Gold and U.S. Dollar Decouple Again

Occasionally the economic forces come into alignment and gold and the U.S. dollar abandon their usual inverse relationship and decouple.

In other words, as gold skyrocketed in price recently, the U.S. dollar rose in value as well. That means the support for gold prices rising, which is based upon the quantitative easing, or inflating, by the Federal Reserve recently, when it announced it would pump another $600 billion into the economy over the next eight months or so.

Depending on whether or not the economy responds, which it didn't in the first round of QE, the Federal Reserve is poised to offer another round after that if they need to.

That will continue to offer support to gold prices as long as the implementation and outlook is quantitative easing will continue on.

with the inevitable increase of inflation coming from the actions of the Fed, that will also push the price of gold to higher levels as well.

The bottom line is gold is looking so strong now and going forward, that it can at time overcome the usual inverse relationship with the U.S. dollar, which to me is one more indicator of its price durability.

Of course the U.S. dollar will continue on its loss of value, even if it does occasionally get a bump up in value.

Gold Ready to Break $1,400 an Ounce

Gold continues to press toward the $1,400 an ounce mark as on Friday it traded as high as $1,398 before pulling back.

While not unprecedented, especially over the last year, gold did remain strong in light of the fact the U.S. dollar also showed strength, which usually carry an inverse relationship to one another; gold goes up when the dollar goes down and the reverse as well.

What determines that in most cases is the strength or weakness of the economy and the monetary policies of central banks that are being implemented at the time, including interest rates and whether the Fed is inflating through quantitative easing.

The price of gold should surpass the $1,400 level soon, as the announcement the Fed would be spending $75 billion a month for the next eight months pushed gold prices up quickly, and that will resume throughout the week with nothing to stop it from advancing.

There is no way interest rates will be raised any time soon, as the Fed and Ben Bernanke don't have the courage or the will to do it. So with the buying up of even more government debt, they're again creating the perfect environment for gold to soar while the U.S. dollar continues to collapse.

Goldcorp (NYSE:GG) Soars and Scores in Third Quarter

Goldcorp (NYSE:GG) soared over 5 percent by the close of trading Thursday, ending the session at $44.29, after a stunning performance in the third quarter.

What was most impressive was its management of costs, even though the reported story will probably be the fact they increased profits y four times the same quarter last year, reaching $4.66.5 million, or 63 cents a share. That's up from $114.2 million, or 16 cents a share, in 2009.

To add a little icing on the cake, they also doubled their dividend to 36 cents a share.

"Our confidence in the Company's financial position and ability to generate strong future cash flows led us to announce a 100% increase in our dividend," CEO Chuck Jeannes said.

Revenue for the quarter also rose nicely, increasing by 28 percent to $885.8 million.

While gold prices are an obvious benefit to every gold miner, it is those who have the discipline and knowledge to control costs who will survive and thrive, as the gold bull market won't last forever, and eventually gold prices alone won't be able to drive performance, which poor ones can be hidden because of the gold price climate we are now experiencing.

To show Goldcorp's ability and determination to control costs, in their first month of operations at their new flagship Penasquito mine, they were able to enjoy a negative cash cost in the first month of production. That's not an easy task to accomplish.

Stifel Nicolaus upgraded Goldcorp from "Hold" to "Buy," saying they see earnings and production growth to continue on.

Goldcorp gained $2.21, or 5.25 percent in Thursday trading. Stifel placed a price target of $53 on them.

Gold Prices Shine for Eighth Straight Quarter

For the eighth quarter in a row gold prices have ended in positive territory, as everything which supports gold remains in place.

Adding to the recent push is the realization we're still in a recession, and a long way from emerging from it. That means the inevitable interference of the government via quantitative easing, where they waste money by attempting to throw it at the problem again, even after close to $2 trillion has already been pumped into it.

That means the continuing debasing of the U.S. dollar and the resultant increase in gold prices.

