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As I write Gold has come screaming back like a rocket to the moon! Currently Gold is up $20 oz back to $913 an oz. Today we here from Peter Grandich on new all time highs for gold are just around the corner. We’ll take a look at Silver, oh we can’t forget about Platinum too! There’s still time but the Precious Metals Bull Train is about to leave the station-Hop aboard! – Good Investing – jschulmansr
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Gold All Time Highs – Not If But When – Grandich Blog
By: Peter Grandich of Grandich Blog
February 10th, 2009
They say in life only death and taxes are guaranteed. They send you to jail if you guarantee an investment and it fails. With both things in mind, I believe we “should” make a new, all-time nominal high in gold before too long.
After putting a strong bottom in at $700, gold has made a series of higher lows while the $930-$940 area remains resistance. Despite an incredibly strong physical market, the paper market at the Comex seemingly trades to a different “drummer”. That’s okay as physical demand eventually overtakes paper markets.
Gold continues to be my most favorite play, followed by being long the Canadian dollar and then oil. But remember, I was also a NY Jets fan for 35 years.
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What’s Going on With the Dollar and Gold? – Seeking Alpha
By: Tim Iacono of Iacono Research
When looking at the PowerShares DB U.S. Dollar Index Bullish ETF (PCX:UUP) and the SPDR Gold Shares ETF (PCX:GLD), it’s clear to see how different the last couple weeks have been as compared to earlier in the year.
As shown in the chart below, the recent surge to much higher levels has not happened in at least two years, probably much longer.
What else happened in January of 2008?
Ahhh… How soon we forget…
From the St. Louis Federal Reserve website:
January 11, 2008
Bank of America announces that it will purchase Countrywide Financial in an all-stock transaction worth approximately $4 billion.
January 18, 2008
Fitch Ratings downgrades Ambac Financial Group’s insurance financial strength rating to AA, Credit Watch Negative. Standard and Poor’s place Ambac’s AAA rating on CreditWatch Negative.January 22, 2008
In an intermeeting conference call, the FOMC votes to reduce its target for the federal funds rate 75 basis points to 3.5 percent. The Federal Reserve Board votes to reduce the primary credit rate 75 basis points to 4 percent.January 30, 2008
The FOMC votes to reduce its target for the federal funds rate 50 basis points to 3 percent. The Federal Reserve Board votes to reduce the primary credit rate 50 basis points to 3.5 percent.
Whether any of this has any real significance remains to be seen, but, the fact that, last time around, the gold price then surged to over $1,000 an ounce should not be ignored.
I, for one, will be happy to see the inverse relationship between the dollar and gold go the way of the dodo bird, never to affect twitchy traders again.
As noted here on many occasions before, there is no fundamental reason for this relationship to exist. If the dollar strengthens against the euro, why should that make the gold price go down? Because gold, priced in dollars, has become more expensive in Europe?
Despite hearing that ad nauseum in the financial media, that really doesn’t make any sense when you think about it.
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Silver Surges but Remains Undervalued Compared to Gold – Seeking Alpha
By: Mark O’Byrne of Gold and Silver Investments.com
The recent sharp rally in the US dollar appears unsustainable and the USD Index was down 0.64% last week and US bonds also fell again – the 10-Year bond sold off again and the yield rose another 4.75% (from 2.9% to 2.979%). As ever, the bond market remains of fundamental importance and nervousness about the humongous size of the Obama bailout and stimulus packages and talk of central banks printing money to buy government bonds is not helping sentiment here. And government debt issuance is set to surge in the coming weeks and there is a real concern that there simply will not be enough buyers – meaning that bond prices may fall from their lofty heights and long term yields and interest rates begin to rise again.
The gold/silver ratio has fallen to around 70 ($905oz/$13/oz = 69.6) today from around 80 in mid January. The long term historical average is 15:1 and this is because it is estimated that geologically there are some 15 parts of silver in the ground for every one part of gold. It is important to note that silver, unlike gold, besides being a safe haven investment is also used in industry and it is believed that since the dawn of the industrial revolution some 95% of the world’s silver has been used up in industrial applications. Because of gold’s much higher value, it gets recycled and all the gold mined in the world ever is still with us but photography and other industrial uses makes silver like oil – when used it is gone forever.
