In a nod to mining companies in general, and gold miners in particular, UBS AG (NYSE:UBS) increased their price targets on a number of miners today, including Iamgold (NYSE:IAG), Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM).
They lifted their target on Barrick from $53.50 to $57.50, and on Iamgold from $21.50 to $23.00.
Other miners having their price targets increased were Eldorado Gold (NYSE:EGO), Goldcorp (NYSE:GG), Agnico-Eagle (NYSE:AEM), Silver Wheaton (NYSE:SLW) and Pan American Silver (NasdaqPAAS).
Wednesday, June 30, 2010
Iamgold (NYSE:IAG), Barrick (NYSE:ABX), Newmont (NYSE:NEM) Price Targets Increased by UBS AG (NYSE:UBS)
In a nod to mining companies in general, and gold miners in particular, UBS AG (NYSE:UBS) increased their price targets on a number of miners today, including Iamgold (NYSE:IAG), Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM).
Freeport McMoRan (NYSE:FCX) hasn't had a lot of good news on the macroeconomic level lately, and that has caused it to plummet from a 52-week high of $90.55 in January to closing at $61.07 a share on Tuesday.
Consequently, they've had their credit ratings lowered during that time, and word is Moody's (NYSE:MCO) is now reviewing a variety of their ratings to see if any merit being upwardly revised.
Freeport ended Tuesday down $3.59, or 5.55 percent, as the global economic picture seems to be getting bleaker all the time, and consumer confidence is plunging as a result.
Add to this the slowing U.S. housing starts, the Chinese battling inflation in their urban property markets, and the chaos in Europe, and copper doesn't look like it has anything out there to offer it support.
Although Gold Fields (NYSE:GFI) struggled some in New York today, with prices dropping $0.28, or 2.03%, the good news is their guidance for gold production for the fourth quarter is on the upper end of the estimate.
Production levels should come in a 895,000 ounces, as production was 13 percent higher than it was in the third quarter.
The company added that all their projects and regions were doing well for the quarter.
Earnings report for the fourth quarter is scheduled on August 5.
Tuesday, June 29, 2010
With the end of the six-month trading period here, and a long weekend ahead for American traders with 4th of July coming up, it looks like a period of volatility for gold prices are on hand, as they have been since records were broken two weeks ago.
Gold prices today did allow for a little momentum, as on the Comex division of the New York Mercantile Exchange, gold for August delivery settled at $1,242.30 an ounce, a gain of $3.80.
Highs for gold prices on Tuesday were $1,246, while swinging a low as $1,230. Spot gold also finished higher by over $2 an ounce.
Some traders may sell their position in gold because of weak equity markets as the end of June arrives, and that could put downward pressure on gold for the short term.
Depending on how traders interpret the market, they could do the opposite as well, investing in some gold to add it to their portfolio to begin the second half.
There is a lot of uncertainty going forward, and that adds to the volatility of gold prices, but also to its attraction.
It's a nod toward gold that it has been holding up so well since the sell off after gold records were set the week before last, and that seems to bode well for the second half of the year, which could be tougher on the first for equities, and investors continue to look for a safe haven for their money.
Freeport-McMoRan Copper & Gold (FCX) has mostly suffered from the low price of copper because of slow global demand, but when it doesn't get help from gold, it can get hit even harder, and that was the case Monday, as gold plunged $17.10, falling to $1.238.60.
In the early part of the trading session it got a nice jump, falling just a couple of dollars off its all-time high, but plummeting around 11:00 AM EDT.
Recent behavior in those cases has been for gold to usually recover after 12:00 PM EDT, but that wasn't the case today, as it never regained traction.
Freeport move jointly with the price of gold, ending at $64.66, a drop of $1.91, or 2.87 percent.
Monday, June 28, 2010
In a recent interview, Peter Schiff revealed how he has been investing in gold, along with some tips on what to avoid.
First of all, through his brokerage firm Euro Pacific Capital, he has been investing in physical gold for himself and his clients and storing it in Australia.
Concerning physical gold, Schiff recommends staying away from collectible gold like you see advertised on television a lot, as it's highly overpriced.
Schiff recommends buying real gold, and not a coin with only a little actual gold in it.
Finally, Schiff invests in a large number of mining stocks around the world, with many of them in the usual hot mining areas of Canada, Australia, South Africa and South America. He said he also has some in the United States, which among them, I presume, would be Newmont Mining (NYSE:NEM), which has been doing very well among the large gold mining companies.
Royal Gold (Nasdaq:RGLD) said today it has closed its public offering of 5,980,000 shares of common stock.
The public offering was made pursuant to the Company’s shelf registration statement filed with the Securities and Exchange Commission and a shelf prospectus filed with certain Canadian securities regulatory authorities. The offering was priced at $48.50, and proceeds to the Company from the offering, net of commission and expenses, are estimated to be about $276.4 million.
Joint book-runners for the offering were Goldman Sachs (NYSE:GS) and HBSB Securities. HSBC was also the global coordinator for the offering.
Royal Gold has stated they will use the capital for the funding of acquisitions for additional royalty interests, paying down its debt, and other general corporate purposes.
In typical fashion at the beginning of a day when gold prices move upward quickly, as it approaches about 11:00 or a little after, they always plunge, as traders sell their investments quickly to get a quick profit.
Normal behavior is prices will usually start to rise again right after 12:00 PM EDT.
Prices reached as high as $1,259.40 an ounce on the Comex division of the New York Mercantile Exchange before pulling back. It'll be interesting to see if it can overcome the plunge below $1,249 an ounce a test out record levels again.
After a level performance last week, as gold prices plunged on Monday after record prices, they were flat until they rebounded on Friday. It seems they could be poised for another run after their lackluster performance last week.
Allied Nevada Gold (AMEX:ANV) over the last year is up almost 300 percent, and they continue on their upward move, finishing an otherwise lackluster week in a big way.
Like most gold miners, they plunged last Monday as traders took their profits from the record-breaking gold prices the week before, and were level through Thursday before the big rebound on Friday, where gold prices were testing record levels once again, although falling short.
Most miners weren't able to recover after the huge hit they took on Monday, and some continued that into Tuesday, although not nearly as bad.
Even so, the continued strength of Allied was able to push them to the positive to end the week, finishing at $22.38 a share.
The 52-week range for Allied Nevada has been $7.27 - $22.92 a share.
Anatolia Minerals (TSE:ANO) has been one of the best performing gold stocks so far in 2010, and they continue to soar, being among one of the leading gold stocks on Friday, surging by $0.42 for a 7.66 percent gain, ending the session at $5.90 a share.
The share price of Anatolia has almost tripled since November 2009, when it hit its 52-week low of $2.01 a share.
The flagship of Anatolia is its Çöpler project in Turkey, where they recently received titles to all the private land within the Life-of-Mine footprint for the Phase I Oxide Project at the mine.
These swap agreements entail the trading of common land held by hte village for home in a new village where construction will begin in June.
There's more to it, but the point is everyone is happy, and that bodes well for the mining company going forward.
Full production capacity is expected to be reached in 2011, and estimates of 500,000 gold equivalent ounces to be mined annually by 2014, with gold ounces expected to come in at about 300,000.
The largest gold coin was put on the auction block in Vienna on Friday, and sold for an astounding $4.02 million.
Acquiring the gold coin was Spanish precious metals trading company ORO, who bid on it unopposed. The coin weighs in at 220.5 pounds.
Investment firm AVW Invest had owned the coin, but was ordered to sell it by the administrator of the bankruptcy proceedings of the company, whose CEO and owner was arrested on a number of charges related to the company.
AVW owned the coin since 2007, which was struck by the Royal Canadian Mint, and one of only five in existence.
The coin is also 21 inches in diameter and is made of the purest gold on the market - 99.999 percent.
Saturday, June 26, 2010
Even though Goldcorp (NYSE:GG) continues to be among the cost leaders in producing gold, they seemed to have lost some of their luster after Newmont Mining (NYSE:NEM) bypassed them in that distinction, and they've been struggling some since the middle of May, with their share price going nowhere during that time, even though gold prices have reached record levels.
They've of course had a great 12 months, and that isn't going to stop them from performing well. It just seems some of their former mojo has left them since Newmont became the cost leader, and by a huge amount. Newmont is able to produce at $241 an ounce, while Goldcorp stands at $325.
This isn't a negative toward Goldcorp, but rather a positive towards Newmont.
Gold prices ended the week with a strong push, they weren't able to move up like Barrick (NYSE:ABX) and Newmont were able to.
Goldcorp ended the week at $45.42, gaining $1.21, or 2.74 percent on the day.
Newmont Mining (NYSE:NEM) performed during the week like the majority of their competitors, plunging on Monday, remaining level on Tuesday, Wednesday and Thursday, and then flying up in price on Friday.
They outperformed their major competitors for the week, Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG), who had similar movements, just not as pronounced.
Goldcorp, even with their nice Friday move, was only able to get back to where they started with on Monday.
Newmont finished the week at $61.67, gaining $2.72 on the day, or 4.61 percent. They reached a 52-week high of $62.11 before pulling back slightly.
Hecla Mining (NYSE:HL), which along with Silver Wheaton (NYSE:SLW), was among the top movers on Friday, as after absorbing economic data, skyrocketed along with other silver and gold mining stocks.
For silver miners, Hecla did something most others didn't, and that was after falling with the others on Monday's sell-off, they continued on up gradually for the rest of the week, while the rest remained level before the big upward movement.
Most never recovered from the huge hit they took to start the week, and so were down even after the great Friday.
Hecla finished the day and week at $5.78, a gain of $0.29 for the day, or 5.28 percent.
That made them one of the few silver stocks to end the week in positive territory.
