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Key Gold Headlines

POSTED ON February 3, 2011  - POSTED IN Key Gold Headlines

Utah Could Use Gold, Silver Under Sound Money Act
New American – The Utah State Legislature is considering a bill that would require the state government to accept taxes and pay obligations in gold or silver upon demand. The “Sound Money Act” cites the US Constitution’s requirement that “no state shall make anything but gold and silver a tender in payment of debts.” That clause has never been repealed, though it was ignored by the courts as the US was gradually taken off the gold standard. This groundbreaking piece of legislation (and fantastic promotional video) could be the start of a movement among the states to return to Constitutional money. Among the coins Utah would accept are: American Gold Eagles, Australian Kangaroos, Canadian Maple Leafs, and South African Krugerrands.
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Emerging Markets Feeling the Heat of High Inflation Rates
Economic Times – Emerging markets are struggling under the burden of inflation ‘exported’ from the US. As the Fed prints hundreds of billions of new dollars, export-based economies feel pressured to print an equivalent amount of their local currency to keep their manufacturers from being choked off from the developed markets. The BRIC bloc (Brazil, Russia, India, and China) are all hiking interest rates to try to contain the flood of dollars pouring in, but the Fed’s inflation is too much, too fast. As a result of strengthening currencies abroad, the Economic Times expects rising prices in “commodities such as gold, silver, crude oil, and various other metals.”
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Are Investors Becoming Too Bearish on Gold?
Minyanville – January saw investors selling gold bullion and mining shares, but the metal is starting to look oversold. Much of the correction is due to recent rate hikes in emerging markets, leading some to believe the threat of inflation is waning. However, Euro Pacific Precious Metals’ own Chief Economist Michael Pento notes that real interest rates are set to be negative for some time, which historically drives the gold price up. It is noted that since so many gold market timers are quick to sell on even potentially bearish news, the gold market is probably far from the euphoria which characterizes a bubble. Also noted is how many traders are shorting gold, which “makes it a virtual certainty that at whatever price point a reversal eventually occurs, it will be a violent one.” That means a fast leap upward may be due in February. Mr. Pento maintains a price target of $1,600/oz by the end of 2011.
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Gold Standard Fully Supported By… Alan Greenspan!?
Zero Hedge – Joining a chorus that now includes the President of the World Bank and the President of the Kansas City Fed, former Fed Chairman Alan Greenspan has publicly voiced his support for a return to the gold standard. Mr. Greenspan, credited by many with planting the seeds for the current dollar crisis, conceded on Fox Business Network that “some mechanism has got to be in place that restricts the amount of money which is produced, either a gold standard or a currency board, because unless you do that, all of history suggests that inflation will take hold.” The re-indexing required to create a new gold standard from the remaining US stockpile would yield a gold price of $6,300/oz.
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POSTED ON January 3, 2011  - POSTED IN Key Gold Headlines

Gold Imports by China Soar Almost Fivefold
Bloomberg – The Shanghai Gold Exchange reported that gold bullion imports into China have jumped five-fold since 2009. This reflects strong demand for gold investment among the Chinese, whose local currency, the yuan, is being rapidly devalued to maintain its exchange rate with the US dollar. While prices at the grocery store are rising 5-6% a year in yuan terms, they are falling in terms of gold as the Chinese standard of living rises. The sheer numbers quoted in the report indicate that the Chinese government may have lifted all of its restrictions on gold imports. Still, the result is surprising given China’s status as the world’s largest producer of gold – proving that private demand is outstripping their immense supply. The World Gold Council expects Chinese demand to increase another 43% next year.
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Gold Jumps on China’s Fund Approval
The Australian – Gold saw a jump this month after the Chinese government approved the mainland’s first fund giving Chinese citizens access to foreign gold ETFs. Chinese citizens have not previously had access to gold through the stock exchange, as Americans do with ETFs like GLD and CEF. This new Chinese fund will purchase shares in Western ETFs, rather than purchasing and storing its own gold. Still, this is viewed as a major milestone in the entrance of the Chinese into the gold markets.
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Gold Becoming a Hedge Against “Monetary Uncertainty”
CNBC.com – Famed analyst Dennis Gartman explains that precious metals demand is no longer driven by simple inflation concerns, but rather widespread monetary uncertainty. The eurozone is in danger of breaking apart; Washington is working overtime to undermine the value of the US dollar; and, no other paper currency is prepared to fill the void created by the big two. In fact, most other candidates – such as emerging market currencies – are largely backed by dollars and euros. So, central banks are turning to the only viable alternatives: gold and silver.
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POSTED ON November 3, 2010  - POSTED IN Key Gold Headlines

