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September 3, 2009
Canadian gold stocks gained for a second straight day, led by financial shares and gold producers, after two more banks beat analysts’ earnings estimates and bullion prices rose. The gold price has continued to post serious gains throughout the day. Royal Bank of Canada, the country’s largest lender, added 1.7 percent after Canadian Western Bank and Laurentian Bank of Canada’s quarterly reports. ABX shares, the world’s biggest producer of the metal, and Agnico-Eagle Mines Ltd. advanced more than 2 percent as bullion rallied to the highest price since February after the U.S. dollar weakened.
The Standard & Poor’s/TSX Composite Index increased 168.06 points, or 1.6 percent, to 10,869.38 at 12:14 p.m. in Toronto. Canada’s equity benchmark rose 1.4 percent last week as five of the country’s six biggest banks reported profits that topped forecasts from analysts. The S&P/TSX climbed for the first time this week yesterday as gold producers rallied on demand for alternative investments. This rally was in hand with the gold price rally. Canadian financial institutions that have reported quarterly results since July 8 have beaten the average analyst estimate by 19 percent, the most among 10 industries, according to data compiled by Bloomberg. Increased consumer lending and an increase in fees from trading and investment banking have outweighed bigger loan losses.
Barrick gained 2.1 percent to C$42.81, and Agnico added 2.8 percent to C$71.07 with the booming gold price. Gold futures for December delivery advanced as much as 1.7 percent to $994.60 an ounce in New York. Raw-material stocks, which account for 19 percent of the S&P/TSX index, rose after the steepest rally in Chinese stocks in six months spurred speculation demand for commodities will strengthen in the world’s third-biggest economy.
Optimistic sentiment regarding the gold price continued into the day as gold neared the $1000 mark. Many analysts have predicted this spike and investors continue to buy at record gold prices. The gold price has certainly shown serious upside to the quantitative easing practices used by the U.S. government.
August 28, 2009
The gold price climbed for a fourth day after the dollar dropped on reduced demand for the safety of the currency as crude oil and equities rallied. Optimism also increased that a global economic recovery is underway. Gold bullion gained, trimming this month’s loss to 0.4 percent, as the U.S. currency declined against the euro for a second day, heading for its first two-month drop since March 2008. Asian stocks advanced ahead of a U.S. report that may show consumer confidence rose this month. The precious metal typically moves inversely to the U.S. dollar.
Gold price for immediate delivery gold rose 0.2 percent to $950.22 an ounce at 2:18 p.m. in Singapore. The dollar traded at $1.4359 per euro from $1.4341 in New York yesterday. Oil for October delivery rose 0.2 percent to $72.63 a barrel after advancing 1.5 percent yesterday. A Bloomberg survey of economists showed that the Reuters/University of Michigan gauge on Aug. 28 is projected to rise. The level of confidence among U.S. consumers probably rose to 64.0 in August from 63.2 in the previous month.
The world’s largest economy last quarter contracted less than economists forecast as companies reduced inventories, spending started to climb and profits grew, a Commerce Department report said yesterday. Among other precious metals for immediate delivery, silver jumped 0.5 percent to $14.37 an ounce, platinum fell 0.2 percent to $1,240.25 an ounce and palladium rose 0.2 percent to $287.05. Outlook for the gold price remains quite optimistic in the face of a socialization of bad debt and the crumbling of the dollar.
Source: http://www.goldalert.com http://www.bloomberg.com
August 25, 2009
Gold Price Tumbles as Greenback Regains Value
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The gold price declined the most in a week as the dollar climbed, dropping the metal’s appeal as an value-holding investment. Silver futures gained as the gold price fell. The dollar rose against six major currencies, ending a four-session slide. The gold price gained 0.6 percent last week, while the dollar plummeted 1.1 percent. Gold futures for December delivery dropped $11, or 1.2 percent, to $943.70 an ounce on the Comex division of the New York Mercantile Exchange. The drop was of the largest observance since Aug. 17. Gold bullion for immediate delivery fell $10.72, or 1.1 percent, to $943.13 at 2:43 p.m. EST. The gold price has exhibited considerable volatility in the recent months.
A sample of hedge-fund managers and other institutional investors reduced their net-long position in New York gold futures by 6.6 percent in the week ended Aug. 18, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets that gold prices will rise, continued to outnumber short positions by 177,530 contracts. Many analysts have commented that a high risk exists that the gold price will fall back to the $925 mark.
Net holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the gold price, rose 0.92 metric ton to 1,066.41 tons on Aug. 21, the first increase since July 16. The fund reached a record 1,134.03 tons on June 1. This represents billions of dollars worth of gold. In the case of a further drop in the gold price, silver prices may increase due to the utility of the metal. Silver futures for December delivery rose 3.2 cents, or 0.2 percent, to $14.231 an ounce. The silver price has gained 26 percent this year, while the gold price is up 6.7 percent.
Source: Bloomberg; GoldAlert; Gold Price Blog
August 20, 2009
The gold price dropped for the first time in three days after an unexpected increase in weekly U.S. jobless claims sent the dollar higher, eroding demand for bullion as an alternative investment. Silver was mainly unchanged. The dollar rose as much as 0.3 percent against a group of six major currencies before retreating. The gold price climbed 1 percent in the previous two days as the greenback dropped by the same amount.