Iamgold (NYSE:IAG), like all the gold miners, big or small, started the week by dropping in a big way as traders too profits after record-breaking gold prices the week before.
In the case of the mid-tier gold miners like Iamgold, they weren't ever able to recover, as gold prices struggled throughout the rest of the week until Friday, where while getting a nice upward push, wasn't enough to make up for the rest of the week, and finished down.
Competitors like Eldorado Gold (NYSE:EGO) and Yamana Gold (NYSE:AUY) performed in similar fashion, although majors Newmont Mining (NYSE:NEM) and Barrick (NYSE:ABX) were able to end the week in positive territory.
At the end of the session Friday Iamgold was at $18.57, gaining $0.84, or 4.74 percent.
Gold prices on Friday closed only about $3 below their all-time high, finishing the day at $1,255.10. The all-time closing high for gold is $1,258.30.
Crushing economic news during the week ensures gold will continue on its upward run in the near term, as news housing starts plummeted over 30 percent and the GDP in the u.S. was downwardly revised for the third time for the first quarter.
The news that jobless claims dropped some was being spun as a positive note, but the market knows that's a bogus claim, as the hiring of worthless census workers is all that's propping up that part of the market, and just like the tax break that increased housing sales, once that's gone the real health of the job market will be revealed, and it won't be pretty.
So while almost everyone agrees gold prices moving up in the long term is a surety, the data confirming the global and U.S. economy remain in shambles makes the short-term upward movement of gold prices a surety as well.
There will of course continue to be corrections and profit-taking in the gold sector, but overall support is there for gold and isn't going to go away any time soon.
Mid-size gold miners like Yamana Gold (NYSE:AUY) weren't able to keep up with their larger counterparts this week, especially Newmont Mining (NYSE:NEM) and Barrick Gold (NYSE:ABX), who in spite of a slow week, were able to end in a flourish, finishing in positive territory in New York.
Even with their strong performance on Friday, Yamana wasn't able to overcome the Monday sell-off in gold as investors took profits, and finished the week in negative territory.
They ended Friday and the week at $18.57 a share, a gain of $0.35 on the day, or 3.37 percent. They closed on Thursday at $17.73.
After investors took profits on Monday, the rest of the week was poor for gold in general, but all the action was saved for Friday, and gold prices rebounded nicely, and Barrick Gold (NYSE:ABX) ended the week positive, after a lackluster performance over the last four days before that.
Gold prices finished at $1,255.80 on Friday, reaching as high as $1,258 and ounce.
Barrick ended the week at $46.33, gaining $1.74 on the day, a 3.90 percent rise in share price.
The stock is still close to its 52-week high of $48.02, and could be poised to pass it after the uneventful week.
Also the economic news that the GDP of the U.S. had to be downwardly revised again could be a strong catalyst for a good start on Monday.
The story for gold miners this week, including Eldorado Gold (NYSE:EGO), was a big downswing on Monday, as traders took profits, the next three days trading at level ranges, and finally finishing the week up with a burst.
Others weren't quite so fortunate, as the plunge on Monday for some, such as Eldorado was huge, and the Friday rebound wasn't as strong as some of their competitors.
Along with Eldorado, another gold miner performing this way was Goldcorp (NYSE:GG), who also wasn't able to reach on Friday where they started the week at.
The week for Eldorado brought their share price to $18.38 at the close, a gain on the day of $0.69, or 3.90 percent. Volume was also down from 3-month averages.
Friday, June 25, 2010
Gold prices pushed higher on Friday as confirmation the US economy is wobbly at best caused investors again to flee to gold for safety.
On the Comex division of the New York Mercantile Exchange, gold prices went as high as $1,255.80 an ounce for August delivery.
Gold prices on Friday traded as high as $1,258 and ounce. The all-time high for gold is $1,264 an ounce.
Although those of us who follow the markets and economy weren't surprised, the U.S. government GDP was downwardly revised again, confirming the US economy is crawling, and reinforces my belief we've never had a recovery, and are still in the midst of a recession.
The first-quarter GDP number was downwardly revised to 2.7 percent.
BHP (NYSE:BHP) (ASX:BHP) - Continue your resistance!
It took only a few hours for the new Prime Minister of Australia, Julia Gillard, to dampen hopes there might be change in the country, especially concerning the hated super tax on mining companies, which ultimately brought the downfall of Kevin Rudd.
While Gillard made some overtures to the mining companies, she didn't change the narrative, already assuming the tax will be an inevitability, and sounding arrogant in communicating that.
The only concession Gillard made was to open up talks on the super tax. What would have won companies and people over would have been to start off with saying she would eliminate the 40 percent tax on profits.
If BHP and other miners would stick together and just wait this out, while continuing the offensive, Gillard and her ilk will be chased out of town, and business and people-friendly people voted in.
what is needed in Australian government and other governments around the world are lawmakers who'll shrink spending and make government smaller and efficient.
The reason for the outrageous super tax is because Rudd, and now Gillard, refuse to make the types of cuts in government spending which would eliminate the need for siphoning off productive money and waste it on unproductive government programs.
The political and popular winds are blowing this way, and even the idea of sitting down with Gillard by the mining companies blows your mind when you see they've already won the battle.
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) declared a quarterly dividend on Thursday of $0.30 a share, which will be payable to common stock holders of record as of July 15, 2010, and will be distributed on August 1, 2010.
The Freeport Board of Directors originally announced an annual dividend of $1.20 a share in April, payable in $0.30 increments on a quarterly basis.
The 52-week range of Freeport has been $43.19 to $90.55, closing today at $63.44, a drop of $1.62, or 2.49 percent.
While copper prices have risen over the last three days, demand has plunged along with new housing starts in America, along with China cooling off their hot urban property markets as well.
Thursday, June 24, 2010
Large gold miners have been doing well so far in 2010, and Barrick Gold (NYSE:ABX) has steadily moved up, capturing the attention of Credit Suisse (NYSE:CS), who upgraded the giant gold miner from "Neutral" to "Outperform."
The price target for Barrick was also raised at Credit Suisse, from $47 to $54.
Barrick has had a 52-week range of $30.67 to $48.02, and as of 2:07 PM EDT, was at $45.24, a $0.50 gain, or 1.12 percent increase.
Some gold investors are getting a little jittery, as the growing popularity of gold, especially as it becomes increasingly reported on by the mainstream press, has them wondering if we're approaching gold bubble status.
Taking the housing market and Tech stocks of the last ten years or so as examples of bubble markets bursting, we're far from that happening with gold, for several reason.
First is the lag time from information reaching someone, to their digesting it, and finally acting on it. That can take years in some cases to come about; the reasons bubble emerge, as everyone suddenly embraces the herd mentality and bypasses their thinking and go straight to making decisions based on emotion.
That aside, from a practical point of view, the other things related to housing and take was people borrowing to feed the frenzy, which hasn't began to happen yet by ordinary investors, who in general really haven't started putting money into gold.
When the gold investing mania truly begins, we'll see the loss of rational in people, and then their doing almost anything to get their hands on gold, just like they did with tech stocks and homes.
Until the ordinary person on the street starts talking gold and investing in gold, and then going beyond that to looking for ways to borrow even more in order to secure more of the yellow metal, I don't think we'll have to worry about a bubble.
A bubble doesn't exist because gold prices, or any other investment goes up, it exists because the prices of something go up for no reason whatsoever, which what investing mania leads to.
We can't be afraid of gold prices going up, as the underlying fundamentals are there to justify it. We also can't be afraid of temporary corrections, which falsely imply a bubble could be ready to burst, when there is no bubble in the first place.
Now that the mainstream media has finally picked up the gold story, we do have to watch closer, but we still don't see that many ordinary people buying into gold yet. Only then should our ears perk of and our eyes stay open concerning a potential bubble.
And then we need to look to how people are going about buying gold. Once leverage comes into play, we're probably getting close to a bubble, and the bursting of that bubble. Until that happens, we should be safe.
The bottom line is still the fundamentals, and everything happening in the macroeconomic world today justifies the price of gold and it continuing to go up.
Even if it goes beyond where it is expected it should be, we still need to pay attention to whether or not the fundamentals are still in play. If they are, there will still be price support at some point.
And that is what we need to pay attention to more than anything else if and when a gold bubble emerges. We need to know where he entered the gold market, as far as the price of gold, and how long we want to or are able to stay in if it in fact looks like a bubble is forming.
For those buying gold at different price points, we can afford to be more patient in finding out where the support level is, and whether or not to sell, or how much to sell.
Freeport-McMoRan (NYSE:FCX) is now being covered by Morningstar, and their first credit rating for the company was a "BBB."
Morningstar said, "After retiring a sizable chunk of debt in 2009 and early 2010, Freeport reported pro forma total debt of $5.1 billion at April 1. With a significant cash hoard, only modest maturities over the next five years, and preferred dividend requirements ending with the mandatory conversion of $2.875 billion in convertible preferred stock in May, Freeport has a solid liquidity profile."
The credit rating would have been higher if not for asset risks associated high-risk countries, said Morningstar. They were referring to the Freeport Grasberg mining gem in Papua, with risks of social unrest and the government seeking higher rents.
Freeport has also invested billions in the Tenke project in Congo, where risk is even higher in regard to either a incremental expropriation, or possibly even an outright one.
In other words, the risks are outside of operational control, and while the rewards are potentially high, so are the potential losses.
While most of the major gold miners have started moving up in response rising gold prices over the last year, Newmont Mining (NYSE:NEM) is among the top gold miners among the majors, and holds its own against a lot of their smaller competitors as well, even when measuring by percentage of moving up in price.
