Thursday, April 30, 2009
"Gold falls as stocks stage early rally"
Author: Sara Lepro
Main Points: After settling a tick above $900 an ounce yesterday, gold for June delivery dropped below the threshold today to finish at $891.20.
Gold and the dollar rallied today following a positive labor market report. The rally pulled back some amid the Chrysler bankruptcy announcement.
Gold has been stuck in a range between $870 and $915 an ounce for several weeks largely, according to George Gero, Vice President of RBC Capital Markets Global Futures, due to investor confusion.
"(Gold) is range bound because it seems that the stock market and the financials are just as range bound," he said. "You have a couple of down days and a couple of up days and the result is that investors are confused. And where there is confusion, people tend to sell rather than buy."
Analysis: Investors, though clearly confused on a day-to-day basis, do see hope. And when the market is already apparently near bottom, any glimmer of hope is a sign to buy -- because if you buy now while at the bottom, the profits will be significant throughout the rebound. This optimism, of course, does not help the value of gold.
Wednesday, April 29, 2009
"Gold prices rebound as dollar falls, stocks soar"
Author: Sara Lepro
Main Points: Gold is up $6.90 to finish today at $900.50 an ounce. The rally back over $900 is thought to be driven by a weakened dollar and fears associated with the swine flu.
Analysis: This is why yesterday's results are so curious. There were also fears of the swine flu yesterday, yet the price dropped nearly $15 by Tuesday's close. Make no mistake, the main driving factor here is the strength of the dollar, which rather consistently has an inverse relation to the price of gold.
"Flu New Threat to Global Finance"
Author: Rob Cox and John Foley
Main Points: In 2003, the SARS health scare impacted the tourism business, but the economy overall could sustain it. This year, such a panic as a result of the swine flu could cause significant problems for a fragile world economy that already has cracks in its foundation.
The industries already suffering have a new problem on their collective plate. Any industry dependent on trade, transportation, tourism and lodging is taking yet another shot to the ribs.
Analysis: How does all of this have anything to do with gold? Poor economic times help the gold price, as investors turn to the safe haven. If the swine flu is not easily contained, gold should benefit due to the repercussions felt across the tourism industry.
This article also discussed why China, which holds a small gold reserve, is unlikely to make a major investment in the yellow metal even during these times. Since the US holds 80 percent of its foreign reserves in gold, a large investment by China will spike the gold price, thus greatly benefiting the US. In fact, if the price of gold were to increase 10 fold (though unlikely), the US would be able to profit enough to erase their $2.5 Trillion debt.
FOR IMMEDIATE RELEASE
April 29, 2009 – Pompano Beach, FL – Cash4Gold CEO Jeff Aronson made the following statement on the passage of first-of-its-kind legislation enhancing the regulation of the industry pioneered by the company:
"Cash4Gold applauds the Florida legislature for passing this historic legislation, and is proud to have worked closely with lawmakers to develop a bill increasing the transparency of transactions in our industry to law enforcement. We are delighted that Florida has now become the first state to pass laws that will help regulate our industry and protect our citizens."
"We also express our appreciation to Florida law enforcement officials, with whom we have worked diligently to generate innovative ideas to enhance the integrity of our industry and facilitate law enforcement investigations. We strongly support the creation of a national database, which will make industry transaction information about suspect goods readily available to police all across the country. We are proud of our ongoing partnership with law enforcement, and look forward to continuing our joint, day-to-day efforts to make our industry more transparent and safe."
"As the leader in its industry, Cash4Gold felt compelled to take on a key role in helping lawmakers craft a new bill that takes into account the revolutionary business model we created, and for which the pre-existing laws were not designed."
Cash4Gold 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. In 2001, Cash4Gold CEO Jeff Aronson founded Albar Precious Metals, a precious metals refinery in Chicago, IL. Then, in April of 2007, Aronson and Cash4Gold President Howard Mofshin co-founded the company known as Green Bullion Financial Services, LLC d/b/a Cash4Gold that now employs almost 300 people in its Florida headquarters. Cash4Gold is a fully-integrated company with front-end customer service and marketing operations, and a back-end refinery. Hundreds of thousands of satisfied customers have received millions of dollars from Cash4Gold since its inception. Cash4Gold’s popular advertisements can be seen on national television and heard across the satellite and terrestrial radio dials. Please visit www.Cash4Gold.com or call 1-877-GOLD590 for more information.
Tuesday, April 28, 2009
"US gold ends 1.6 pct lower, tracks platinum drop"
Author: Frank Tang
Main Points: Gold for June delivery dropped $14.60 to finish the day at $893.60 an ounce, ranging from $884.60 to $907.70 throughout the day. Although fears of a swine flu pandemic could have driven the gold price higher, those reactions seemed to be outweighed by investors wanting to make a profit on their gold. Also, a gold buying festival in India, which otherwise was thought to benefit the gold retail industry, was not as profitable as previously expected.
Analysis: This is actually quite surprising. Gold has been quite solid during the past week-plus, and the current environment would have seemed to benefit gold. Swine flu fears combined with negative bank stress test results and increasing concerns about the US auto industry should have benefited gold investors -- these are prime conditions for safe haven buying.
Maybe the price will jump back up tomorrow, but the one day drop of nearly 2% is difficult to explain. This is the first time gold has finished a day below $900 an ounce since last Wednesday, April 22, when it was on its way back up to $900.
"Festival Demand Inauspicious for Gold Sales"
Author: Swansy Afonso
Main Points: The expectation that the Indian gold-buying festival of Akshaya Trithya would significantly boost the gold retail business has not played out. This is largely due to the higher price of gold jewelry (and gold in general) compared to this time last year.
Retail gold jewelry prices were up about 25% compared to last year's festival, which causes problems considering the price-conscious consumers. The increase is due to a rupee which has weakened when compared to the US dollar (40 to the dollar at this year's festival compared to 50 to the dollar last year).
The result: Retail sales are expected to be down 60-70% when compared to last year, even though last year's sales were also considered weak, down 11% year over year.
