January 2010 Archives

On top of the record 140 bank failures in 2009, there have been 9 bank failures thus far in 2010.  They are:

Columbia River Bank	The Dalles	OR		January 22, 2010
Evergreen Bank	Seattle	WA		January 22, 2010
Charter Bank	Santa Fe	NM		January 22, 2010
Bank of Leeton	Leeton	MO		January 22, 2010
Premier American Bank	Miami	FL		January 22, 2010
Barnes Banking Company	Kaysville	UT		January 15, 2010
St. Stephen State Bank	St. Stephen	MN		January 15, 2010
Town Community Bank & Trust	Antioch	IL		January 15, 2010
Horizon Bank	Bellingham	WA		January 8, 2010

Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold

Let me get right to the point. Gold's going to $5,000 an ounce.

I know that sounds preposterous to most people. In fact, some of you probably think I'm crazy.

But for a whole host of reasons, $5,000 may well end up being a conservative estimate.

So before you start posting comments that I've gone bonkers, hear me out...

In 2001, gold traded as low as $255 an ounce. Within eight years, its price had quadrupled to more than $1,100 an ounce. How many investors thought that was possible, or even likely? Probably not very many.

Yet, it happened.

What's more, since hitting its secular bottom back in 2001, gold has posted a positive return in every calendar year. So far, the current bull market has been pretty orderly.

During the past 10 years, gold has indeed become the trade of the decade, beating out commodities, oil, high-grade U.S. corporate bonds, U.S. Treasuries, and yes, U.S. stocks.

A crisp $100 bill invested 10 years ago would today be worth more than $400 in gold, $357 in commodities (as measured by the S&P GSCI Enhanced Total Return Index,) $268 in oil, $190 in corporate bonds or U.S. Treasuries, and only $90 in U.S. stocks.

That's right: We're talking about a $10 loss in U.S. stocks over 10 years. Ouch.

Meanwhile, gold has embarked upon a secular upward trend that is far from over. If the 1970's are any indication, gold's going much, much higher from here.

When U.S. President Richard M. Nixon opted to close the gold window in August 1971, the yellow metal had already risen from its fixed price of $35 an ounce to $42 an ounce. By the time gold peaked in 1980, it had risen to $850, rewarding early investors with a 2,400% return. My guess is that any such forecast in 1970 would probably have been met with the same kind of ridicule I expect that my current projection could attract.

Granted, there's no guarantee that we're about to duplicate the 1970s. (I could certainly do without the disco, bell bottoms and leisure suites). But as Mark Twain once noted: "History does not repeat itself, but it often rhymes."

And that could mean even sweeter returns for gold investors this time around.

In fact, let's crunch a few numbers - just for fun.

Why $5,000 an Ounce Gold Isn't Out of Bounds

To start with, let's take the 1980 peak price of gold - $850 - and adjust it for inflation. That would take the price of gold to $2,400 in present-day terms.

Better still, let's take the 2,400% gain that gold experienced during the 1970s and translate it into present-day terms. From the 2001 low of $255 an ounce, a 2,400% gain would take the yellow metal all the way up to $6,120 an ounce, making my $5,000 price projection seem a lot more reasonable.

But these are just superficial price comparisons. If we look at what the fundamentals are telling us, it's clear that gold at $1,100 is a long way from its eventual peak, meaning it still appears cheap.

So let's take a closer look.

Five Fundamental Reasons Gold Will Soar

Gold Fundamental No. 1: You Can't Ignore Inflation: The 2008 stock market panic sent stock and commodity prices - including the price of oil - into a tailspin. And that launched the big debate about whether inflation or deflation would ultimately carry the day. Keep in mind that since 2001 - under benign price inflation of roughly 2.5% - gold has managed to rise about 400%. Meanwhile, the U.S. Federal Reverse is widely expected to keep short-term rates near zero through this year, leaving the door open for rampant inflation.