Gold miners in general had been slow to move up with gold prices, lagging the market significantly, but that all has changed, and Newmont has experienced that change as well as any of the majors, up by over 23 percent for 2010 so far, and way more when you take them back 12 months.
The giant gold mining company, and its shareholders, have enjoyed record cash flow and earnings this year, and isn't that far off from its record high of $62.72. A number of analysts believe over the next year they'll reach $70 a share, shattering the former high if they attain that level of price.
Newmont is a well run gold miner who has started to finally catch up with the price of gold, and with the economic conditions we face, should do very well for investors over the next couple of years.
Wednesday, June 23, 2010
In hopes of raising approximately $240.3 million, after expenses, Royal Gold (NASDAQ:RGLD) prices its public offering at $48.50 a share. The company is offering 5.2 million common shares at that price.
The price is a discount of 5 percent off the Tuesday close of the company, which was $51.28. The share price was trading in New York at $48.74, a decline of $2.54, or 4.95%, as of 1:09 PM EDT.
This was an expected result because of the dilution factor of the added shares out there.
An additional 780,000 shares are offered as an option to the underwriters in order to cover over-allotments (demand). The options are available for 30 days.
The capital is being raised to fund acquisitions, pay down debt, and for any other general corporate purposes.
The offering is scheduled to close on Monday, June 28,2010.
U.S. exploration company Paramount Gold and Silver (AMEX:PZG) (TSE:PZG) has been hunting for over a year for an acquisition that makes sense to them, and they have found it in Canadian-based gold exploration company X-Cal Resources (TSE:XCL), which they announced they have acquired in a straight stock deal for $30.4 million.
Paramount's existing projects are in Mexico, while the primary holding of X-Cal Resources is the Sleeper gold project in Nevada.
The newly merged company, assuming shareholder approval, will focus on getting the Sleeper project.
"They have a program to spend between $4 million and $10 million on that property over the next 18 months to bring it back to the point where it can be developed," said one source.
The Sleeper project has an estimated million ounces of gold in it.
The SPDR Gold Trust (NYSEArca:GLD) reached record levels of gold they hold again, as on their website they show they've increased their gold holdings to 1,313.13 metric tons as the close of the trading session on Tuesday. It rose slightly to 1,313.14 metric tons about 12:30 PM EDT on Wednesday.
So far in 2010, the gold ETF has increased by 13.2 percent, and is valued at $52.2 billion, while holding assets worth $38.54 billion.
Since the latter part of 2009, the fund has added close to 180 metric tons of gold to its holdings.
Tuesday, June 22, 2010
After the expected profit-taking following the record-breaking gold week, Barrick Gold (NYSE:ABX) (TSE:ABX), Newmont Mining (NYSE:NEM) and Goldcorp (NYSE:GG) (TSE:G) followed the market down, but are starting to climb back up as gold prices continue their upward run.
Barrick and Newmont continue to outperform Goldcorp, but they have continued a more consistent upward trend since February 2010.
Newmont has been strong today, reaching $60.21 a share, a gain of $0.73, or 1.22 percent, as of 1:38 PM EDT.
Barrick Gold is next, standing at $45.25 a share, a $0.45 increase, or 1.00 percent.
Goldcorp has struggled to remain positive throughout the trading session today, although as of 1:39 PM EDT, they were still up $0.11, or 0.25 percent, hitting $44.46 a share.
Kinross Gold (NYSE:KGC) (TSE:K), Eldorado Gold (NYSE:EGO), Iamgold Corp. (NYSE:IAG) (TSE:IMG) are partaking in the rebound of gold after noon today in New York, as investors start to return to the metal after taking profits from last week's two record-breaking gold price days.
At 1:21 PM EDT, gold prices were at $1,240.20 an ounce, a gain of $7.60.
Eldorado Gold led the gold miners today, and continues to hold strong, hitting $18.04, a $0.25 increase, or 1.41 percent gain, as of 1:22 PM EDT.
Kinross Gold was close in share price to Eldorado Gold, standing at $18.24, a gain of $0.16, or 0.88 percent, also at 1:22 PM EDT.
Also at about the same share price was Iamgold, which stood at $18.23 a share at the same time as the others, increasing $0.20, or 1.11 percent.
Yesterday's sell-off in gold was expected, as the two record-breaking days last week all but ensured Monday would follow that pattern, and that was the case.
Today's gold prices continue to decline early in the session, as investors continue to take profits after a robust gold week.
Yet as the day progresses, a rebound has emerged, and gold prices have started to go up after 12:00 PM EDT; a trend that happens many times after profit-taking early in a day.
This will continue to be the practice concerning the movement of gold prices, as there are a variety of people and institutions involved, and they include gold investors, traders and speculators, each one with their own strategy to make money on gold, which will continue to create a jagged graph on a daily basis, but one that will continue to trend up.
by Toby Connor
We continue to hear pundits describe gold as a bubble. Certainly it will turn into a bubble before this is all over but we are hardly in the bubble stage yet. In order for a bubble to form you need the public to come into an asset class. The public is pretty dim and it can take 15-20 years before they "catch on". It took 18 before they noticed the tech bubble.
Once they do start to "get it" we will have about a year to a year and a half as gold enters the parabolic stage before the bubble pops. See the Nasdaq chart below from late 98 to March of 2000.
At the top 7 of 10 billboards you see driving down the highway will have something to do with precious metals.
At the top the guy standing next to you in the grocery store will tell you how many thousands of dollars he made last month off his gold coins.
At the top smart money will eventually come to their senses and realize that true value (profitable companies making the necessities for life on Earth) are being given away for pennies on the dollar to purchase a shiny metal that really has no intrinsic value.
Of course not!
I think we might be getting close to the Nasdaq 1998 level, but gold is hardly in the runaway parabolic stage where it rallies over 100% in a year. Not to mention that none of the other signs I noted above are even remotely present yet.
But no one needs to worry about a bubble just yet. We need to have at least one more serious correction similar to what happened in `08 or in tech stocks in 1998 to wash out bullish sentiment before we can start the final parabolic run into a true bubble top.
If I had to guess I would say that will occur during the next liquidation event which should be due in mid to late 2012 as the stock market collapses down into the third leg of the secular bear market.
That should mark the next four year cycle low and possibly the nominal bottom for the secular bear market in stocks that began in March of 2000. I expect the selling pressure at that climactic event will also drag gold down into the correction that should separate the second phase (what gold has been in since early '06) from the third and final bubble stage. Gold will quickly recover, like it did from the last selling climax, and when it does this is when we will see the public begin to panic into gold.
Then and only then can we start talking about a bubble.
At the moment I think we are about to enter the second leg of an ongoing C-wave advance that began in September of last year. I'm expecting this leg to take gold to the $1400-$1500 level before experiencing a major D-wave correction.
I'll be monitoring the advance on a daily basis to keep subscribers appraised of where gold is in its intermediate cycle. When I think we are getting close to the top of the C-wave I'll warn subscribers to take profits and exit the precious metals market so as not to get caught in a D-wave correction.
Monday, June 21, 2010
Ivanhoe Mines (NYSE:IVN) (TSE:IVN) went against the grain of gold prices today, and pushed up over 2 percent, gaining $0.30, or 2.02 percent at the close in New York.
In what could become the mining story of the decade, Ivanhoe is poised to continue its rise in value, even if all it had was its Oyu Tolgoi Project in Mongolia, which is scheduled to being production sometime in the middle of 2013, with construction on the mine starting this month.
The project will bring Ivanhoe into the top tier of not just gold mining companies, but mining companies in general, with copper production expected to be at 1.2 billion pounds a year, and gold at 650,000 ounces a year over the first decade of production.
At its peak, single-year production at the project could reach as high as 1.1 million ounces of gold and 1.7 billion pounds of copper. Hints have been swirling that these estimates could possibly be conservative.
Oyu Tolgoi is projected to become one of the three top copper/gold mines in the world, and has a solid, long-term legal and regulatory agreement in place, and is partners with the Government of Mongolia in the project.
Ivanhoe has a 57 percent stake in SouthGobi Resources, a subsidiary also based in Mongolia which has been providing coal to customers in China.
They also own 81 percent of Ivanhoe Australia (ASE:IVA), which a scoping study has concluded has significant molybdenum and rhenium deposits which should offer long-term cashflows, according the company. The caveat there of course is the impact of the 40 super tax on profits which has resulted in many companies putting off projects into the future.
The company also owns the Altynalmas Gold Ltd., in Kazakhstan, recently bumping their position up to a 50 percent stake in the company which controls the Kyzyl Gold Project in that country via a 100 percent stake.
Altogether, Ivanhoe has the underpinnings for a long, profitable run into the future, and in a few short years should become one of the premiere miners in the world, and as mentioned earlier, possibly the mining story of the decade.
If the main solid management and keep operational cost, along with debt, low, they should be one of the best investments in the sector for the long term.
In the morning it looked like gold may be performing a little differently after it broke all-time highs on two different days last week, but that changed later in the day as gold prices plummeted, and gold majors like Newmont Mining (NYSE:NEM), Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG) plummeted with it.
Barrick Gold dropped the most of the major three gold miners, falling to $44.80 in New York, a decline of $1.58, or 3.41 percent, at the end of the trading day.
Goldcorp wasn't far behind them, falling to $44.35 a share, a drop of $1.51, or 3.29 percent at close.
Finally, Newmont was next, plunging to $59.48 at the end of the day, a decline of $1.77, or 2.89 percent.
This was mostly based on investor taking profits and putting their money to work elsewhere.
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), along with a number of raw materials companies has been rising in price today as hopes the appreciation of the yuan against the U.S. dollar will help commodity companies going forward, after the announcement the Chinese will float their currency more against the greenback.