Gold for the month of September rose over five percent as it broke records in eleven of the last thirteen trading days.

Another major factor in gold price support is interest rates, and along with the Federal Reserve, the Bank of Japan and Bank of England have signaled they're unlikely to make any major moves to increase them any time soon.

The sovereign debt crisis in Europe, which has been trying to be hidden by the media, or taken at face value from the mouths of politicians that things aren't as bad as they seem, is in reality again being seen as a disaster, as this time Ireland battles to manage its huge debt load.

These and other important elements continue to provide healthy soil for gold to grow in.

Other than raising interest rates, there's nothing that can be done to change these circumstances in the short term, and that guarantees gold prices are far from ending their bull run.

John Paulson: Gold Could Hit $4,000

Hedge fund manager and billionaire John Paulson said he sees gold prices moving in a range of $2,400 to $4,000 an ounce, citing double-digit inflation emerging by 2012.

Paulson, speaking at New York's University Club recently, said 80 percent of his assets are held in gold.

He added that the coming inflation will result in gold prices being pushed up even more.

Paulson also said the inevitable quantitative easing by the Federal Reserve could extend double-digit inflation out for serveral years.

It's possible it could be even more than that depending on the economy and the political pressure to interfere with it, which would result in even more stimulus. That would add to the desirability and value of gold.

Harmony (NYSE:HMY) CEO Sees $1,500 Gold Price by End of Year

Harmony Gold Mining Co. (NYSE:HMY) chief executive officer Graham Briggs said gold prices by the end of 2010 could reach as high as $1,500 an ounce.

This comes on the heals of several record-breaking performances by gold, as it soars on continuing concerns over the recession, European sovereign debt and anemic American and European economies.

Other than that, some clowns actually had the guts to declare the recession was over, but not just over now, but over in June 2009.

I guess the rest of us were just too dumb to see that. Glad they told us. We were so foolish to think otherwise.

Briggs added he doesn't see anything in the way to stop the continuing climb of gold anytime soon.

Gold Still Inexpensive Says Marc Faber

Speaking at a CLSA Investors’ Forum 2010 in Hong Kong recently, Marc Faber said he still sees gold prices as relatively inexpensive, even though record prices continue to be set.

Faber gave his reasoning as this, “Given all the unfunded liabilities and the money printing in the world and the size of the financial assets in the world, I don’t think we are in a bubble.”

He's definitely right. At this time these elements aren't close to being fully priced into the value of gold, and central banks and governments are drunk on spending and reckless in stimulus, as they're caught in their socialist schemes which can't be paid for.

Even though he still considers gold to be cheap, Faber does recommend a monthly investment rather than attempting to time the market or putting everything in at once.

He also suggests gold will go through some significant price swings and corrections while maintaining its upward climb. That means those with large, one-time investments could get slammed if their entry point is on the high end.

Bottom line is governments aren't going to quit attempting to pay for their socialist programs, and that guarantees quantitative easing and stimulus, along with the accompanying increase in gold prices.

Jefferies & Co. Recommend Barrick Gold (NYSE:ABX)

Now that summer is gone, a typically slow season for gold, Jefferies & Co. said the fall factor is playing a factor in the increase in gold prices, and they like gold mining giant Barrick Gold (NYSE:ABX) in the sector.

"The combination of monetary, supply demand, and technical drivers should allow gold and silver prices to achieve higher highs and greater lows over next 12-18 months. As investors discount a higher gold and silver price, we expect precious metal-related equities to better reflect improved price realizations and scarcity value," said Jefferies in a note to clients.

Barrick was at $46.10, gaining $0.20, or 0.44 percent as of 11:23 AM EDT.

George Soros Clueless on Gold and "Ultimate Bubble"

George Soros seems to be clueless on gold and his obsession with it being the "ultimate bubble."

Soros doesn't seem to understand the reason there's support under gold and why that will continue for a long time.

