Paulson Holds Gold, Soros, Robertson Sell

Hedge fund managers were cautious in the latest quarter in reference to their gold investments, with John Paulson holding onto his gold investments, while George Soros sold some of his and Julian Robertson sold all of his fund's stake in Market Vectors Gold Miners ETF.

Paulson didn't sell any of Paulson & Co.'s 21.8 million shares in SPDR Gold Trust, of which the fund is the biggest shareholder in.

With the price of gold dropping, that obviously had a negative impact on the value of Paulson's stake in SPDR, as it fell from a value of $3.75 billion to $3.54 billion in the fourth quarter. During the fourth quarter spot gold prices dropped about $100 an ounce, or close to five percent.

Paulson also held onto stakes in major gold miners AngloGold Ashanti and Barrick Gold (ABX), among a number of others.

George Soros cut his position in SPDR Gold by over 50 percent from the 1.32 million he held in the third quarter to 600,000 shares in the fourth quarter.

Via Tiger Management, Julian Robertson held onto his stake in the Junior Gold Miners ETF.

All of this isn't entirely unexpected, as it was thought that gold could drop in the short term while rebounding as the year goes on.

This should be the case, with gold and other commodities jumping once the equities market begins to correct.

At this time gold is pressing down towards the $1,600 an ounce mark, with some believing it'll go below that in the not-too-distant future.

Gold Prices in QE3 Environment

Now that Ben Bernanke and the FOMC have implemented another round of quantitative easing - one that could go on indefinitely with the promise to purchase $40 billion in mortgaged-backed securities on a monthly basis - gold and silver prices are about to go ballistic, as there's absolutely nothing in the way now to keep them from resuming their upward climb.

Gold shot up by over $38 an ounce on the news, while silver climbed over 4 percent in response to the highly anticipated move, which was more aggressive than thought by most.

The U.S. dollar is about to reverse directions, set to weaken in response to the stimulus move.

As for gold in general, there is nowhere for prices to go except up, at least until there is a reversal in job numbers in the U.S., which could take years to improve if we are to measure it by the prior response to QE1 and QE2 by the U.S. economy.

What has been a volatile and unsure economic environment because of there being no response from the Fed in the recent past concerning more stimulus, has now become much more stable in the sense of knowing what is coming from the central bank in the near and long term.

That will result in investors moving into commodities in droves as they seek to protect their assets from inflation and the falling value of the U.S. dollar.

In the short term we'll also see a big boost in the equity markets, but that has a lot more risk to it with stimulus than commodities do.

Barrick Gold jumped, trading at $1.50, up 3.78 percent, as of 2.51 PM EDT. Silver Wheaton was at $38.22, up 2.00, or 5.52 percent, as of 2:52 PM EDT. Goldcorp (GG) was trading at $45.17, up $2.11, or 4.90 percent. First Majestic Silver was at $21.91, up $0.87, or 4.13 percent.

Barrick (ABX) (GG) (NEM) Jump on Stimulus Expectations

Gold giants Newmont Mining (NEM), Goldcorp (GG) and Barrick Gold (ABX) jumped on Friday after the August nonfarm payrolls report revealed a dismal month, with an anemic 96,000 jobs created, far below the 125,000 analysts were looking for.

Other commodities and related companies jumped as well, as it pointed towards the likelihood that Ben Bernanke and the Federal Reserve will institute another round of quantitative easing in hopes of jump starting the economy.

As for gold itself, on the Comex division of the New York Mercantile Exchange, the most active contract for December deliver jumped $34.90, or 2.1 percent, to settle at $1,740.50. The last time gold settled that high was on February 28.

If Bernanke does pull the stimulus trigger, when coupled with the potentially unlimited bond-buying program launched by the ECB, gold, silver, and other commodities will soar again in response.

But even if the Fed decides to wait till later in the year, it appears a floor has been placed under the market for now. The longer nothing else is down though, the shakier that floor will become.

Bernanke and the Fed probably only have one real shot left at making it appear they can do something to help the economy recover, so while it's probable there will be some type of stimulus offered next week, it's also possible the decision will be made to wait a little longer.

That would put some downward pressure on gold and silver, along with other commodities in the near term, but it probably won't take long to recover once investors realize it's only a matter of when, and not if, the stimulus will come.

Stocks on the other hand will get crushed if nothing is done be Bernanke.