Shares of Freeport stood at $68.96, gaining $3.06, or 4.64%, as of 1:25 PM EDT.
One major problem many haven't considered yet, is the yuan, or renminbi, isn't assured of appreciating, and all the hand clapping and backslapping may be premature if the Chinese currency depreciates in value instead, which wouldn't be a stretch to consider at all.
Either way, the market is assuming the yuan will appreciate, and mining companies and commodity producers are benefiting from that assumption at this time.
No matter what happens though, it'll unfold over a period of time and not in the short term, which will be more sustainable whichever way things go.
Indian imports for gold is down, as surging gold prices has cut down on demand for the precious metal, according to Citigroup (NYSE:C).
“Import data indicates that the surge in gold prices during May appear to be taking their toll,” Citigroup economists said in the report. “Although jewelry demand is typically price inelastic, the run-up in prices has begun to hurt consumption.”
Gold acquisitions in the country dropped by over half, as only 16 metric tons to 17 metric tons were purchased in May, plunging from the 34 metric tons acquired in April.
India has been the largest consumer of gold in relationship to jewelry use, although it really hasn't been a factor in gold prices during the year, although in the wedding season it at times can give it a bump up in price.
Economics is what's driving gold prices now, and that's the reason Indian demand for gold is down. That won't be a factor in the price of gold going forward, but a consequence of it.
Recent behavior of gold has had it plunging after a record day, and the fact that gold prices are holding up well today is a good sign that it may have gained support, and may be ready for another upward push.
Risk appetite has returned some today, and investors have been moving their money out of gold into other sectors.
There is nothing to conclude that this will continue, as economic data recently released showed there is little to be optimistic about in the American or global economies.
If there is much growth, it'll be very slow, if it happens at all. The obvious exception will be China, which will be growing at several percentage points below its recent average, which had reached close to 12 percent.
This ensures a strong case for gold continuing to go up, and the decision by China to float their currency more will not only enhance the desirability of gold, but will help other commodities as well; albeit over a period of time.
Saturday, June 19, 2010
Jaguar Mining (NYSE:JAG) has been struggling some over the last 52 weeks concerning its share price, as it has held back while many gold miners have moved up with the gold prices, which continue to set records.
It's possible the lagging stock may be ready for a bull move, as it reached over its 50-day moving average on Friday, while also generated more interest, as volume reached 1,452,678 shares, far above the 3-month average of 1,039,440. The moving average for the stock has been $9.88.
Jaguar ended the week at $10.11, and in after hours trading stands at $10.30, as of 1:43 PM EDT on Saturday.
There hasn't been any significant news to suggest reasons for a bull move, so it's more a matter of whether or not the share price is reflecting its true value, and it definitely could be undervalued when measured against the performance of some of its competitors.
Gold closed Friday at an all-time record level of $1,256.50.
Friday, June 18, 2010
AngloGold Ashanti (NYSE:AU) was one of the few poor gold performers on Friday, on a day which broke another record at the close of $1,256.50, an increase of $11.30 on the day.
The news yesterday that they were going to focus on developing mining projects outside Australia because of the 40 percent super tax, seems to have overshadowed the rest of the good news related to gold.
This isn't necessarily looked upon as a negative in the long term, but it will probably extend the period of time for AngloGold to increase its gold reserves, as it had been looking to the Tropicana gold project in western Australia to boost it reserves, but now has relegated that to the back burner and is looking to other properties to develop.
AngloGold lost a penny in New York to close on Friday at $44.79.
Although well off its 52-week high of $9.18, NovaGold Resources (NYSE:NG) was among the gold mining leaders on Friday, surging to close at $7.36, a $0.45 gain, or 6.51 percent.
NovaGold attained its high at the beginning of May.
Hedge fund managers John Paulson and George Soros have both expressed deep interest in the company, investing at least $175 million combined in the gold mining company, with Paulson's hedge fund investing $100 million.
NovaGold holds large stakes in Donlin Creek and Galore Creek, both holding huge reserves of gold, which the company now has the money to develop with its partners.
A consistent performer among gold miners, Barrick Gold (NYSE:ABX) (TSE:ABX) is closing in on its 52-week high, as rising gold prices are helping pull gold mining companies up with it.
The 52-week high of Barrick is $48.02, reaching that level in the early part of December. Friday the giant gold miner closed the session at $46.09, an increase of 2.8 percent.
As gold prices continue to rise, Barrick will break through the resistance and probably run into the low $50 a share and find support there.
Even in the midst of several gold corrections throughout the last several months, Barrick has been able to remain pretty steady, and hasn't swung that much in contrast to other gold miners, although in the latter part of March they did drop to around $37 a share.
Gold prices continue to break records, and Newmont Mining (NYSE:NEM) is moving along with them, as the company moved to a new peak on Friday, the third day in a row the company has done that.
Newmont rose to $61.57 as of 2:23 PM EDT, gaining $1.89, or 3.17 percent. The all-time high for the stock is $62.70, which the gold miner is expected to break through, although they could experience a slight correction before they do.
Even though recent news on their Batu Hijau, Indonesian mine wasn't the best, as worse rains then normal have batter the region, causing uncertainty as to whether or not sales from the mine will reach earlier projections.
Newmont shareholders largely ignored the news though, probably considering the significant gold stockpile of the company which they can use to generate sales if gold production drops.
Newmont owns 45 percent of Batu Hijau.
Economic data released on Thursday confirmed what many gold investors have known for some time, that is we're really not in an economic recovery, and gold will continue to be the key place to put our money for safety and retaining wealth.
Gold prices continue to break records again, after yesterday's all-time record close, and gold reaching another record today, surging past $1,260.00 an ounce for the first time in history.
Momentum for gold continues on from yesterday's record gold close, as numerous data show there is nothing that can be pointed to which can justify saying there is a sustainable economic recovery, if there ever one was to begin with. More than likely we've never left the recession, and even though economists may ultimately call this a double-dip recession, it would be probably more accurate to describe it as an ongoing recession.
Unemployment continues to rise in the U.S., manufacturing is slowing way down, new housing starts have plunged, and the sovereign debt crisis and Europe and China battling inflation in its urban property markets is dragging down the global economy, and there's nothing in the near-, or probably mid-term that will change any of that.
Consequently gold prices will continue to move up, and even though we'll always have temporary corrections, there's nothing in the way of gold that will stop it from its climb ... at least not in the near future.
Thursday, June 17, 2010
AngloGold Ashanti Ltd. (NYSE:AU) is the latest mining company to put a hold on Australian projects, as the inability to turn much of a profit from mining operations in the country has miners fleeing to more profitable areas of the world.
"While we are still committed, what should be a 20-year development that our industry so desperately needs, has slipped back down the project priority list," CEO Mark Cutifani said. "It is very difficult for the Board to accept any recommendation when we don't know what it means in terms detail, or we can't guess what great new ideas the Government has up its sleeve."
Cutifani was referring to the Tropicana gold project in western Australia, which had become among the top priority projects the company was going to develop, until the misguided and unpopular tax imposed by the Rudd government on miners.
Other countries have been ecstatic over the situation, as they're promoting all over the place to draw mining companies to their borders, based on of course, less taxation.
Once miners decide to put off a project, it could end up being years, and even decades till they revisit the mine, as it can take up to 10 years just to get one running. If you add the additional years of abandoning the project, and it is increasingly seen the corner the Australian government has trapped itself in, and there's simply no way out until and unless they change or completely get rid of the tax.
Gammon Gold (NYSE:GRS) fired 397 low-producing union workers at its El Cubo mine in Mexico, while also filing criminal charges against seven union leaders.
Gammon has also suspended operations at the mine indefinitely until the consider which options it wants to take next.
Usual attempts from union members like those here to shake down the company, in this case - illegally, caused the decision to be made, as well as financial demands from these union workers that were described as “untenable.”
“Although the company continues to believe in the potential of this property, given its location in one of the most prolific mining districts in Mexico, the board and management have a fiduciary responsibility to invest in operations that provide a positive rate of return for its shareholders,” said Rene Marion, president and CEO of Gammon.
“The ongoing challenges caused by the relentless distractions of union labor disruptions and sub-optimal performance have rendered the El Cubo mine uneconomic and any further investments, including management's time and effort, are not justified.”
Shares of Gammon dropped almost 10 percent on the news, ending the session at $6.78 in New York, falling $0.74 cents on the day.
Gold prices reached a record high close on Thursday, as continuing negative economic data show we are far from being out of the recession, even if people want to soon call it a double-dip recession, as if there was ever a recovery any of us have experienced.
Most of the economic data put forth as evidence of recovery has come from government gimmicks like "cash for clunkers" and tax rebates, as as far as housing starts go, which already plunged 10 percent once the rebate program was ended.
All this means there is no true demand in the private sector which can be pointed to as a reason to believe there has ever been a recovery in the first place.
Gold has been a major indicator of this reality, and the price of gold continues to go up as those who understand the forces at work run to the one real place of safety continue to invest in it.
Even the bad economic news was reported as only revealing slow recovery, not even questioning whether it was legitimate or not.
Gold prices today closed at a record $1,248.70 an ounce, a gain of $18.20 for the day. The former record close was $1,245.60 an ounce on June 8.
The recent news that housing starts in the U.S. plunged after the tax credit ended, wasn't good news for copper producer Freeport McMoRan (NYSE:FCX), which has also faced bad news, along with other copper producers, over the Chinese battling inflation in their property market by raising interest rates and limiting the number of properties people can buy.
Add to that increasingly bad economic news from the European Union over its sovereign debt crisis, and as far as their copper business, Freeport is going to struggle for some time, as not much in the way of good economic news is coming from anywhere, confirming we may not have ever left the recession, or at minimum, we're going experience a double-dip recession heading into summer.
