Geniuses with gold

Shining golden week

According to Alec Hogg, this week has been all about gold.

Felicity Duncan
19 March 2009 17:15

With all the chaos in the world - big banks blowing up, normally responsible governments printing trillions with abandon, and even pirates trawling the high seas - it's understandable that investors are looking for the safest assets they can find, and this is where gold comes in.

As safe harbours go, gold is an all-time favourite. The gold price has rocketed upwards ever since the disaster-riddled nature of the global financial system became apparent. Right now, gold is trading at $950, and it's tapped to head upwards as the real economy sputters.

According to Moneyweb editor-in-chief Alec Hogg, speaking in the weekly Boardroom Talk Podcast, there can be little doubt that this week, gold has held centre-stage.

On the gold price, Hogg said: "[Thursday] was a big day for gold, [Wednesday] night when the Fed decided it was going to spend a whole lot more money, pulled out of thin air, gold bulls got excited, pushed the gold price up $35 and as we're talking right now, coming from a level of around 890, it's now trading 935 to 950."

"The Americans, certainly the mid-Americans or middle Americans, tend to love gold and they're going for it in a big way. Nick [Holland, CEO of Gold Fields (JSE: GFI)] said he'd just returned from America and he heard some fairly reputable commentators over there now talking about $2 500 an ounce."

"But what was interesting was the reasoning behind Nick Holland's view. He didn't say it would go to $2 500, but he also felt that it would go north of $1 000 in the not too distant future. He felt that the inflationary boosts that are going on in the United States are likely to have a direct impact on what he produces."

Mark Cutifani, CEO of AngloGold Ashanti (JSE: ANG), took a similarly bullish view.

"What was interesting and more supportive of this view, we had a ten minute chat on Wednesday ... after John Paulson had made an investment of 11%, or he paid just over $1bn for 11% of AngloGold [we had a chat with] Mark Cutifani."

"And what is interesting here, and Mark said he met John Paulson in the past, John Paulson, when you start digging into his background, is quite an incredible investor. Forbes magazine rates him as one of the top three. Steve Forbes said that if we were to have a Mount Rushmore for investors, in the United States - Mount Rushmore which you well know because you've been there, have got the heads of presidents on a mountain - and if we had them for investors, he said, it would be Bill Gross of Pimco, Warren Buffett and John Paulson. So that puts him right up in the very top league."

Paulson shot to fame after his hedge fund took a large bet against the sub-prime debt holders and house price.

Explained Hogg: "Personally he made billions of dollars. Last year he went from position 175 to a position in the top 75 on the billionaires' list and the primary reason for that is that his company, which has come from nothing, has now got assets of $35bn."

Given Paulson's investing acumen, and the prestige he now has, it's very interesting that he has chosen to get in on the gold game.

"He's betting on gold and more specifically he's betting on Mark Cutifani's firm, AngloGold Ashanti. So that's a very strong tip for us. John Paulson, who is like a Warren Buffett, makes [a] substantial investment in a South African-based company that is in the gold market."

"And we had [further] support of that as well in another of the podcasts with market commentators through the week - the one that is always the best read is with the Allan Gray commentators - and [Allan Gray director] Delphine Govender was explaining that they are overweight gold in the Allan Gray portfolios and overweight AngloGold in the gold side of the portfolios, so AngloGold is also their favourite."

For Hogg's insights on the Huge Group (JSE: HUG) SSF debacle, and the troubles of Super Group (JSE: SPG), check out the Boardroom Talk Podcast.

$152 in 18 days - Fin24 technical analysis

Has gold seen its 2009 high?

Feb 16 2009 10:45Joe Meyer

 

THERE are times when it is difficult to see the rhythm of a market. At other times, the market's heartbeat is unmissable.

From a $681 low, gold advanced to $833. This was a $152 move in 21 days. Then it pulled back and rallied from $741 to $893. This was a $152 move in 18 days.

The third advance was from $801 to $954. This was again a $152 move in 18 days. So we have three advances equal in magnitude and equal in time! This is indicated in red on the chart.

During these advances within the channel, we had three lows and three highs. The lows were at $681, $741 and $801. It is striking that these lows are all $60 apart. The three highs were at $833, $893 and $954, also $60 apart. This is also indicated on the chart.