Analysis: The decline makes sense. Not only does the higher gold price raise the cost of jewelry, but the poor global economic conditions allow for more cautious buying habits. You'd assume that during normal economic times, even with a higher price of gold the income from the festival, even if not the quantity, would remain steady. The fact that buyers are less inclined to spend their money on jewelry due to these tough times magnifies the struggles of the retail jewelry industry -- even during gold-buying festivals like this one with a reputation for lavish spending.
Monday, April 27, 2009
"China buying 'could push Gold Prices past $1,000 per oz'"
Main Points: The price of gold is on its way back up, and according to BullionVault.com it could soon approach $1,000 an ounce once again. The price of gold was last over $1,000 an ounce in March of 2008.
The main factor for gold's revival is not so much the poor global economy as it is the recent news that China has bought more than 450 tons of gold to increase their stockpile to more than 1,000 tons.
According to Carey Smith, an analyst with Alto Capital, the news from China is what drove the recent gold rally. "It put a bit of a rocket under the gold price. I mean, it's run from about $860 when they announced it to, at the moment, about $917," said Smith. "So it's once again trying to go through that $1,000 mark."
Analysis: This explains some things. The upward trend has otherwise defied logic given that there haven't been any major negative economic changes during the past couple of weeks that would drive the price of gold upward. The demand for gold as a result of the India gold festivals may have contributed, but China's activity is also a factor since it would affect supply.
"GLOBAL MARKETS-Oil, stocks fall as flu sparks risk aversion"
Author: Herbert Lash
Main Points: Gold for June delivery dropped $5.90 to finish at $908.20 an ounce on Monday amid fears of a global pandemic associated with the swine flu.
Analysis: This behavior is not consistent with what we've come to see when Wall Street gets jittery. Guardian says that investors turned to the US dollar as a safe haven; typically, we'll see the dollar fall along with stocks as investors turn to gold as much safer investment. According to Guardian, the price of gold only fell $5.90 due to its safe haven appeal. This could be a sign of an impending rebound tomorrow.
Friday, April 24, 2009
"Gold prices finish higher as dollar weakens"
Author: Sara Lepro
Main Points: Gold was up $7.50 to finish the week at $914.10 an ounce, largely as a result of a weakened dollar.
Analysis: Impressive. If not for a hiccup on Tuesday when the price of gold rose early only to drop by the end of the day, gold would have been up every day this week. We wondered yesterday if the momentum could be sustained after eclipsing the $900 mark, but clearly it could. Because of that, you have to start reassessing the ceiling. But again, don't underestimate the impact of the gold festival in India on the gold retail industry. Gold retail had otherwise been holding the price down.
"Gold prices surge but can it last?"
Author: Xavier La Canna
Main Points: Consistent with our recent tracking on this blog, gold has had a strong surge during the past week, but TheAge.com cautions investors who believe the trend will continue for the long term.
"I think it will go higher, perhaps as much as $950 per ounce by around the middle of the year," said David Moore, Commodities strategist for Commonwealth Bank, "but we forecast it to fall back to about $875 per ounce by the end of the year, and continue to fall over 2010."
TheAge sites 2008's high of $1,011.25 an ounce and fall to $712.50 in October. Additionally, an investor needs to be confident that economic stability is nowhere in sight to expect further gains in the gold price.
"I think the risks are there for a rebalance (in gold prices)," said Grant Craighead, managing director of Stock Resource. "The safe-haven attributes are what is holding it up and the potential for a return to economic stability and growth is putting that at risk."
Analysis: As we continue to do here, use caution. There is no certainty in this environment. Gold passed a major milestone yesterday by piercing $900 an ounce, but it is a milestone that was also passed a couple of months ago. We'll likely see $950 an ounce again, and we'll likely see it in multiple cycles. Similarly, we're likely to see $850 an ounce in the not too distant future. There is little use attempting to time such a volatile market. If you have gold to sell, the best time to sell it is when you need the money.
Thursday, April 23, 2009
"US gold rises over $900/oz on fund, trade buying"
Author: Felix Salmon
Main Points: Gold had a big day today, rising $14.10 to finish at $906.60 an ounce. The price was as high as $910.40, the highest price since April 3.
The reason, at least the general reason, is expected. The dollar was weakened as stocks took a tumble, and investors turned towards gold as a safe haven. Gold, rather consistently, has an inverse relationship with the dollar and stocks.
Another contributing factor is that gold jewelry demand is up due to Akshaya Tritya, a gold jewelry festival in India.
Analysis: It's been largely a good week so far for the price of gold:
Monday: Up nearly $16
Tuesday: Down $4.80 (after being up early in the day)
Wednesday: Up $9.80
Thursday: Up $14.10
This is the longest sustain gold rally in some time. In recent weeks, there have been very few consecutive days of gold gains. Now that the $900 barrier has been breached, it will be interesting to see if this momentum will be sustained tomorrow. Recent history would suggest it will not. If it does, one could infer that there is no immediate cap.
Don't, however, forget about the impact of the festival in India. The jewelry industry can't rely on this every week.
Wednesday, April 22, 2009
"PRECIOUS METALS: Comex Gold Gains On Haven Buying, Lower Dlr"
Author: Matt Whittaker
Main Points: Gold for June delivery rose $9.80 today, closing at $892.50 an ounce. Safe haven buying and inflation were the main drivers, according to George Gero, vice president with RBC Capital Markets Global Futures.
"Everybody's a little concerned about the stress-test results," Gero said. "The financial fears have not gone away. The aversion to risk is still here."
Inflation concerns had practically disappeared when it was announced recently that retail prices had in fact dropped for the month of March, but reappeared today when the Federal Housing Finance Agency said that home prices rose a seasonally-adjusted 0.7% in February.
Analysis: The market movement on an hour to hour basis is really quite fascinating. Yesterday, we detailed how the price of gold initially rose in the wake of Bank of America's first quarter results, then fell following an optimistic statement from Tim Geithner. Now, this small piece of news about home prices drives prices back up.
In other words, don't pick a time to buy or sell gold. It will always be a rather safe investment. If you need the money, it will always be a good time to sell.
Tuesday, April 21, 2009
"Gold, Silver Decline as Equity Rebound Curbs Demand for Metals"
Author: Halia Pavliva
Main Points: After a strong start, gold for June delivery dropped $4.80 to end the day at $882.70 an ounce. The shift occurred when Treasury Secretary Timothy Geithner announced that the majority of US banks have more capital than they need.
