InvestMacro Forex News

Article by Investazor.com

Fundamental analysis is a method of examining the factors that influence and characterize a company or a market. When looking into details of a company, fundamental analysis takes into consideration its financial statements. When applied to futures or forex, it takes into account a broad palette of factors that influences the economy as a whole.

Fundamental Analysis or Technical Analysis? This is the first question that arises to the persons interested in this domain. F.A. is known for the analysing of the present situation having a more rapid effect. Meanwhile, T.A. is mainly based on past patterns based on which long term strategies can be built. Some considers that the T.A. is more accurate and some believes that the F.A. offers the real signals of trading. In my opinion the healthier way is the combination of both technical and fundamental analysis if a careful supervision of the market is wanted.

Why fundamental Analysis? It offers to the investors an overview of the investment opportunities encountered in the market. An important advantage is offered by the possibility to predict which stocks are valuable and which are not. This way, an investor can remark in advance the overestimated assets (in which case the investor is advise to enter a sell position) and underestimated assets (in which case the investor is advised to enter a buy position). Moreover, fundamental analysis provides the investor with a profound understanding of the instrument and the market that he targets. This way, he is able to take smart investment decisions.

How can you apply the fundamental analysis? There are two approaches when using the fundamental analysis. The first one, top-down analysis, requires the investor to take a look at the bigger picture, the general condition of the economy followed by a tightening of the research to the specific domain of interest and a closer look the specific asset. The second approach consists of the bottom-up analysis when the investors pay attention first at the specific asset and after that they can expand its research towards the industry of interest.

Fundamental analysis based on the asset that interests me! Depending on the financial instruments included in your portfolio, there are various factors that need to be considered. Thus:

– When trading FX, you should pay attention to macroeconomic indicators as: interest rate, labour market, consumers’ confidence, inflation;

– When trading on the Equity Market, you should consider financial indicators as: general aspects of the company and assessment indicators (Price to Earnings Ratio, Price to Book Value, Price to Sales, dividend yield);

– When trading on the Commodities market, you should pay attention to:  supply, demand and factors of impact (technological developments, new resources);

We can conclude that Fundamental Analysis represents the use of financial and macroeconomic indicators, along with news with impact strength in order to evaluate an asset. In order to compose an investment portfolio, a careful fundamental analysis is required.

The post Fundamental Analysis – An Inside Look appeared first on investazor.com.

Source: Kevin Michael Grace of The Gold Report (8/19/13)

http://www.theaureport.com/pub/na/chris-mancini-the-good-the-not-so-bad-and-the-maybe-ugly-of-gold-equities

With gold in the $1,300s, Gabelli Gold Fund Research Analyst Chris Mancini recommends performing triage on the gold equity sector. In this interview with The Gold Report, Mancini says that companies with cash and cash flow will survive the crisis, while those with the ability to take advantage of the downturn, like streaming companies, will do the best of all.

The Gold Report: Were you surprised by the collapse of the prices of gold and silver?

Chris Mancini: Yes, I was very surprised. I thought that the macro backdrop for gold and silver was very positive at the beginning of the year. The Federal Reserve had just begun its process of Quantitative Easing 3 (QE3): printing $85 billion ($85B) a month. Japan announced it would undertake its own QE program, which would be a much bigger percentage of its GDP than the U.S. plan.

TGR: And Mario Draghi said he’d do “whatever it takes”?

CM: Yes. The president of the European Central Bank said he’d do whatever it takes to ensure that there was a recovery in Europe, implying a willingness to buy bonds with printed money. It seemed that all this liquidity splashing around should have been positive for gold.

TGR: What, if any, is the relationship between QE and the price of gold?

CM: I think what drives the gold price is the view that gold is the ultimate savings instrument. It can’t be tampered with, is not replicable and is nobody else’s liability. With QE1 and QE2, that money found its way to the highest-growth economies: China, India, Thailand, Vietnam and other countries in Asia. These countries experienced high rates of inflation because this money was chasing scarce resources. And so the average guy on the street was getting 3–4% interest rates on his savings in a the equivalent of a six-month certificate of deposit versus price increases of goods of more than 10%. In other words, negative real interest rates. Holding cash in the bank is a money-losing proposition. This led to an increased demand for gold.

