
Main Points: Following Federal Reserve Chairman Ben Bernanke's comments that the recession may end in 2009, causing a surge on Wall Street generally, energy and agricultural futures specifically.
"Bernanke's words that the economy could improve by later this year were particularly reassuring to investors who have been sending the price of grains and other commodities down on the fear that demand for basic materials will wither as the recession deepens."
Gold, however, is different. The less comfortable investors are, the higher the price goes. Gold for April delivery fell $8.10 to $922 an ounce on Monday.
Analysis: The early gains on the market were overcome by a slight loss by the end of the day, but there wasn't enough concern to benefit gold. What is interesting is that the dollar weakened -- typically, gold and the dollar have had an inverse relationship.
Friday, March 13, 2009
"New Gold Rush"
Author: Carol Costello (video)
Main Points: A couple of Cash4Gold commercials launch this CNN story about the increased popularity of selling gold -- and the resultant rise of the gold buying market. It's an interesting review of why people use the services, what people are selling, and how the business works.
Analysis: Times are tough, which creates a need for gold buyers. People are selling broken and unwanted jewelry and other gold items because they can get money -- and sometimes a substantial amount -- for something they no longer use to help pay for the bills. One of the items this story discussed was gold teeth. These were popular in the '80s, and now people are having them removed to get paid for the gold.
"Gold firm on currency fears, rising demand"
Author: Frank Tang and Paul Lauener
Main Points: Gold futures for April delivery rose $6.10 to finish at $930.10 on Friday on the heels of a weaker dollar. The US dollar fell to a 2 1/2 week low against the Euro.
Concerns about impending inflation also seemed to drive the price of gold. "Gold can go over $1,000 when we start getting inflation, which is going to be inevitable here," said Zachary Oxman, senior trader at Wisdom Financial.
Analysis: It was interesting how gold's rise a few weeks ago stopped once it eclipsed $1,000 an ounce; then, following a consistent downward trend, gold rebounded after briefly dropping below $900 an ounce. While the price of gold was slightly down overall for the week, things have seemed to balanced out for the time being.
"World mints report soaring demand for gold coins"
Author: Jan Harvey, Frank Tang, James Macharia, Cameron French, Adrian Bathgate, Gus Trompiz
Main Points: Gold's appeal isn't only reflected on Wall Street, but in booming business in the minting industry. Demand for gold coins has soared along with the spot price.
The Royal Canadian Mint says it quadrupled its production capacity late last year. The US Mint said sales of its American Eagle gold coins jumped to 710,000 ounces in 2008 from 140,000 in 2007. The French Mint says that sales doubled in 2008 and are expected to rise another 50% this year.
Analysis: The gold dynamic -- opposites, depending upon the industry -- is interesting. Gold as an investment or collectible continues to be appealing. On the flip side, jewelery retailers and manufacturers are struggling as the demand for their product during tough economic times has dropped.
Thursday, March 12, 2009
"Gold Rises for Second Day on Demand for Haven; Silver Climbs "
Author: Pham-Duy Nguyen
Main Points: Gold for April delivery rose $13.30 to $924 today, a day after rising 1.7%. Despite the rebound, some experts expect the recession to harm the value of gold.
"The reality is that the combination of high prices and the effects of the credit crunch encourages people to sell precious items they already own," said Jon Nadler, an analyst at Kitco Inc. in Montreal.
Analysis: Exactly. It's supply and demand. During these difficult times, those owning gold are more likely to sell in order to hit margins. Just as ordinary Americans hoping to pay their bills are sending in their unwanted jewelry to Cash4Gold.
And more evidence that no one is all that sure about the future of the price of gold:
"Newmont CEO sees gold in range of $1,200"
Author: Steve James
Main Points: Richard O'Brien told Reuters that he expects gold trading to remain in a range between $900 and $1,200 per ounce over the next few years.
"I will be surprised to see gold on average below $900 this year," O'Brien said. "If you take the highest gold price in the 80's and escalate it into today's dollars, you get a number around $2,000 an ounce.