Super-Rich Investors Buy Gold by Ton
Reuters – A survey of private wealth managers catering to high net worth individuals has shown that the world’s ultra-rich are selling currencies and buying gold “by the ton.” One notable difference from past downturns is the demand for physical gold, as opposed to just ETFs and mining stocks. Anecdotal evidence from bankers shows the wealthy buying tons of gold for physical delivery, then storing the assets away from the banking system.
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Drinks Are Free as Bartenders Refill Punchbowl
Bloomberg – Noted Bloomberg columnist William Pesek openly challenges the myth of central bank independence. In the 13 years since the Bank of Japan was granted “independence,” it has left interest rates near zero the entire time. To explain why, Pesek brings the illustration to American shores. He imagines what would happen if Fed Chairman Bernanke were to try to raise interest rates under present conditions. The answer? Immediate Congressional subpoena, followed by a quick resignation. ECB President Trichet is in the same boat, but with 16 irrational captains. And Pesek sees the problem as only getting worse. Come to think of it: when was the last time you heard anyone in Washington say the words “exit strategy”?
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Gold May Climb to Record $1,650 an Ounce on Fed Easing, Goldman Forecasts
Bloomberg – The headline says it all. Goldman Sachs, which in August cautiously raised its guidance on gold to $1,300 by the end of this year, is now forecasting that the bull trend will continue until this time next year. This is all predicated on the Fed continuing its easy-money policies with abandon. If trends were to reverse, then a re-evaluation would be necessary. Meanwhile, with no sign that the Fed is even considering a reversal, Goldman’s new price target is looking to become obsolete faster than Betamax.
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Commodities to Extend Rally on Federal Reserve’s “Game Changer,” UBS Says
Bloomberg – The Fed’s second round of quantitative easing (QE2) will be a “game changer” for copper, gold, and palladium, according to a report from UBS commodities analysts. A new round of inflation is a “virtual certainty”, which is bullish for commodity prices. The report cited a Goldman Sachs estimate that the ultimate tally for QE2 will be $1 trillion. UBS’ gold target for 2011 has been raised to $1,400/oz.
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POSTED ON September 30, 2010  - POSTED IN Key Gold Headlines

Gold Demand Jumps 36% as Investors Step Up Purchases of ETFs, Council Says
Bloomberg – Private investors and central banks are stepping up purchases of gold-backed ETFs. Concerns about sovereign debt in Europe and the continuing viability of the dollar have sent gold prices up 30% year-over-year. In June, Gold shattered all previous nominal records against the euro, pound sterling, and Swiss franc. With the Federal Reserve reiterating its pledge to keep interest rates near zero and the EU setting up a $1 trillion bailout fund for its weaker member-states, individuals, institutions, and creditor governments have found gold to be the last reliable safe haven. As investors pour into ETFs for liquidity and accounting purposes, gold moves off the market and into vaults, allowing holders of physical gold the benefit of rising prices without counterparty risk.
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POSTED ON September 3, 2010  - POSTED IN Key Gold Headlines

Sinai Says Fed’s Statement Means “Gotta Buy Gold”
Bloomberg – The FOMC policy statement on Sept. 21 said that inflation too low for the Fed to achieve its dual mandates of price stability and maximum employment. This language was much more aggressive that previous statements, and lays the groundwork for a second round of ‘quantitative easing,’ i.e. money printing. Respected private economist Allen Sinai explains that the statement was “code for: ‘we don’t want to go the way of Japan so we’re going to print money.'” How does one trade this information? “You gotta buy gold,” says Dr. Sinai.
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Gold Bull Market Has a Long Way to Go, Says Jim Rogers
Kitco News – Famed commodities investor Jim Rogers describes the recent gold rally as a direct response to aggressive money printing by the governments of the United States and Japan. Both manage what have traditionally been considered “safe haven” currencies, so their devaluation efforts have destabilized the currency markets. Rogers says a gold bubble will form one day, but not anytime soon — because gold is still an unusual investment for financial professionals, and very rare among retail investors. As recently as this year, he asked the money-manager audience at one of his lectures how many had ever owned gold and only about one in four raised their hands. He recommends everyone own some gold in their portfolio, but sees silver as having even greater potential for gain.
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POSTED ON August 31, 2010  - POSTED IN Key Gold Headlines

Prices Excluding Food, Energy in US Rise More Than Forecast
Bloomberg – Trouble in the eurozone may be helping to bolster the US dollar, and hold down the CPI, as investors seek perceived safety. Meanwhile, retailers are aggressively cutting prices in an attempt to improve weak sales figures. Nonetheless, the “core” Consumer Price Index (CPI) increased slightly in June, surprising many analysts who were bracing for deflation. More Americans are losing their jobs, and yet the cost of living continues to climb.
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Silver – The Next Belle of the Ball?
Barron’s – Gold is trading at 66 times silver, compared to a historic average of 16 times. Many analysts, notably Jim Rogers, expect this gap to narrow. While Jim Turk points out that silver is more volatile than gold, he believes the gold/silver ratio will return to 20:1. With gold at its current prices, this would mean a silver price of about $60/oz – a gain of some 240% from current levels. Reasons to be bullish on silver include safe haven demand like gold, but also strong industrial demand for use in solar panels, water purification plants, and as an antibacterial agent.
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The Death of Paper Money
Daily Telegraph – Celebrated conservative columnist Ambrose Evans-Pritchard discusses the renewed interest in studying past episodes of hyperinflation. Each one starts with a passive increase in the money supply [the Fed more than doubled the US dollar supply after the 2007 credit crunch], which may not affect general price levels for a long time. But, once it does, the currency system can collapse in a matter of weeks. Germany, Austria, and Hungary provide examples of this after World War I. Each saw civil society disintegrate as starving urbanites fled into the countryside to pillage farms. “The winners,” Pritchard recounts, “were those who – by luck or design – had borrowed heavily from banks to buy hard assets.”
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