Analysis: This goes to show just how jittery investors are right now. After several optimistic outlooks from key financial institutions, one partially flawed report from Bank of America caused an immediate panic. Stocks dropped and investors flocked to gold as a safe haven. A few optimistic words from Timothy Geithner today quickly reversed the trend and all is again well. For now.
"Gold Prices Continue to Climb"
Author: Alix Steel
Main Points: As of 11:07 am EDT, the price of gold was up $7.20 to $894.20, continuing an upsurge since the release yesterday of Bank of America's weak first quarter financials (of course, the price of gold inevitably dropped, as explained above).
"Going forward you probably aren't going to see many companies fair as well as they did last year. We are going to see weak economic data over the next several months [and] unemployment is expected to rise. You will see investors move to safe haven assets", says Carlos Sanchez, associate director of research for CPM Group.
That said, Sanchez also believes that scrap selling and price manipulation could keep the price below $900. Although the first quarter GDP number and Fed's market commentary, expected out next week, could potentially bump the price of gold up to $920, the increase would be temporary. The price we've seen below $900 has kept trading strong, but I higher price will dry up demand.
Analysis: Part of the reason two stories are featured with completely different outlooks on the same day is to show just how erratic things are right now. Things were looking gloom for the market and positive for gold. Quite quickly, that all changed.
Conservative short-term projections like this one appear on the surface to be much more realistic than some of the more aggressive $1,000 - $1,500 prognostications. As Mr. Sanchez and several other experts have pointed out, despite the seemingly ripe opportunity for a high gold price, there are simply far too many forces in this environment keeping it down.
Monday, April 20, 2009
"The close: Very ouch"
Author: David Berman
Main Points: After a strong six week rally, stocks took a beating today on Wall Street. It all began when Bank of America released their first quarter report. Although they reported $4.2 Billion in earnings, the stock dropped 24.3 percent during the session. Why? Investors focused on rising credit losses and the CEO's words, describing "extremely difficult challenges."
It was then a domino effect across Wall Street. Citigroup and Wells Fargo, both strong after optimistic reports, both fell more than 15 percent. The market in general had its worse day since the beginning of March.
Of course, bad news means good news for gold. The price of gold rose nearly $16 to finish at about $885 an ounce.
Analysis: It's been mentioned here before, but while confidence has been rising of late that confidence is awfully fragile. It didn't take much for investors to change their minds on the entire state of the market based on one report with mixed results. Suddenly, gold is again a safe haven investment.
Interesting how Bank of America can reverse the good fortunes following prior first quarter announcements. Each day is independent of the last. Anything can happen.
"Gold Prices 'could rise to $1,500 per oz'"
Main Points: Charles Gibson of Edison Investment Research suggested that the price of gold could rise to $1,500 an ounce. He cited two main reasons for this:
1) The market is being squeezed by negative real interest rates that are skewing the 'leasing' machinery. Under similar conditions in the 70s, the price of gold reached $850 an ounce, or $1,560 in today's dollars.
2) Gold mining companies are no longer selling gold to bullion banks, creating a shortage.
"We are going to see, after a bit of a lull," Gibson said, "investment demand come back with a vengeance."
Analysis: $1,500 is awfully optimistic, but it's impossible to rule out any scenario in this environment. As we've covered in the past, it's difficult comparing the current environment to the 70s or 80s. These are largely uncharted waters. Lack of retail jewelry demand as well as record levels of gold recycling are limiting the demand. We'll see if those trends continue.
Sunday, April 19, 2009
A recent article by the Associated Press (AP) titled "Fla. seeks to stop thieves from mailing in jewelry" underscores Cash4Gold’s support for a new bill making its way through the Florida legislature and highlights the various security efforts taken by the company to ensure safe and secure transactions. It also focuses on Cash4Gold’s ongoing cooperation with law enforcement to prevent thieves from misusing its mail-in refining service.
Florida lawmakers are currently considering a new piece of legislation that takes into account the revolutionary, business model created by Cash4Gold and for which current laws are not designed. Cash4Gold strongly supports the bill and is proud of its work with legislators to implement legislation that will increase transparency for law enforcement.
The AP article also notes that Cash4Gold already takes the security precaution of photographing the contents of each of the 15,000 to 20,000 packages it receives every week. Cash4Gold does this so that it can ensure secure transactions for its customers and play the most helpful role possible in assisting law enforcement. The company’s photos of the goods validate what is inside each and every package it receives. Company employees check these images against detailed descriptions of the items, which are filled out and mailed in by customers.
Cash4Gold has found that having photos of all materials it processes is the fastest and most effective way for the company to assist law enforcement, which is able to present photographs to victims of theft in order to identify missing goods. Without the photos, the authorities would otherwise have to rely on physical descriptions of items.
The article also discusses how Cash4Gold has worked in partnership with law enforcement agencies all across the country and received commendations for the help it has provided. The story outlines one example where a burglar confessed to police in Ohio that he had sent items to Cash4Gold. Alerted to the situation, the company immediately tracked the items down and turned over the goods.
The story also pointed to another well-publicized example of Cash4Gold’s effective and multi-layered security protocols—the discovery of a stolen 1995 Pittsburgh Steelers AFC Championship ring. The ring, which had been missing since 2000, was flagged by an alert Cash4Gold employee and returned to its rightful owner, former Steeler Brenden Stai.
As the AP story illustrates, Cash4Gold is not simply content to be America’s number one buyer and appraiser of gold. It is also continuing to play a leadership role by strongly supporting efforts to create greater transparency and security in the mail-in refining industry which it pioneered.
Friday, April 17, 2009
"NY gold ends down on dollar rise, weak ETF demand"
Main Points: The combination of current circumstances are not in gold's favor. Gold for June delivery dropped $11.90 today, falling to $867.90 an ounce. Week over week, gold dropped more than $12.
Let's take a look at some of the reasons why:
General Eletric and Citigroup both reported better than expected first quarter results. This is a trend that has continued since last week, as large US companies come out with positive results.
Dollar remains strong, thus harming gold in its inverse relationship.
Overall economic outlook is optimistic. Therefore, investors are 1) turning away from gold as a safe haven, and 2) turning towards riskier investments.