Barrick Gold closed Friday at $40.16, gaining $1.16, or 3.0 percent. GoldCorp ended the session at $43.00, up $0.86, or 2.0 percent. Newmont Mining closed at $51.69, rising $.79, or 1.6 percent.

Gold Poised to Jump on Stimulus Hints

Gold and commodity prices soared Friday as European leaders announced they're going to recapitalize the banks in the region, although specifics of the deal weren't revealed.

In response, gold futures for August delivery climbed $53.80 to settle at $1,604.20 an ounce on the Comex division of the New York Mercantile Exchange. Silver prices also soared, jumping $1.32 to settle at $27.61.

While it help prop up the markets in general, it also did with gold as well, as it basically supports the premise there will be much more stimulus going forward; presumably with a big dose coming sometime soon in the euro zone.

The announcement by the Federal Reserve that it would keep interest rates low through 2014 and continue on with its "Operation Twist," also teases and sends a signal to the markets that there will inevitably be more stimulus from that source as well.

With the EU, euro and euro zone fighting for its very survival, there isn't even a question as to whether or not there will be a stimulus, it's only a matter of when and how much.

For the United States, it's pretty much the same situation in the sense of slowing growth, and the Federal Reserve has stated it's ready to act in response to negative economic conditions, which are in fact already upon us, as growth rate estimates in the U.S. have been recently lowered.

The central bank cut its estimate for the 2012 gross domestic product growth to 1.9 to 2.4 percent, from 2.4 to 2.9 percent in April. Estimates for 2013 were lowered to 2.2 to 2.8 percent, compared to 2.7 to 3.1 percent in the prior projection.

All of this refers to speculation by the market that more quantitative easing is coming, and that will continue to provide support for gold, which already got a boost with the news out of the EU.

One major result from all of this will be for the euro to strengthen against the U.S. dollar, which will also provide impetus for the price of gold and other commodities to rise.

Pressure is mounting for stimulus action, and for better or worse it's going to come. The market is ready to reward gold and silver when that happens, as evidenced by the huge price increase on just a little good news from that point of few. What's going to happen when full-fledged stimulus is put into action again; especially when more than one part of the world does it? Friday's response by gold and silver prices give us a glimpse into what that will be.

Barrick Gold (NYSE: ABX) closed Friday at $37.57, rising $1.34, or 3.70 percent. Goldcorp (NYSE: GG) ended the session at $37.58, up $1.48, or 4.10 percent. Newmont Mining rose $1.39, to close at $48.51, gaining $2.95 percent. SPDR Gold Trust (NYSEARCA:GLD) ended the day at $155.19, up $4.14, or 2.74 percent.

iShares Silver Trust (NYSEARCA:SLV) soared $1.02, gaining 3.98 percent to close at $26.65. Silver Wheaton (NYSE: SLW) exploded $1.35, jumping $5.30 percent, to end the day at $26.84. Endeavour Silver (NYSE: EXK) closed the day at $8.12, up $0.33, or 4.24 percent.

Gold Mining Stocks About to Crumble?

The gold mining industry is poised to go through some shock, as the little talked about rise in gold production costs is hitting the industry hard, and is only going to get worse going forward.

Taking a major hit from the fallout surrounding rising production costs was Barrick Gold (NYSE: ABX) CEO Aaron Regent, who was recently fired because of his inability to keep costs at a lower level.

While it wasn't explicitly cited as the reason, it definitely was implicitly suggested as the impetus behind the move.

That is supported by the production cost numbers, which have jumped by 22 percent over the last year, to $560 an ounce, soaring from the $460 an ounce it cost to produce an ounce of gold last year.

Even these figures are about 6 months behind the current cost levels, which are estimated to have soared to about $1,000 an ounce in production costs, and more for some gold mining companies.

According to AngloGold Ashanti (NYSE: AU) CEO Mark Cutifani, gold production as measured by total cost basis is "running at about $1,200. The industry average is probably around $1,250 an ounce."

Iamgold (NYSE: IAG) CEO Steve Letwin concurs with those numbers, saying, "It's going to be difficult for anybody to produce gold at less than $1,200 an ounce."

Not only are all the usual production costs rising in the industry, like labor, mine infrastructure, heavy equipment, utilities, fuel, permits and drilling, but the process of reaching quality gold deposits are rising as well, based upon the fact companies are having to dig deeper and deeper to reach them. Coupled together, these are the causes in increased gold production costs that aren't going to go away any time soon.

