We can all speculate about when the next leg up for gold will kick in, but the point for now is to take advantage of the weakness, like many of [the individuals, central banks and financial institutions are doing/suggesting. When the price breaks out of its trading range, are you sure you won’t wish you’d bought a little more? Here’s a sampling of this year’s “gold bugs” and what they’ve been doing about precious metals recently. Words: 1449
So says Jeff Clark (www.caseyresearch.com) in edited excerpts from his original article* entitled 12 Gold Bugs Bring Christmas Cheer.
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Clark goes on to say, in part:
It’s a tad puzzling that gold hasn’t broken into new highs, despite enough catalysts to move a herd of stubborn mules but that’s the hand we’re dealt right now. We can’t get up from the table until the game reaches its conclusion. Besides, I think the stall in prices is giving us one last window to buy before prices break permanently into higher levels for this cycle.
At least that’s how a number of prominent investors and institutions are viewing the price action right now. While the price of gold has languished in a trading range much of the year, leaving some investors scratching their heads, many have been buying – and in some cases, really loading up. Here’s a sampling of this year’s “gold bugs” and what they’ve been doing about precious metals recently.
1. Jim Rogers, billionaire and cofounder of the Soros Quantum Fund, publicly stated last month that he plans to “sell federal debt and purchase more gold and silver.”
2. George Soros increased his investment in GLD by a whopping 49% last quarter to 1.32 million shares. His stake is now worth over $221 million. Many investors don’t realize that he also placed call options on GDX worth$9 million. The most logical explanation is that he thinks gold equities are undervalued and that there’s big money to be made in them within a year.
3. Marc Faber mocks those claiming gold is in a bubble. “It’s nowhere close to that stage,” he says and even though he’s already sitting on a huge gain, he won’t take any profits. Why? “I keep a picture of Mr. Bernanke in my toilet, and every time I think about selling my gold, I look at it and I know better!”
4. Brent Johnson, a San Francisco hedge-fund manager, believed in gold so much that he started his own gold fund, Santiago Capital, earlier this year. His latest video points out that there have been “278 global easing moves in the last 14 months.” How does someone not own gold in that kind of environment?
5. Don Coxe, a highly respected global commodities strategist, stated at the Denver Gold Forum that “now is the best climate I have ever seen for an increase in gold prices.” He told fund managers, mining analysts, and mining executives to prepare for significantly higher gold prices and thus higher gold-mining-stock valuations. “The opportunities ahead are the best I’ve seen.” He thinks a new gold rush is ahead for gold stocks, and that a “lustrous” rally will occur within a year.
6. Jeffrey Gundlach, cofounder of DoubleLine Capital, predicts that deeply indebted countries and companies will default sometime after 2013. Central banks may forestall these defaults by pumping even more money into the economy – but at the risk of higher inflation in coming years. He recommends buying hard assets including gold, and also “gold-mining firms because we consider them to be bargains.”
7. Rob McEwen, CEO of McEwen Mining and founder of Goldcorp, is buying precious metals because he believes gold will someday hit $5,000 and silver $200.
8. Savneet Singh, a former investment analyst at Morgan Stanley, was frustrated with the options available to acquire physical gold in an allocated, whole-bar format outside the banking system. He started Gold Bullion International…a service that virtually does away with the need to buy GLD.
The above is only a handful of individual investors who have made recent news with their bullion buying. Institutions, governments, and others are participating, too, as outlined below:
9. Central Banks
The South Korean central bank added 14 tonnes (approximately 450,000 troy ounces) of gold in November, and now holds six times more than back in June of 2011. “Gold is a physical, safe asset, and allows us to deal with changes in the international financial environment more effectively,” bank officials said.
Brazil bought 18.9 tonnes (607,650 ounces) in September and October alone. It will likely buy more, since gold still accounts for only 0.8% of its reserves.
Paraguay bought 7.5 tonnes (241,130 ounces) in July.
Turkey imported 4.2 tonnes (135,000 ounces) of gold in November. It has bought 117.2 tonnes (3.7 million ounces) so far this year, almost double last year’s purchases.
Central banks around the world bought a total of 351.8 tonnes of gold (11.3 million ounces) in the first nine months of 2012, up 2% from a year ago.
Even Argentina added 7 tonnes last year (225,000 ounces), and Colombia 2.3 tonnes (almost 74,000 ounces).
Then there’s China. While nothing official has been announced by its central bank, its imports and buying habits are mind-boggling.
These data suggest, in and of themselves, that dips in the gold price are likely being bought – and will continue to be bought – by central banks. They’re not exactly short-term traders. Remember, central banks were net sellers as recently as 2009, so this reversal will likely play out for years.