There can be no doubt copper prices will fall along with demand, as already seen today in London, where prices fell by 2.5 percent early in the session.
Although Freeport of course mines other metals, copper is their mainstay, and they will be most affected by what happens there, and going forward there isn't much positive to show there is something that will cause copper demand to increase.
Citigroup (NYSE:C) said BHP Billiton Ltd. (NYSE:BHP) and Rio Tinto Group (NYSE:RTP) have up to $17 billion in assets they could spin off that don't add much to the profits of the companies.
“These assets could be viewed as non-core and there may be the potential to sell or spin those assets out into the market,” Citigroup analyst Craig Sainsbury said in a report. “There is over $17 billion of net present value within the assets.”
For BHP, Sainbury noted their Worsley alumina refinery, which only adds about 1 percent to earnings, and for Rio Tinto, their Palabora copper and gold operation was noted as a unit they could divest of.
The attempt to paint a rosy economic picture is being ignored or not believed by investors, and gold prices are again exploding upward as it's considered the safest place to put your money in these difficult times.
At just before 1:30 PM EDT, spot gold prices were at $1,247 an ounce, a gain of $16.50 for the day.
People are starting to see that every time new, negative or weak economic data come out, the term "surprising" or "unexpected" is used, implying either the economists and government are completely inept, or it's a buzzword used in an attempt to manipulate people into thinking it's a temporary situation.
That strategy is no longer effective, as what is really being seen is when you use those terms month after month, the inevitable conclusion is there is no real recovery, and it's highly unlikely we've ever moved out of the recession in the first place.
No matter, gold prices are reflecting the growing disbelief in the economy picture attempted to be painted by the Obama administration, and other governments around the world.
Date from China, Europe and the United States confirm we're still in economic trouble, and gold prices will continue to rise in response to that economic reality.
One confirmation of this is the latest consumer price index data which dropped 0.2 percent in May, the largest fall since December 2008, confirming demand is slow and retailers are having to continue to cut prices in order to encourage consumers to spend.
Wednesday, June 16, 2010
Several factors are moving in the right direction for Freeport-McMoRan (NYSE:FCX), and if they line up like they in the way that it looks like they will, Freeport could break out nicely for some time into the future.
While the movement of copper prices is the obvious chief indicator for Freeport, being the largest public copper producer in the world, other factors could also enter the picture, which when added together form a potentially lucrative investment.
Over the last 60 days or so, shares of Freeport have plunged almost 24 percent in value, as China and European demand are under question, especially China, which accounts for the largest copper demand of any single country.
One question is how far the price of copper can go down, as it closed on Tuesday at $3.
With the price of gold assured to continue climbing, and the potential for the price of molybdenum to increase as well, Freeport could be poised for a rebound sometime soon, and over the long term will be a winner for those wanting to invest in companies providing raw materials to the market.
Goldcorp (NYSE:GG) (TSE:G), Newmont Mining (NYSE:NEM) and Barrick Gold (NYSE:ABX) (TSE:ABX) continued on from yesterday's good performance, all up a little before 11:30 AM EDT, even though gold prices were down slightly, standing at $1,232.90 an ounce, down $1.50 at 11:18 AM EDT.
All three performed strongly yesterday, and investors aren't convinced the crisis in Europe is resolved or that China won't strongly influence demand for raw materials and other products through their fight against property inflation.
The euro was weak overnight, also prompting gold miners to have investors gravitate toward them, even though, as mentioned, gold prices are still down and haven't caught up with the sentiment.
Normally it is the opposite with gold prices rising and gold miners following, but today it's the opposite, at least for now.
Tuesday, June 15, 2010
Pan American Silver (NASDAQ:PAAS) (TSE:PAA) announced they've come to an agreement concerning the Morococha mine project in Peru in relationship to surface rights over the long haul, with Minera Chinalco Peru.
The deal will involve Pan American relocating its core facilities now at Morococha and transferring some access rights and mineral concessions to Minera Chinalco over a five-year period.
Pan American will be paid approximately $40 million against the costs of relocation on a periodic basis.
The Silver miner will also receive mineral concessions outside the planned Toromocho pit area of Minera Chinalco, which includes veins of high-grade silver.
Everywhere you look today, gold mining companies were up, as gold prices surged, carrying the gold miners with them. IAMGOLD (NYSE:IAG), Yamana Gold (NYSE:AUY) and Royal Gold (NYSE:RGLD) were all up in the session, moving in conjunction with gold prices, which leveled at gains between $10 to $13 an ounce, and $1,231 a range of $1,234 an ounce overall, after it settled in afternoon trading.
As measured by percentage, Iamgold was up the most of these three gold miners, gaining $0.42 a share, or 2.47 percent, increasing to $17.44 a share as of 2:54 PM EDT.
Next was Royal Gold, gaining $1.25 a share, or 2.45 percent, reaching $52.35 as of 3:16 PM EDT.
Last of these gold miners today was Yamana Gold, rising $0.21 a share, or 2.05 percent, attaining $10.45, as of 3:15 PM EDT.
AngloGold Ashanti (NYSE:AU), Randgold (Nasdaq:GOLD), Gold Fields (NYSE:GFI), Harmony Gold (NYSE:HMY) Rise on Gold Prices
Like their American counterparts, gold ADRs like AngloGold Ashanti (NYSE:AU), Gold Fields (NYSE:GFI), Randgold Resources (Nasdaq:GOLD), and Harmony Gold Mining (NYSE:HMY) have performed strongly today, as gold recovers from its recent plunge and price and continues its upward climb.
AngloGold continues with its nice recent run, as it was up $1.22, or 2.89 percent, as of 2:45 PM EDT, reaching $43.48 as of 2:45 PM EDT.
Gold Fields gained $0.35, or 2.62 percent, standing at $13.71 a share.
Randgold enjoyed an increase of $1.91, or 2.16 percent increase, reaching $90.54 a share, while Harmony gained $0.20, or 2.07 percent, to go to $9.85 a share, all as of about 2:45 PM EDT.
Gold prices and gold miners continue to move up on worries over the sovereign debt crisis in Europe and China dealing with inflation in its property markets.
After a few days of being pushed down, gold mining majors Barrick Gold (NYSE:ABX) (TSE:ABX), Goldcorp (NYSE:GG) (TSE:G), and Newmont Mining (NYSE:NEM) are rebounding nicely, all up over 2 percent as of 2:30 PM EDT.
The gold miners' share prices are moving up in conjunction with gold prices, with gold prices today increasing by $10.90, reaching $1,232.30 an ounce.
Now that the temporary gold correction is over, it'll be interesting to see if gold can break the $1,250 an ounce barrier, which once it does in a sustainable way, is expected to make significant gains, with some predicting gold prices could reach $1,300 even by the end of the week.
US Gold (AMEX:UXG), Eldorado Gold (NYSE:EGO), Compania de Minas Buenaventura (NYSE:BVN), New Gold (AMEX:NGD) Continue to Surge
Since the S&P 500 hit its high on April 23, gold mining stocks have been hot, and several have soared by double-digits during that time, including US Gold (AMEX:UXG), Eldorado Gold (NYSE:EGO), Compania de Minas Buenaventura (NYSE:BVN), and New Gold (AMEX: NGD), all of which are continuing to soar today, as gold resumes its upward price movement.
Using the high on April 23 and the low on June 7 as a measuring stick for the performance of these gold mining companies, they skyrocketed during that time, with US Gold leading the way with gains of 22.2 percent. Eldorado Gold was next with a gain of 21.9 percent during that period of time, followed by Compania de Minas Buenaventura with a 15.7 percent increase in share price, and last New Gold, which still had a solid 10.4 percent gain.
Much of this was of course simply in line with the rise in gold prices because of concerns over the sovereign debt crisis in Europe and inflation in China related to their urban property markets.
For Eldorado, they also surged upward because management increased gold production estimates for the rest of their fiscal 2010 year, increasing the range from 550,000-600,000 ounces of gold to 575,000-625,000 ounces to be produced this fiscal year.
With Compania de Minas Buenaventura, they benefited from a major gold discovery in a Peru project they are in partnership with Gold Fields (NYSE:GFI) in.
Every company mentioned in this article are continuing to move upward in price today, as gold prices in general move strongly upward after a few days of correction.
Gold prices were up $13.50, reaching $1,234.90 as of 2:22 PM EDT.
Monday, June 14, 2010
Ivanhoe Mines (NYSE:IVN) may have positioned themselves as one of the top mining companies of the future, as their stake in the copper-gold mining project Oyu Tolgoi in Mongolia, ensures them a place among the top mining companies at minimum, and potential to be among the largest.
The extraordinary production numbers projected by the company through 2040, are an average of 540,000 tons of copper and 670,000 ounces of gold, starting in 2013, through the estimated 27-year life of the mine.
With proven reserves, it's hopeful the cost of financing the operation will kept to a minimum through the years, and that Ivanhoe retains solid leadership in the company.
Executive chairman Robert Friedland has said in the past that the mine could rank among the top several in the world, including legendary mines Escondida and Grasberg.
Those looking for a long-term play in the mining sector probably won't get a better company than Ivanhoe, as there's simply no known mine out there with the reserves in copper and gold for the period of time mentioned, taking into account other large mines already being operational and having resources extracted from them.
Ivanhoe is a company that must be closely watched, as it's sure to explode upwardly in price as production gets closer to launch.
Freeport-McMoran (NYSE:FCX) is largely dependent on the price of copper as to its success, and the news today that Europe allegedly had improvement in their industrial sector last month added more to the confusion if copper prices than helped it.