Add to that corrupt governments which can wait until all the money is spent and production begins before they suddenly change their tax structures to basically steal money from the miners, and you have another volatile situation added to the mix.

The reason I mention this is because the idea the gold miners have been lagging the rise in the price of gold has been used as a reason to invest in the miners because it is felt it is inevitable that the price of the gold mining stocks will follow the price of gold upwards.

But the real reason the gold miners haven't been doing well is the soaring production costs, which have disallowed what appeared to be a logical move up in share price of the companies.

Assuming you want are invested or want to invest in gold miners, the key number to look at on a quarterly basis are the production costs of the companies. That will be the key for profitability for them, even when gold starts to rise in price again.

Seeing that costs have climbed so high, so quickly, gold could reach about $2,000 an ounce and it would only bring the gold miners back to where they were in 2010 and 2011 as far as production costs versus the price of an ounce of gold.

If the price of gold remains level, or even drops in the short term, we'll see some gold miners begin to go bankrupt over the next few years, as they simply can't operate with a profit at these cost levels.

On June 30, 2008, Barrick Gold was trading at $45.09. As of this writing it's trading at $35.76. So unless you got in below $20 in October 2008, you would have made very little money, if any, over a four-year period. Most likely you would have lost money.

So are there any good gold mining investments? Those that will bring shareholder value will be those that are best able to manage production costs. That will be measured, for the most part, by those with the best mines, and least amount of production costs needed to extract the gold.

Some companies are positioned well in this area, so be sure to perform due diligence concerning the gold mining companies you're taking a look at.

Are there other ways to invest in a gold stock that could offer better returns? Sure. I would look at gold streaming companies such as Royal Gold (NASDAQ: RGLD), which is tied more into the price movements of gold, and incurs little risk on the production side. The risk for streamers lies in the production of a particular mine or mines, not the costs associated with it.

What about the eventual return to rising gold prices? That will happen, as central banks around the world won't allow the global ecomomy to go on as it is without putting up a fight by throwing more money at it.

There is also the surety of more bailouts in the euro zone, which will push up the price of gold. Add to that the announcement by Federal Reserve Chairman Ben Bernanke that interest rates will remain where they are until 2014, and there are all the elements in place for gold prices to rise.

The artificially bloated U.S. dollar will come crashing down again once stimulus measures are resumed, and then gold will continue its upward rise in price.

What the question is for all gold miners is if it will increase enough to significantly offset the rise in production costs.

Whatever the answer, those gold miners with those costs best under control will be the winners in the future, while those that aren't able to contain costs, will likely fall by the wayside by declaring bankruptcy.

At that time interesting things will happen, as significant gold reserves could be made available to the better run companies.

For now investors in gold miners need to be even more vigilant as usual, and be sure to know as accurately as they can, what the real production costs of the miners are, as that will determine profitability and whether or not they'll survive over the next several years.

Barrick (ABX) (EGO) (NEM) Jump Monday

After starting off strong on Monday, gold futures were up and down the rest of the session, closing the day at $1,588.70 per ounce for June delivery, down slightly from Friday's close.

Barrick Gold (NYSE: ABX), Eldorado Gold (NYSE:EGO) and Newmont Mining (NYSE:NEM) all finished up on the day, as the U.S. dollar fell against the euro.

It appears gold is ready to move up again after it dropped to $1,527 an ounce last week, the lowest level in 2012. That reversed significantly when gold traders scrambled to cover their short positions.

Expectations are when gold prices move slightly above $1,600, investors will jump back into the gold market.

Even so, the volatility of the price of gold because of the perceived safety of the U.S. dollar, which has been strengthening of late, along with the sovereign debt crisis in Europe, has investors jittery, and most are buying on dips until they get more clarity.

It's highly probable the greenback will weaken sometime soon, as it's a flawed currency itself, although it's been strong against the euro lately because of the financial crisis in the euro zone.

The question is whether the U.S. dollar will rebound yet again as the euro falters in full view of the world.

If it does, it makes gold more expensive for other currencies, putting even more downward pressure on it.

Until the crisis in Greece is resolved, we'll see this being the ongoing scenario. Much of this is now driven by headlines.

Barrick (ABX) Misses on Rising Costs

The ongoing rise in cost continues to weigh on the mining sector, as evidenced again by the performance of Barrick Gold (NYSE:ABX) in the latest quarter, where it missed its EPS estimates by a huge 10 cents a share.