According to Reuters and CitiFX, "The price of gold could tumble to $730 an ounce if support gets breached, as the metal has failed to follow through on its recent rise."
Analysis: We've been saying this for a while, but while a sustained positive economic outlook appeared unlikely, it would spell disaster for those hanging on to gold. Anything continues to be possible, but early returns are not good for gold. The fact that it couldn't sustain $1,000 an ounce levels during apparent optimal times (less the fact that gold for retail purposes struggled), a steep drop if reports continue to reflect economic improvement would seem imminent.
"Gold remains most secure investment: World Gold Council"
Main Points: Despite its recent struggles, the World Gold Council claims that gold remains the most secure investment. The WGC cites that, during the past decade, gold has provided an average 26% return year over year, and always a positive outcome.
WGC Managing Director Ajay Mitra said, gold jewellery has been treasured, sought after and popular since the beginning of Indian history and till date, bears an extraordinary significance especially during festivals. The presence of a safe asset like gold in an investment portfolio ensures assured returns, which further adds to its appeal."
They also cite a report from the GFMS indicating that sustaining levels over $1,000 and even $1,100 is likely.
Analysis: I'd consider this a tough sell right now. Granted, they are referring to average annual price, so the current average gold price for 2009 is 17% higher than that for 2008 -- even though the price is down since year-end 2008. That said, current conditions would suggest a 26% return may be unlikely -- although that level of a return over 2008 average instead of 2008 year-end would seem much more possible.
Thursday, April 16, 2009
"Gold prices retreat as stocks push higher"
Author: Sara Lepro
Main Points: Gold for June delivery fell $13.70 today to finish at $879.80 an ounce.
Gold, which typically has an inverse relationship to the dollar and investor confidence in general, suffered as economic good news continues to spill out. In particular, positive profit reports from Nokia and JPMorgan Chase drove investors away from the safe haven and towards riskier investments.
The dollar and stock market have recovered during recent weeks, the main source of a steep dip in the gold price -- once over $1,000 an ounce less than two months ago.
"If the market's five-week rally continues, many analysts believe gold prices could fall further in the near term."
Analysis: Despite gaining $12.50 on Monday, gold has remained about flat from the $880.10 that it finished at last week. Many experts believe that life remains for gold, but we may be waiting until the third or fourth quarter for a resuscitation. Reports are currently optimistic, but some believe that once top financial companies are expected to succeed on their own funds instead of the stimulus, things will take another downturn.
"The Daily Resource 04/16/2009"
Author: Casey Research
Main Points: Although the gold price has not moved upwards in recent weeks, some take that as a good sign "in the face of falling oil prices and a slightly rising dollar." These should be conditions that would force the price downward, but gold, for the most part, has held its own.
Once gold flirted with $1,000 an ounce a couple of months ago, the landmark price appeared to be something of an obstacle. The same appears to be true now with $900.
"Gold is struggling with $900 an ounce," said Burton Schlichter, Senior Market Strategist at Daniels Trading. "As long as it stays under this level, trading is going to remain quiet."
This IBTimes articles asks what many of us have been struggling with for weeks: "Is gold stuck, and preparing for a correction back below $900, as some believe? Or is the spring just steadily tightening, awaiting that one big event that will release it, sending the gold price rapidly skyward, as others maintain?"
The debate remains open. Dennis Gartman, publisher of the Gartman letter, is recommending gold owners sell at $891 an ounce.
"The uptrend that extends back into the lows of last November and December has been decisively broken," said Gartman, "and since then, the most recent rally attempts have failed at progressively lower levels, while the lows are steadily lower too."
Analysis: There you have it. Sell, Sell, Sell! Ok, maybe not so decisive. Investors are skittish, unsure, and evolving their perception of the economy on a daily basis. While investor confidence is climbing now, bad news can change that in a hurry, thereby driving gold back above $900 an ounce.
Wednesday, April 15, 2009
"US gold ends up in quiet trade on physical demand"
Author: Felix Salmon
Main Points: After a day of ups and downs in which the price of gold bottomed at $886.20 and topped at $902.10, the yellow metal ended the session up a modest $1.50 at $893.50 an ounce.
Recent reports that retail prices have dropped eased immediate fears of inflation, a notorious motivator for investment in gold. Even so, Reuters quoted HSBC Chief Commodities Analyst James Steel as a supporter of gold in the immediate future for other reasons.
"Despite the weight of deflationary data in recent weeks, concerns that quantitative easing and rising fiscal deficits will stoke inflationary pressures" and rejuvenate support for gold.
Analysis: The price of gold will ebb and flow with economic reports from the US government and key financial companies. There are certainly endless scenarios that would be favorable for a rising price of gold, but there are nearly as many that would support a plateau and potential downturn. Has the economy hit bottom? Will housing sales pick up? Will banks report improved performance? All of these developments would likely result in a drop in gold price. Will the US print more money? Inflation result? Deflation? Prolonged financial hardships? Weakened dollar? All would benefit gold as an investment.
"Gold Prices 'to surge' at end of bull run"
Main Points: Nick Goodwin, a gold analyst at GFMS, uses history as a guy to project a "very strong acceleration" of gold prices in the future.
Gold, he says, is in the midst of a bull run that began at $250 an ounce in 2001. Near the end of the last bull run in the late 70s and early 80s, there was a sharp upturn in gold prices.
"In the last stages of that bull market you get very strong acceleration in the price and we haven't really seen that here, where you almost get like a vertical climb and it started in sort of late '79 and then moved into '80 and in those last few months you had almost like a doubling in the Gold Price. Well we haven't seen that yet. I think we could still see that coming."
He also claims that the price of gold could reach $1,200 an ounce by next year when inflation, aided by the economic stimulus, takes hold.
Analysis: History is a nice educator, but it does not always help us predict the future. Quite clearly, the environment now is different than it was in the early 80s. Even so, it is a unique point that shouldn't be completely dismissed.
Tuesday, April 14, 2009
"Gold futures fall after weak retail sales, PPI"
Author: Moming Zhou
Main Points: Gold for June delivery fell $3.80 to finish at $892 an ounce today, cutting into yesterday's $12.50 gain.
