Is Gold Overpriced or are We Headed for $1,000 Per Ounce?
- Written by Marc Courtenay
- Tuesday, 15 January 2008
Even some bullish gold bugs are getting nervous about the price of gold going up so far, so fast. Technicians are saying that we are in "overbought" territory and that we are ripe for a correction. They do say that a pullback will most likely be greeted with buyers waiting for a correction. Some who have missed this unexpectedly fast run-up are chomping at the bit for a chance to buy in.
Rumor has it that gold jewelry sales are diminishing at these high prices, and the scrap markets are seeing an increase in people who are willing to sell their gold at these prices. A self-fulfilling prophecy is most likely underway that will allow a healthy sell-off at some point. 2008 looks like it will be a good year for the precious metals and the mining stocks. Investors are taking notice.
Add a commentIncreased Price Volatility in 2008 as Gold Moves Toward $900 an Ounce
- Written by Marc Courtenay
- Saturday, 15 December 2007
VM Group, in conjunction with Fortis Bank, has released its latest "yellow book", in which the group looks ahead to 2008 and forecasts that the gold price is heading for one of the most volatile years for some time. A small production surplus of 123 tonnes is expected, which would be equivalent to just less than two weeks' projected consumption and investment demand and suggests that investor purchases will be important if prices are to remain strong. Given that the residual surplus is this small, the study acknowledges that small changes in the environment could easily swing the market into deficit, and also that the closeness of the balance intensifies the importance of external forces. The major factors affecting the market are thus identified as the fate of the US dollar, that of the western economies and prospects for Asia.
Rhona O'Connell in a posting from London for Mineweb.com reports that the group takes the view that the prognosis for continued background macro-economic problems relating to the probability of a US recession and additional dollar weakness suggests that there will be no lack of investment activity. Remember, Alan Greenspan said this week he thinks the chance for a US recession is now better than a 50-50 chance.
Add a commentWill Gold and Silver Prices Be Forced to Take a "Time-out"? The Possibility is Real.
- Written by Marc Courtenay
- Friday, 07 December 2007
One of the reasons that precious metals, especially gold, tends to spike higher is the weakening of the U.S. dollar. The direction of the price of gold does seem to be quite impacted by how the dollar is doing compared to other benchmark currencies like the euro and the yen. When the dollar goes lower, the price of gold usually goes higher. For awhile there it looked like the dollar would have a "hard landing" driving gold to new, all-time levels.
While the overall feeling now is that the dollar is still weak and could fall further, there does seem to be a change in perception in the financial sector which may suggest otherwise. While the dollar may not yet be considered strong, the fall in its value in recent months has now created problems for the US's major trading partners, with their currencies, and economies, suffering. This has served to reduce the relative strength of the trading partner's currencies versus the greenback. It also hurts their ability to sell their products in the US.
Add a commentGold Dances With Oil...to $1,050
- Written by Marc Courtenay
- Wednesday, 31 October 2007
In addition, traders recently responded to a Wall Street Journal article which reported that Fed policy makers were deliberating between a quarter percentage-point rate cut or no cut at all at their meeting, Nearly everyone has priced in the expected quarter-point cut, with some even thinking half-point.
If the Fed were to take no action at all, that could hurt gold short term, thus, “You're seeing people paring down some positions in gold coming into the meeting, given expectations the Fed will be conservative,” said Stephen Platt, a commodity analyst at Archer Financial Services in Chicago. Here are some other responses that the people at www.CaseyResearch.com put together as part of "Casey's Daily Resource", which we think is a very useful service.
“I think you're seeing a little slide today in gold based off of the money coming out of crude, which have both been highly correlated markets as of late,” wrote Zachary Oxman, a senior trader at Wisdom Financial.
“I'd expect the trade in gold to resume its movement towards $800 within the next few days, especially after the Fed,” Oxman continued. "I believe you'll see a listless trading … ahead of the Fed report as traders decide where to position themselves.”
Peter Grandich, editor of the Grandich Letter, chimed in with: “Despite being very overbought, gold still has $800 in its sights thanks to a very big short position on the Comex which is in danger of being squeezed.”
As to the influence of the Fed, “Historically, gold is sold off on the day of Fed interest rate decisions,” Grandich wrote. However, “the bears have the next day or so to take prices lower or else I expect a big squeeze to over $800 very soon.”
And some of the big boys are making decidedly bullish noises. Bear Stearns analysts said that if the Fed cuts the expected quarter-point, gold prices will surpass the $800/ounce mark within a week, while over at Credit Suisse analysts are predicting $838/ounce in 2008, $950 in 2009 and $1,050 in 2010. Add a comment
Gold and Precious Metals Correcting? Maybe, One Step Back Before Two Steps Forward!
- Written by Jonathan Brownfield
- Wednesday, 24 October 2007
The investment banking arm of the Royal Bank of Canada recently hosted an invitation only major gold seminar in London. They released a research report which predicts that the bullish upswing in the gold price will likely endure until the end of this decade.
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