For the fourth quarter ended December 31, Barrick earned $1.17 billion, or $1.17 a share. Analysts had been looking for $1.27 a share.

The rise in gold prices during the quarter wasn't enough to offset the soaring cost of doing business, although they did boost revenue to a huge $3.79 billion or 26 percent increase. Gold price increases accounted for 22 percent of the gains.

Net income fell from $961 million, or 96 cents a share last year to $959 million, or 96 cents a share in the latest quarter.

Fourth quarter gold production came to 1.81 million ounces, at $505.00 an ounce. For all of 2011 gold production reached 7.68 million ounces, at an average cost of $460.00 an ounce.

Gold production estimates for 2012 are from 7.3 million to 7.8 million ounces at a cah cost range of $520 to $560 an ounce. Barrick said the higher costs in production are the consequences of rising labor costs and inflation, as well as a change in the production mix.

The most recent analyst activity on Barrick was a downgraded from Canaccord Genuity on January 30, where they were taken from a "Buy" rating to a "Hold" rating, with a price target of $57.50 on the gold mining giant.

Barrick was trading at $47.65, up $0.22, or 0.46 percent, as of 12:45 PM EST.

John Paulson's Barrick (ABX) (GLD) (GOLD) (IAG) Positions Changed

After a rough 2011, which followed a record-breaking 2010, John Paulson changed his positions in gold-related stocks SPDR Gold Trust ETF (NYSE:GLD), Randgold Resources (NASDAQ:GOLD), Iamgold (NYSE:IAG) and Barrick Gold (NYSE:ABX).

SPDR Gold Trust ETF (GLD), which continues to remain his largest holding, was lowered by Paulson by close to 3 million shares, now owning 17.3 million shares in the gold ETF. As of December 31, SPDR Gold Trust shares held by Paulson had a market value $2.6 billion.

Randgold Resources (GOLD), Iamgold (IAG) and Barrick Gold (ABX) were among the 10 positions Paulson increased his holdings in, a nod towards the continued belief that some gold miners are still undervalued when measured against the price of gold.

Other gold holdings of Paulson include NovaGold (AMEX:NG), Gold Fields (NYSE:GFI) and AngloGold Ashanti (NYSE:AU).

Barrick (ABX) (HMY) (MFN) (CRK) (SARA) (PXD) Ratings, Price Targets

Barrick Gold (NYSE: ABX), Harmony Gold Mining (NYSE: HMY), Minefinders Corp. Ltd. (NYSE: MFN), Comstock Resources (NYSE: CRK), Saratoga Resources (NASDAQ: SARA) and Pioneer Natural Resources (NYSE: PXD) ratings and price targets.

Barrick Gold (ABX) was downgraded by RBC Capital from an “Outperform” rating to a “Sector Perform” rating.

Harmony Gold Mining (HMY) was upgraded by UBS AG (NYSE:UBS) from a “Neutral” rating to a “Buy” rating.

Minefinders Corp. Ltd. (MFN) was downgraded by Canaccord Genuity from a “Buy” rating to a “Hold” rating.

Comstock Resources (CRK) was downgraded by Global Hunter Securities from an “Accumulate” rating to a “Neutral” rating. They have a price target of $20.00 on the company, down from $30.00.

C.K. Cooper initiated coverage on Saratoga Resources (SARA). They placed a “Buy” rating and a price target of $10.00 on the company.

Pioneer Natural Resources (PXD) was downgraded by Stifel Nicolaus from a “Buy” rating to a “Hold” rating.

Barrick Gold (ABX) (AKS) (ANR) (GSS) (NFX) Ratings, Price Targets

Barrick Gold (NYSE: ABX), AK Steel Holding Co. (NYSE: AKS), Alpha Natural Resources (NYSE: ANR), Golden Star Resources Ltd. (NYSE: GSS) and Newfield Exploration Co. (NYSE: NFX) ratings and price targets.

Barrick Gold (ABX) was downgraded by Canaccord Genuity from a “Buy” rating to a “Hold” rating. They have a price target of $57.50 on the company.

AK Steel Holding Co. (NYSE: AKS) was downgraded by Deutsche Bank (NYSE:DB) from a “Buy” rating to a “Hold” rating. They have a price target of $10.00 on the company.