The drop in gold can be attributed to reports that have come out in the past 24 hours. Goldman Sachs Group Inc. reported yesterday that profit and revenue were up in the first quarter. This follows preliminarily positive results from Wells Fargo a week ago. More first quarter announcements are coming this week.
"Ostensibly positive news from the financials has lifted [stock] markets in recent days," said Mark O'Byrne, executive director at Gold and Silver Investments.
Gold, which typically thrives on poor financial news, will likely continue to suffer with more good news from financial companies.
Meanwhile, it was reported that US retail sales are down 1.1% after two months of gains. Wholesale inflation also fell more than expected after two months of gains, as the Producer Price Index dropped 1.2%, driven largely by a drop in energy prices. Gold, often seen as a hedge against inflation, therefore loses some appeal among investors.
"Further resistance [in gold prices] is expected at $900," said James Moore, a precious metals analyst at TheBullionDesk.com. "With ETF investment demand still slow, further significant gains may be curtailed."
Analysis: Good news continues to come in from Wall Street, but investors stress caution considering much of the positive results are coming from financial companies that are directly benefiting from the economic stimulus. The true test will be whether companies not receiving stimulus money succeed and companies that do receive stimulus money continue to succeed throughout the year.
"FACTBOX-Revisions to precious metals price forecasts"
Author: Jan Harvey
Main Points: We've covered updated projections for the price of gold in the past as they come in, but ForexPros had a nice piece today that compiled projections dating back to February 18. Much easier to set reasonable expectations when taken together.
JPMORGAN (APRIL 8): Raised projected 2009 gold price to $960 an ounce from $831; 2010 forecasts to $950 from $825.
BARCLAYS CAPITAL (MAR 20): Raised its 2009 gold forecast to $940 an ounce; they expect gold to hit $905 in the second quarter, $950 in the third and $980 in the fourth.
BNP PARIBAS (MAR 11): Sees a rather volatile year, but finishing strong. $905 in the first quarter, $860 in the second, $865 in the third and $970 in the fourth, for a $900 an ounce average. They site struggling retail demand for gold as a reason for the delayed rise.
NUMIS SECURITIES (MAR 12): Increased its projection from $700 to $900 an ounce average for 2009; also increased 2010 and 2011 projections to $850.
UBS (FEB 23): Increased their one-month forecast to $1,050 from $900 and three-month forecast from $900 to $1,100. Looks like their original one month projection was spot on.
STANDARD BANK (FEB 19): Projected a $940 average over 2009; $1,000 for one month, $950 for three months, and $1,050 for six months. Their one month projection was off significantly, which likely changes the annual outlook.
RBC CAPITAL MARKETS (FEB 19): One of the more conservative predictions, RBC projected gold at $850 an ounce for 2009 and $875 for 2010.
CANACCORD ADAMS (FEB 18): Projected a $975 average for 2009 and peak price of $1,100, up from their original projection of $950. Likely influenced by the Feb. 20 high that pushed the gold price a shade over $1,000.
Analysis: Let's break this down a little more.
Highest projection for 2009: $975 (Canaccord Adams)
Lowest projection for 2009: $850 (RBC Capital Markets)
Average Projection for 2009: $923.57
Even if you remove the outliers, the average is about $928 an ounce. Regardless, it goes to show that the general expert opinion is rather conservative. Gold may rise some, but don't expect an average much higher than $925 an ounce for 2009. In other words, if you need money for your gold, no need to keep waiting for a gold spike.
Monday, April 13, 2009
"Gold, Silver Rise on Demand for Store of Value as Equities Ease"
Author: Pham-Duy Nguyen
Main Points: Gold for June delivery rose $12.50 today to finish at $895.80, the highest increase in three weeks.
The increase is seen as protection from potential bad news. Financial companies such as Citigroup and JPMorgan Chase are expected to announce their first quarter results this week.
"There’s some positioning ahead of financial results," said Matt Zeman, a LaSalle Futures Group metals trader. "Financials led us down this path, and they’re going to be the sector that leads us out. You might see the flight-to- quality buying in Treasuries and gold if earnings don’t meet expectations."
Analysis: The reaction can be seen as a way to hedge against potential losses in the event the news isn't good this week. If news ends up being positive, expect at least minimal decline in the gold price. Of course, the price of gold is low relative to global economic strength right now. The price compared to the end of 2008 in nearly flat, less some rather dramatic rises and falls in between.
"Now is the time to sell family jewels"
Author: David Robertson
Main Points: A combination of a high price of gold and tough economic times for many created the perfect environment for the selling of gold jewelry by customers. For the first time in 30 years, the amount of scrap gold sold (500 tons) during the first quarter of 2009 exceeded the amount of new gold purchased (420 tons). This is startling, meaning that instead of selling jewelry, many retail jewelers are buying gold back from customers.
The record for scrap gold sold was set in 2008 at 1,218 tons. That mark is likely to be broken this year, barring unforeseen circumstances.
The increased activity in the scrap gold industry has also likely contributed to the recent fall of the gold price back below $900.
"The sheer quantity of metal they are pumping into the market should even up the supply-demand balance and may even push it towards lower prices. That is why many analysts believe that gold will settle at about $700 to $800 an ounce this year with occasional spikes should Iran get belligerent or North Korea fires off another rocket."
Analysis: This is a very unique look at the contribution of Cash4Gold, Albar Metals, Argent, and other similar companies in the precious metals refining business. It's surprising that this angle hasn't been pursued more often. Why, during such historically bad economic times, won't the price of gold exceed $1,000 an ounce on a regular basis? We have heard some point to the struggling retail jewelry industry, which is certainly contributing. But the fact that consumers are selling more jewelry than they buy must significantly impact supply and demand, and should therefore be a major drag on some of these aggressive projections of a gold price far exceeding $1,000 an ounce.
Friday, April 10, 2009
Wall Street is closed in recognition of Good Friday, today, so not a lot happening across the web in regards to gold chatter.
Let's take this opportunity to step back and look at the activity of the price of gold this year.