"I don't see that particular number as being out there, but there is clearly upward mobility...and I do think we're in a trading range of $900 to $1,100 or $1,200 over the next several years."
"Numis increases 2009 Gold Price forecast - Thursday 12th March 2009"
Main Points: Numis Securities raised its 2009 gold forecast from $700 to $900.
According to Numis: "The massive global monetary and fiscal stimuli, including US and UK quantitative easing, may result in a shift from a potentially deflationary environment to an inflationary one."
Analysis: I list these together to emphasize that there is far from a consensus when it comes to the future price of gold. We have also seen others project $1,500 or even $2,000 in the coming years.
Granted, O'Brien isn't exactly unbiased as a mining CEO to make an aggressive projection, but the numbers are across the board. I also find it interesting that Numis would change their 2009 projection after two months of trading.
Wednesday, March 11, 2009
"Gold Futures Rebound in N.Y. on Dollar’s Decline; Silver Gains "
Author: Pham-Duy Nguyen
Main Points: Following a drop below $900 an ounce on Tuesday, gold futures for April delivery rebounded on Wednesday, rising $14.80 to $910.70.
Coincidentally (or not, depending on your theories), the dollar fell. Historically, it's been widely believed the two have an inverse relationship, although that has not held as of late.
Analysis: No doubt about it, gold is volatile right now, likely reflected the daily shift in perception of the economy. Things look rough, the value of gold rises. Investors begin to gain some confidence, and they shift to riskier investments.
Consumers could take the volatility as a time to sell their gold to Cash4Gold. There is little guarantee that gold will again eclipse the $1,000 mark, and while it's speculated that the economy will continue to decline (thus helping the price of gold), there is an awful lot of unknown at this point.
Tuesday, March 10, 2009
"Gold Futures End Below $900 an ounce"
Author: Polya Lesova
Main Points: It's a short article, so I'll just quote the whole thing.
"Gold futures ended below $900 an ounce Tuesday, as a rally on Wall Street reduced the metal's appeal as a safe haven. Gold for April delivery dropped $22.10 to end at $895.90 an ounce on the New York Mercantile Exchange. Earlier, the benchmark contract hit an intraday low of $893.50 an ounce."
Analysis: Today's activity supports the theory that gold is most successful when things are their darkest. There was a glimmer of hope today in the stock market when Citigroup announced it has been operating at a profit thus far this year. Due to that good news, investors were more willing to dive back into the stock market.
"Fund managers, CEOs forecast higher gold"
Author: Frank Tang
Main Points: Fund managers and top mining executives expect gold prices to remain volatile for the short term, but forecast growth over the long term.
"I think that gold as an attractive asset class is continuing to grow, and that is evidenced by the strong inflow to the ETF market," said Aaron Regent, CEO of Barrick Gold.
Nick Holland, CEO of Gold Fields, called it a "distinct possibility" that the price of gold could eclipse the $1,000 mark once again within the next couple of months, assuming the financial conditions continue to worsen.
Fund managers, on the other hand, view the short term as very volatile, but with longer term payoff. Frank Holmes, CEO of US Global Investors, forecasts "$100 of risk on the downside for bullion, and about $300 on the upside over the next six months. That is the risk-reward ratio that I am looking at."
Analysis: It's up, it's down, it's all around. Every day, we read strong long-term forecasts for gold in conjunction with dropping prices. Some of the more aggressively optimistic predictions, however, seem to be dwindling. Even so, there appears to be agreement that while the price of gold has been shaky of late, clearer skies are ahead -- if not for the economy.
Monday, March 9, 2009
"Ex-Steeler Brenden Stai recovers AFC title ring"
Author: Robert Dvorcha
Website: Pittsburgh Post-Gazette
Main Points: Former Pittsburgh Steelers guard Brenden Stai thought his AFC Championship ring was gone. He earned the ring as a rookie on that Super Bowl XXX Steelers team, and last saw it in 2000 shortly after being traded to the Jacksonville Jaguars.
