The following is a guest post by Lawrence Carrel, author of “ETFs for the Long Run” and “Dividend Stocks for Dummies.” The opinions expressed are his own. Full disclosure: The author has had 7 percent of his personal retirement account in a gold ETF for the past four years.
When the price of gold plunged 20 percent last month, many market watchers declared the gold boom over. Stalled, yes; ended, no, according to many gold analysts, who believe the precious metal may instead be near a new sustained rally.
“I can tell investors don’t sell off your gold,” says Martin Murenbeeld, the chief economist at DundeeWealth. “We’re at a crossroads here.”
During the summer, gold surged 29 percent to a record high of $1,920 a troy ounce. This jump caused the price to drastically detach from its 200-day moving average, an important trend line in technical analysis that the gold price had closely hugged for much of the last decade. Technical analysts considered this jump unsustainable and in September gold gave back most of these gains.
Gold fell to a low of $1,534.49, much to the technicians delight, and it bounced off the 200-day moving average’s support level of $1,527. While most gold watchers expect the metal to experience turbulence during the next few months, the world hasn’t changed much, and gold prices may climb higher because of its status as a safe-haven during turbulent times.
“Have the countries around the world solved the debt crisis?” asks Nick Barisheff, president of Bullion Management Group, a precious metals investment company based in Toronto. “Have the bailouts ended? Have their currencies stopped tanking?“ With the world already worried about Greece’s fiscal problems, gold summer’s rally was sparked by fears that the U.S. might default on its debt.
After Standard & Poor’s downgraded the U.S. debt, investors flocked to gold as one of the few safe havens left. This raised the specter of recession, which is never good for gold. The combination of increased collateral requirements for trading with falling commodity and stock markets, gold tumbled as investors sold it for liquidity amidst a flurry of margin calls.
Still many analysts think the gold market isn’t in a bubble and that the run-up is far from over. Analysts say a bubble is when an asset goes up exponentially 15 to 20 times.
Gold is up seven times during the last decade. Since its low on Sept.26, 2011, gold has jumped 9 percent. Most analysts expect the price to retest September’s low during the next few months. If it bounces again that would be the buy signal.
Ed Carlson, Chief Market Technician at Seattle Technical Advisors.com says gold could fall as far at $1,460. But even Carlson predicts a new sustained advance will begin after Thanksgiving.
The fundamental factors for being bullish are also compelling. Low interest rates are very good for gold. In August, the Federal Reserve promised to keep rates low for the next two years. Additionally, most analysts expect the European Central Bank (ECB) to stem the European debt crisis with a flood of new money.
“The relationship between gold and world liquidity is very direct,” says Murenbeeld. “If countries print money gold goes up.” Murenbeeld says there is a high probability that the ECB and the European System of Financial Supervisors (ESFS) will insert a significant amount of money into the system, anywhere from 1 trillion euros to 2 trillion euros.
“This liquidity will stabilize the banking sector so that it can withstand a default from Greece and speculation of default from other countries. All that plays into the hands of gold.” Murenbeeld recommends investors use a dollar cost averaging strategy here. “When they do the bailout that will dilute the currency, “ says Barisheff.
“The governments will be forced to print more money because politically that’s the least painful thing to do. And as they do the price of gold goes up.”
However, Barisheff warns that it’s easy for governments to lose control of their currency, which can send a country into hyperinflation. He says gold will stop rising when governments institute sustainable economic policies, but if inflation isn’t controlled, gold could rise as high as $10,000 in five years. “And there is no appetite to do anything sustainable.”
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Recent
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437 notes
The following is a guest post by Lawrence Carrel, author of “ETFs for the Long Run” and “Dividend Stocks for Dummies.” The opinions expressed are his own. Full disclosure: The author has had 7 percent of his personal retirement account in a gold ETF for the past four years.
When the price of gold plunged 20 percent last month, many market watchers declared the gold boom over. Stalled, yes; ended, no, according to many gold analysts, who believe the precious metal may instead be near a new sustained rally.