He said to Reuters, “I called gold the ultimate bubble which means it may go higher but it’s certainly not safe and it’s not going to last forever,” although reluctantly admitting it's the only bull market at this time.

One reason Soros asserts this is he's big government socialist, and has out-of-the-mainstream views on politics and life.

Gold interferes with his worldview in that regard, and even though he has millions invested in gold, continues to hammer at it as if it's poised to plunge at any time.

There's no problem with Soros saying gold is an ultimate bubble, as someday in the far future that will eventually play out, especially when investors and the average person on the street all pour their money into it without knowing why, and far past the reason it is going up at this time.

That's the overall practice of fast-moving stocks and bull markets of any kind throughout history.

Where he's completely wrong is in he says gold isn't safe. Gold is safe, but it of course, like anything else, depends on how someone is investing in it, and the degree of overall exposure of their overall portfolio.

The price of gold is going up because of economic weakness and disastrous policies and practices of central banks and governments around the world.

And with the recession continuing on, or at minimum the global economy slowing down significantly, quantitative easing is ready to begin again, which will drive up the price of gold even more.

Of course it's not going to last forever, as Soros says, but that's obvious.

But that's like saying if you live in certain parts of California you're going to experience an earthquake sometime.

Everyone knows that, but you simply need to be prepared for that inevitable moment and respond accordingly. You don't stop living and life because it may happen.

Danger can come anywhere and any time, and safety is always an issue, even when traveling to a neighborhood store.

So to suggest gold isn't safe is like saying living in California isn't safe. What's the point?

As long as the fundamental reasons for the price of gold continuing to rise remain in place, gold prices will continue to rise. It's as simple as that.

when the macroeconomic climate changes, then we all need to remain vigilant with our gold investments.

Gold isn't even close to being in a bubble at this time, as nothing in the global economy has changed to make it be a concern. It will eventually happen, but that is probably a number of years away.

Until governments stop the printing presses and their stimulus plans, gold will continue its upward ride.

Will Yamana Gold (NYSE:AUY) Every Recover?

Yamana Gold (NYSE:AUY) continues to be the gold mining stock that could and should, but doesn't.

Investors have lost interest in Yamana when it started to downwardly revise production targets, and while recovering some, it still remains flat, and seemingly undervalued.

If you acquired shares in Yamana in November of 2008, you would be happy, as it had dropped to $3.60, and closed Friday at $10.14. But if you would have bought it in November of 2006, you would have taken a loss after holding it for four years.

Considering the amount of proven resources in the ground, it remains puzzling as to why Yamana doesn't have a higher valuation or amount of investor interest.

Taking into consideration the price of gold alone, and not their copper resources, this stock should be much higher.

It could be that gold investors consider other mining stocks as better positioned to take advantage of rising gold prices.

Either way, Yamana is definitely worth watching and investigating further, as the share price should catch up with its resources sooner or later.

Gold Prices Ready to Rebound?

Gold has taken a little bit of a hit this week, as investors ignored the bad economic news and latched onto the good.

That's highly unlikely to continue for long, as the weakness in the global and U.S. economy isn't going to improve any time soon, and mounting evidence confirms we're in for a continuing recession.

Gold prices will respond accordingly and continue their upward push to who knows where, as central banks' and government policies around the world continue to debase currencies and have done nothing to make a difference economically.

As predicted by us here and a number of others, government spending exasperates the problem, it doesn't help it. And gold and gold investors will be the beneficiaries of this folly for years into the future.

In the short term, gold prices could possibly drop, maybe to $1,245, but the support is so strong, that even if it goes below that it's unlikely it'll stay there long.

The revelation, which many of us already knew, that European banks and the stress tests related to them were a joke, and the depth of the sovereign debt risk is probably even worse than we know.

Picking and choosing what economic date we want to focus on isn't a good way to get a good overall picture of what is really happening, and gold investors aren't usually the type to do that, at least those that follow gold throughout the years.