The ring, valued at about $3,000, was being used by a criminal looking to impersonate the NFL player, and has since been on a police stolen properties list.
Amazingly, that ring showed up at Cash4Gold, and thanks to an alert screener it is now headed back to Stai. The screener alerted a supervisor, who then contacted local police.
"We handle two million individual pieces a week, but this shows you the level of security we use," said Jeff Aronson, Cash4Gold CEO. "I can only imagine the thrill of being a rookie and getting a ring only to have it stolen from you. It had to have been gut wrenching."
Authorities are currently investigating the person who sent the ring to Cash4Gold, but this is yet another happy ending to a potentially devious act.
"To be able to return it to him thrills me," Aronson said. "He's getting his ring back. He's getting those memories back."
Analysis: Cash4Gold takes unprecedented steps to insure a secure transaction. Armed guards, security cameras, a secure vault, and constant documentation of contents are just a few examples of the on-site security. Additionally, Florida residents who send in jewelry are required to provide a thumb print before payment is submitted -- a security step that no competitor takes.
"Gold may hit $2,000 if dollar falls: Schroders"
Author: Joseph Chaney
Main Points: According to Christopher Wyke of Schroders, government spending could drive metals prices up during the current year. In fact, if the dollar falls you can expect gold to reach $2,000 an ounce.
"If you saw the dollar resume its fall and maybe toward the end of this year you started seeing people worried about the inflationary consequences of U.S. government policies, then gold prices could move up very sharply," Wyke said.
"In the next 12 months, if that were to happen and the dollar were to fall, a gold price of $2,000 an ounce is quite likely."
Analysis: This is also the same expert who last year predicted that gold could rise to $5,000 an ounce, so he has tempered his enthusiasm for the metal. Regardless, he's bullish on gold for the current year.
"Gold Falls, Halts 2-Day Rally as Demand Wanes; Silver Declines"
Author: By Pham-Duy Nguyen
Main Points: After a two day rally, gold futures for April delivery fell $24.70 to $918 on the New York Mercantile Exchange's Comex division. This follows a rather volatile few weeks that started with surpassing $1,000 per ounce before falling for eight straight sessions.
While the price of gold does benefit from a weak dollar, a low demand for jewelry during tough economic times also weighs in the opposite direction on gold.
Analysis: This encapsulates the question mark behind the future price of gold. While history says that inflation, deflation, and a weak dollar all help drive up the cost of gold, we are also in lightly chartered waters when it comes to the economy. It is important to consider the importance of the retail buyer when considering the path of the price of gold.
Friday, March 6, 2009
According to MarketWatch.com, reports that the U.S. unemployment rate rose to a 25 year high in February helped drive up the price of gold. Gold for April delivery was up $14.90 to $942.70 an ounce, ending the week almost flat after a rough start.
The report highlighted the high level of security in the building. Employees are subject to a security wand as they enter and exit the building and are under the careful watch of guards and cameras as they work.
The Nightline crew provided an overview of the process from the packet's arrival at the company to payment of the check: Photographing, analyzing, weighing and then the payment of the check. Customers who don't like their offers have 12 days to call Cash4Gold to ask for their goods to be returned.
Nightline also did an excellent job of explaining why a few customers may have had unrealistic expectations for payout (the company has conducted more than 700,000 transactions and 93.6% of all customers have accepted their checks). Cash4Gold, after all, is not the same as a pawn shop. Customers are paid for the metal only and not the craftsmanship since the gold is melted down and sold to various manufacturers.
"To me," said Cash4Gold CEO Jeff Aronson, "whether gold is an ugly, broken earring or a pretty charm, it's still the same piece of gold." Some customers may feel their jewelry should be worth more because of sentimental value or because they were overcharged when they made the initial purchase.