Meanwhile, quantitative easing to shorten the recession has caused America's monetary base to explode. Starting in October 2008, during a very short span of only four months, the central bank doubled the U.S. money supply, going way beyond anything ever attempted in the nation's history.

Worldwide, central banks have rolled out an unprecedented $12 trillion worth of stimulus programs, with most of the money still to be spent.

Make no mistake, inflation will win out over deflation.

Gold Fundamental No. 2: Investment Demand is Exploding: Large institutional investors - hedge funds and pension funds - are making large allocations to gold, as are individual investors.

The proliferation of gold-focused exchange-traded funds (ETFs) bears this out. The SPDR Gold Trust (NYSE: GLD), the world's largest physically backed ETF with 1,100 tons of the lustrous metal, is the sixth-largest holder of gold bullion. Individual investors have never had an easier avenue for owning gold.

This isn't just merely a U.S. manifestation. According to the World Gold Council, demand advanced 15% from the second quarter to the third last year.

Asia, with a population that exceeds 2.5 billion inhabitants and a long-standing cultural affinity for gold, is stoking global demand in a big way. China is overtly encouraging its citizens to buy gold and silver, while offering them gold-linked checking accounts. China is primed to overtake India as the world's largest consumer of gold. A quickly developing middle class whose members are experiencing rapid escalations in disposable income are a major bullish driver for the price of gold.

Gold Fundamental No. 3: Central Banks are Becoming Net Buyers: India's recent purchase of 200 tons of International Monetary Fund (IMF) gold was the likely impetus that pushed gold up over the $1,200 level in December. But more important is the sea change that has seen central banks morph from net sellers into net buyers of gold. BlackRock Inc. (NYSE: BLK), one of the world's largest investment managers, said that 2009 was that turning point. If that was the case, it will have been the first time in 20 years, as central banks have been net sellers of gold since 1988.

Gold Fundamental No. 4: A Currency Crisis is Looming: The "PIGS" - Portugal, Italy, Greece and Spain (or "PIIGS," if you want to include Ireland) - aren't in very good fiscal shape. And they aren't alone. Iceland has already gone over the edge. The United States, the United Kingdom, and countless other economies are struggling. And that reality has ignited a crisis of confidence about fiat currencies in the minds of many investors. Money is nothing more than paper and ink, backed by the full faith and credit of the issuer. When investors find that their faith in the issuer is shaken, the value of that currency erodes. Additional sovereign-debt downgrades from ratings agencies are but one potential trigger of a currency crisis. Under such conditions, gold - the ultimate store of value, and the oldest existing form of money on earth - will soar as investors seek to protect their purchasing power.

Gold Fundamental No. 5: We've Yet to Reach the Mania Stage: As we've outlined before, the gold bubble that takes prices to all-time-record levels will inflate in three distinct stages. This process will start with currency devaluations in Stage One, will be fueled by growing investment demand in Stage Two and will experience its stratospheric ascent in Stage Three, the mania phase of this evolution.

Make no mistake, the $5,000 price point will most likely be reached in this third and final phase. The price of gold will behave like it is strapped to a jet pack. And today's market prices will be dwarfed by the levels gold prices will ultimately achieve.

Keep in mind, the entire gold industry has an aggregate market capitalization (value) below that of Wal-Mart Stores Inc. (NYSE: WMT) alone (currently about $210 billion). So as the crowd piles in, the "big money" to be made will lie with gold explorers and producers, where 1,000% returns will not be uncommon, even from today's prices.

All these fundamentals underscore that gold prices have plenty of room to run from here.

And since I expect gold will eventually reach the $5,000 range, that leaves plenty of room for investors to profit by entering at current levels.

It's Time to Make Your Move

Everyone needs some exposure to gold in their portfolios, no matter their age or risk tolerance. Owning some physical coins or bars makes sense, but it's complicated to do inside most retirement accounts.