Jan. 2: $874.90
Jan. 9: $853.60
Jan. 16: $842.40
Jan. 23: $898.30
Jan. 30: $927.10
Feb. 6: $911.40
Feb. 13: $941.60
Feb. 20: $993.20
Feb. 27: $939.60
Mar. 6: $938.40
Mar. 13: $929.40
Mar. 20: $952.60
Mar. 27: $923.10
Apr. 3: $893.80
Apr. 9: $880.10
While the price of gold did top $1,000 an ounce briefly, it's interesting to note that Thursday's closing price is a mere $6.80 above Jan. 2 close, and $1.00 below the close of 2008. As volatile as it seems gold has been, the price has been completely flat overall from the start of the year to now.
What does that mean? Tough to say, and there's no consensus on the future of the gold price. Some are bullish, others more cautious -- well respected experts on each end of the spectrum. However, it would seem there are a couple of factors working against gold hitting $1,000 an ounce again any time soon:
1) There is more investor confidence and global economic optimism now than there was a few months ago. It's possible that we've seen the worst. If that's the case, given that gold is most appealing during tough times, this works against gold. We may have seen the best conditions for gold pass us by.
2) Although things are turning around, let's not fool ourselves. Businesses are still struggling. Most important to gold investors, jewelery retailers are struggling. This will continue to weigh down the price of gold.
That doesn't mean this is an open and shut case. Inflation is still a major driver of the price of gold and is a very huge possibility.
In the end, though, what the first three months-plus reminds us is that gold is both safe and stable. If you have gold to sell, the best time is when you need the money.
Thursday, April 9, 2009
"Gold falls as investors turn to stock market rally"
Author: The Associated Press
Main Points: The stock market rallied today, on the heels of the announcement that Wells Fargo expects to earn $3 Billion in the first quarter. As a result, riskier investments became more attractive, the dollar strengthened, and the appeal of a "safe haven" like gold diminished.
Gold had a modest drop of $2.60 to settle at $883.30.
"A sharp rise in stocks has weighed on demand for gold in recent weeks. Prices have fallen since early March when Wall Street began a rally that lifted major stock market indicators more than 20 percent in less than a month from 12-year lows."
Analysis: Not a good week for gold. After starting the week a shade under $900, gold finished the week down about $17. That said, other than Monday, when the price of gold fell $24.50, the investment was stable.
The appeal of gold in the coming weeks will come down to investor confidence in the stock market. If more positive stories like the Wells Fargo projection come out, the markets will surge; gold will falter. If we begin to see global economies move forward as a result of the recent G20 summit, gold will falter. However, investor confidence is fragile right now. While the markets are rallying, any new crack in the armor will benefit gold.
The markets will be closed tomorrow in recognition of Good Friday.
"Gold Prices may rise by 'thousands of dollars' in the long term"
Main Points: The Aden Forecast, written by Mary Anne and Pamela Aden, boldly claim that the price of gold could rise "thousands of dollars" in the coming years, reaching as high as $5,800.
"Gold is the ultimate inflation hedge and there's no telling where it'll end up, at least well into the thousands of dollars in the years ahead, and maybe sooner."
The report goes on to say: "Remember, gold's peak in 1980 at $850 is now the equivalent of about $2,200 in today's dollars. Gold has not even approached that level yet. Once the dollar declines again and inflation kicks in, it'll be another story."
Analysis: Other reports dispute such aggressive projections, saying that the past -- particularly adjusted for inflation -- is a weak gauge for future expectations. More positive reports have come in the last few days, but an upside of $5,800 in the next "few" years (no definition of how many that is) seems a bit extreme -- barring, of course, a significantly worsening global economic disaster.
Wednesday, April 8, 2009
"JPMorgan hikes 2009, 2010 gold, silver price views"
Author: Jan Harvey
Main Points: JPMorgan shifted its forecasts for 2009 and 2010 gold prices dramatically, citing a weakened dollar and inflationary concerns -- both conditions that benefit the price of gold.
JPMorgan's projections were moved from $831 to $960 in 2009 and $825 to $950 in 2010.
"Investment demand continues to act as an offset, to some degree, to a very weak physical market in precious metals, gold in particular," the bank said.
"Inflation and / or U.S. dollar weakness do however need to materialize to justify gold above $1,000. In the meantime, the threat of these factors will support prices."
Analysis: Quite the shift. We've seen some minor adjustments from economists and banks alike (both up and down), but this may be the most dramatic yet. It's also a curious shift, given much of the chatter recently has been for more conservative expectations, limited largely by the declining demand for gold in retail.
"Gold May Extend Gains on Renewed Investor Concern Over Economy "
Author: Glenys Sim
Main Points: Gold had little movement on Wall Street today, hovering around the $880 an ounce mark. Gold's immobility did little to dampen the enthusiasm of some investors, however.
"We still see systemic risk in the financial system," said Walter de Wet, head of commodity research at Standard Bank Plc. "We also expect physical demand for gold to rise at these price levels, which should support the gold price."
Bloomberg also cited the GFMS analysis that we quoted yesterday, indicating gold prices may well exceed $1,000 an ounce again soon.
Analysis: The analysis certainly goes in waves. As soon as it seems everyone has an aggressive outlook on gold, investors express caution. Once caution takes over as the majority opinion, stories like GFMS and JPMorgan surface.
If anything, it would seem that gold is a safe buy right now following a relatively abrupt fall from the $950-$1,000 an ounce range. Whether gold again approaches those numbers soon remains up for debate.
Tuesday, April 7, 2009
400 Children and Families To Receive Free Food and Personal Care Items; Future Events Planned
Pompano Beach, FL (April 7, 2009) -- Cash4Gold and three-time Grammy award winner MC Hammer are teaming up with international hunger relief organization Feed The Children to provide 400 Stockton families with boxes of food and personal care items at noon on Wednesday, April 8, 2009 at Interfaith Food Bank - His R.A.F.T. Inc (2209 E. Main St., Stockton, CA). MC Hammer will be present at the distribution. The event will be the first of several sponsored by Cash4Gold and MC Hammer.
Feed The Children's local partner agency, Interfaith Food Bank - His R.A.F.T. Inc, has pre-identified all 400 families who will each receive a box of food and personal care items. The boxes are designed to help supplement a family for up to one week.
"As soon as our friend MC Hammer shared with us his commitment to the global mission of Feed The Children, we wanted Cash4Gold.com to get involved," said Co-Founders Jeff Aronson, CEO and Howard Mofshin, President, www.Cash4Gold.com. "Through this week's event, and a series of additional local events to benefit families in need, the whole team at Cash4Gold looks forward to making a positive change in thousands of people's lives in this community."