The 1970s saw an average gold to silver ratio of around 25:1 and fell below 20:1 when silver rose to over $45/oz nominally. Thus it seems very likely that in the coming years, silver may well return to its long term historical average of closer to 15:1. This means that silver is likely to continue to outperform even gold in the coming weeks and months. Silver may return to its recent highs of over $20/oz in 2009 due to very strong supply demand fundamentals. It is also important to note that the CFTC investigation into artificial manipulation and suppression of the silver market could potentially lead to a massive short squeeze.
All investors should diversify within the precious metals allocation in their portfolio and own silver as well as gold. Gold remains the ultimate safe haven while silver is a safe haven but has the potential for very significant returns and growing wealth in the coming months.
Stock position: None.
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Bullish for the Short Term But Consider Gold, Platinum as Well – Seeking Alpha
By: Jeffrey Saut of Raymond James
…[I]n last Tuesday morning’s verbal strategy comments we noted that since the inception of the S&P 500 futures contract there have been five instances when the futures slid by 2% (or more) on back-to-back days and then gapped lower by 1%+ the following session. On EVERY one of those occasions the S&P 500 (SPX/868.60) was at, or within one day, of beginning a decent rally. Further, last November we opined that at the November 20, 2008 “price low” the DJIA was 34% below its 200-day moving average [DMA] and consequently very oversold.
According to Susan Berge, of the Berge Report, that reading was greater than the momentum low occurring in October 1974 of 27%, as well as the 24% reading during the 1987 crash. Even after the rally we have experienced since the November “lows” during the recent downside re-test of those November’s “lows” the differential was still a massive 25%. Subsequently, we advised buying the exchange-traded fund [ETF] of your choice, which in our case was the recommendation of the ProShares Ultra S&P 500 (SSO) that is “geared” two-to-one on the upside. We further suggested that the more timid types might want to consider hedging these positions to minimize the downside.
Accordingly, the Dutiful Dow sprinted 141 points in Tuesday’s session, but gave back most of those gains on Wednesday’s wilt (-121). Therefore, in Thursday morning’s strategy comments, we said that if our upside rally “call” was going to play ,the equity markets would need to shake off Thursday’s worse than expected employment claims number, as well as the anticipated worse than estimated employment numbers on Friday. BINGO, for indeed the late week numbers were much worse than expected, yet the DJIA shook them off and rallied. How far the rally will carry is anyone’s guess, for while we are bullish on a short-term basis, it would take a closing price above 8375 on the DJIA to turn us merely “neutral” on an intermediate-term basis.
However, if the DJIA (8280.59) can close above its January 6, 2009 closing high of 9015.10, with a like close by the D-J Transportation Average [DJTA] (3203.70) above its 1/6/09 closing high of 3717.26, it would be a Dow Theory “buy signal” according to our interpretation of Dow Theory; and should be viewed as a pretty bullish occurrence. Moreover, as stated in previous missives, so far what we have seen is a downside non-confirmation, with the DJTA breaking below its November 2008 “low” without a similar breakdown by the DJIA; and, you should read that bullishly.
Meanwhile, there was an interesting rotation last week with the Commodity Research Bureau Index “up,” the Dollar Index “down,” bond prices “down” (read: higher interest rates), and Dr. Copper “up” nearly 11%. This action, if it continues, suggests the potential for the return of inflation and the potential for a stronger economy. If so, in addition to our recommendation on gold, participants might want to consider investments in platinum. Indeed, unlike gold, platinum is not only a precious metal, but is used heavily in industry due to its tensile strength characteristics…
Typically, platinum sells at a substantial premium to gold, but because of the collapse of the auto industry platinum is approaching parity with gold for the first time since the early / mid-1990s. Investors, therefore, might want to consider platinum in addition to their gold positions, for they will be purchasing a relatively “cheap” metal with a “call” on an auto industry rebound. Our vehicle of choice for this theme is the iPath Dow Jones AIG Platinum ETF (PGM).
