March 2011

Silver Is Way Undervalued Compared With Gold – FastMoney, by John Melloy. Mar. 28, 2011.

Mother nature, one could say, is the ultimate asset allocator over a long enough time span. Going by that notion, silver is very undervalued versus gold.

Silver is about 16 times as plentiful in the earth’s crust as gold, according to John Stephenson, author of the “The Little Book of Commodity Investing.”

Yet, the price of gold per ounce currently trades at about 38 times that of silver.

According to the basic laws of supply and demand, especially given that the two metals are quite similar, the price gap between the two metals should be much smaller.

“It basically has the same physical characteristics of gold as a store of value and it also has an industrial kicker,” said Stephenson, a portfolio manager for FirstAsset Management in Canada. “For my money, the trade of the decade will be in silver. Gold was the best investment over the last decade, but in the future, silver will be the go-to investment for investors looking to ride out the current storms in the global economy.”

Gold has jumped about five-fold in the last decade as investors flocked to the metal. They went there first for safety from two bear markets, but then for an inflation hedge as the Federal Reserve lowered interest rates to zero.

Historically, gold sells for about 30 times the price of silver. Since gold is currently selling at about 38 times, silver is undervalued by about 27 percent and should be closer to $47 an ounce instead of $37.

Of course, gold will always be the more precious metal, not only because of its relative scarcity but because of its cultural significance around the globe.

Indeed, all the focus has been on gold over the last decade. The gold spot market is ten times bigger than the silver market and the SPDR Gold Trust ETF has $55 billion in assets, compared to just $13 billion for the iShares Silver Trust.

“In a world where the amount of paper fiat currency is staggering and increasing as governments from U.S. to Europe keep printing, it may be time to start looking at the poor’s man’s gold,” said Stephenson, who pointed out that while gold has exceeded its record price during the 1980s, silver is still way off the $68 per ounce level it reached during that time.

Newmont, Agnico see 2011 gold at $1,500-$1,600/oz –, by Carole Vaporean. Mar. 22, 2011.

NEW YORK (Reuters) – U.S. gold miner Newmont Mining Corp (NEM.N: Quote, Profile, Research, Stock Buzz) and Canada’s Agnico-Eagle Mines (AEM.TO: Quote, Profile, Research, Stock Buzz) said on Monday they expect increasing demand for gold as a monetary asset to send the price up to levels of $1,500 to $1,600 an ounce in the next 12 months.

Speaking in exclusive interviews at the Reuters Global Mining and Steel Summit, the companies’ chief executives cited gold’s use as a proxy currency, central bank gold purchases, rising demand from Chinese and Indian buyers, and an affinity for gold as an investment in developed economies as chief drivers leading the metal to $1,750 or even $2,000 an ounce in the next few years.

“If you had said 10 years ago that gold was going to be at $2,000, everyone would have agreed that the world would be in a total shambles and there would be chaos in the streets,” said Agnico-Eagle Chief Executive Sean Boyd.

“You could see gold at $2,000 and you could see the world function the way it’s functioning right now. And, I don’t think that’s a stretch,” he added.

Unless governments take steps to stave off growing inflationary trends, Richard O’Brien, president and CEO of Newmont, the world’s second largest gold miner, said gold’s value as a protection against inflation could lead it to $1,750 an ounce or higher in several years, possibly by 2012.

“It just depends on how well governments respond to inflation, on whether there are counteracting activities that governments take to forestall the rise in inflation,” he said.

O’Brien said, he thinks the pace of inflation is already picking up with governments increasing their currency balances over the last few years and higher food and fuel prices. It will only increase as construction of infrastructure picks up.

Historically, he said, governments have not been able to control inflation, so gold will be used as protection.

For 2011, the CEO of the Denver-based miner said he thinks volatility spawned by global currency movements and political turmoil in the Middle East will mean gold will trade in a range of $1,350 to $1,500 an ounce.

Agnico’s Boyd said a gold price at $1,600 an ounce in the next 12 months would “not be a stretch,” given its demand as a monetary asset, its desirability as an investment in developed countries, and jewelry purchases in China and India.

The higher gold price would mean silver could surge to $40 to $50 an ounce, he said, “And I don’t think that’s wild.”

“We saw for the first time (in recent history) net central bank buying last year. I think that’s going to continue.”

On Monday, spot gold was higher around $1,427 an ounce, slightly off the record high of $1,444.40 set March 7.