That's why the explorers and producers of the gold sector promise the biggest payoffs. Although production costs will rise, as gold prices rise, profit margins are sure to expand even faster. Once cocktail-party conversations turn to gold, for any one of the reasons I've outlined, gold stocks will erupt and then streak for record highs.

When will this happen? I think it will take a few years. But with bubbles, or speculative frenzies, one never knows. Just this week, in fact, Robert R. McEwen, the chairman and chief executive officer of U.S Gold Corp. (AMEX: UXG), predicted that gold could more than quadruple to hit the $5,000 level by 2012. Some experts have labeled this expected move as a looming "superspike."

When this happens, gold is likely to create a whole new generation of millionaires, and even a few new billionaires. Despite the mania stage being several years away, the wise investor recognizes both the importance and the potential of investing in gold.

I have no doubt that today's $1,100 gold price level will eventually, in hindsight, look like an outrageous bargain.

My advice: If you own gold and gold shares, hang onto them and buy more on dips. If you don't, what on earth are you waiting for?

[Editor's Note : Peter Krauth is a contributing editor to Money Morning and is also the editor of the Global Resource Alert advisory service. A highly regarded market analyst and expert in metals and mining equities, Krauth specializes in energy- and resource-related investments.

Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold

 

Jan. 12 (Bloomberg) -- US Gold Corp. Chief Executive Officer Rob McEwen said global gold prices may increase to $5,000 an ounce between 2012 and 2014 as rising U.S. government debt weakens the dollar.

“Money supply has expanded so rapidly that there are a lot more dollars looking for a steady home,” McEwen, also founder of Goldcorp Inc., said today in a Bloomberg Television interview. “Governments cannot help themselves. They want to help the economy. They are printing money. They are going into debt on a horrific scale, and that will depreciate the value of the dollar.”

His forecast for gold, which is more than quadruple the current price, represents a “once-in-every-300-years” phenomenon, McEwen said. He maintained his previous forecast that gold will rise to $2,000 an ounce by the end of this year.

Gold futures for February delivery fell $3.60 to $1,147.80 an ounce at 8:27 a.m. on the Comex division of the New York Mercantile Exchange. The price of most-active contracts has risen for nine straight years. 

Watch the video by clicking here or cut and past this link into a new browser window:

http://www.bloomberg.com/avp/avp.htm?N=video&T=Robert%20McEwen%20Interview%20on%20Outlook%20for%20Gold%20Prices%20&clipSRC=mms://media2.bloomberg.com/cache/v6ALeGNsOrcc.asf

Robert McEwen Interview on Outlook for Gold Prices
Jan. 12 (Bloomberg) -- Robert McEwen, chairman and chief executive officer of U.S. Gold Corp., talks with Bloomberg's Erik Schatzker and Deirdre Bolton about the outlook for gold prices. McEwen expects gold prices to increase to $5,000 an ounce between 2012 and 2014 as rising U.S. government debt depreciates the value of the dollar.

Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold

 

Jan 8, 2010:  Gold prices rose towards $1 140 (R8 345) an ounce on Friday after December's US non-farm payrolls data missed expectations, dampening expectations a US interest hike may be imminent and pressuring the dollar versus the euro.

Spot gold hit a high of $1 139.40 an ounce in the wake of the data and was bid at $1 135.60 an ounce at 16:13 SA time, against $1 131.40 late in New York on Thursday. Earlier it slipped as low as $1 119.45.

"People were largely going short into the market, and as the non-farm payrolls for December were slightly worse than expected, those shorts were covered," said Michael Widmer, an analyst at Bank of America Merrill Lynch.

"The dollar came off quite a lot on the back of it, and that contributed to pushing gold higher," he added.

US gold futures for February delivery on the COMEX division of the New York Mercantile Exchange rose $3.30 to $1 373.00 an ounce.

The dollar plunged against the euro after data showed US job losses were 85 000 last month, while markets were expecting no cuts.

The numbers dampened burgeoning hopes an economic recovery may be on the way, which might have led to a hike in US interest rates sooner rather than later.