The Nightline segment highlighted this provlem with its interview of a woman who had filed a complaint with the Better Business Bureau. The woman said she had sent a chain, her class ring and a pendant to Cash4Gold and received $5 for it. "I was hoping I would get close to what I paid for it." Cash4Gold assessed the ring and determined it had no gold content at all, but the woman refused to accept that explanation.
As Jerry Ehrenwald, CEO of the International Gemological Institute, put it: "The sentimental value is really owned by the person that has that sentiment." Cash4Gold goes to great lengths to educate ist customers, urging them to consider all options before selling their jewelry.
CEO Aronson has always said Cash4Gold isn't for everyone. "If a jeweler can resell it, he's going to give you more money." But as the Nightline segment shows, Cash4Gold is a great option for those looking for a fast, secure, professional service. "We are a tremendous service business," Aronson said. "And that's what we pride ourselves on."
Thursday, March 5, 2009
The report projects the average spot price to $1,000/oz for 2009 and $1,050/oz for 2010. While that may be a modest projection from the current 900s, their view is that gold prices have the potential to hit $1,500/oz – and potentially more – over a three year period. The report outlines a three stage scenario that would lead gold to that $1,500 Promised Land focused on risk, currency and a recovery of energy prices.
During a time dominated by credit risk in the investment markets, gold is free of credit risk. Because of this, gold becomes a very attractive investment during crisis. We are in the midst of the first stage.
The price of gold would benefit from currency weakness in the second stage. Weak currency leads to inflation, which drives up demand for gold.
The third stage is a recovery in energy prices. The bank bailouts in the US could result in inflation, thus pushing up the price of oil. The report details that "the combination of higher cost of money and higher input cost inflation could force oil back up to $150/bbl. As we expect gold to maintain its long-run relationship with other commodities, gold prices could well push higher to $1500/oz."
These experts are predicting an average spot price of $1,000 this year, $1,050 for 2010, and as much as – if not more than – $1,050 within the next three years. So what could go wrong for gold investors? The upside of gold would be limited if the dollar does not depreciate as expected in stage two. Likewise, "should the world economy revert to a period of peace, prosperity and price stability, gold prices could suffer." That's a "doomsday" scenario we'd all gladly accept.
"Gold Rises, Halts Eight-Session Slump, as Stocks Fall; Silver Gains"
Author: Pham-Duy Nguyen
Main Points: Some investors purchased gold as an alternative to slumping stocks today, thus driving up the price of gold for the first time in nine sessions. "As equities continue to liquidate, we can see safe-haven buying in gold," said Tom Pawlicki, an analyst at MF Global Ltd. in Chicago. Gold for April delivery rose to $927.80, up $21.20 since Wednesday close. While gold has slumped since briefly eclipsing $1,000 per ounce, it has still risen a total of 4.9 percent this year.
Why are investors buying gold? Jeffrey Christian, a managing director for CPM Group in New York, says that they "are buying gold due to financial market fears."
It's not only that investors are buying it, but experts recommend it. Analysts at Jeffries Group Inc. say that "we continue to think investors should own gold as a hedge against the increased riskiness of other assets."
Analysis: After a brief rise yesterday, gold again struggled to close the day. That close appeared to be "rock bottom," or at least for now -- in line with what some experts were projecting. Gold is looked upon favorably during these times – particularly in a long term view – but it will be interesting to see if the price continues to rise tomorrow after such an impressive one day jump.
Wednesday, March 4, 2009
"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."
Analysis: 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. Goldprice.org
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.
Tuesday, March 3, 2009
"Gold Fever Strikes During Hard Times"
Author: The Economist
Main Points: As Adrian Ash at BullionVault puts it, "Gold is something you buy if you have something to lose." Indeed. During difficult times, people keep their faith in gold. Despite a seven day downward trend, gold has still plenty of upside. "Gold bugs talk excitedly about it reaching $2,300, which would match the January 1980 peak in real terms." Why the optimism during the tumble? It comes down to supply and demand – there is a limited supply of gold and plenty of buyers. "If gold is burnished by grim news, it seems likely to become still more alluring."