Despite record gold prices motivating some miners to expand their capacity, O’Brien said the limited life of existing mines, as well as lack of accessible new sites and the extended time it takes a new discovery to go into production, would assure that new supply will have little impact on price gains.

Both chief executives said they do not hedge any top-line assets like gold, silver or copper. They added, however, that they do hedge some input costs, like oil and the Canadian dollar in the case of Agnico-Eagle.

Newmont sometimes uses hedging to lock in energy costs, or hedges the Australian dollar and other currencies in countries where it operates.

(Additional reporting by Frank Tang in New York; editing by Rob Wilson)

Utah House Passes Bill Recognizing Gold, Silver as Legal Tender – Mar. 4, 2011.

Utah took its first step Friday toward bringing back the gold standard when the state House passed a bill that would recognize gold and silver coins issued by the federal government as legal currency.

The House voted 47-26 in favor of the legislation that would also exempt the sale of gold from the state capital gains tax and calls for a committee to study alternative currencies for the state.

The legislation now heads to the state Senate, where a vote is expected next week.

Under the bill, the coins would not replace the current paper currency but would be used and accepted voluntarily as an alternative.

If the bill passes, Utah would become the first of 13 states that have proposed similar measures. The others states are Colorado, Georgia, Montana, Missouri, Indiana, Iowa, New Hampshire, Oklahoma, South Carolina, Tennessee, Vermont and Washington.

Backers of Utah’s bill say they want to send a message to the rest of the country.

“People sense that in the era of quantitative easing and zero interest rates, something has gone haywire with our monetary policy,” said Jeffrey Bell, policy director for the Washington-based American Principles in Action, which helped shape the bill.

“If one state recognizes gold as a valid currency, I think it would embolden people not just in other states but in Washington,” he said.

The U.S. used the gold standard from 1873 until 1933, when President Franklin D. Roosevelt outlawed the private ownership of gold amid the Great Depression. President Richard Nixon abandoned the gold standard altogether when he announced in 1971 that the U.S. would no longer convert dollars to gold at a fixed value.

Critics of the gold standard say it limits countries’ control over its monetary policy and leaves them vulnerable to financial shocks, such as the Great Depression. But supporters argue that the current financial system’s dependence on the Federal Reserve exposes the value of U.S. money to the risk of runaway inflation.

Jim Cramer: Buy Gold Before It Soars to $2,000 – Moneynews, by: Dan Weil. Mar. 2, 2011.

Stocks struggled Tuesday, while oil soared. But not to worry, says CNBC’s Jim Cramer, investors have a way out of this – buy gold, especially before it soars to $2,000.
“I can’t emphasize enough that gold is your antidote here to what’s going on,” he says.

“What’s interesting is this is really the first genuine deviation day where the oil companies are just getting killed,” he said Tuesday.

It feels like 2008, when the surge in oil prices pushed oil stocks down, Cramer says. “This is the nightmare scenario that the bears have been looking for.”

“Gold is extraordinarily poised to be able to go up better than every other asset in the world,” he says.

With interest rates low and stocks starting to drop, gold is “exactly what you should be in,” Cramer says. “I think you can see $1,550 (an ounce) very quickly and $2,000 within the next 18 months. I think between 10 and 20 percent of your portfolio should be gold.”

In terms of gold mining companies, Cramer favors Goldcorp because of its lower production costs.

Spot gold was bid at $1,432.90 an ounce early Wednesday, down from $1,433.70 late in New York on Tuesday, having peaked that day at an all-time high of $1,434.65.

Others are bullish too. “Spreading tensions in the Middle East have prompted gold safe-haven buying,” Mark Pervan, an analyst at ANZ Banking Group, wrote in a report obtained by Bloomberg.

Rising oil prices have “fueled concerns over inflation and rising costs, boosting gold’s inflation hedge appeal.”

Gold Settles at Record High on Libya Unrest – Reuters, by: Frank Tang. Mar. 1 , 2011.

Gold rose to settle at an all-time high Tuesday above $1,431 an ounce as chaos in Libya and political turmoil in the Arab world prompted safe-haven buying and soaring oil prices boosted bullion’s inflation hedge appeal.

Unrest across the Middle East and North Africa, which unseated leaders in Tunisia and Egypt before spreading across Libya, Bahrain, Yemen and Iran, fueled a 6 percent rise in gold prices in February.