Gold prices have benefited from low interest rates in the last year, which contributed to dollar weakness and cut the opportunity cost of holding non-interest bearing assets.

"The play for gold (this year) is speculating on the move in US interest rates," said Jeremy East, Standard Chartered's global head of commodity derivatives trading. "(The payrolls data) will obviously have an impact on expectations for that."On the wider markets, oil prices eased after the data, while US stock futures pointed to a lower opening on Wall Street after the report. European shares briefly turned negative after the numbers.

INVESTMENT SOFT

Investment demand for gold-backed exchange-traded funds remained soft after a lacklustre start to the new year. The largest gold ETF, New York's SPDR Gold Trust, reported a further 0.4 tonne dip in its holdings on Thursday.

Its holdings have fallen 10 tonnes in 2010 so far, while those of London-based ETF Securities' gold-backed exchange traded products are down 19 000 ounces in the same period.

Spot silver tracked gold lower to $18.38 an ounce against $18.22. Platinum was at $1 563 an ounce versus $1 554.50, while palladium was at $428 an ounce against $424.

The United States' first platinum and palladium-backed ETPs are due to start trading in New York later on Friday, which will allow US investors to invest in the metals used in autocatalysts via an ETP.

"Both (platinum and palladium) could gain serious traction should ETF investment demand prove strong," James Moore, an analyst at TheBullionDesk.com, said in a note.

Investment appetite for the metals is expected to be firm this year as a turnaround in the global economy lifts car demand. Over half the world's platinum and palladium is consumed by carmakers.

China sold more than 13.5 million vehicles in 2009, the official Xinhua news agency said on Friday, overtaking the United States to become the world's largest auto market as government policy initiatives spurred demand. - Reuters

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By Luca Di Leo and Meena Thiruvengadam 

JANUARY 8, 2010, 12:20 P.M. ET

WASHINGTON -- U.S. job losses were higher than expected in December of last year and the unemployment rate remained at a lofty 10%, a sign the labor market has still some way to recover.

Although the November 2009 data was revised to show the U.S. economy added jobs for the first time since the recession began two years earlier, the December payroll number was worse than forecast.

Nonfarm payrolls fell by 85,000 last month, compared with a revised 4,000 gain in November, the Labor Department said Friday.

Economists surveyed by Dow Jones Newswires had expected a payroll decrease of just 10,000. The November figure originally showed an 11,000 drop in payrolls. . .

. . . The central bank's rate-setting committee left interest rates close to zero mid-December in the face of low inflation and still-high unemployment. Since the financial crisis began in 2007, the Fed has slashed its benchmark lending rate from a peak of 5.25%.

Minutes of last month's meeting, released earlier this week, showed that Fed officials remained worried about the labor market's weakness. "Several participants observed that more than one good report would be needed to provide convincing evidence of recovery in the labor market," the December minutes showed.

Fed officials have predicted the unemployment rate will average between 9.3% and 9.7% in the fourth quarter of 2010 due to a slow recovery.

The U.S. economy is expected to have expanded at a healthy pace in the second half of 2009, but the jobs market's weakness, tight bank lending and a fading government stimulus is seen keeping the recovery contained.

Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold

By Moming Zhou, MarketWatch

Jan. 6, 2010, 9:45 a.m. EST

NEW YORK (MarketWatch) -- Gold futures rose Wednesday for a fourth straight session, climbing above $1,130 an ounce on concerns that the ongoing economic recovery could bring higher inflation, increasing gold's investment appeal.

The four-day winning streak, the longest in one month, came after the metal declined more than 7% in December, the biggest monthly loss in 14 months.

Gold for February delivery gained $11.40, or 1%, to $1,130.20 an ounce on the Comex division of the New York Mercantile Exchange, after rising to $1,133 an ounce earlier in the session.