Analysis: Such commentary reiterates that gold is a long-term investment that is not defined by short spikes. The recent drop in the price of gold may simply attract more attention to it in the coming weeks. Only time will tell.
"Wanted: Someone who thinks the gold price is going to fall"
Author: Paul Farrow
Main Points: Though prices have dropped of late, Farrow points out that there are reports of gold coin shortages around the world during difficult economic times, creating a surge in demand. The typical trend is for gold prices to rise early and then fall back, though these are not typical times. There have been signs of de-hedging, which Farrow says suggests the price of gold has room to grow. When writing this article, Farrow interviewed several analysts, looking for an expert who isn't bullish on gold. They couldn't find one.
Analysis: A couple of keys here: 1) Supply and demand, and 2) expert analysis. Gold tends to go up during tough economic times because it is a "safe haven," but you don't think about the fact that it also creates a shortage of the precious metal. Despite a daily drop in price during the past week, market experts continue to have a long-term outlook. Overall, there does seem to be some hint of "uncharted territory" here, and experts are torn between predicting based on history and re-writing the book.
"Gold Falls Most in Seven Weeks as Equities Climb; Silver Drops"
Author: Pham-Duy Nguyen
Main Points: After topping out over $1,000 an ounce on February 20, the price of gold is down for the seventh straight session. "Gold futures for April delivery fell $31.10, or 3.3 percent, to $908.90 an ounce at 11:15 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest drop since Jan. 12. Earlier, the metal touched $905.70, the lowest for a most-active contract since Feb. 10."
Analysis: The question, of course, is whether this is a trend or an opportunity. If it's a trend, it's certainly a good time to sell (send your jewelry to Cash4Gold). There does not appear to be a short-term consensus, at least, on the immediate direction of gold.
"The Daily Resource: 03/03/2009"
Main Points: IBTimes looks at the recent selling of gold as a way for investors to manage margins. While gold has had a recent slide, a sell – unless a very short sell – will result in a profit. Given the way the market is currently behaving, there aren't many opportunities for profits right now.
But that recent slide will likely attract new investors, given that gold is still up more than 6% this year and not all that far from all-time highs. Meanwhile, the S&P 500 has fallen more than 21% and is at a 12-year low. The advantage for gold is still quite clear.
Tom Hartmann, a commodity analyst at Altavest Worldwide Trading Inc. in California, envisions more investors flocking to gold. "If one is scared about their cash sitting in the bank or short-term stock volatility, then perhaps gold would be a place to tuck away some money."
Analysis: It's easy to have a knee-jerk reaction to the recent gold slide, but the broader picture still paints it as a stable investment – particularly when compared to the rest of the market. It would not be at all surprising to see markets open next week with a new upward trend for gold, reflecting investors taking advantage of a quick dip.
Monday, March 2, 2009
"A New Gilded Age"
Author: Peter Koven
Main Points: Cash4Gold CEO Jeff Aronson is interviewed to get his expert opinion on the recent gold trend. "People have been using their homes to subsidize their income through home equity loans. That game is over. So now people have to go inside their home and find things to subsidize their income, i. e., cash for gold." The reason for gold’s rise is that several factors came together in favor of the metal. The credit bubble burst, the stock market tumbled and governments are printing money to dig out of the hole. Ian Gordon, publisher of the Long Wave Analyst report, says that "Gold does very well in this environment because it's the money of last resort. It's the only money people trust."
Analysis: Aronson makes an excellent point here at explaining why Cash4Gold is so successful in this economy. Consumers are losing safe ways for a quick cash out. Due to the increase in the value of gold and the likelihood that consumers have some gold to sell, the need for such a company arises.
"Gold Price to stay high due to economic 'panic'"
Main Points: Peter Major, a South African analyst from Cadiz Corporate Solutions, expects gold prices to remain flat for the rest of the year. He also told Mining MX that "it shows the extent of the panic in the market for the gold price to be trading so high."