If this does not strike you as fascinating (or at least interesting) you must be totally tone deaf! This is the rhythm gold dances to.

How should we interpret this?

Considering the fact that gold is at significant resistance and that both price and time formations peaked on Thursday 12 February, we can assign a high probability case that we have likely seen the high for the year in gold. Falling below $870 should confirm that significant downside is to follow towards our $700 and then $600 targets.

For daily updates and market analysis reports, visit Fin24.com's technical analysis page.

- Fin24.com

gold on its way back to the far from far-fetched $1,000 oz

As I write this I am watching gold sit just under $970/0z.

I read this article on Moneyweb this morning.

As a matter  of intrest we saw this morning, the highest price for a Krugerrand ever! R10,320.

Where is the price going to go? experts are saying that it will hit $1,100 + by the middle of the year. What does this mean for us? Well if the R/$ stays at around R10 we are looking for a Krugerrand price of atleast R12,000 

Gold could come into its own as true safe haven--Scotiabank

Scotiabank's Patricia Mohr notes that record gold ETF inflows have boosted gold prices, as gold regains its luster as a true "safe haven."

Author: Dorothy Kosich
Posted: Friday , 30 Jan 2009
click here for original article

RENO, NV -

Scotiabank economist Patricia Mohr says the big picture outlook for gold remains bullish, suggesting "gold could come into its own as a true ‘safe haven' in coming months."

Noting that gold prices have outperformed base metals in the past six month, Mohr advised, "In view of a massive U.S. budgetary deficit likely to surpass US$1.25 trillion in FY2009, Asian and Middle Eastern central banks and sovereign wealth funds may seek to diversify away from U.S. Treasury Bonds and agency debt."

In her monthly analysis of the Scotiabank Commodity Price Index, Mohr highlighted "record investor inflows into gold ETFs...have also lifted precious metals prices, as retail and institutional investors seek a ‘safe haven' from volatile currency and equity markets."

Meanwhile, while commodity prices have not yet hit the floor, Mohr said the pace of their decline is slowing and "the forced, indiscriminate selling by funds-triggered by investor redemptions and tight-credit appears to be subsiding. Many prices are approaching average world cash costs, triggering substantial production cuts, new project deferral and tighter supplies."

Mohr's research revealed the rapid decline in base metals prices "has been unprecedented and reflects in part the forced exit of hedge funds from commodity market positions due to fund redemptions and curtailed credit in 2008:Q4."

However, Mohr noted copper prices have lifted off the recent low, although they remain vulnerable to poor global economic activity and a "huge OECD inventory correction in 2009:Q1."

"Zinc prices have also been supported b pro-active and very unusual production cuts by twenty smelters (including Zhuzhou in Chiba -20%, Trail in B.C. -20% to mid-2009 and Kidd Creek in Ontario -30% to mid-2009," she said. However, zinc prices still remain just below average world cash costs.

Meanwhile, spot potash prices at the Port of Vancouver remained at record levels of $872.50 per tonne last month, "though new business has come to a virtual halt," Mohr said. She suggested that stronger nitrogen fertilizer prices next spring may rekindle interest in potash.

Mohr's research revealed that Scotiabank's Commodity Price Index lost further ground in December for the fifth consecutive month, falling -5.5% m/m.

Sees strongest level in more than three months.

Jan Harvey
26 January 2009 14:45

click here

LONDON -

Gold climbed above $900 an ounce to its strongest level in more than three months in Europe on Monday, lifted by interest in bullion as a haven from risk.

Spot gold was $905.90/907.90 an ounce at 1046 GMT, up from $898.10 in New York late on Friday. Earlier in the session the precious metal hit $907.40, its highest since Oct 10.

Gold priced in sterling hit a record 661.55 pounds, while euro-priced gold remained near the all-time high it hit on Friday, as fears over the global economic slowdown and volatility in other asset prices spurred buying.

RBS Global Banking & Markets' head of commodity strategy Nick Moore said factors including falling interest rates, the reinflation of Western economies and the prospect of lower supply both from mines and via central bank sales were supporting gold.

"There is an insatiable thirst for gold at the moment," he said.

The dollar, whose strength usually weighs on gold, climbed to a six-week high against the euro on Monday, as investors worried about the outlook for the banking sector. [ID:nLQ139147]

However, other factors outweighed the dollar-euro exchange rate to support the precious metal. Demand for physical gold both from investors in smaller products such as coins and bars and from exchange-traded funds remains firm.