With QE3, we have continued to see a lot of demand from China, India and other countries in Asia, especially as the gold price has come down. But we also heard this steady drumbeat of talk that QE was going to end because the economy was doing really well. And because the economy was doing well, people should be in income-producing investments, like stocks or even bonds. So they started getting into them.

This became a self-fulfilling cycle: stocks went up, which meant that the economy was supposedly getting better, which meant that QE was ending, so you shouldn’t have any gold. Then we had the crash in April.

TGR: Don’t some people believe that QE is the only thing keeping us from economic disaster?

CM: Over the past three quarters, we’ve had enormous and unprecedented amounts of fiscal and monetary stimulus, while the U.S. economy has grown on average by less than 1%. What I don’t understand is why people expect the economy to grow at 3–4% without any monetary or fiscal stimulus.

Interest rates were pushed way down by QE, and so people needed to find yield. They weren’t finding any in bonds. So they went into dividend-paying stocks. So you had this enormous rise in the stock market so far this year, which I think has been mostly due to QE and forcing investors out of other assets, bonds specifically.

TGR: That’s what they say about inflation—the money has to go somewhere, right?

CM: What the stock market is showing us is the effect of the creation of $85B every month.

TGR: Let’s assume there will be a tapering of QE. What effect will this have on the price of gold?

CM: I don’t think a relatively small tapering of QE would have a meaningful effect because it has already been priced in to a large degree. If QE ends completely, I think the S&P 500, Dow and NASDAQ will correct meaningfully. And then you’ll hear a tremendous clamor from the markets for more QE. If that happens, there will be a realization that we’re in this for good, and I think that this would be good for gold.

TGR: You have probably come across these stories of skullduggery in paper gold. One story heard often these days is that the Comex in London has no physical gold. Another is of tremendous amounts of paper gold being leased in order to drive down the price. Do you put any credence in these stories?

CM: I don’t know the intricacies of it, so I can’t really say. However, the severe drop in gold on those two days in April made very little sense from a pure supply and demand perspective. It just didn’t smell right.

TGR: Even before the gold price collapse, gold equities were in the doldrums. So with gold in the $1,300s, what is the case for gold equities?

CM: The equities are highly leveraged to the gold price. So if the price of gold goes back up to where it was at the beginning of the year, $1,500–1,600/ounce ($1,500–1,600/oz), the profitability for gold miners is going to be highly leveraged on the upside. The other case to be made is that given that the average all-in cost of production is around $1,100/oz and there are plenty of mines that produce at $1,350/oz or above, there will be mines that will come offline. So that supply coming offline should support the gold price. The companies are cutting costs right now, and the cost base should be relatively fixed. With gold at, say, $1,600/oz, the companies will be very profitable given the cost cuts taking place now. I believe they’ll then pay down debt, and then they’ll hopefully start returning cash to shareholders in the form of dividends. I think there is a very good argument to be made that if you own the miners now and you want exposure to upside movement in the gold price, the miners are a very good way to do it.

TGR: You’ve divided gold companies into three categories “relative to their ability to be able to weather the current storm.” These categories are the “Good,” the “Not-So-Bad” and the “Maybe Ugly.” Which criteria determine the good company?

CM: Access to cash, access to cash flow and the ability to take advantage of the current distress in the market. The best example now is a royalty or streaming company.

TGR: What royalty and streaming companies do you like?

CM: I like Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX), Franco-Nevada Corp. (FNV:TSX; FNV:NYSE) andSilver Wheaton Corp. (SLW:TSX; SLW:NYSE). All of these companies have access to cash. They are all cash-flow generative. None of them has real operating leverage. They have royalty or streaming rights to lower-cost mines, which really aren’t at much risk of coming offline in the lower gold-price environment.

Some are taking advantage of the downturn. Franco-Nevada bought a royalty on Pretium Resources Inc.’s (PVG:TSX; PVG:NYSE) Brucejack deposit in British Columbia. It bought a royalty on Midas Gold Corp.’s (MAX:TSX) Golden Meadows deposit in Idaho, so that Midas could finance its existence going forward.