As a result, puts and calls were made on both side of the trader aisle, reflecting the uncertainty of the copper market.
Conflicting news and data are behind the uncertainty, as the sovereign debt crisis in Europe threatens the stability of the region, and yet somehow the industrial sector is said to have improved.
Something obviously isn't right there, and traders know there is some type of dishonesty going on, but aren't sure which way to bet against it.
For those who want to invest in Freeport-McMoran, we need to take the demand side of the equation and forget about the countradictory news which on the one side is fueled by government and mainstream media who want the more positive side of things to be the narrative, rather than the obvious challenges facing the region.
Off and on during the ongoing gold bull market, gold miners like Newmont (NYSE:NEM), Barrick (NYSE:ABX) and Goldcorp (NYSE:GG), for no apparent reason, lag behind the upward rise in gold prices.
Much of this is because of the push and pull between gold when it is used as an offensive financial tool and when it's used defensively.
When investors are focusing on the defensive side, which garners most the financial press, relating to inflation, safety, and preserving wealth, gold futures prices and bullion are what is focused on.
Gold miners are largely ignored at the outset of these times, something that creates that lag in share prices moving in step with gold prices in general.
A lot of investors are just getting to see the offensive side of gold miners as potential generators of capital gains, and so when gold prices move, especially upwards, they are still slow to respond to the positive side of the gold market at that time.
But changes by gold mining companies have made them better investments, and they're operating much closer to regular businesses than they have in the past.
I think that will change the way gold mining companies will be perceived in the future, and we'll see movements much closer to in line in gold prices than the legs we've been seeing at times when gold prices surge, but the gold miners don't.
The euro gained another temporary reprieve today, as it rose after the announcement industrial production in the European Union increased in April, somewhat relaxing concerns over the sovereign debt crisis expanding in the region.
Gold prices today consequently fell in response, dropping today by $9.40, to $1,218.10, as of 12:31 PM EDT.
“A lot of the risk trade has abated with a rally in the euro,” said Matt Zeman, a trader at LaSalle Futures Group in Chicago. “That’s the biggest reason to sell gold.”
So far in 2010, gold has increased by 12 percent, while the euro has dropped 15 percent against the U.S. dollar.
Saturday, June 12, 2010
Over the medium term, Citigroup (NYSE:C) says silver prices could outperform gold prices, as industrial demand for silver continue to rise.
Citigroup analyst David Thurtell said this, "Gold is likely to encounter repeated resistance at the US$1,250 mark over the coming month. The seasonal low period for buying in India is upon us, which will take some of the heat out of the market."
Over the six to twelve months, Citigroup thinks silver could reach $20 an ounce.
I'm not that impressed with the idea Thurtell is making his decision in what appears to be seasonal fluctuations in demand from India, which is high during their seasonal wedding periods.
To tie the existing gold market into India gold jewelry demand doesn't compute, and doesn't account for any of the factors as to why gold prices continue to rise.
That being said, the possibility silver will rise higher than gold in the medium-term is definitely a possibility, although it has nothing to do with whether the people of India are buying gold jewelry.
Centerra Gold Inc. (TSE:CG) CEO Stephen Lang reiterated his plans to grow the company primarily via acquisitions rather than organically, confirming again they've set aside $2.9 billion for that purpose over the next year.
Lang said, “We would be interested in something that is approximately our size. We are looking for potential acquisitions that are in the late stages of exploration."
They are also interested in gold miners in the early-stage of production.
Centerra is looking to pay in cash, stock or a combination of the two.
2010 has been a booming year for gold companies in merger and acquisitions, as a total of 212 have been announced so far, with many more expected to come through the pipeline, as gold prices continue to surge.
There are several mining companies taking a different route to generate earnings, and one of them is Freeport McMoRan (NYSE:FCX), which has decided to cut costs out of the production side of the business.
While this all looks obvious as a strategy, the reasoning behind it is much more important than just generating better margins and earnings.
What is does is prepare for what is a cyclical business in order to generate profits in the up as well as down times.
Strong interest has come back to the mining companies, and those that respond by acting like an easy to understand business will outperform rivals who allow themselves to be taken on the winds of the market place, with little or no control of their destiny.
Those miners like Freeport, who in the case of copper, for example, have driven down production costs from $1.04 a pound to 62 cents a pound, are positioning themselves to thrive in any economic climate.
Probably even more important, it frees up capital to take advantage of the cyclical nature of their business, giving them opportunties to buy competitors who may be struggling because they aren't prepared as well.
I think those mining companies, no matter what the particular raw material they're mining, who will be the most profitable in the future will be those tackling the cost of doing business and who have room for pricing moves which won't hurt them that their competitors don't have.
Freeport has that, and going forward they should do well for those investing in the company.
Friday, June 11, 2010
Barrick Gold (NYSE:ABX) (TSE:ABX) is under investigation again in the Dominican Republic, this time for unknown reasons, but identified by the general explanation of whether or not they are respecting the rights of workers, whatever that means.
This is the third investigation of Barrick by the Labor Ministry of the country this year, and is starting to look a little suspicious as to whether they're legitimate or not.
Deputy Labor minister Julio Sanz said this, “Just today we instructed the director of Labor to begin an investigation a in Barrick Gold and subsidiary companies to determine if there’s some violation, if the workers’ rights aren’t being respected and we guarantee that we’ll proceed against those who fail to comply with the law and we can even taken them to court."
It seems like these investigations are based on nothing more than workers whining about something they don't like, and from there an entire process is begun against Barrick.
This time there was nothing stated in relationship to why the investigation is going forward, just that it was.
For those looking to gold for a safe haven and to make money, the release of the latest retail sales report confirms we continually say at Everything Gold, and that is we're not even close to being in a sustainable recovery, and all the massaged numbers the government wants to put out can't cover up the reality of the ongoing recession.
In May, retail sales plunged by 1.2 percent, confirming what I just said, as consumers remain extremely skittish and concerned about the weakness of the economy.
Another thing the government hasn't included in the retail picture is most people were simply spending their tax money, at temporary event, just like the ridiculous notion a bunch of jobs were created, when in fact they were a bunch of temporary census positions, which will end very soon.
It's one thing to listen and read this stuff, it's quite another to believe it.
For gold investors, we need to largely ignore the positive numbers thrown out by the government at this time, as they're largely irrelevant, and only used to show one tiny part of the picture.
All the props and gimmicks are coming to an end, and the real condition of the economy is starting to emerge.
One example of that is the huge decline in hardware and home improvement sales, which plummeted 9.3 percent after the homebuyer tax credit expired.
Keep those types of things in mind when making decisions about investing in general, and investing in gold specifically.
Gold prices were up by $11.80 today, hitting $1,229.50 at 12:44 PM EDT, heading for gains for the third week in a row.
Recent pullback in prices has brought another buying opportunity, and investors are taking advantage of it by buying on the dips.
Over the last couple of days gold have fallen by just under 2 percent, after breaking another record earlier in the week of $1,254.50 an ounce.
All this continues as the faith in paper currencies continues to plummet, making gold to be an alternative currency.
“We’ve seen gold reassert itself as an alternative currency,” said Evy Hambro, the manager of Blackrock Investment Management Ltd.’s World Mining Fund. “You only really get a true bull market for gold when gold is rising in all currencies, and that’s exactly what we’re seeing.”
There is nothing happening in the world that will change this any time soon.
Thursday, June 10, 2010
Several gold mining stocks are closing in on 52-week highs, including the increasingly popular Randgold Resources (NASDAQ:GOLD).
Randgold jumped to an early start today, climbing quickly by 2 percent, and it has pretty much held there all day.
The gold miner continues to flirt with the $89 mark, going back and forth just under or over it.
It seems the resistance is at about $91, and if the company breaks through there, it could rise up to about $97, or even higher.
of course it'll generally follow the path of the price of gold, and that closed today at $1,220.20, a decline of $12.90.
With that in mind, Randgold had some resilience in the midst of a minor correction over the last couple of days.
In 2008 GBS Gld went bankrupt, leaving a mine behind which still has some gold production value, which Crocodile Gold (TSE:CRK) (OTC:CROCF.PK) came in and took over, to the delight and relief of area residents, who are almost all gainfully employed in some capacity with the mine.
According to Crocodile Gold Chief Executive Officer Mike Hoffman, they are looking for the mine to produce about 200,000 ounces of gold in 2011.
He said recently, "Basically we're moving forward and hoping to produce 100,000 ounces this year and looking to expand to 200,000 ounces next year."
The company owns another gold mine nearby, and Huffman said they're making progress there as well.
"We've had some great exploration success and we just hit a milestone where we started developments on our Cosmo Deep underground mine [on] June 1 and took the first portal blast," added Huffman. "And we hope to have that going into production mid next year."
Apollo Gold (TSE:APG) (AMEX:AGT) has launched construction at its Black Fox Mine near Timmin, in preparation for mining underground ore, scheduled to start sometime in the third quarter of 2010.
Already completed at the projects are the electrical and engineering design work, along with the concrete foundations built for surface facilities, including the ventilation raise bore pad.
On order are also equipment needed to carry out production like three jumbo drills, three scoop trams, one 40-ton capacity haul truck and two 50-ton capacity haul trucks.
Those are scheduled to arrive in the third quarter, with production expected to reach about 750 tons a day by the latter part of 2010.
Freeport-McMoRan Copper & Gold (NYSE:FCX) has been under pressure lately based on slowing imports of copper by China.
For May, the number of metric tons imported dropped to 396,712, a decline of 9.1 percent from April, and 6.1 percent from May of 2009.
While copper imports from China are up 8.2 percent in 2010 over 2009 at the same time last year, that is expected to continue falling through the rest of the year.