Investors were seeking the safety of physical bullion as other asset prices met fresh volatility, analysts said.

"In times of economic crisis, falling equity markets and mounting aversion to risk, physical gold is preferred as the safest form of investment," Commerzbank analyst Eugen Weinberg said.

The world's largest gold-backed ETF, New York's SPDR Gold Trust GLD, which issues securities backed by physical stocks of the precious metal, said its holdings rose 1.6 percent to an all-time high of 832.57 tonnes on Friday. [ID:nT293191]

The trust's bullion holdings have climbed more than 52 tonnes or nearly 7 percent since the beginning of the year.

ASIA

Japan's biggest bullion house Tanaka Kikinzoku said its gold coin sales more than doubled in 2008 as the global financial crisis unfolded. [ID:nT252802]

Asian precious metals trading is likely to be muted by the closure of the Shanghai Gold Exchange on Monday due to the Lunar New Year holiday.

On the supply side, AIM-listed gold miner Peter Hambro Mining (POG.L: Quote) said its 2008 attributable gold production was up 36 percent at 393,600 ounces, and that it expects its 2009 production to be 460,000-510,000 ounces. [ID:nWLA5793]

Among other precious metals, silver rose in line with gold to $12.03/12.11 an ounce from $11.92.

Platinum firmed to $965/970 an ounce from $955.50 an ounce in New York late on Friday.

"We would not be surprised to see the gap between platinum and gold narrow: the ratio stands at about 1.07 at the time of writing and we have a standing recommendation to buy the platinum gold spread when the ratio falls below 1.05," UBS strategist John Reade said in a daily note.

"We believe that in the long term platinum should trade at a considerable premium to gold and we observe that periods of platinum's discount to gold tend to be measured in days or weeks rather than months and years," he added.

Palladium eased to $191.50/196.50 an ounce from $195.00. (Editing by Sue Thomas)

© Thomson Reuters 2009 All rights reserved

2009 gold price revised down - Standard Bank

2009 gold price revised down
Jade Menezies
Posted: Mon, 19 Jan 2009

[miningmx.com] -- The 2009 gold price could average $900/oz because of decreased demand and an easing of a prevailing supply deficit, said Standard Bank in its Equities Research report for this year.

“Our gold price forecast for 2009 has changed to US$900 from our previous forecast of US$980/oz” Standard Bank said in the report dated 16 January. The average price for 2008 was $872. The impact of the credit crisis will be strongly felt on the demand side for gold, it said. “A slowdown in global growth will likely affect fabrication demand specifically gold jewellery, electronics and other industrial components,” said Standard Bank. “We estimate the downturn in fabrication demand could be between 240 tonnes and 360 tonnes in 2009.” The gold price has not been immune to the global financial crisis; however, relative to almost all other commodities it has been an outperformer, said Standard Bank. The up-trend of the gold price depends heavily on the performance of the dollar, for which the outlook in the second half of the year is poor, MD of GFMS Analytics, Rona O’Connell told SAfm Market Update. “We could certainly see the old high challenged and possibly even taken out, but whether we can stay much above $1,000 for any reasonable period of time has to be open to question, I'd have thought,” she said. The main drivers of the gold price will be investment flows and speculators because the physical side of the market is weak, she said. “The investment fraternity is still relatively friendly but, as I say, not quite friendly enough yet, and the hot money is obviously one of the most important elements when it comes to pushing prices,” O’Connell said. “So, increasing investor activity, particularly from the institutions, from pension funds, is likely to create a drain on the metal supplies. That almost by definition would then be coloured by speculative activity, as speculators piggy-back on top of it - and that's going to be driven by economic and financial uncertainty,” she said. Standard Bank said its calculations now showed the physical gold market in a neutral position for 2009 against a previous expectation of a 315 tonne supply deficit. "We believe the gold price will be volatile and will likely rise significantly by fourth quarter 2009 on the back of seasonality and a gradual upward trend in global GDP. We maintain our long-standing view that the supply and demand fundamentals will remain intact for a long-term upswing in the gold price," it said. O’Connell said sales under the Central Bank Gold Agreement fell considerably during 2008 and was unlikely to be much different this year, meaning there is less gold available to the market.