TGR: Is Franco-Nevada your second-largest holding?

CM: Yes. We’ve held it since its initial public offering. Franco is able to benefit in good times because companies expand and also find more gold, but it doesn’t have to put up any capital. And it has the ability to capitalize during the bad times by picking up some good royalties and good properties at very good valuations, which is what it has done in the past couple of quarters.

TGR: Could you name some other companies in your good category?

CM: B2Gold Corp. (BTG:NYSE; BTO:TSX; B2G:NSX) has net cash on its balance sheet and generates cash flow. The company is building its Otjikoto project in Namibia, which is low cost. Once that is completed, it has no further capital commitments. It has a credit line of about $150M that it could use to finance another project. If it doesn’t make an acquisition, it should be fine. If it does, it has the ability to make a very accretive acquisition.

Another company in the Good category would be Fresnillo Plc (FRES:LSE), a Mexican company.

TGR: Your fourth-largest holding?

CM: Yes. Fresnillo has net cash on its balance sheet. It has some of the lowest-cost production in the industry for silver and gold. It is generating cash flow now. It is building mines. And it is starting to fund some juniors that are running out of cash. Now is a great time to do it.

TGR: When you spoke to The Gold Report in January, Randgold Resources Ltd. (GOLD:NASDAQ; RRS:LSE) was No. 1 of your holdings, around 12%. At the end of June, that’s up to 13.8%. Why do you like it so much?

CM: Randgold has been through a number of cycles. It has net cash on its balance sheet and has low-cost operations. It should be able to benefit from this downturn when we come out on the other side. The company has good managers, and it is building in an environment where input costs are becoming less tight. Its Kibali project in the Democratic Republic of Congo should begin production at the beginning of 2014. After that, I could see Randgold buying exploration-stage properties in distress or continuing to earn into properties by financing their exploration.

TGR: What characterizes the Not-So-Bad companies?

CM: Access to enough cash that they won’t need to finance anytime soon or access to capital through cash flow. One example is Comstock Mining Inc. (LODE:NYSE.MKT), which built its Nevada mine in an unconventional way. In a typical Canadian model, a company would go out and spend a lot of money drilling a deposit, then trying to finance it into production or sell it. Comstock knew that it had gold: a very economic, small, oxidized, heap-leachable deposit. It decided to bring that into production while still exploring. So now it is cash-flow generative and will become more so as the mine scales up. As it explores, it will be able to show how big the deposit could be. That said, Comstock’s balance sheet is kind of tight right now: only a few million at the end of Q2/13. Hopefully, it won’t have to finance again. If it doesn’t, I would promote it to the Good category.

TGR: What are some other companies in this category?

CM: Detour Gold Corp. (DGC:TSX) is coming into production and should be cash-flow generative at $1,300/oz gold. It has a little bit of debt and just did an equity deal to get it through this startup period. I’d put Detour in the Not-So-Bad category now, but once it’s at full commercial production, if it operates according to plan and begins to pay down some of its debt, I would promote it to the Good category.

I would rate Continental Gold Ltd. (CNL:TSX; CGOOF:OTCQX) in the Not-So-Bad category. It can weather the storm. It has a lot of cash. The company can get its project in Colombia to the preliminary economic assessment or prefeasibility stage with the cash on its balance sheet. Once that’s done, it will be able to show it has a very good, very high-grade gold deposit, which shouldn’t require a large upfront capital expenditure. After it demonstrates the economics of the deposit through a prefeasibility study, it could be bought by a major.

TGR: How do you rate companies that have financed, but will need to go to the markets again?

CM: I would rate them between Maybe Ugly and Not-So-Bad. The true Maybe Ugly companies don’t have a defined resource and don’t have economics surrounding the resource. They’re just exploring and need cash.

Golden Queen Mining Co. Ltd. (GQM:TSX) is not like that because it has a defined feasibility study, and it has a permit to mine. It is actually building its very economic, heap-leach deposit in Mojave, Calif. It has $10M, which should get it maybe to the beginning of 2014. It is going to need to finance again, but when it does, it should be able to show that any return on incremental capital being committed by an equity investor will be high even at $1,300/oz gold. I think Golden Queen is OK.