"Feed The Children is a cause close to my heart," said MC Hammer. "Jeff Aronson, Howard Mofshin, and their 300+ employees at Cash4Gold should be considered heroes for their generous commitment to provide for families who need help."
Cash4Gold.com plans to sponsor additional Feed The Children events in the coming months. The fast-growing company, which has achieved notable success in an otherwise trying economic environment, remains committed to giving back by supporting worthy causes in communities nationwide.
MC Hammer's association with the successful company began earlier this year when he co-starred in Cash4Gold's popular Super Bowl® commercial.
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. In 2001, Jeff Aronson founded Albar Precious Metals, a precious metals refinery in Chicago, IL. In April of 2007, Jeff Aronson and Howard Mofshin co-founded the company known as Green Bullion Financial Services, LLC d/b/a Cash4Gold that now employs almost 300 people in its Florida headquarters. Cash4Gold is a fully-integrated company with front-end customer service and marketing operations, and a back-end refinery. Hundreds of thousands of satisfied customers have received millions of dollars from Cash4Gold since its inception. Cash4Gold's popular advertisements can be seen on national television and heard across the satellite and terrestrial radio dials. Please visit www.Cash4Gold.com or call 1-877-GOLD590 for more information.
About Feed The Children
Founded in 1979 by Larry and Frances Jones, Feed The Children is consistently ranked as one of the 10 largest international charities in the U.S., based on private, non-government support. Feed The Children is a Christian, international, nonprofit relief organization with headquarters in Oklahoma City, Oklahoma, that delivers food, medicine, clothing and other necessities to individuals, children and families who lack these essentials due to famine, war, poverty or natural disasters. In FY 2008, Feed The Children distributed more than 100 million pounds of food and other essentials to children and their families in all 50 states and internationally, supplementing almost 900,000 meals each day. Since its founding, the organization has reached out to help those in need in 118 countries around the globe. For more information, please visit www.feedthechildren.org.
"Gold Rises for First Time in Four Days as Drop Lures Buyers"
Author: Nicholas Larkin
Main Points: The price of gold rose for the first time in four days today, rallying $11.50 to $879.75 an ounce.
"We fell too much yesterday," said Bernard Sin, head of currency and metals trading at Swiss refiner MKS Finance SA. "We fell as much as 3 percent yesterday and a lot of people were hurt."
Analysis: In line with what Sin is saying, gold was bound to rise eventually, even if temporarily. The price was hanging around $950 for some time, so it is bound to be attractive for investors once it plummets below $900 -- safe haven motivation or not. The question will be whether this is the start of some upward momentum or simply a one-day blip on a downward trend.
"Gold price may touch record $1,100: GFMS"
Author: BS Reporter
Main Points: In an announcement contradictory to the current path of the price of gold, a survey by London-based precious metal researcher Gold Field Mineral Services (GFMS) projects that the yellow metal could reach $1,100 an ounce.
Of course, it wouldn't be a direct route. After a summer lull, inflationary pressures and interest rate cuts would benefit gold and drive it's price up to record levels.
"The price may have pulled back a fair bit from the highs," said Philip Klapwijk, chairman of GFMS, "but that was largely just the market’s reaction to jewelry demand crumbling and scrap booming. It’s far from game over for investors and it will be that crowd which sets the price alight."
Analysis: As mentioned before, the projected path of the price of gold is far from a consensus. Though GFMS is bullish, they do acknowledge the current struggles may continue, if not briefly.
Monday, April 6, 2009
"Gold prices slump further on lack of demand"
Author: SARA LEPRO
Main Points: The price of gold continued its recent downward trend today, falling $24.50 to finish at $872.80 an ounce -- the lowest close in more than two months.
Stocks pulled back slightly today, but the dollar -- continuing its inverse relationship with gold -- was strong.
"Gold prices have been suffering amid increased risk appetite on Wall Street and signs of strength in the dollar. The Dow Jones industrial average has rallied more than 22 percent since the beginning of March on an increasing number of better than-expected readings on the economy."
Analysis: This is good news for the economy and bad news for gold investors. There are a couple of ways to look at this recent decline: 1) you could take advantage of the recent drop, that prices will turn around once realities of continued economic troubles encountered; or 2) the economy is still far from strong, so you should sell gold now before the price drops even further.
"IMF gold sale may push down prices below $800"
Main Points: Gold has dipped of late, but this may only be the beginning. At the recent G20 Summit, world leaders agreed to allow the International Monetary Fund to sell 400 tons of gold to the open market in order to raise funds.
"Gold prices are set for a big fall in the next two to six months mainly because of the IMF gold sale. There will be abundant supply of gold in the market in the coming months thanks to the release of 403 tons of IMF gold. Moreover, with stock markets looking up after the big falls, gold prices are likely to fall to $800 or below $800 levels," bullion analyst Mark Robinson told Commodity Online.
Analysis: This story, combined with the improving economy and value of the dollar are flashing warning signs for anyone investing in gold. And if you own scrap gold, it may be a good time to send it in to Cash4Gold.
POMPANO BEACH, FL--(Marketwire - April 6, 2009) - Cash4Gold, America's #1 gold buyer direct from the general public, is building on the sports marketing momentum created by its popular Super Bowl® ad featuring Ed McMahon and MC Hammer. Today, the company announced its entry into auto racing through a multi-car sponsorship of the JD Motorsports team in the popular NASCAR Nationwide Series.
"JD Motorsports is truly a top-notch organization and we look forward to building a long-lasting relationship with them and their fans," said Cash4Gold Founder and CEO Jeff Aronson. "We made a splash with our Super Bowl ad, but that was only step one in our plans to use sports marketing to build the Cash4Gold brand."
Cash4Gold is the co-primary sponsor of two JD Motorsports cars on the NASCAR Nationwide Series circuit; the No. 0 car, driven by JC Stout, and the No. 01 car, driven by Danny O'Quinn, Jr.