“What gold needed was a catalyst, and it found it in the form of tensions that are surfacing in the Middle East and rising oil prices, which served as an inflationary threat and also led to political instability,” said Mark Luschini, chief investment strategist of Janney Montgomery Scott, a brokerage that manages $53 billion in client assets.

On Tuesday, Iranian security forces fired teargas and clashed with anti-government demonstrators protesting the treatment of opposition leaders. The United States said Libya could descend into civil war if Muammar Gaddafi refuses to quit, after word of unspecified Western military preparations.

Gold has rallied strongly since uprisings in Tunisia and Egypt unleashed a swathe of popular protests across the region, sending oil prices to 2-1/2-year highs and raising investors’ concern about the potential effects of high energy prices on economic growth. U.S. light sweet crude oil futures soared $2 to $99 a barrel.

Spot gold rallied to a session peak of $1,432.10 an ounce — surpassing its previous record of 1,430.95 set on Dec. 7. The metal was last bid around $1,429 an ounce, extending its winning streak to three consecutive trading days.

U.S. gold futures for April delivery settled up $21.30 to end at $1,431.20 an ounce.

Bullion rose 6 percent in February, its largest monthly rise since August. It traded mostly sideways last week, then gained on Tuesday on resurgent safe-haven bids.

Silver hit a fresh 31-year high at $34.57 an ounce and later climbed 1.9 percent to $34.46. Silver has risen about 11 percent this year.

The gold-silver ratio, which shows how many ounces of silver it takes to buy one ounce of gold, approached a 13-year low. Silver has risen amid limited supplies for near-term delivery and on prospects of rising demand for industrial metals as the economy recovers.

Bernanke Comment Helps

Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee Tuesday that the recent surge in oil prices was unlikely to have a big impact on the U.S. economy, but could dampen growth and raise inflation if sustained.

Bernanke’s comments boosted gold as he offered no hint that the U.S. central bank was considering winding down its loose monetary policy, which also sent the U.S. dollar to a 3-1/2 month low against major currencies.

“From the start of crude oil’s ascent based on Libya, you are seeing general risk issues become more of a front burner in peoples’ psyche,” said James Dailey, portfolio manager of the TEAM Asset Strategy Fund.

“You’ve had the U.S. long-term Treasurys rally. You’ve had a lot of the things that traditionally occur when people start to get afraid, all except the U.S dollar rally,” Dailey said.

Since the Fed cut interest rates to 0.25 percent in response to the global financial crisis in late 2008, gold has risen 70 percent.

In a reflection of investor ambiguity on gold, holdings of the metal dropped in the SPDR Gold Trust [GLD 140.03 2.369 (+1.72%)], the world’s largest gold-backed exchange-traded fund.

Holdings fell for a fifth consecutive month in February, marking its worst string of declines since the creation of the fund in 2004.

Platinum was last near $1,837.49 an ounce, while palladium was last quoted around $814.80 an ounce.

February 2011

Silver Prices hit 31-Year High as Coin Sales Rocket –, by: Tom Petruno. Feb. 17, 2011.

Silver prices rose to new 31-year highs Thursday, underpinned by soaring investor demand for silver coins.

Near-term silver futures in New York jumped 94 cents, or 3.1%, to close at $31.57 an ounce. That topped the previous high of $31.09 reached on Jan. 3.

Before adjusting for inflation, prices haven’t been at these levels since the infamous spike of late 1979 and early 1980, when the Hunt brothers briefly cornered the market for the metal.

Silver and gold both surged in 2010, boosted in part by investors’ hunger for a hedge against potential inflation. Silver rocketed 84% last year, its biggest calendar-year gain since 1979.

Silvereagle But both metals sold off in January as some investors and traders cashed out. Silver fell as low as $26.80 an ounce by late January, a drop of nearly 14% from the Jan. 3 high, despite ongoing market rumors about shortages of the metal.

This month, traders say social unrest in the Middle East helped rekindle demand for precious metals as a haven — a shift that continued on Thursday amid more confrontations between protesters and troops in Bahrain and Yemen.

What’s more, sales of silver coins by leading government mints show that investors’ craving  for the metal has mushroomed this year.

The U.S. Mint sold 6.4 million ounces of American Eagle silver coins to dealers in January, up 78% from what it sold in January 2010 and up 263% from December.