Alpha Natural Resources (ANR) was downgraded by Deutsche Bank from a “Buy” rating to a “Hold” rating. They have a price target of $27.00 on the company.

Golden Star Resources Ltd. (GSS) was downgraded by Credit Suisse (NYSE:CS) from an “Outperform” rating to a “Neutral” rating.

Newfield Exploration Co. (NFX) was downgraded by Susquehanna from a “Positive” rating to a “Neutral” rating.

Barrick (ABX) (URI) (VRTX) (WNS) (BAMXY) (BMC) Upgraded

Barrick Gold Corp. (NYSE: ABX), United Rentals, Inc. (NYSE: URI), Vertex Pharmaceuticals (NASDAQ: VRTX), WNS Holdings Ltd (NYSE: WNS), BAYERISCHE (OTC: BAMXY) and BMC Software, Inc. (NYSE: BMC) were upgraded by analysts.

United Rentals, Inc. (URI) was upgraded by RBC Capital to an “Outperform” rating.

Vertex Pharmaceuticals (VRTX) was upgraded by RBC Capital to a “Sector Perform” rating.

WNS Holdings Ltd (WNS) was upgraded by Robert W. Baird from a “Neutral” rating to an “Outperform” rating. They have a price target of $13.00 on the company, up from $12.00.

Barrick Gold Corp. (ABX) was upgraded by Scotia Capital from a “Sector Perform” rating to an “Outperform” rating.

BAYERISCHE (BAMXY) was upgraded by WestLB to a “Neutral” rating.

BMC Software, Inc. (BMC) was upgraded by BMC Equities Research to a “Neutral” rating.

Barrick Gold (ABX) (CRM) (EXPR) (RAD) (DG) (KEX) Ratings, Price Targets

Barrick Gold (NYSE: ABX), Salesforce.com (NYSE: CRM), Express, Inc. (NASDAQ: EXPR), Rite Aid (NYSE: RAD), Dollar General (NYSE: DG) and Kirby Co. (NYSE: KEX) ratings and price targets.

Barrick Gold (ABX) was upgraded by Scotia Capital from a “Sector Perform” rating to an “Outperform” rating.

Salesforce.com (CRM) had its “Buy” rating reiterated by Needham & Company.

Express, Inc. (EXPR) had its “Overweight” rating reiterated by Piper Jaffray (NYSE:PJC). They have a price target of $32.00 on the company.

Rite Aid (RAD) had its “Neutral” rating reiterated by Goldman Sachs (NYSE:GS).

Dollar General (DG) is now covered by Bank of America (NYSE:BAC). They placed a “Buy” rating on the company.

Kirby Co. (KEX) is now covered by Evercore Partners. They placed an “Overweight” rating on the company.

Barrick (ABX) (WSO) (WWW) (AYI) (WES) (BECN) Upgraded

Barrick Gold Corp (NYSE: ABX), Watsco, Incorporated (NYSE: WSO), Wolverine World Wide (NYSE: WWW), Acuity Brands Inc (NYSE: AYI), Western Gas Partners (NYSE: WES) and Beacon Roofing Supply (NASDAQ: BECN) were upgraded by analysts.

Barrick Gold Corp. (NYSE: ABX) was upgraded by BMO Capital Markets from a “Market Perform” rating to an “Outperform” rating.

Watsco, Incorporated (WSO) was upgraded by Robert W. Baird from a “Neutral” rating to an “Outperform” rating. They have a price target of $68.00 on the company, down from $69.00.

Wolverine World Wide (WWW) was upgraded by Argus from a “Hold” rating to a “Buy” rating. They have a price target of $44.00 on the company.

Acuity Brands Inc. (AYI) was upgraded by KeyBanc from a “Hold” rating to a “Buy” rating. They have a price target of $50.00 on the company.

Western Gas Partners (WES) was upgraded by Stifel Nicolaus from a “Hold” rating to a “Buy” rating. They have a price target of $37.00 on the company.

Beacon Roofing Supply (BECN) was upgraded by KeyBanc from a “Hold” rating to a “Buy” rating. They have a price target of $21.00 on the company.

Novagold (NG) (EGO) (ABX) (GG) (AUY) (NEM) Soar with Gold Price

Shares of Novagold (NYSE:AMEX), Eldorado Gold (NYSE:EGO), Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG), Yamana (NYSE:AUY), Newmont (NYSE:NEM) jumped Friday, along with the price of gold, as it closed in on its record of $1,888.70, set on August 22.