"Bringing the Cash4Gold.com program on board is a perfect fit for our NASCAR Nationwide Series teams," said JD Motorsports owner Johnny Davis. "We have loyal support from mainstream America, the same people that can benefit from this service. We encourage everyone to at least have their items appraised by ordering a free Refiner's Return Pak. NASCAR fans support the people that support the sport!"
NASCAR remains one of the most popular sports in the U.S. with individual races drawing well over 100,000 die-hard fans. The combination of live and televised audiences make NASCAR a tremendous brand marketing channel.
The NASCAR Nationwide Series features stock-car racing events beginning in February at Daytona International Speedway and concluding in November at Homestead-Miami Speedway. The Nationwide Series schedule features 35 races at 26 tracks. Races are held on a variety of track types, including short tracks, intermediate tracks, superspeedways and road courses. The Nationwide Series is the second-most watched auto racing series in the United States and features many well-known drivers.
Cash4Gold's sports marketing footprint to date includes the successful Super Bowl XLIII ad that catapulted the brand into the national zeitgeist, an ongoing sponsorship of the NBA's Washington Wizards, and the JD Motorsports/NASCAR sponsorship announced today. As one of the most prolific brand marketers in the world, and one of the nation's fastest growing privately held companies, Cash4Gold plans significant expansion of its sports marketing activities in 2009.
Cash4Gold 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. Albar Precious Metals, Cash4Gold's parent company, was founded in 2001 in Chicago, IL by Jeff Aronson. Cash4Gold was spun off from Albar in April 2007 by Jeff Aronson and Howard Mofshin and today employs more than 350 people in its Florida headquarters. Cash4Gold is a fully-integrated company with front-end customer service and marketing operations, and a back-end refinery. Hundreds of thousands of satisfied customers have received millions of dollars from Cash4Gold since its inception. Cash4Gold's popular advertisements can be seen on national television and heard across the satellite and terrestrial radio dials. Please visit www.Cash4Gold.com or call 1-877-GOLD590 for more information.
Friday, April 3, 2009
"Gold prices extend losses, close below $900"
Author: SARA LEPRO
Main Points: Gold for April delivery fell $11.60 to finish the day at $897.30 an ounce today, falling below $900 for the second time in a month.
Not surprisingly, Wall Street continued to rally. The stock market has increased 20% since hitting 12-year lows in early March.
"An increasing number of better-than-expected readings on the economy, combined with worldwide efforts to fight the financial crisis, have filled investors with a sense of optimism that has been absent from the market for some time."
Analysis: It was a bad week for gold, falling on four of five days. In previous weeks, it has been difficult to gauge the metal given that it's rises and falls seem to alter with the day of the week. This is beginning to look like a trend. More conservative projections have been trickling in of late, and they are beginning to look more and more valid.
Thursday, April 2, 2009
"Gold prices slide as investors rush to into stocks"
Author: The Associated Press
Main Points: Gold for April delivery fell $18.80 to finish at $908.90 an ounce today. Stocks rallied on Wall Street amid efforts among world leaders to put an end to the global financial crisis at the G20 Summit.
"Investors reacted as finance ministers, gathered in London, pledged steps including $1.1 trillion for lending to less well-off countries and stepped-up regulation of financial markets."
Analysis: This follows two days of modest gains. Whether progress is made following this summit will help decide the fate of the gold price in the near term. As discussed, gold is most attractive to investors when other more riskier options are taking a beating.
"Gold price could fall 20% by end-year - SocGen"
Author: Rhona O'connell
Main Points: Investment bank Société Générale has made a startling and bold projection, claiming the price of gold could fall below the $800 mark by the end of the year. Peaking at a shade over $1,000 an ounce in February, gold has been an attractive investment during tough economic times. The bank cites concerns that the low demand for gold in retail jewelry offsets any demands as an investment.
"The fact that prices fell very sharply when investment faltered over the turn of February and March is cited as a potential precursor to more of the same later in the year."
This will be a slow process throughout the year. Gold continues to benefit from economic uncertainty, but that, according to the bank, will change by the end of the year.
"For the short term, further investment activity is likely and higher prices are expected to come with it. For the longer term, though, the investor is expected to 'take his foot off the pedal' and this will put gold prices under substantial pressure."
Analysis: Goes to show the wide range of projections on the future price of gold. We've seen some project a price reaching and in excess of $1,500 an ounce, others projecting it to remain or stay close to flat, and now this. This is the most pessimistic projection we've covered on gold in the near term, but more evidence that there is no consensus on the investment.
There may be no better time than now to sell.
Wednesday, April 1, 2009
"Gold ends slightly higher ahead of G20 meeting"
Author: Moming Zhou
Main Points: Gold for April delivery edged up $3.50 today to finish at $926.10 an ounce. MarketWatch indicated "the metal's investment appeal increased with expectations that the meeting of the Group of 20 nations may not pull the world's economy out of recession."
Subjects up for discussion that could have ramifications on the market at the G20 summit include the dollar's status as the global reserve currency and the potential sale of 403 tons of gold by the International Monetary Fund.
Analysis: Expecting one meeting to pull the world's economy out of recession may be asking a bit much. It's widely understood that getting out of economic tough times will be a process that may take years to complete. This is why investment experts continue to tout gold as a safe long-term investment.
"George Topping Shares Price Outlook for Gold, Copper and Uranium"
Website: The Gold Report
Main Points: The Gold Report interviewed George Topping, a research analyst specializing in the mining sector at Blackmont Capital, about his outlooks on gold, copper and uranium. He projects the price of gold to remain flat at $950 an ounce through 2011.
Analysis: Keep in mind that Topping pays closer attention to uranium and copper than he does gold, but it's not an unusual projection. He doesn't provide this as an explanation, but many have suggested gold has a low ceiling due to the hit gold in retail takes during these tough economic times.
"Gold price to plateau: analyst"
Main Points: Justin Smirk, a senior economist with Westpac, doesn't expect the price of gold to spike suddenly.
"I don't think gold will go down but it won't rise as fast as everything else", he said.
"I think gold relative to everything else has stretched itself out because of the risks around now, it's about as far as it can get".
"When we get a strong rise in commodity prices, gold too will rise, but other commodities will rise faster".
Analysis: Smirk also goes on to say that, while gold typically does well during an economic downturn, you can expect it to fall once investors gain confidence in the stock market.