“I can tell investors don’t sell off your gold,” says Martin Murenbeeld, the chief economist at DundeeWealth. “We’re at a crossroads here.”
During the summer, gold surged 29 percent to a record high of $1,920 a troy ounce. This jump caused the price to drastically detach from its 200-day moving average, an important trend line in technical analysis that the gold price had closely hugged for much of the last decade. Technical analysts considered this jump unsustainable and in September gold gave back most of these gains.
Gold fell to a low of $1,534.49, much to the technicians delight, and it bounced off the 200-day moving average’s support level of $1,527. While most gold watchers expect the metal to experience turbulence during the next few months, the world hasn’t changed much, and gold prices may climb higher because of its status as a safe-haven during turbulent times.
“Have the countries around the world solved the debt crisis?” asks Nick Barisheff, president of Bullion Management Group, a precious metals investment company based in Toronto. “Have the bailouts ended? Have their currencies stopped tanking?“ With the world already worried about Greece’s fiscal problems, gold summer’s rally was sparked by fears that the U.S. might default on its debt.
After Standard & Poor’s downgraded the U.S. debt, investors flocked to gold as one of the few safe havens left. This raised the specter of recession, which is never good for gold. The combination of increased collateral requirements for trading with falling commodity and stock markets, gold tumbled as investors sold it for liquidity amidst a flurry of margin calls.
Still many analysts think the gold market isn’t in a bubble and that the run-up is far from over. Analysts say a bubble is when an asset goes up exponentially 15 to 20 times.
Gold is up seven times during the last decade. Since its low on Sept.26, 2011, gold has jumped 9 percent. Most analysts expect the price to retest September’s low during the next few months. If it bounces again that would be the buy signal.
Ed Carlson, Chief Market Technician at Seattle Technical Advisors.com says gold could fall as far at $1,460. But even Carlson predicts a new sustained advance will begin after Thanksgiving.
The fundamental factors for being bullish are also compelling. Low interest rates are very good for gold. In August, the Federal Reserve promised to keep rates low for the next two years. Additionally, most analysts expect the European Central Bank (ECB) to stem the European debt crisis with a flood of new money.
“The relationship between gold and world liquidity is very direct,” says Murenbeeld. “If countries print money gold goes up.” Murenbeeld says there is a high probability that the ECB and the European System of Financial Supervisors (ESFS) will insert a significant amount of money into the system, anywhere from 1 trillion euros to 2 trillion euros.
“This liquidity will stabilize the banking sector so that it can withstand a default from Greece and speculation of default from other countries. All that plays into the hands of gold.” Murenbeeld recommends investors use a dollar cost averaging strategy here. “When they do the bailout that will dilute the currency, “ says Barisheff.
“The governments will be forced to print more money because politically that’s the least painful thing to do. And as they do the price of gold goes up.”
However, Barisheff warns that it’s easy for governments to lose control of their currency, which can send a country into hyperinflation. He says gold will stop rising when governments institute sustainable economic policies, but if inflation isn’t controlled, gold could rise as high as $10,000 in five years. “And there is no appetite to do anything sustainable.”
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Recent
selloff
sets
up
next
gold
rally
502 notes
By Poornima GuptaSAN FRANCISCO, Oct 18 (Reuters) - Apple Inc plans
to shutter U.S. retail stores for several hours on Wednesday so
employees can take part in a company-wide celebration of
co-founder Steve Jobs’ life, a person familiar with the
celebration said.Store employees in United States will use that time to view
a live broadcast of the event, which is being held at an
outdoor amphitheater at Apple’s headquarters in Cupertino,
California.The celebration — which will be held from 10 a.m. PDT
(1700 GMT) to 11:30 a.m. PDT — will follows a private memorial
service for the late tech visionary at Stanford University
expected to be attended by Silicon Valley luminaries,
politicians and celebrities.Many Apple stores across California were not accepting
online bookings for Wednesday morning, either for tech-support
or tutorial appointments.Employees across Asia and Australia will be able to view a
re-broadcast of the celebration, the person said.An Apple spokeswoman could not be immediately reached for
comment.Jobs died on Oct 5 at the age of 56 after a long battle
with a rare form of pancreatic cancer. Chief Executive Tim Cook
had said in a memo to employees on Oct. 10 that a celebration
of his life would be held Wednesday.