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Late Breaking Intelligence Report…
MineWeb Gold News – Japan Investors Turn To Gold! – MineWeb
Source: Reuters
TREND SPREADINGJapan investors turn to gold
Online traders are turning to commodities from FX, stocks and gold is the most popular commodity product for online retailers.
Author: Chikako Mogi
Posted: Tuesday , 10 Feb 2009
TOKYO (Reuters) –
Japanese retail investors are stepping up their online gold investment in a trend that is unlikely to be reversed, an executive at a top online commodity trading firm said on Tuesday.
As the country’s retail investors catch up with global trends of asset diversification, they are hunting for alternative investments to enhance returns, and the trend is spreading outwards from the rich to engulf ordinary people.
Japan’s risk-averse retail investors are estimated to hold an eye-popping $16.4 trillion, more than half of it in cash and deposits, Mizuho Bank, the country’s second-largest lender, says.
Although the global financial crisis hit the real economy and battered commodities directly linked to the economy, gold remains unscathed by such declining industrial demand while retaining merit as an asset.
“Given its relatively stable value, interest in gold will persist for a while and the market will remain bullish,” Naoaki Kurumada, chief executive of Dot Commodity, Inc, told Reuters.
“Gold is our main commodity product — by purchasing gold, investors can start including commodities in their portfolios.”
Since its establishment in 2005, the company has grown as Japan’s top online commodity trading firm, with about 20,000 accounts against some 50 initially, and assets of 8 billion yen ($87.45 million) by October. It is also second in the online commodity trading industry in volume terms.
The company is drawing interest from seasoned online traders who are turning to commodities for high returns, as Japanese stocks have plunged and the yen has strengthened.
“I expect online accounts to increase, given the strengthening appetite for asset diversification and more people finding commodity trading interesting,” Kurumada said.
There are two key kinds of investors who use the firm’s services. One of them has experience in trading currency or stocks online and can analyse technical charts or moves in other markets to aim for high returns amid price fluctuations.
“Some are day traders, others more longer term, like a few weeks. They are largely in their 30s and 40s,” Kurumada said.
The other type is non-traders interested in commodity investment who buy gold as a start, he said.
Reflecting the popularity of the yellow metal as an investment, the open interest in the gold mini contract, launched in July 2007, hit a record high 83,428 contracts on Jan. 8, according to Tokyo Commodity Exchange Inc (TOCOM), exceeding that of the standard gold contract.
TOCOM will extend trading hours of all derivatives contracts later this year to boost liquidity after Japan’s main commodity market launches upgraded trading systems in May.
Kurumada said this would help attract more investor interest to commodity investment and trading, as it would allow players to cut losses timely or swiftly react to overseas market moves.
“We hope that the environment will be set so traders can reap profits just like in currency and stocks,” he said.
While Japanese retail investors are waking up to the attraction of commodity investment, the pace of growth may be moderate.
About 20 percent of those investing in gold, for instance, are investing in TOCOM’s gold mini contract and about 10 percent are actively trading. The rest are investing in such products as gold savings plans, Kurumada said.
“Retail investors jumped on the gold mini contract a year after its launch. It takes time for them to catch up,” he said. ($1=91.48 Yen) (Editing by Clarence Fernandez)
© Thomson Reuters 2009 All rights reserved
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That’s It for Now- I close with this quote below- Good Investing! – jschulmansr
“Nothing will unnerve the paper gold shorts more quickly and do more to undercut their confidence than to strip them of the real metal and force them to come up with more hard gold bullion to make good on deliveries. “Stand and Deliver or Go Home” should be the rallying cry of the gold longs to the paper gold shorts.” –Trader Dan Norcini
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Nothing in today’s post should be considered as an offer to buy or sell any securities or other investments; it is presented for informational purposes only. As a good investor, consult your Investment Advisor, Do Your Due Diligence, Read All Prospectus/s and related information carefully before you make any investments. – jschulmansr
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