India has more than doubled its imports of gold in three years (through 2011), and investment demand has climbed almost fivefold – and all this occurred while prices were rising and from a nation that already has a strong cultural predisposition towards the metal. Further, silver demand is taking off: sales have jumped 24% this year over last….
Germany: A precious-metals group recently reported that Germans are increasingly buying gold because of fears about economic uncertainty, and that a third of [its]citizens are now considering gold as part of their investments….
10. Commercial Banks
Morgan Stanley’s preferred metal exposure for 2013 is gold, though the company expects silver to outperform it. The bank stated that it believes “nothing has changed with gold’s fundamental thesis: QE 3 (and 4…) and similar commitments from the ECB and BoJ; low nominal and negative real interest rates; ongoing geopolitical risk in the Middle East; and mine supply issues.”
ScotiaMocatta stated that it will “not be surprised to see prices reach $2,200/oz.” Why? “One of the main reasons we are still bullish is because of the mess the Western world is in. Europe has a debt problem that is proving all but impossible to solve, and all efforts to date have revolved around throwing more money at the problem to avoid the monetary system from breaking down… that should be reason enough to be bullish.”
Deutsche Bank released a new report essentially declaring that gold is money. “We see gold as an officially recognized form of money for one primary reason: it is widely held by most of the world’s larger central banks as a component of reserves. We would go further, however, and argue that gold could be characterized as ‘good’ money, as opposed to ‘bad’ money which would be represented by many of today’s fiat currencies.”
Bank of America Merrill Lynch says gold will hit at least $2,000 by the end of 2013.
JP Morgan now accepts physical gold as collateral.
Another source of demand from banks could be the change in Basel III regulations. If you haven’t read about it, gold could get promoted to Tier 1 status, meaning it would be considered a “zero-percent risk weighted item.” Eric Sprott recently wrote, “If the Basel Committee decides to grant gold a favourable liquidity profile under its proposed Basel III framework, it will open the door for gold to compete with cash and government bonds on bank balance sheets – and provide banks with an asset that actually has the chance to appreciate. Given that US Treasury bonds pay little to no yield today, if offered the choice between the ‘liquidity trifecta’ of cash, government bonds or gold to meet Basel III liquidity requirements, why wouldn’t a bank choose gold?” We’ll be watching the news on this topic.
None of the above parties think the gold bull market is over, nor the price too high. They recognize the implications of a world floating on fiat currencies, and that government “solutions” to debt and deficit spending will significantly – perhaps catastrophically – dilute the value of currencies, the fallout of which has yet to materialize. As for me, I think that the longer the malaise continues, the more likely the breakout is to be both sudden and dramatic.
I say give you and your loved ones a lasting Christmas gift and call your favorite bullion dealer. Now is a great time to give yourself another gift… one that will make next year’s holiday season even brighter.
Today’s world is as uncertain as any we’ve seen in some time. Sovereign-debt crises threaten major economies in Europe and Japan and the fiscal state of the United States is the worst in non-wartime history! It’s no surprise, then, that investors are becoming increasingly attracted to the safety, anonymity and purchasing-power preservation that comes with bullion ownership. That being said, one of the most-often-overlooked benefits of bullion is its ability to help you increase your wealth across currencies, so today I’ll show you how owning physical metals — and the most-precious of them all, gold in particular — can help you to boost your global net worth! Words: 896
I like gold because it’s a risk-reducing, portfolio-diversifying asset. It’s also been a strong-performing asset over the past decade – up nearly 400%. What’s more, it’s been reliable. In 2008, when the major U.S. indices plummeted 37% (and more into early 2009), gold returned nearly 6%. In addition to being an exceptional investment, however, gold has also been an exceptional investment within a portfolio context. That is, it has provided return while reducing portfolio risk. Gold has, in essence, been a free lunch. Words: 490
Some say that the gold price rises and falls, but they are grabbing the wrong end of the stick. It is the purchasing power of national currencies that rise and fall. Here is an analogy to make this point clear. When standing in a boat and looking at the shore, it is the boat (currencies) – and not the land (gold) – that is bobbing up and down. [Let me explain the value of gold further.] Words: 631
Gold and Silver are not an investment! Let me repeat that. Gold and silver are not an investment! Gold and silver are (excuse the pun) the most “solid” form of money you can possess. Yes, these two precious metals are money!…Don’t fear owning gold my friends. Fear not owning gold and silver, especially if you are a saver. [Let me explain.] Words: 795
It would seem that there is a considerable lack of understanding about what the term “safe haven” actually means when it comes to gold. Let me explain just what it means – and does not mean. Words: 740
Comments I have made that “when this [financial crisis] finally ends the big winners are apt to be the ones who have lost the least purchasing power. Keeping score in nominal dollars is likely to be meaningless. Gold tends to hold its purchasing power regardless of what happens to fiat currency.” have prompted questions about a) how to achieve such purchasing power with physical gold when this stage is reached, b) how to go about buying things with gold coins and c) how gold would be utilized under the assumption that a barter system would develop when dollars become worthless. [Let me explain.] Words: 700
Do you own enough gold and silver for what lies ahead? If 10% of your total investable assets (i.e., excluding equity in your primary residence) aren’t held in various forms of gold and silver, we…think your portfolio is at risk. Here’s why. Words: 625
To fully understand gold’s role in an investment portfolio, we need to adopt a new mindset, a gold mindset which is, simply put: gold is not a bad investment, and gold is not a good investment. Gold is not an investment at all – gold is money.