So gold will continue on its upward run, and the economic data, if it can be trusted, will support the fact the global economy is still struggling, and the recession has never really ended. It was just masked by the trillions countries through at it.

That's all good news for gold investors.

Gold Fields' (NYSE:GFI) Nick Holland Says Company Not Relying On Gold Price

The CEO of Gold Fields (NYSE:GFI), Nick Holland, said in an interview that the company isn't going to rely on gold prices to "bail us out." Holland added that the company is actually going to budget a lower price than the spot price is today.

This isn't to say he believes gold prices are going to fall, but that the company needs to focus on streamlining their operations, and that's going to be the focus over the next year, said Holland.

Holland added the gold price will move where it moves, and that's outside the control of the company, he wants to focus on what the company can control, and he's going to do that by putting all aspects of the business processes under review.

The goal is to improve the profitability of the cash flow for each ounce of gold that comes out of the ground.

Holland's goal is to widen margins, which this year were 15 percent. He wants to bring that to 20 percent no matter what price gold ends up at.

I think this is what gold mining companies around the world should be doing, as some miners had much larger revenues but dropped the ball on costs and margins, which lowered earnings.

AngloGold Ashanti (NYSE:AU) Rises with Gold Futures

The market has been teetering back in forth for gold over the last month, and investors have been shrugging off the underlying fundamentals underlying the reasons gold has been moving up in price for years.

AngloGold Ashanti (NYSE:AU) has followed the price movements of gold over the last week, like the majority of their counterparts, moving in tandem with the yellow metal.

The gold miner finished the week in New York at $40.52, growing $0.94, or 2.37 percent. Volume reached 2,267,099, a little above its 3-month average.

Gold prices will resume their upward run, it's a question of whether they'll continue to fall in August before that happens.

Even with the positive economic spin in the mainstream media, gold has found decent support, although it is down to its lowest levels since the early part of the year.

Poor GDP Report Pushes Gold Prices Up 1 Percent

While gold has been hobbling along throughout July, the lower than expected numbers of the GDP report caused it to surge in the last trading day of the month by 1.1 percent, reaching $1,183.90 an ounce on the COMEX division of the NYMEX for December delivery.

Even so, it still finished July down 5 percent, falling $62.68. Spot gold price increased to $1,180.97, rising $12.20. This was the worst month for gold since December.

Gold surged on the day because gold investors rushed to cover their short positions in response to the GDP numbers.

Nothing has changed in the fundamental reasons of why gold has continued to rise over the last decade, and that will continue on.

Even the government attacks on the alleged fear-mongering of those pushing gold coins over gold bullion won't deter the rise of gold. The government attack is to shut up the voices of those who rightfully point out the risks related to the governmental policies around the globe which have brought to the economic catastrophe we're now experiencing.

Using Glen Beck as a focal point and the gold company he works with to sell gold coins and bullion, the government is using a few complaints (assuming they're even legitimate) to make it look like the reason gold is going up is because of unwarranted use of fear to sell gold coins rather than gold bullion.

The idea is to make a connection between gold and fear in a way that makes it seem like a bunch of hype. Don't think this isn't being orchestrated, even if a few innocent dupes are being used by the government to attack people investing in gold, which is a daily reminder of the failed and irresponsible policies of the government and Federal Reserve.

Giving the advice to acquire gold coins rather than gold bullion has been one that has been offered by many advisers for years, and it will continue to be because it's much more portable and easier to hide than bullion. Of course how many people can even afford to buy gold bullion in the first place, making this even more suspect.

Anyway, back to the fundamentals. Gold will continue to rise because of the practices attempted to be hidden by the government and Federal Reserve of continuing to print money and "stimulate" the economy, the ongoing sovereign debt crisis in Europe, and increasing and dangerous government deficits which are becoming more risky by the day.

Investors have been caused to dangerously relax because of the so-called banks stress tests in Europe which made it appear as if the majority passed with flying colors, while experts said they were in reality a joke. Even Citigroup (NYSE:C) noted, of the banks tested, 24 should have failed rather than only the seven asserted to have failed.