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to
shut
US
stores
Wed
for
Jobs
memorial
79 notes
Rival union and employee shareholders at the mutual lender
are fighting over board nominees after the bank overhauled its
governance structures in a move to boost management
independence, as requested by the Bank of Italy.The Fabi and Fiba trade unions recently presented a slate of
candidates for a new supervisory board which will be appointed
at a BPM shareholder meeting scheduled for Oct. 22. The slate is
headed by Marcello Messori.The supervisory board will appoint a management board.Lando Sileoni, secretary general of the Fabi union, told
reporters the aim of the group’s slate was to “guarantee the
success of the capital increase via a contribution by the Sator
Fund.”He said another aim was to “construct around Matteo Arpe,
indicated as chief executive, a top-quality management team”.The Bank of Italy has asked for a complete renewal of
corporate structures at the bank with high profile choices in a
clear break with the past.Arpe, whose early career included a long spell at top
investment house Mediobanca , helped turn round Rome
bank Capitalia before it merged with UniCredit . He
founded the Sator Fund.Messori said on Monday Arpe was ready to join the management
board but added neither he nor Sator owned shares in BPM nor had
committed to any investment.Last Friday, the powerful rival union and employee
association “Friends of Bipiemme” named its own candidates for
the bank’s supervisory board.The association owns less than 4 percent of the
undercapitalised lender but controls shareholder meetings
because of a one-head-one-vote rule.
($1 = 0.725 Euros)
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1BPM
shareholder
group
eyes
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Fund
“He was pretty clear that he was not running,” Law told Reuters in a telephone interview following the event. Giuliani’s remarks were first reported by Politico.”As a moderate, he thought it was a pretty significant challenge. He said it’s tough to be a moderate and succeed in GOP primaries,” Law said.Giuliani proved himself a formidable fundraiser when he ran for president in 2008 but his campaign faded and he left the race early. This time, some of his former staffers are working for Texas Governor Rick Perry and big donors have thrown their support behind Perry or former Massachusetts Governor Mitt Romney.”If it’s too late for (New Jersey Governor) Chris Christie, it’s too late for me,” Giuliani said, according to Politico.Christie announced last week he would not run for president and on Tuesday endorsed Romney’s presidential bid.Giuliani ruled out running as an independent and replied that he had not been asked about whether he would consider the vice presidency, Law said.
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Giuliani
not
running
for
US
president
in
2012
41 notes
The Paris-based Organization for Economic Cooperation and Development said its composite leading indicator (CLI) for its 33 member countries dropped for a fifth straight month in August, hitting 100.8 after 101.4 in July and signaling a slowdown in economic activity.Individual country readings fell across the board, including for non-OECD member countries, with most seeing their CLIs drop below their long-term average of 100.Only Germany, Russia and the United States kept readings above 100. Japan, meanwhile, stood out as the only country not yet headed for a clear slowdown, registering a modest 1-point decline in its CLI to 102.5 from 102.6.”For all other major economies, except Japan, the CLIs are now pointing strongly to a slowdown in economic activity below long-term trend,” the OECD said.The OECD CLIs are designed to anticipate turning points in economic activity relative to trend - a turnaround in an indicator tends to precede turning points in economic activity by around six months.The consensus at the moment is that many major western economies are teetering on the brink of recession, as they struggle to repay inflated levels of debt.The OECD’s reading for the Group of Seven major economies — France, Germany, Italy, Japan, the United Kingdom and the United States — slumped to 101.1 in August from 101.7 in July, while the reading for the euro area fell 9 points, to 99.8 from 100.7.
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OECD
indicators
paint
dark
picture
of
global
economy
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