All of this is the result of urban centers in China whose property markets have skyrocketed, generating inflation pressure and concerns, which resulted in regulatory measures and the raising of interest rates to cool them off.
The rural areas aren't as affected, and so the idea of a Chinese housing bubble is overplayed, as they're located almost solely in the large cities.
Either way though, Freeport and others with strong exposure to copper will be under pressure for some time, at least as far as prior expectations of a China growth rate in the lower double-digits.
That will probably fall to around 7 to 8 percent, which many feel would a much healthier and predictable China.
There will be a temporary drop in raw material demand in China, but once things smooth out, companies should be able to make more accurate projections of sustainable growth.
But add this to problems in Europe and a stagnant American economy, and times are going to be tough for a while.
JP Morgan (NYSE:JPM) raised its price target on a number of gold miners today, including Agnico Eagle Mines (NYSE:AEM) and Kinross Gold (NYSE:KGC).
They also raised price targets on Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG) and Newmont Mining (NYSE:NEM).
For Agnico-Eagle, JP Morgan analyst John Bridges sees it reaching $64 a share, and with Kinross Gold, he sees them increasing t $30 a share.
Agnico was at $59.59, or $0.97, as 1.65 percent gain, as of 12:08 PM EDT.
Kinross was up $17.37, an increase of $0.15, 0.87 percent, as of 12:07 PM EDT.
In a note to clients, Bridges said about Kinross that he believes they're undervalued because of the delays at the Paracatu project in Brazil.
JP Morgan (NYSE:JPM) continues to like the gold market, and raised the price target on major gold miners Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG) and Newmont Mining (NYSE:NEM).
Analysts at the giant financial institution said that while it's "difficult to buy gold after its strength and close to record highs," everyone should have a position in the metal at these times, and recommend at minimum launching a starting position in gold.
The company is also looking for gold to hit $1,500 based on inflation increasing.
While Ben Bernanke attempted to sell the idea inflation wasn't a factor, it's hard to believe that when looking at the price increases in a number of areas.
For example, iron ore prices were raised again with Japan, which will push up the costs of steel.
I think it's a mixed bag at this time, and there is no way the amount of money that has been thrown into the economy can keep prices down for a long time, even in a low interest rate environment.
Wednesday, June 9, 2010
South African-based gold miners Gold Fields (NYSE:GFI) and AngloGold Ashanti (NYSE:AU) are now being covered by Morgan Stanley (NYSE:MS), and they opened their ratings with an "Equal Weight" on Gold Fields and an "Underweight" on Anglogold Ashanti.
Both gold companies were down in New York today as a slight correction took place after another recent session breaking all-time highs.
Gold Fields ended the day at $13.43, down $0.08, or 0.59 percent a share.
AngloGold Ashanti finished the session at $42.11 in New York, dropping $0.28, or 0.66 percent.
Eldorado Gold (NYSE:EGO) gave up some of its recent gains today, as gold prices in general were down after recent record-breaking prices.
They closed the session in New York at $17.28 a share, a decline of $0.32, or 1.82 percent. They were down further in after hours trading.
This isn't surprising as they're standing near to their 52-week high, and will have downward pressure when temporary downward pressure is exerted on them.
Eldorado is one of the highest producing, low-cost gold miners.
Barrick Gold (NYSE:ABX) dropped in New York today as the perception or temporary response to the possibility the European Central Bank is about to announce plans which will supposedly stabilize the debt markets in the region.
In other words, they're going to throw money at the problem and that will create the illusion for some that everything is okay.
These types of announcements will always temporarily affect gold futures and gold mining companies, but they will always come back once the market digests the irrelevancy of it, and realize throwing trillions at the recession and giant financial companies has done nothing to stimulate the economy, but rather has done far more harm in the long term than otherwise would have been experienced.
These types of actions will only increase the value of gold as a safe haven and protection against inflation, and solid gold mining companies like Barrick Gold will benefit in the long run.
Freeport-McMoRan Copper & Gold (NYSE:FCX) had its earnings estimates lowered today by Deutsche Bank (NYSE:DB) analysts, although the financial giant kept its "Hold" rating on them.
The changed was based solely on the lack of support in copper prices which continue to go lower on shrinking demand and continued expectations that will be the case going forward.
Deutsche Bank analysts said, “We now look for 2Q10 EPS of $1.31, 28% lower than prior estimates of US$1.81 and 34% lower QoQ. Revised 2Q10 EPS now 17% below Bloomberg consensus of $1.59. While FCX share price has entered attractive territory, we are concerned that near-term earnings weakness could impede sustained rally and await better entry.”
Freeport's performance will be in line with copper prices, and earnings will move in unison with them, which will give them some tough times ahead.
Gold futures in the US are falling today as the usual practice of taking profits after gold prices reach a new high continue on.
When gold prices go up, that usually means traders and speculators are losing somewhere else as well, and that causes them to sell some of their gold positions in order to cover losses.
On Tuesday gold hit its all-time high of $1,250 an ounce, generating the sell-off today.
The range for gold today has been from $1,227.90 an ounce to $1,242.60 an ounce so far.
Gold futures continue to break records, and they will for some time to come, as there's absolutely nothing standing in the way of price increases based on the economic conditions we face, unless you want to listen to Federal Reserve Chairman Ben Bernanke, who came out of hiding to announce we're continuing on in an economic recovery (laughter in the background).
While I don't believe we've ever been in a recovery, as the spending of trillions hasn't been able to stem the downward spiral of the economic tide we continue to face, while adding to our national debt in the United States, and other countries as well who have participated in similar practices to no avail, as Europe is showing us all in its sovereign debt crisis.
Yesterday gold again broke a record high, ultimately settling at $1.245.60 on the Comex division of the New York Mercantile Exchange.
There are no quick solutions to the flat American economy, no quick solutions to the European sovereign debt crisis, and no quick solutions in China's attempt to stem the tide of inflation emerging from their urban property market, which has and will continue to reduce demand for raw materials like copper, although they will still grow, albeit at a much more sustainable pace than in the past.
Add this together and you have gold prices continuing to go up for some time into the future.
This doesn't mean their won't be short term corrections based on all sorts of variables, like speculators and traders covering positions they've lost money in in other sectors, and many just taking profits.
But overall, there is simply nothing out there other than concerns over too much optimism in the gold market which could drive up gold prices more speculatively.
Because of the fundamentals and safety concerns emerging from those fundamentals, even if speculators drive prices up at times, it doesn't negate the safety factor and fears over weakening and untrustworthy paper currencies as a result of unprecedented spending by central banks and governments around the world.
There is no recovery in the short- or mid-term, and that will mean gold will continue on its upward journey during that time.
Tuesday, June 8, 2010
There are a number of people who are telling people they should stay away from gold and gold mining companies, for what seems to be nothing other than being contrarian for the sake of being contrarian. So they recommend not investing in companies like Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG) and Newmont Mining (NYSE:NEM) because they're focused almost solely on producing gold, rather than a variety of metals, among other reasoning.
Others have also stated they think this is largely speculators driving the gold price increases, rather than based on fundamentals.
Forgetting gold miners for a moment, to suggest that gold prices are driven by speculators rather than fundamentals is to basically reveal incredible lack of understanding of gold and what is driving its price.
For pure gold miners, those who are controlling costs and producing gold to meet increasing demand aren't being driven by speculators, but, again, demand.
So the idea that gold miners aren't a good investment is ludicrous in our current economic environment, although obviously each one needs to be taken a close look at.
Freeport-McMoRan (NYSE:FCX) was upgraded from "Neutral" to "Overweight" today by HSBC (NYSE:HBC).
While upgrading Freeport, at the same time the price target was lowered from $85 to $80 by the financial institution.
Freeport has plunged by over 22 percent over the last month over fears copper prices will decline even more as China battles inflation in its property market which will result in lower orders which will put more downward pressure on copper.
Since Thursday of last week Freeport has dropped by over 15 percent, although they were up to $59.97 a share, a gain of $1.31, or 2.23 percent at 10:49 AM EDT.
Gold prices exploded to new highs today in New York and London as confidence in paper currencies continue to erode and concerns over the sovereign debt crisis in Europe and China demand for raw materials and products surge.
Prices for gold today early in the session reached as high as $1,254.50 an ounce, and was trading at $1,250.80 an ounce as of 10:34 AM EDT, a gain of $10.50 at the time.
These gold prices reflect the August futures delivery.
The past high for gold was $1,249.70, set on May 14, 2010.
Monday, June 7, 2010
The recent investment by Kinross Gold (NYSE: KGC) in Red Back Mining (OTC:RBIFF.PK) (TSE:RBI) has drawn the attention of industry watchers as to the possibility of Red Back being an acquisition or merger target.
Red Back produced around 340,000 ounces of gold in 2009, and estimates it'll produce about 485,000-525,000 ounces in 2010. Those production levels going forward is what makes the company attractive to potential suitors, which some analysts believe could be producing over 1 million ounces of gold by 2015.
The valuation of the company has skyrocketed, and few companies have an interest or ability to acquire the company at this time, and so may wait it out for awhile.
If someone is interested though, that could be a mistake, as it's possible it could continue rising in value going forward, and that would make it out of the price range of all but the very highest level gold miners like Barrick Gold (NYSE:ABX), Newmont (NYSE:NEM) or Goldcorp (NYSE:GG).
There are a few others who may be interested, but Red Back already has a higher valuation than they do at this time, so we'll have to see how it all plays out.
Kinross recently paid C$600 million for its 9.4 percent stake in Red Back, and they would probably do well to just get a bigger piece of them than to take it over altogether. But they have time, and if the share price of Red Back plummets, it would definitely be a buying opportunity for Kinross or others wanting a piece of them, or all of them for that matter.