Eastmain Resources Inc. (ER:TSX) also has the potential to move into the Not-So-Bad category. It has a very high-grade deposit in a good jurisdiction: Eau Claire in north-central Quebec. It will publish a resource within the next couple of months showing about 1+ million ounces of very high-grade, open-pittable gold. It also has mineral rights to a vast, prospective and never explored vein field adjacent to Eau Claire.

TGR: How do you rate the majors?

CM: Newmont Mining Corp. (NEM:NYSE) is in the Good category now. The company is cutting its cost structure and doesn’t need to finance. It has cash on its balance sheet. Newmont is in the process of completing construction on a new mine called Akyem in Ghana. It is also in the process of completing a pit layback on a copper-gold deposit in Indonesia called Batu Hijau, which should give it access to increased cash flow.

Barrick Gold Corp. (ABX:TSX; ABX:NYSE) is in the Not-So-Bad category. It has some of the best mines in the world, is the biggest producer and one of the lowest-cost producers. But Barrick has a lot of debt, and in this lower gold price environment, all its excess cash flow is going to service that debt.

Goldcorp Inc. (G:TSX; GG:NYSE) is in the Good category. It is building the Cerro Negro project in southern Argentina, the Éléonore project in northern Quebec (adjacent to Eastmain’s Eau Claire deposit) and an expansion to its Red Lake mine in Ontario. So Goldcorp is spending a lot right now, but it has a net-neutral balance sheet. Once these projects are completed by the middle of next year, they should generate a lot of cash. Goldcorp owns 10% of Eastmain, and if it were to finance Eastmain at reasonable valuations, I think that would be accretive for it.

Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) is in the Good category and shouldn’t have any issues with financing in the short term. It is building a heap-leach project called La India in Mexico, which should be brought on-line by the middle of 2014. The key issue is its LaRonde mine, which will be getting to some higher-grade ore hopefully by the beginning of next year. This will generate a lot of cash. Agnico has taken advantage of the downturn by financing some juniors. It has bought stakes in ATAC Resources Ltd. (ATC:TSX.V), Kootenay Silver Inc. (KTN:TSX.V), Probe Mines Limited (PRB:TSX.V) and Sulliden Gold Corp. (SUE:TSX; SDDDF:OTCQX; SUE:BVL).

I think AngloGold Ashanti Ltd. (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE), Sibanye Gold Ltd. (SBGL:NYSE) and Harmony Gold Mining Cos. (HMY:NYSE; HRM:LSE) are really going to struggle, given their high costs and labor issues in South Africa.

TGR: What about some other of the larger companies?

CM: Newcrest Mining Ltd. (NM:TSX; NCM:ASX) is in the Not-So-Bad category now, and hopefully it can get into the Good category. In this lower gold price environment, it has really taken its medicine. It’s modified its mine plan at its biggest mine, Lihir, to maximize cash flow. It modified the mine plan at Telfer to some extent. Once its best mine, Cadia East, gets to full production capacity—it’s an underground block cave that has copper and gold—it will generate a great deal of cash. It has a little bit of debt now, and it will have to deal with that.

I’d put Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE) in the Good category. It has financial flexibility. It is building three mines now: Ernesto/Pau-a-pique, Pilar and C1 Santa Luz. When they are finished, we’ll see how much cash flow they generate. Of its current stable, the most economic mines are El Peñón, Chapada and Mercedes, which make up around half of Yamana’s production. They are good, very low-cost mines. Their other mines are only OK, but they do generate good cash flow at $1,300/oz gold.

I think Kinross Gold Corp. (K:TSX; KGC:NYSE) is a little stuck. I’d put it in the Not-So-Bad category. It has deferred Tasiast, which was its big capital item, so I don’t think it’s going to need finance any time soon. Its balance sheet is OK, but its mines are not generally great, and some are relatively high cost. So at $1,300/oz, it’s not going to be generating a lot of free cash flow. If Kinross doesn’t build Tasiast, then it’s difficult to see where it goes from here.