Analysis: Gold has slipped since topping out at a shade over $1,000 per ounce, but Major is one of many experts who expect gold to remain steady or rise in value as the economy continues to stumble and investors move to "safe havens."
"Plenty of Room for Gold Prices to Go Higher"
Author: Peter Cooper
Main Points: There has been some talk of a bubble "burst" as with oil in more recent times, but Peter Cooper does not see the warning signs. There is no spike in the price of gold, and in fact there has been a "gentle upward curve over the past decade." Cooper reiterates that a slumping stock market will only continue to increase the appeal.
Analysis: While it may be tempting to call the recent rise to $1,000 a spike (and then a sudden drop into the $950 range), the long term chart over the past decade is gradual. Oil was doubling and tripling in very short time, thus creating the perfect scenario for a crash.
"Gold Glitters in Troubled Times"
Author: Terry Savage
Main Points: Gold is considered safe because it protects against inflation and deflation. Savage also puts together the perfect storm of events that would make gold exponentially more valuable. Calling it a "doomsday scenario," if the US dollar comes under attack it could be forced to link it to gold – only at much higher prices. "Some are predicting a conversion price as high as $4,000 an ounce one day."
Analysis: Savage’s "doomsday scenario" is not likely to be realized anytime soon – if ever – but it’s yet more support for the upside of gold.
"Gold Prices Fall Further as Dow Drops Below 7,000"
Author: Sara Lepro
Main Points: After hitting a high just over the $1,000 per ounce mark, gold fell for the sixth consecutive session on Monday. The problem, according to analyst Stephen Platt of Archer Financial Services, is that "gold is also a commodity that is used in jewelry, used in electronics," he said. "The demand from those sectors has been very poor. You're being torn by a couple crosscurrents and today I think the economic weakness is driving things."
Analysis: This is an interesting perspective, but one that should be considered. On one hand, we are told that gold is a safe haven and will thrive in tough economic times. However, during these times people are less likely to buy jewelry or electronics, items that need gold to function. This would seem to be one vote for gold having spiked.
The ability to accurately appraise the quality and amount of gold in the items it receives is of central importance to Cash4Gold and essential to understanding the precious metals refining business. It is considered so critical that the company requires every new employee to undergo rigorous instruction in the testing processes, and actually requires every worker to serve first as a “tester” before moving on to other positions within the organization.
Each of the Cash4Gold testers has three methods at his/her disposal to accurately assess the jewelry that pours in every day from customers all around the United States: electronic testing, scratch testing and x-ray fluorescence testing.
Jewelry that is received by Cash4Gold is first subjected to state-of-the art electronic testing devices. An alligator clip attaches the metal to the small device. After a few drops of test solution are added to the test area, the machine quickly and accurately provides the accurate gold quality (measured in karats) on its digital display screen.
In the event that the quality of the gold measured by the electronic tester differs from the quality of the gold as reported by the customer who sent it in (we will explore the danger of trusting engravings in a future posting), the piece will then undergo a second test—the scratch test. The scratch method is the oldest method used in the jewelry industry and you may have seen it performed by a jeweler or pawn shop operator.
Scratch testing involves the use of needles verified as having certain levels of gold and low-grade acid solutions corresponding to each karat level. By treating the pieces with acid and comparing scratches from the needles, the tester can confirm what kind of gold is contained in the piece.
If both the electronic testing and scratch methods do not confirm clear results, pieces are subjected to an X-ray fluorescence scan. The machine used for this test is an incredibly powerful, remarkably expensive and capable of providing detailed analysis by measuring the intensity of the generated gold X-rays by wavelength dispersion analysis. When testing is complete, a full report displays which indicates the gold content as well as other alloying metals such as copper, silver, zinc, etc. This method is remarkably accurate.
Cash4Gold understands and appreciates the tremendous level of trust involved in handling its customers’ jewelry and testing the quality of the gold items it receives. The company insists on the highest levels of transparency and honesty and is always happy to send back the belongings of customers who decide not to accept their cash offer.