Still, the bulk of silver usage is for industrial applications and jewelry. That means the metal’s price can be closely tied to the health of the global economy, particularly manufacturing.

If your bet is that the economy will continue to expand, “Fundamentally silver probably has better reasons to rally than gold,” said Frank Cholly, a senior market strategist at commodities trader Lind-Waldock & Co. in Chicago.

Rising inflation wouldn’t hurt either. The U.S. government said Thursday that inflation ticked higher in January.

Gold also rallied Thursday, gaining $10 to $1,384.70 an ounce, although the yellow metal still is 2.7% below its record closing high of $1,422.60 reached Jan. 3.

Chinese investor demand for gold surged in January, Reuters reported Wednesday.

January 2011

Are Gold Prices Ready to Return to Record Run? –, by: Sharon Epperson. Jan. 26, 2011.

Gold has certainly had a lackluster start to 2011, but there are many reasons not to expect the recent slack to last.

Risks of further crises in the euro zone remain high, as well as the risk of a fiscal crisis in Japan and trade war between the U.S. and China, says Capital Economics’ chief international economist Julian Jessop. He expects gold prices will rise to $1,600 an ounce by the end of the year—even if investors’ appetite for risk starts to fade.

Gold may already be on its way higher. Gold futures ended the floor trading session in New York in positive territory Wednesday for the second straight session. After Tuesday’s “bullish reversal”, traders say the “hot” money that wanted out of the gold markets has found the exits.

After a huge drop in open interest in Comex gold futures on Monday and steep declines in precious metals ETF holdings earlier this week, open interest has returned and gold prices seem to have found solid footing above near-term support levels.

“We saw indications of massive liquidations and hedge funds getting out, but now it appears that liquidations are complete. I’m looking for gold to resume its prior trend to the upside,” says MF Global precious metals analyst Tom Pawlicki, as gold has stayed above $1,317 an ounce, a key technical support level.

Gold priced in euros is another way to look at the recent price move as the “great trade” of 2010 has turned south. That trade was even better bet in 2010 than gold in dollar terms. Gold priced in euros gained 37 percent last year, as traders opted to go long gold and short euros as a way to mitigate U.S. dollar risk.

Yet in the past two weeks, the price of gold has fallen nearly 100 Euros an ounce—an 8.5 percent decline since January 12.

There are indications there too that “the bottom is in” as gold priced in euros bounced off its intraday lows Wednesday, says trader John Netto, president of M3 Capital.

“The unwind contributing to the velocity behind the rally in the Euro and sell off in gold appears to be over, making it a great spot to now go long gold/short Euros after this recent shakeout,” Netto said.

© 2011

Gold could reach $1,600 this year, says GFMS – Marketwatch, by Claudia Assis. Jan. 13, 2011.

SAN FRANCISCO (MarketWatch) — Gold futures could trade as high as $1,500 by midyear and $1,600 at the end of 2011, a metals consultancy said Thursday.

MarketWatch’s Mark Hulbert looks at whether the recent big jump and subsequent quick retreat in gold prices is actually a bullish sign for the precious metal.

Gold’s January correction is no indication the metal is permanently on its way down, although the first months of the year could disappoint gold bulls, GFMS said in a report.

Much of gold’s expected run-up in 2011 and early 2012 is likely to be “driven by still-low interest rates, poor returns elsewhere, the elevated level of government debts in Europe, the United States and Japan, and lastly nagging concerns over quantitative easing in the United States and its ramifications for the dollar,” the London-based consultancy said.

Since the start of the year, gold futures have fallen 2.5%, the combination of portfolio reallocations, a stronger dollar and easing concerns about the U.S. economy.

On Wednesday, gold for February delivery (COMMODITIES:GCG11) closed up $1.50 at $1,385.80 an ounce after a late-session reversal. Gold futures have lost 2.5% this year. SPDR Gold Trust (CONSOLIDATED:GLD) , the biggest bullion exchange-traded fund, is down 2.4%. Read more on gold in Metals Stocks.

Support won’t come from jewelry demand, GFMS forecast. It expects consumption to decline by 7% in the first half of the year.

An uptick in jewelry and bar purchases, particularly in Asia, could emerge following any price dips, providing some support for the physical market, GFMS said.

Behind gold’s 30% rally last year, the consultancy said a recovery in jewelry demand; trends in scrap supply; and purchases from central banks offset mine production and producer de-hedging.