Even the downgrade of Ireland's debt recently was shrugged off as irrelevant by investors, who seemingly have swallowed the kool-aid.

The economic condition of the United States is dismal, China is being forced to slow, and Europe is in shambles, yet nobody seems to have remembered these things.

Maybe the BP (NYSE:BP) fiasco temporarily got their attention off of the ball. But that is close to being over as far as permanently plugging the oil well goes, and people are getting interested in other things again.

The fact that gold moved nicely today on just missing the GDP numbers by a small amount, shows investors are looking for a reason to push prices up again, and I don't think it'll take that long before it happens.

Barrick (NYSE:ABX), Agnico-Eagle (NYSE:AEM) See $1,400 Gold

After solid earnings for the second quarter were reported by Barrick Gold (NYSE:ABX) and Agnico-Eagle (NYSE:AEM), executives at both companies said they see gold going to $1,400 an ounce by the end of 2010.

Agnico CEO Sean Boyd said this in an interview concerning how people are viewing gold at this time:

“I think a lot of people are jumping to the conclusion that it's over, it's run its course.

“But I would not count gold out. We are going into a period, September/October, which is traditionally strong, let's see how things go there.”

The major reason behind the drop in gold prices is the easing of concerns over the sovereign debt crisis in Europe, said Boyd, and I agree with him. That and the typical slow summer gold season.

Much of this came about from the stress test bank results in Europe which gave the illusion all things were well. Many people that understand how it works said the tests were really a joke, and follow-up research revealed that far more than seven of the banks are under stress; up to 24 of them, according to Citigroup (NYSE:C).

No matter what gimmicks and tricks are attempted to fool people, there is no way you can hide the disaster that Europe is, and it's only a matter of time before conditions worsen and people look for a safe haven for their money again.

News from China continues to confirm they're slowing things down there, and the United States is far from any type of sustainable recovery.

In other words, conditions that caused gold prices to skyrocket in the first place haven't changed, and even though people are in denial and shrugging off what is right in front of their face, won't change what the reality is, and these conditions will continue to contribute to the rise in gold prices, even as Ben Bernanke reiterates he'll do what he needs to do to prop up the economy, i.e., print more money. All of this offers support to ongoing increases in gold prices, and people and institutions who ignore that will do it to their loss.

UBS (NYSE:UBS), CIBC World Markets, TD Securities Increase Gold Estimates

Last week, investment banks UBS (NYSE:UBS), CIBC World Markets and TD Securities all increased their outlook on gold prices, will all of them looking for around $1,300 an ounce or more going forward.

UBS was the last of the three during the week to upwardly revise their numbers, increasing their outlook from $1,129 an ounce to $1,205 an ounce for 2010, and up to $1,295 an ounce, from $1,250 an ounce in 2011.

The dubious stress tests and their results didn't impress UBS, as it didn't many others, as the bank noted that "ongoing pressure on sovereign debt markets, combined with persistent concern over private sector credit contraction will raise the specter of debt monetization repeatedly over the next few years.”

TD Securities increased their gold price estimates in 2011 from $1,100 to $1,300, and from $1,000 to $1,400 in 2012. They also cited global economic uncertainties as the impetus behind their changes in viewpoint concerning gold.

For CIBC World Markets, their changes were the largest, increasing their outlook in 2012 to $1,500 an ounce. Over the long term, they see gold leveling at from $1,000 to $1,200 an ounce.

The fall season is historically a big mover for gold prices, and with prices continuing to find support a slightly below $1,200 an ounce, gold could make a big move starting in September.

Gold Levels After Bank Stress Test Results Released

Gold futures and spot gold prices have held their own so far after the release of the stress test results of 91 banks, while the U.S. dollar rose against the euro immediately afterwards.

Results found that of the 91 banks being tested, seven totally failed the test, and were found they couldn't survive losses incurred from sovereign-bond holdings.