Gold futures in New York closed at $1,873.70 an ounce, gaining $47.70, or 2.6 percent.

The ongoing recession, endless sovereign debt crisis in Europe, and surety of a another round of quantitative easing will continue to offer support to gold prices going forward.

Silver also jumped, climbing $1.54, or 3.7 percent, to $43.02 an ounce. It's still off its 30-year high of $48.58 reached on April 29.

Newmont Mining closed Friday at $64.47, gaining $2.00, or 3.20 percent. NovaGold ended the session at $10.91, up $0.69, or 6.75 percent. Yamana closed at $16.83, rising $0.75, or 4.66 percent. Barrick closed at $52.87, climbing $1.20, or 2.32 percent. Eldorado Gold closed at $20.85, jumping $0.49, or 2.41 percent.

Gold Jumping on QE3 Speculation

Speculation the Federal Reserve will introduce another round of quantitative easing had the price gold surpassing the $1,890 mark early in the trading day, as investors continue to migrate toward safety in the volatile and weak economy.

Gold broke $1,890 in New York and London, as the failed Obama economic policies continue to weigh on the global economy.

While some continue to talk double-dip recession, we at Everything Gold have maintained we've never left the recession, as the data continue to confirm.

Others who believed in the recovery myth are now talking entering a recession, which has helped offer support to the price of gold, as well as the ongoing sovereign debt debacle in Europe. An earlier-than-expected QE3 adds more fuel to the gold price fire, and could cause an inevitable correction in gold to be somewhat subdued in comparison to what it may have been.

Barrick Gold (NYSE:ABX) was trading at $52.61, gaining $1.83, or 3.60 percent, as of 11:48 AM. Yamana Gold (NYSE:AUY) was trading at $15.94, jumping $0.43, or 2.77 percent. Newmont Mining (NYSE:NEM) was at $63.23, climbing $3.15, or 5.24 percent. Goldcorp was trading at $53.96, increasing $2.31, or 4.47 percent. Eldorado Gold was at $20.12, up $0.73, or 3.76 percent. Novagold was trading at $10.05, gaining $0.49, or 5.13 percent.

JPMorgan (JPM) Says Gold Could Push $2,500 by the End of 2011

After three straight days of a huge gold rally, the largest since 2008, JPMorgan (NYSE:JPM) said gold could go crazy and soar to as high as $2,500 an ounce by the end of 2011.

This of course is led by Obama and the Democrat refusing to do the responsible thing and cut back on government spending (along with some Republicans).

Gold has jumped recently to an all-time high of $1,779 an ounce. The $2,500 mark, if reached, would represent a new high when taking into consideration being adjusted for inflation.

Goldman Sachs (NYSE:GS) has also joined the gold chorus, saying they see it hitting $1,730 an ounce within 6 months and $1,900 an ounce in 12 months.

Keynesianism is in its death throes as the realization the failed economic theory of the government printing money to escape recessions is just that - a failed one. Socialism everywhere is on the run as the unsustainability of entitlement programs and excessive military spending is increasingly being made clear to a growing number of people.

Consequently, the reason gold is soaring is not only as a safety hedge and defense against inflation, but it's value and recognition as a viable currency is roaring back. Gold has also broken away from the impact of demand, from and industrial standpoint, no longer considered to be affected by the business cycle.

As expected, gold miners are trading up today, with Yamana Gold (NYSE:AUY) trading at $13.61, gaining $0.16, or 1.19 percent, as of 12:14 PM EDT. NovaGold (NYSE:NG) was at $9.30, up $0.26, or 2.88 percent. Eldorado Gold (NYSE:EGO) was trading at $18.08, gaining $0.20, or 1.12 percent. Newmont Mining (NYSE:NEM) was at $54.46, up $0.33, or 0.61 percent. Goldcorp was trading at $46.66, gaining $0.22, or 0.47 percent. Barrick Gold was at $46.62, jumping $0.48, or 1.04 percent.

Gold Futures Soar to Record $1,684.70 An Ounce

Gold futures jumped to another record today, reaching as high as $1,684.70 in morning trading, as investors continue to pour their money into the safety of the yellow metal.

Gold futures for December delivery climbed $12.70, or 0.8 percent, to $1,679 at 10:29 A.M. on the Comex in New York after earlier reaching the record amount. This is the third day in a row gold has broken records.