The official sector swung to net purchases of almost 90 metric tons in 2010 from net sales around 30 metric tons in 2009, the consultancy said.

Gold – More Than a Twinkle in the Eye – The Business Times, by Felda Chay.  Jan. 3, 2011.

(SINGAPORE) Analysts believe that gold will shine even brighter this year, as the flight to safe-haven assets continues amid the weakening US dollar and euro, as well as rising demand in markets such as China, will keep gold in the limelight.

On the last day of trade for 2010, gold spot prices closed at US$1,412.63 an ounce, marking a 28 per cent surge this year – the 10th straight annual gain and the third consecutive year to see a double-digit rise. Gold has averaged US$1,227 per ounce in the last year, hitting a record US$1,426.45 on Dec 7.

It marked a spectacular end to a decade that began with trepidation, as industry players had feared a third straight decade of a bear market.

Analysts whom BT spoke to expect gold to reach new highs this year – with an average price of at least US$1,400 an ounce. Some have even touted prices hitting an average US$1,500.

This can happen, given that factors that lifted gold prices in 2010 are likely to linger, with increased demand for safe-haven assets and worries over the stalled US economy as key reasons, said analysts.

For one thing, the US and Europe are likely to continue their currency-weakening policies this year. Most recently, the US Federal Reserve embarked on another round of quantitative easing – a move that has, and will continue, to put pressure on the dollar.

European governments have also moved to tighten fiscal policy because of the sovereign debt crisis that is spreading across the region. This means that the European Central Bank will have to keep interest rates ‘extremely low, in order to prevent the eurozone economy from contracting’, said Citigroup global metals researcher David Thurtell.

The weakening US dollar and euro has also made gold a sought-after hedge against currency losses, said Mr Thurtell.

Citi has a short-term price target of US$1,450 an ounce for gold, and a 6-12-month target of US$1,550. It expects an average gold price of US$1,500 an ounce this year.

The need for a safe harbour from financial storms has sparked renewed interest among retail investors in gold, which lost favour following its crash in January 1980.

Gold hit a then-record of US$850 an ounce on Jan 21 – equal to an inflation adjusted price of more than US$2,200 today – before crashing the next day.

But these investors are back. Christian Nolting, Asia-Pacific & regional head of portfolio management at Deutsche Bank private wealth management, said: ‘Retail investor demand for gold has been quite resilient this year, given the environment of heightened macroeconomic uncertainty, as investors bought gold to diversify their portfolios and hedge against inflation risks.’

Deutsche Bank private wealth management expects gold to reach US$1,400 an ounce within the first quarter this year, and US$1,420 over 12 months. It has an average gold price of US$1,400 an ounce for 2011.

Gold’s resurging popularity among retail investors worldwide can also be seen in much simpler, everyday terms, as opposed to a portfolio investment.

An upscale shopping mall in Florida state in the US installed an ATM that dispenses 24-carat gold bars and coins. The ‘Gold To Go’ machines – the brainchild of German firm Ex Oriente Lux’s chief executive, Thomas Geissler – has also been installed in Abu Dhabi’s Emirates Palace hotel, as well as countries such as Germany, Spain and Italy.

Firms promising attractive returns on gold investments have sprouted in Singapore. Pawnshops in the country have also seen a new trend: clients redeeming their gold items, only to pawn them later at a higher value.

Central banks – both from developed and developing countries – have also showed more interest in gold given the uncertainty over the future of the international monetary system, with the World Gold Council (WGC) saying that central banks have raised their gold holdings in order to diversify their foreign exchange reserves.

Albert Cheng, managing director of the far east region at WGC, said: ‘This is something that won’t go away in 2011, especially because the emerging markets will likely continue to look for diversification.’

For example, a WGC report issued in November 2010 showed that the gold holding of Russia’s central bank rose 7 per cent in the third quarter of last year.

It is likely that central banks became net buyers in 2010 for the first time in decades, something that is expected to continue.

China, in particular, has thrown its weight behind gold. In 2010, the Chinese central bank moved to liberalise its local gold market and open its doors to local individual investors. This allowed Chinese banks to trade gold bullion on the global market and advertise gold-related investment products for locals.

Citi’s Mr Thurtell said: ‘China demand appears to have risen more than five-fold in 2010 from 2009, and is set to make further strong gains over 2011.’

WGC’s Mr Cheng also believes that China’s measures to curb price increases in its property market would make gold a more attractive option to investors.