In our travels to the Middle East, the Far East and South and Central America [we have found that] most people in those parts of the world see gold as the protector of wealth [as opposed to] in the West where it is viewed as a commodity for speculation… [That shouldn’t be the case. Let me tell you why.] Words: 2159
I was taught years ago that “gold is not about price… gold is about value.” Be measured, be balanced and don’t make more of it than it is. Gold is just a tool, an anchor to sound money; to value. [Let me explain.] Words: 1120
Out of the 7,500 separate mutual funds available, and with 22,000 shares classes to choose from, only 1 fund – just ONE fund – actually managed to achieve a greater percentage return than gold bullion since the alarm bells rang out at the turn of 2007! [That being said, are you still one of the 99% of investors who, for whatever reason (are you foolishly listening to the “advice” provided by your stock broker/securities salesman going under the guise of a financial “advisor”), is still without any physical gold or silver?] Words: 395
The traditional view of portfolio management is that three asset classes, stocks, bonds and cash, are sufficient to achieve diversification. This view is, quite simply, wrong because over the past 10 years gold, silver and platinum have singularly outperformed virtually all major widely accepted investment indexes. Precious metals should be considered an independent asset class and an allocation to precious metals, as the most uncorrelated asset group, is essential for proper portfolio diversification. [Let me explain.] Words: 2137
It is no longer a matter of whether or not you should buy gold and/or silver but, rather, which type of investment(s) and how much. You don’t need a lot but you do need some – and here’s a primer on just what type of investment vehicles are available and recommendations on just how much you should buy. Words: 1086
There is such a “fear of gold” amongst most people that it must be due to statist indoctrination and propaganda because it makes no rational sense to have such a fear of such a time tested and true store of wealth. After all, we are talking about time tested and true money – the only money that has lasted for thousands of years and is still fully accepted worldwide as a store of wealth….What would you rather hold “for eternity” gold [or] US dollars [which are nothing more than] a paper debt obligation of a bankrupt nation state? Words: 450
In my opinion, the greatest threat to long-term and retirement investors is the wealth-destroying triple combination of monetary inflation, asset deflation, and inflation taxes. Fully understanding [these factors] is absolutely essential for financial survival because history shows us quite clearly that when all three of these major wealth destroyers are working together in the real world then conventional investing methods cannot withstand the destruction of investor wealth that occurs. [Let me explain why, then, your past and future stock market gains actually have been, and will continue to be, absolutely nothing more than a mirage – a cruel illusion that has and will continue to only benefit our governments – unless you develop a drastic out-of-the-box investment strategy that is radically different from anything that currently exists (or is in the public domain).] Words: 3456
Asset allocation is one of the most crucial aspects of building a diversified and sustainable portfolio that not only preserves and grows wealth, but also weathers the twists and turns that ever-changing market conditions can throw at it. However, while the average [financial] advisor or investor spends a great deal of time carefully analyzing and picking the right stocks or sectors, the basic and primary task of asset allocation is often overlooked. [According to research by both Wainwright Economics and Ibbotson Associates and the current Dow:gold ratio, allocating a portion of one’s portfolio to gold and/or silver and/or platinum is imperative to protect and grow one’s financial assets. Let me explain.] Words: 1060
We are reading a lot of hype these days about gold and the necessity to own it but only about 2% of ‘investors’ actually have gold in their portfolios and those that have done so have insufficient quantities to offset the future impact of inflation and to maximize their portfolio returns. New research, however, has determined a specific percentage to accomplish such objectives. Words: 1063
The United States is now so far in debt, it will never be able to pay it off, that is, without hyper-inflation. That subject alone will require many more articles than this. The sky is not falling (yet) but your savings and investments are in dire jeopardy going into 2012. You might wish to now do something to protect yourself. [May I offer the following investment ideas.] Words: 1648