Gold futures for December delivery dropped $3.10, or 0.3 percent, to $941.70 an ounce on the commodities division of the New York Mercantile Exchange. Silver futures for September delivery settled at $13.913 an ounce. The metal has gained 23 percent this year, while gold climbed 6.5 percent. Gold for immediate delivery fell 92 cents, or 0.1 percent, to $941.13 at 2:40 p.m. New York time. Spot silver climbed 8 cents, or 0.6 percent, to $13.91. U.S. equities gained for a third day, and some analysts forecast the gold price will rally in line with stocks.
Lately, the gold price has had an almost linear relationship with the U.S. dollar index. This has caused many investors to steer clear of the investment arena since there is “nowhere to hide.” The gold price outlook still remains quite bullish as many analysts do expect the gold price to easily break $1000 by the end of the year. As the gold price increases, the outlook for gold stocks increases at a disproportionally high rate,
Source: Bloomberg Goldpriceblog.org
August 19, 2009
Gold in Global Financial Markets
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To say that global financial markets have had an interesting ride this year is to put things mildly. The first two months of the year saw fear and high volatility dominate, with heightened concerns of the stability of the banking system and calls for a second Great Depression. The past five and a half months have seen quite the opposite, as massive government stimulus has led investors to seek out risky assets behind the premise of economic recovery and a resumption of global growth. Overall this trend can be characterized as a risk aversion trade early in 2009, followed by the risk seeking trade.
While most assets classes, such as equities, credit, currencies, and resource-based commodities have tracked the overall risk aversion versus risk seeking trade well, the gold price has primarily moved to the beat of its own tune. Gold began the year strong, peaked before the risk aversion trade did, sold off in March and April, rallied back along with risky assets in May, and has traded in a more narrow range over the past couple months.
This idea of creating its own path seems to fit with gold, as it is the one asset class that serves as both a commodity and form of currency. Gold has been viewed throughout history as a safe haven investment and a store of wealth during difficult economic times. In general gold also has an inverse relationship with the US dollar, and that is the currency in which it is denominated.
The gold price also tends to be a polarizing investment topic, as it attracts a large group of loyal supporters as well as those who love to criticize the yellow metal. Gold price loyalists frequently point to the money printing efforts of central banks and the use of gold as money throughout history, while gold detractors claim the metal serves little practical purpose and has little real value. The fact though that the gold price is traded in a global financial market and a considerable number of people purchase it for investment purposes lends credence to the view that gold is at least an important asset class which deserves serious consideration.
Going forward the gold price appears to have many factors working in its favor. Recently the gold price has given up some of its gains from earlier this year, but it remains above the crucial $930 level and has not broken its long term trend line. This price action has been coupled with a growing bearish sentiment (based on the NDR Crowd Sentiment Poll), the highest since late 2008 when gold was well below $900. Furthermore, August and September are historically the most positive for the gold price, and the back half of the calendar year is also consistently more bullish than the first half. Finally, central banks have not indicated that global economies are in healthy enough shape for them to withdraw their easy money policies of currency debasement and low interest rates. The conditions are therefore set for a positive near term future for the gold price.
Source: http://www.goldalert.com
August 18, 2009
Gold Price Falls, Along with Equities
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Yesterday, the gold price fell to $933 per gold ounce, a drop of about 1.5% for the day. The S&P 500 declined 2.4% after the Shanghai equity market’s 5.8% massive drop on a report out of China that foreign direct investment was presently declining. Also, much bearish sentiment is present as the put/call ratio jumped in the past day. This mainly mainly because risk aversion is coming into play once again.
In the past weeks, the U.S. dollar has fallen and has had very low troughs. Yesterday, the dollar index began to solidify its recent rise. This has forced the gold price to drop as a seemingly perfect inverse correlation exists. The silver price recently fell 5% as it is much more sensitive to these determinants than the gold price. Gold stocks are down 4.6% as of the market close. In all, the gold industry faced a short term fall yesterday. However, the long-run poutlook for this industry is still quite positive.
August 12, 2009
Detour Gold is one of the few gold producers that holds a gold resource above 10 million ounces and still has less than 60 million shares outstanding. The company’s share price has appreciated 231% since its IPO in Jan 2007. With a gold resource of 13.2 M gold ounces, the company has meaningful leverage to the gold price and only trades at about $40 per resource ounce. Detour Gold’s wholly owned Detour Lake project has increased its resource base by 288% since acquisition. The project is located in a region that has historically produced 180 million gold ounces.
August 11, 2009
Gold Price Stable Before Fed Meeting
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The gold price held stable before the conclusion of the Federal Reserves’s FOMC Meeting. The meeting will last two days and is scheduled to end Wednesday. The gold price has certainly fallen in the past few weeks due to a stronger dollar and positive economic indicators. The more positive the economic data becomes, the less rationale the Fed has for keeping interest rates at such artificially low levels and for maintaining a nearly $2 trillion balance sheet. This interest rates will be indicative of the next movement in the gold price. The collaboration of a weakening gold price and slightly disappointing industry-wide earnings reports has caused the gold stocks to be amongst the weakest sectors of the marketplace for the last few months. However, quantitative easing must stop as money cannot be created from nothing. The gold price may be set to make significant leaps in the comings weeks.
Gold Price 