The WGC thinks that China’s investment-driven consumption of gold could have nearly doubled to 150 tonnes last year from 80.5 tonnes in 2009. Mr Cheng added that China’s gold consumption is likely to be double in 10 years or earlier.

The jump in Chinese demand could even see China replace India as the world’s largest gold consumer. In 2008, India’s total gold consumption was 700 tonnes.

Dominic Schnider, head of commodities research at UBS wealth management, told BT: ‘Chinese demand might be similar to India, which, by providing a type of base demand on top of financial demand from the developed world, can drive prices.’

UBS has a 12-month price target of US$1,650 an ounce for gold, with the year’s average at US$1,500 an ounce.

Investors, however, should not be blinded by all that glitters. Peter O’Malley, HSBC head of resources and energy group, said: ‘We suspect that given gold’s significant run-up this past year or so, it will be difficult to maintain such momentum. Increasingly, many analysts on the Street see the beginnings of a turnaround in the US economy.’

This, he said, will push investors to look to US equities and the US dollar, thereby paring their gold exposure. HSBC’s forecast price for gold in 2011 stands at US$1,425 an ounce.

December 2010

Gold Hits 10th Annual Gain; Silver Surges in 2010 – Reuters, by Carole Vaporean and Amanda Cooper.  Dec. 31, 2010.

(Reuters) – Gold rose to within $10 of a record high on Friday, closing out an unprecedented tenth annual gain as the combination of a weaker dollar and global economic uncertainty seemed to pave the way higher next year.

The entire precious metals complex had a stellar run in 2010, led by palladium’s 97 percent rise, in a broad commodities rally that pushed the 19-commodity Reuters-Jefferies CRB index .CRB up 15 percent.

Spot silver, too, swept higher for an 83 percent gain on the year, as investors sought the white metal as an alternative to gold. It was the best-performing assets in the CRB, hitting a 30-year peak of $30.92 on Friday.

Spot gold moved up to $1,418.85 an ounce by 2:22 EST, up 1.06 percent from the previous close at $1,403.99, and a 29.4 percent advance over 2009. Bullion prices were on track for their fifth straight month of gains, the longest stretch of monthly increases since late 2001.

U.S. February gold futures settled 2010 at $1,421.40 an ounce, up $15.50, or 1.1 percent, and marked a 29.7 percent gain over 2009’s settlement when the active gold contract ended at $1,096.2 on the COMEX division of the NYMEX.

Friday’s gains were spurred by the dollar’s broad decline against a basket of currencies .DXY, as investors closed their books on 2010. But the U.S. currency still managed to end a volatile year a bit firmer.

“The gold price remains well supported by a weaker dollar and solid investment demand,” said Anne-Laure Tremblay, precious metals strategist at BNP Paribas.

“We expect the gold price rally to continue into 2011 on the back of strong fundamentals, including inflationary pressures (notably in China), ample liquidity and concerns about the value of the dollar,” she added.

Traders and analysts expect gold to break above $1,500 in 2011, particularly if the dollar extends its decline, the U.S. economy remains unable to generate enough jobs to lower unemployment and Europe’s debt crisis is not diffused.

“As for next year, I’m thinking gold could trade firmly over the next quarter or two. And then have the potential to see some weakness in the second half of the year,” said Tom Pawlicki, precious metals analyst at MF Global in Chicago.

He said he thinks gold investors will remain focused on sovereign debt issues, and Chinese and central bank buying of gold, along with quantitative easing enhancing gold’s luster.

But eventually those issues will get played out, he added and an increase in the negative real yields that have been benefited gold in 2010 could work against precious metals plays in 2011 as economic growth begins to pick up.

“If short-term yields start rising because the economy gets better or because monetary policy gets normalized that may take away that negative yield argument for holding gold and add pressure later in the year,” said Pawlicki.

Also tempering some of the enthusiasm, holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 1,280.722 tonnes by Dec 30, its lowest since early June.

Spot palladium surged to a nine-year high at $799.47 an ounce, and platinum, at $1,766.24, was up 20 percent on the year.

(Additional reporting by Rujun Shen in Singapore; editing by Keiron Henderson and Sofina Mirza-Reid)

Cramer: Buy Any Dip in Gold Prices – Mad Money of CNBC, by Tom Brennan.  Dec. 17, 2010.