TGR: If trillions of dollars keep being created to forestall deflation, what does this mean for gold in the long term?

CM: I don’t think anyone really knows the answer to that. To the degree that we had economic growth over the past 10 years, it’s been predicated on increased leverage. After the leverage bubble popped, consumers couldn’t borrow any more. The way we avoided deflation was through increased government borrowing and money printing. Eventually, it comes down to people questioning the value of the dollars in their pockets, and when people begin to doubt paper money, gold should be a very valuable alternative and do extremely well.

TGR: Chris, thanks so much.

Chris Mancini, CFA, is a research analyst at the Gabelli Gold Fund Inc., specializing in precious-metals mining companies. He has over 13 years of investment management experience, including research analyst positions at hedge funds Satellite Asset Management and R6 Capital Management. Mancini earned a bachelor’s degree in economics with honors from Boston College.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE:

1) Kevin Michael Grace conducted this interview for The Gold Report and provides services to The Gold Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Gold Report: Franco-Nevada Corp., Pretium Resources Inc., Comstock Mining Inc., Detour Gold Corp., Continental Gold Ltd., Goldcorp Inc., Probe Mines Limited and Sulliden Gold Corp. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Chris Mancini: I or my family own shares of the following companies mentioned in this interview: Agnico-Eagle Ltd., Barrick Gold Corp., Comstock Mining Inc., Continental Gold Ltd., Eastmain Resources Inc., Franco-Nevada Corp., Fresnillo Plc, Golden Queen Mining Co., Goldcorp Inc., Newcrest Mining Ltd. and Randgold Resources Ltd. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.

5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.

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By WallStreetDaily.com

We just experienced a pretty news-heavy week, with company earnings, economic reports and the turmoil in Egypt reaching a boiling point.

So I thought I’d review how some of the stocks I’ve mentioned recently fared.

Let’s get right to it…

~ SeaWorld (SEAS)

I recommended that we take a “wait-and-see” approach to the SeaWorld IPO. You’re welcome. The company went public on April 18, raising $245.4 million. And it wouldn’t surprise me if initial investors asked for their money back. In the first earnings report since going public, the company missed profits by 24%, and its stock sold off 8% in two days. Making matters worse, SeaWorld projects that it will fall short of the $1.5 billion in revenue that analysts estimated for 2013. The company places part of the blame on higher ticket prices and wet weather. Unless the price falls under the $27 IPO level, I wouldn’t touch it.

~ Wal-Mart (WMT)

I touted Wal-Mart as a back-to-school play earlier this month. And in many ways, Wal-Mart is a gauge for the overall health of retail. So when it reported lower-than-expected sales and earnings – and gave a pessimistic outlook for a full year – its stock fell 2%. Granted, so did the rest of the market because of imminent moves by the Fed to reduce stimulus. The following day, we discovered that the Thomson Reuters/University of Michigan’s index of consumer sentiment slipped to 80.0 from 85.1 for July. So perhaps Wal-Mart is, indeed, a microcosm of the overall retail sector. Either way, if consumer spending doesn’t meet expectations in September and into the holidays, we could be in for a long winter.

~ Emerging Market’s ETF (FM)

I brought frontier markets to your attention because of their diversification and lack of correlation with developed countries. Well, as you know, today’s global stocks can fall like dominoes. When one area of the world crashes down, it tends to take the others with it. Indeed, all three major indices sold off during a two-day period, and so did the iShares Emerging Market’s ETF (EEM). On the other hand, the iShares Frontier Market ETF hardly flinched. So it still makes sense to save a small spot in your portfolio for them.

~ Bitcoin

Last month, I told you to avoid bitcoins at all costs. Recent news confirmed my suspicions. Reports have surfaced that bitcoin wallets on Android are vulnerable to theft because of problems in a component that generates secure random numbers. Plus, the U.S. Financial Crimes Enforcement Network of the U.S Department of the Treasury has issued subpoenas to about 24 companies in its investigation of the virtual coin. Again, current investors should be squirming. Don’t fall for yet another hoax.