Red Back's major operations are the Chirano Mine in Ghana and the Tasiast Mine in Mauritania.
At the Reuters Investment Outlook Summit in New York, Elliott Wave president Robert Prechter maintained gold could fall 40 percent in a major market correction.
Prechter is trying to weasel out of his projection in January that gold will plunge by 40 percent, saying it couldn't continue on because of deflation and too many institutions and people owing it.
Of course the assertion of deflation is ridiculous, and unless you trust the government numbers, which they massage and tweak to their benefit, deflation hasn't been around yet, and only once in decades has their been a deflationary year.
There is the crowd that redefines inflation and deflation in order to say there is deflation, but they can't be taken serious, and for everyday items people buy in America, there hasn't been deflation, unless want to pick out a couple out of the bunch to justify your point.
The weasel aspect I mentioned was when he said gold was being stalled by technical momentum and since 2006 the increase has subsequently been experienced at a lower rate, which he covered his butt by saying, "That is not a guarantee of change but a sign that one is likely."
Anything is likely, so that's irrelevant.
What must be taken into consideration is the sovereign debt crisis in Europe, the Chinese battling inflation and the so-called jobless recovery in America, which isn't one, as the recent job numbers revealed, where the government has propped up the jobs market by hiring people, while the private sector has been holding back, not trusting in the assertions of the government, as they're the ones on the street experiencing the realities of the economy on a local, regional, national and international basis.
That means investors will continue to seek safety, and there is nothing safer than gold at this time, and there is a growing lack of faith in paper currencies around the world, with gold really being the only alternative.
I think the idea of gold being over-bought is where Prechter misses it, as that may be true in general among institutional investors, but the vast majority of people on the street haven't even entered into the gold market yet, and until that happens, there's not going to be a bubble, let alone one that bursts, neither will there be a major correction to the degree Prechter calls for, although there will always be some corrections in any market.
Demand for safety and concern over inflation is what is primarily driving gold prices up, and that isn't going to change or correct, based on what Prechter calls "technical indicators," which to me is a bunch of BS and mumbo jumbo.
The idea that 98 percent of people are positive about gold is another somewhat irrelevant statement. Obviously that 98 percent would have to have been culled from a small group of a certain type of investor.
What he meant by that is if everyone is positive, he's going to run the other direction. In normal investing circumstances that's not a bad strategy, but with gold in these economic circumstances it doesn't make sense.
Gold isn't going to correct to that level at this time because there is simply nothing out there to make it happen. Everything is pointing to instability and ongoing recession.
And if you believe there has been a weak recovery, then call what's coming a double-dip recession.
Either way, gold prices are going to continue going up, and while there will be sell-offs and taking of profits like a couple of weeks ago, I don't see anything that will change the price of gold going up for years into the future.
Now that doesn't mean there will never be a correction, but it's not going to be for some time, and it won't happen until there is a real bubble market similar to the housing bubble, where clueless people bought homes to make some quick money, not understanding they were at the top of the ponzi scheme. Gold isn't anywhere near that, and there is too much inflation and geo-political situations to change that in the near term.
Freeport-McMoRan (NYSE:FCX) senior vice president of marketing and sales Javier Targhetta said today the copper concentrate market will suffer a shortfall over the next three years because of 2008 prices which caused mining projects to be delayed.
Of course add the current plunge in prices to the mix, and it's hard to tell how extended that shortfall will be if demand picks up.
Estimates are there will be a fall of between between 500,000 metric tons and 1 million tons in 2010.
“The concentrate market will remain tight over the next three years, or even longer,” said Targhetta.
It's hard to tell what type of effect this will have on the short term, as scrap is helping meet demand around the world, and it's unknown how long that will last, and if it'll end up causing shortages which will cause prices to rise.
Eventually that will be a certainty, but the current economic conditions in China, Europe and the U.S., make demand possibly a less worrisome part of the equation, as it continues to drop in relationship to copper.
Short term this will probably be meaningless, and it'll depend on how long shortage last as to what the price of copper will be going forward.
Copper concentrate is what is used to produce copper.
Gold is again closing in on a new record, while silver surged by 5 percent to finish the session at $18.16 an ounce.
Gold futures increased by almost 2 percent to close at $1.240.80 an ounce, only a couple dollars short of the all-time record.
For the day, gold rose by $23.10 for August delivery, while silver numbers were based on July delivery.
Silver prices were moving in unison with gold as a secondary safe haven, as it wasn't based on silver demand at this time.
Gold mining companies, for the most part, were all up today.
Gold prices are skyrocketing today giving major gold companies like Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM) and Goldcorp (NYSE:GG) a nice push upward in share prices, as investors continue to gravitate toward safety for their capital.
After a correction and traders and speculators selling off their positions in gold, that has done almost nothing to dampen the enthusiasm for gold, which continues on its historic bull market, with nowhere in sight as to when it'll pull back for the long term.
This reveals the view of gold by those investing in it, and how they believe there is a strong support under the metal as it continues to be resilient in the face of every type of pressure that could come against it.
Gold companies are extremely happy about this of course, as well as those investing in the right gold miners, as they will continue to move up with the price of gold, and the low-cost gold producers and their shareholders will profit handsomely from it, including those holding positions in the giant gold miners like Barrick, Newmont and Goldcorp.
Gold prices today are again approaching record levels.
Gold prices exploded upward today as we called at Everything Gold on Friday, as the emerging narrative for the global economy continues to weaken, with the major economies and growth areas faltering.
The macro-economic conditions continue to deteriorate, as China battles inflation, the European Union struggles to survive, and now the latest being the confirmation the jobs being created in the United States are fake, just government spending in attempts to make things look much better than they are, including the temporary and worthless census workers who will be laid off in the near future.
Gold prices will continue to surge in the light of these circumstances, which have nothing in the near- or mid-term to show it's going to change.
At a little after 3:00 PM EDT, gold prices stood at $1,243.10 an ounce.
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) has fallen today as prices of metals overall have dropped. As of 11:48 PM EDT, the stock was at $61.27, a $1.54 decline, or 2.45 percent.
This is all related to the macro-economic conditions in Europe and China, and most recently, with the new job creation numbers coming out that were highly disappointing in the private sector, with about 95 percent of jobs created being temporary census worker jobs, which are pretty much meaningless.
So with everything pointing to a continued slowdown and little if any economic growth, copper prices are expected to drop or grow very slowly in the years ahead. Gold on the other hand will be a strength for Freeport, although copper will be the primary driver of share price for them.
They could possibly divert more resources to gold, as there is a surety the gold bull market will continue on for years.
Saturday, June 5, 2010
Confusion over the daily fluctuation of the markets based on little snippets and tidbits of news can drive even the most astute trader or speculator batty, but in the case of gold, investors and pundits like Marc Faber and Jim Rogers aren't confused at all, and they both say they have no intention of selling their gold, and are always on the lookout for dips so they can acquire more.
Without getting into too much detail, the reasons these guys continue to do this is there overall understanding of the macro-economic circumstances.
If you understand the macro-economic situation affecting any investment, and gold in particular, the daily ins and outs of the market are largely irrelevant, unless you're trying to make a quick killing, which hopefully you're not. Even the day traders can't do that great in attempting to time the market, and very few are that successful, even though there is always the glamor attached to being involved in it.
In general, macro-economics as it relates to gold, will deal with issues like national debt, inflation, paper currency and the practices of central banks; all of which the above are highly affected by.
For example, around the world now central banks refuse to implement austerity measures into their practices, as they're committed to bailing out whatever major problems occur in order to save the various economies or industries they deem in need of saving.
That means they'll have to print money and government debt will continue to rise to astronomical levels.
Another indicator is job creation in the private sector, which is just above zero in the United States, with the government being the almost sole creator of jobs, which means they're propping up the economy while creating nothing of value that has a chance to last.
This is why Faber and Jim Rogers continue to hold gold. The central banks and governments have become addicted to these practices even more than in the past, and it's not sustainable by any stretch of the imagination.
Consequently, trust in paper currencies is eroding around the world, and the only reason the U.S. dollar is stronger is because the euro isn't. It's not because it has some type of safe or mystical power which makes it a place of safety. It's only relative in the sense when you compare to the condition of most other currencies in the world, which for the most are even more unstable.
So within these general parameters, gold can be counted on to continue to move upward in price, no matter what type of temporary correction will take place.
Some clueless analysts and pundits try to make it look like gold is in a bubble, but it's not even close, as until the general population gets into the gold market and drives up prices without knowing or understanding the fundamentals, similar to clueless house flippers and those with HELOCs in the housing bubble, where they kept refinancing or bidding up the prices of houses like it was a game with no end, not understanding it had become a ponzi scheme which was about to come falling down around their heads.
It seems the average or everyday investor hasn't even began to invest in gold, so until that happens it won't be those who bid up the price of gold, but the things mentioned above.
There will of course be the traders moving in and out of the market which will drive gold prices up over short periods of time, and then the price gets a correction when they sell their positions to cover other unrelated investments they've lost on.
Only when the price of gold goes up at unrealistic levels for no apparent reason will be be in a bubble, and that won't happen until far into the future, as people in general still stay away from the yellow metal, as they fear that which they don't understand, and only after years of financial reporting on it and they feel safe, will they enter in. At that time the market will be close to a top, and then they'll start to bid gold prices up based on nothing else than everybody has caught gold fever.
So that's when and how a gold bubble will occur, and until then we should feel confident gold prices will continue onward and upward.
This is why Marc Faber and Jim Rogers, among others, continue to hold and invest in gold, and will continue to do so for many years to come.