The misguided actions of American politicians to raise the debt ceiling will increase the pace at which the U.S. dollar will eventually stop being the reserve currency of the world.

Even with the outrageous quantitative easing of the Federal Reserve and the Obama administration, the recession continues, no jobs have been created, and the value of the U.S. dollar continues to plunge. Gold will continue to rise in price under these conditions.

Gold miners, which have largely been lagging the upward price move of gold, show signs of beginning to be rewarded, as recent quarterly reports from Alamos Gold (TSX:AGI) and Yamana Gold (NYSE:AUY) seem to reveal that may be over. Most of this is in direct relationship to rising gold prices, as input costs have risen.

Even so, gold miners are getting punished today, as majors like Newmont Mining (NYSE:NEM), Goldcorp (NYSE:GG) and Barrick Gold (NYSE:ABX) are all trading down between 3 to 5 percent.

Barrick Gold (ABX) Facing Cost Challenges

During its conference call with analysts, Barrick Gold (NYSE:ABX) said its capital expenditures remain a challenge, as its project pipeline costs for its Cerro Casale project in Chile, Pueblo Viejo JV in the Dominican Republican, and the Pascua-Lama mine on the Chile-Argentina border have all been raised.

Also noted by Barrick CEO Aaron Regent is the increase in costs for labor, consumables and design adjustments at some of its major projects.

"Operationally and financially, we had a solid quarter but the increased pressure on the capital costs for projects has been a challenge," said Regent on the conference call.

Barrick has completed its $7.3 billion acquisition of Equinox Minerals in July, which should provide an additional cash flow source which will be reinvested in the gold business of the company. The Lumwana mine should produce about 300 million pounds of copper annually.

As for gold production in the second quarter, it rose from 1,944,000 ounces in 2010 to 1,977,000 ounces this year. The company said it should reach its production goal guidance of 7.6 million to 8 million ounces in 2011. Barrick's five-year goal is to reach 9 million ounces a year in gold production.

On the cost side, the company wants to cut is cash costs by 20 percent during that five-year period.

Earnings for the second quarter jumped 35 percent from $859 million, or 84 cents a share in the second quarter of 2010 to $1.16 billion, or $1.16 billion a share in the second quarter of 2011.

NovaGold (NG) (GG) (NEM) (EGO) (ABX) Trading Up as Gold Jumps

The price of gold is hopping again today, pushing up shares of gold miners like NovaGold (NYSE:NG), Goldcorp (NYSE:GG), Newmont (NYSE:NEM), Eldorado Gold (NYSE: EGO) and Barrick Gold (NYSE:ABX), as the market remains jittery over the inability of politicians to come to a conclusion concerning the debt ceiling.

U.S. gold futures for August delivery rose to $16.80 an ounce at $1,618.30.

Spot gold climbed as high as $1,624 an ounce and was up 1.1 percent at $1,615.74 an ounce.

Expectations are the price of gold will be volatile this week, moving in conjunction with news stories released covering the negotiations.

Silver Prices jumped to $41.08 an ounce in Monday morning – a 2.5 gain from the close on Friday. It has pulled back since then.

Price Targets on Alcoa (AA) (ABX) (AVB) (CDE) Changed

Alcoa Inc. (NYSE: AA), Barrick Gold (NYSE: ABX), AvalonBay Communities, Inc. (NYSE: AVB) and Coeur d'Alene Mines (NYSE: CDE) had their price targets adjusted by analysts.

Deutsche Bank (NYSE:DB) cut their price target on Alcoa Inc. (AA) from $22.00 to $20.00. They have a “buy” rating on the company.

Deutsche Bank cut their price target on Barrick Gold Corp (ABX) from $76.00 to $67.00. They have a “buy” rating on the company.

Barclays Capital raised their price target on AvalonBay Communities, Inc. (AVB) from $123.00 to $125.00. They have an “equal weight” rating on the company.

Deutsche Bank cut their price target on Coeur d Alene Mines Corp (CDE) from $54.00 to $50.00. They have a “buy” rating on the company.

Coeur d'Alene Mines closed Tuesday at $24.83, gaining $0.91, or 3.80 percent. Alcoa closed at $16.39, jumping $0.08, or 0.49 percent. Barrick Gold closed at $45.98, up $1.20, or 2.68 percent. AvalonBay Communities, Inc. closed at $134.39, rising $1.83, or 1.38 percent.