Gold dropped right after the results came in, but had rebounded slightly, and are holding level for now.

The U.S. dollar gained 0.8 percent against the euro.

Over the short term, how traders interpret the data of the banks will determine the volatility of gold prices.

Freeport (NYSE:FCX) Earnings Increase 10 Percent in Second Quarter

Freeport McMoRan Copper & Gold Inc. (NYSE:FCX) enjoyed a 10 percent increase in earnings in the second quarter, as higher copper and gold prices helped them to a strong showing, even though production numbers were down.

The miner earned $1.49 a share after excluding one-time items, far above the $1.34 a share analysts had been looking for.

Copper prices surged 38 percent higher on average during the quarter, leading the earnings gains. Copper entails about 75 percent of all sales by Freeport.

Gold also helped the company, as prices were at $1,234 an ounce on average during the second quarter. That was up by 32 percent over last year, which averaged $932 an ounce during the same quarter.

Revenue grew to $3.86 billion a gain of 5 percent, from $3.68 billion last year. Analysts had been looking for $3.66 billion. Again, this was led by higher prices and not increased production.

To get an idea of how the stronger prices helped the company, production last year for copper during the same time period was 1.1 billion pounds, while the most recent quarter was 914 million pounds.

Gold production was at 298,000 for the most recent quarter.

Guidance for the year remained the same, with production of copper estimated at 3.8 billion pounds, and gold production expected to reach 1.8 million ounces. Molybdenum, which could perform strong if the demand for steel increases, which is expected, has an estimated 63 million pounds to be produced for the year.

Freeport was up to $66.74 in New York as of 1:26PM EDT, gaining $2.42, or 3.76 percent.

Iamgold (NYSE:IAG), Goldcorp (NYSE:GG), AngloGold (NYSE:AU) Up on Weak Economy

As we gradually sift through the economic data and news, confirmation we are far from any type of recovery continues to emerge, as the latest data in new housing starts confirm once government props are removed it falls apart. Gold companies like Iamgold (NYSE:IAG), Goldcorp (NYSE:GG) and AngloGold Ashanti (NYSE:AU) will continually be the beneficiaries of the weak economy, as gold prices resume their upward climb.

Gold prices finished above $1,190 an ounce today, and the majority of gold miners climbed with it, as housing starts dropped another 5 percent in June, following the 15 percent drop the prior month.

Among the group of gold miners mentioned here, Iamgold performed the strongest of the three, ending the trading session in New York at $16.21, gaining $0.65. or 4.18 percent. They did decline after hours to $15.99 a share.

Next was Goldcorp, who had a nice upward move of $0.60, to end the day at $40.35, or 1.51 percent. They were level in after hours trading.

AngloGold Ashanti moved the lowest of the three, reaching $39.53 by close, a gain of $0.43, or 1.10 percent.

There is nothing that points to any of this changing, as the job market would have to completely turn around, which it hasn't, as consumers continue to hold back on spending as the economy continues to sputter.

Gold investors will be a happy lot going forward, as there will be a big move once the reality is digested by the market.

Barrick (NYSE:ABX), Goldcorp (NYSE:GG), Newmont (NYSE:NEM) Crushed as Gold Demand Wanes

Gold companies continue to slide on the weakening demand for gold, and Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG) and Newmont Mining (NYSE:NEM) were all down in New York today as gold prices continue to drop.

Spot gold was at $1,184.10 at 4:00 PM EDT, rebounding some after plunging earlier in the day, down about $8.90 at that time.

Other than the usual downturn in gold during the summer months, some of the reasons for the gold miners to fall, along with gold prices, is that inflation seems to be very low, and investors aren't taking into account the sovereign debt crisis in Europe, even though it's as bad as ever, contrary to mainstream media accounts.

Today Moody's (NYSE:MCO) downgraded Ireland government bonds, a sober reminder of the crisis still going on in Europe, and which is far from being under control.