Any dips in gold’s price these days are “gifts,” Cramer said during Friday’s “Stop Trading.”
The “Mad Money” host was emphatic that gold was now a currency and not a commodity, and therefore investors shouldn’t treat the precious metal as if it were, say, copper. Plus, gold’s popularity among the growing middle classes of China and India, in addition to the lack of new, viable mines coming online, have created a classic supply-and-demand situation, and that is what’s driving up the price. He expects that price to reach $2,000 about five years from now.

As for plays on gold, Cramer remains bullish on NovaGold Resources and Agnico-Eagle Mines, though both stocks lately have been weak. He called them “solid” stocks and said NG should climb to $20.

AT&T is in “a bull market that nobody cares about,” Cramer said. Despite announcing a 300-million-share buyback and upping its dividend by more than 2 percent, the Street has barely taken notice.

“Why are we yawning?” Cramer asked. “This is great.”


When this story published, Cramer’s charitable trust owned NovaGold Resources.

GFMS sees silver average $30/oz in 2011; gold at $1,400” – Reuters. Dec. 3, 2010.

“Dec 3 (Reuters) – Strong investment flows coupled with industry demand, will contribute to the strength of silver prices in 2011, Philip Klapwijk, chairman of metals consultancy GFMS told a conference on Friday.

The consultancy forecasts silver prices to average around $30 an ounce in 2011, peaking at $35, he said, while gold would peak at around $1,600 to $1,650 per ounce, and average $1,400.”

Goldman Sachs: Gold Going to $1,750, Peaking in 2012” – Wall Street Journal, by Matt Phillips.  Dec. 1, 2010.

“As long as we’re on the topic of Goldman Sachs calls, Dow Jones Commodities Service’s Rhiannon Hoyle reports:

Gold prices will likely continue to trend higher in 2011, supported by a fresh round of quantitative easing in the U.S., before recording a peak around $1,750 a troy ounce in 2012, Goldman Sachs said in a report Wednesday.

The investment bank said it expects downside risks for the precious metal, which has rallied 25% since the start of the year, to increase as economic growth and real interest rates recover.

“At current price levels gold remains a compelling trade, but not a long-term investment,” it said. “With the current round of [quantitative easing] set to end in June 2011, and our U.S. economics team now forecasting strong economic growth in 2011 and 2012, we expect U.S. real interest rates to begin to rise in 2011, likely causing gold prices to peak near $1,750/oz in 2012.”

In the report, Goldman suggested it is a good time for gold producers to begin scaling up hedging of forward production, particularly for 2012 and beyond.”

October 2010

Commodities Rally Still Strong, Gold Will Hit $2,000: Rogers” – CNBC, by Jeff Cox.  Oct. 4, 2010.

The huge rally in gold is expected to continue—with $2,000 an ounce well within sight over the next decade, well-known commodities investor Jim Rogers told CNBC.

Gold will be among the premier plays in commodities, which stand to benefit whether the economy rebounds or not, said Rogers, creator of the Rogers International Commodity Index.

“Gold is going to go a lot higher over the next decade. It may slow down for a while because it’s run up so dramatically here in the last few weeks. But gold’s going to be much higher,” Rogers said. “Adjusted for inflation it should be well over $2,000 now. When I say something like it’s going to 2,000 in 10 years it’s not a very dramatic statement given the state of the world. I’m sure it’s a given.”

Rogers said one reason gold will continue to gain is because of what he called the failed policies of the Federal Reserve, its Chairman Ben Bernanke, as well as Treasury Secretary Geithner and other government officials. He said their efforts to prop up the economy have made things worse, not better.

“They’ve all been dead wrong, totally unadulterated wrong,” he said. “Unemployment is higher now than it was before. Everything is worse instead of better. Let people go bankrupt. Let the system clean out and start over.”

Either way, he said, investors are better off in commodities than stocks and bonds.

“If the world economy gets better I’m going to make money in commodities,” Rogers said. “If the world’s economy doesn’t get better I’m going to make money in commodities, because (the Fed is) going to print money.”

He also said silver may even be a better buy now than gold because it is well off its historical high, while gold has been setting a series of new peaks lately. Rice will do well among soft commodities, he predicted.

“Look at the things that are cheap. Gold is making all-time highs, silver is still 60 percent below it’s all-time highs,” he said. “So if I was looking at a precious metal, I would look at the places that are still cheap.”

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