"The global economy is improving at a faster pace than expected, and the net result is increased demand for products, which causing a [price] rise in commodities," said Brian Kelly, chief executive of Kanundrum Research, a commodities and macroeconomic research firm.

"Investors are interpreting these price increases as inflationary and are buying gold as a hedge."

Economic data coming out Wednesday reinforced hopes for an economic recovery. Private-sector firms in the U.S. eliminated 84,000 jobs in December, according to the ADP employment report. It was the fewest jobs lost since March 2008.

Wednesday's gains in gold came despite a stronger dollar, which tends to add downward pressure on dollar-denominated commodities. In currencies trading, the dollar index was last up 0.1% at 77.705.

"Strength in gold in the face of a stronger dollar is quite bullish for the yellow metal," Kelly said.

Holdings in the SPDR Gold Trust, the biggest gold exchange-traded fund, stood at 1,128.75 metric tons Tuesday, unchanged from a day ago.

In other metals, March silver gained 1.2% to $18.01 an ounce, March palladium added 0.3% to $423 an ounce and April platinum rose 1.3% to $1,558 an ounce.

March copper gained 1.9% to $3.479 a pound.

Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold

by Alix Steel, 1/6/10

NEW YORK (TheStreet) --

Gold delivery for February was rising $9.60 to $1,128.30 an ounce at the Comex division of the New York Mercantile Exchange. Prices have traded as high as $1,133 and as low as $1,116.80 despite a stronger U.S. dollar. The U.S. dollar index was rising 0.14% to $77.75.

Silver prices were rising 20 cents to $18 an ounce while copper was up 6 cents to $3.47.

Investors were turning to riskier assets like commodities ahead of the Federal Reserve's FOMC minutes and Friday's U.S. unemployment number.

In the short term, investors will monitor the Fed's language looking for any hints of an interest rate hike; a better than expected jobs number might also raise the expectation of higher interest rates. Higher rates would quash inflation fears, support a strong U.S. dollar and put pressure on gold prices.

Today's ADP unemployment report showed that nonfarm private jobs decreased 84,000 from November to December. Although this was the smallest decline since March 2008, job losses are still mounting.

"If the numbers come out better than expected [on Friday] it's probably going to reinforce the positive risk trade," argues Nicholas Brooks, head of research and investment strategy for ETF Securities. "Investors are, at the moment, still looking for confirmation that the recovery is durable. I think they will start worrying about the interest rate element further down the line."

Gold prices started off strong Tuesday, touching $1,128 an ounce, but fell throughout the day settling to $1,118.70 as the dollar gained strength. Although worries over an interest rate hike are capping gold's bull run, prices are finding strong support from bargain hunters. "The risk trade seems to be back on again. The VIX is now sitting at its lowest level since 2007," says Brooks. "The dollar is coming off a bit and gold prices are starting to pick up a bit." 

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by Alix Steel
1/4/10

NEW YORK -- Gold prices pop in the New Year.



Gold prices continue their inverse correlation to the U.S. dollar as trading resumed in full force Monday. Gold ended 2009 just under $1,100 settling at $1,095 an ounce as the precious metal locked in a 24% gain for the year. "We're starting off very strong [in 2010]....We've got all the technicals back that we were looking for", says George Gero, vice president of global futures at RBC Capital Markets. "We've higher open interest and higher volume....We're back to $1,100 on the low side and probably $1,200 on the upside for this year."

The U.S. dollar index was slipping .61% to $77.39 pushing gold prices higher by $26.60 to $1,122.80 an ounce at the Comex division of the New York Mercantile Exchange. Gold delivery for February, the most actively traded contract, has traded as high as $1,124.60 and as low as $1,093.80. A stronger than expected nonfarm payroll report on Friday will boost investor confidence in an economic recovery which could strengthen the U.S. dollar and put pressure on gold prices. Gero says gold could see some short term pressure but he thinks any negativity is already priced in.

Silver prices were rising 55 cents to $17.39 while copper prices were up 6 cents to $3.41.