~ Egyptian Pound

The Egyptian pound was also in my crosshairs last month. Well, the Egyptian government declared a month-long state of emergency after clashes between security forces and Muslim Brotherhood supporters. All told, 525 died, including 43 police officers. Now, if that’s not enough to scare you away from investing in any Egyptian pound scam, this ought to do the trick: Analysts at Societe Generale say that they “keep a bearish stance on all Egyptian assets despite the central bank’s attempt to stabilize the Egyptian pound, and also expect a further re-pricing in Egyptian Eurobonds.” Again, stay away!

Ahead of the tape,

Karen Canella

The post Heavy News Week Rocks the Boat appeared first on  | Wall Street Daily.

Article By WallStreetDaily.com

Original Article: Heavy News Week Rocks the Boat

Article by Investazor.com

Monday was a pretty chill day for trading. There were not that many economic indicators published and the FX major currencies maintained their trend.

EURUSD remained stable around 1.3340 after a rally fueled by the Bundesbank announcement that they see a recovery for the European Union economy. USDJPY tried several times to remain above 98.00, but it seems that investors are still buying the Japanese yen. The current support sits at 97.00 and a daily close under this level might trigger further appreciation for the Japanese currency. AUDUSD has been in a rectangle for the past week. Its support is around 0.9080 while the resistance is situated at 0.9215. A break outside this box could signal the next move for the aussie. Cable broke 1.56 with the US dollar and seems to be in a steady uptrend. It would be advised to keep an eye over the economic calendar to anticipate the short term corrective waves.

The economic calendar will start to get crowded for the rest of the week.  Next on the list to be published are the following:

–          Monetary Policy Meeting Minutes and CB Leading index for Australia;

–          Speech from governor Wheeler of RBNZ, Inflation Expectations, Visitor Arrivals and Credit Card Spending for New Zeeland;

–          CB Leading Index, Foreign direct investments and HSBC Flash Manufacturing PMI for China;

–          Wholesale Sales, Retail Sales and Core Retail Sales and CPI with core CPI for Canada;

–          CBI Industrial Order Executions, Second estimates GDP, BBA Mortgage Approvals and Prelim Business Investments for Great Britain;

–          German PPI, German Flash Manufacturing and Services PMI, German final GDP and Consumer Confidence for the Euro Area;

–          Existing Home Sales, Crude Oil Inventories, FOMC Meeting Minutes, Unemployment Claims, Flash Manufacturing PMI, Jackson Hole and New Home Sales for the USA;

The post What to Expect for the Forex Market This Week? appeared first on investazor.com.

By www.CentralBankNews.info Here’s today’s Central Bank News’ link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don’t miss any important news.

By The Sizemore Letter

Jeff Reeves and I take a trip around the world, giving our thoughts on American, European and Chinese equities.

From The Slant:

There’s a lot of frothiness right now in U.S. stocks as equities continue to push higher despite earnings and revenue remaining challenged.

Charles Sizemore, editor of the Sizemore Investment Letter, says he’s pretty neutral on U.S. stocks as a result. And that means it might be prudent to look overseas for opportunities right now.

A look at valuations in the U.S. stock market makes it clear that a lot of the “easy money has already been made,” Charles says. That’s not to say he’s bearish on the U.S., of course … just not impressed with the hope of continued upside.

On the other hand, Europe appears to be undervalued based on earnings. And more importantly, as the Federal Reserve cuts back on its stimulative efforts there is a chance that Europe will be the place investors look to for more central banking assistance. After all, says Charles, the Fed can’t get any looser with policy even if it wants to, while the ECB has more wiggle room in regards to monetary policy.

But what about China?

Well, China’s growth is still impressive at 7.5% annually based on recent GDP estimates … but that admittedly is much reduced from previous years and even expectations a few months ago. Charles says he is cautiously optimistic on the region after so much negativity has been priced in, but certainly not as optimistic on a China recovery as he is on a European one.

SUBSCRIBE to Sizemore Insights via e-mail today.

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London Gold Market Report
from Adrian Ash
BullionVault
Monday, 19 August 09:05 EST

WHOLESALE GOLD edged back from last week’s two-month closing high on Monday morning, recording its best London Gold Fix since 18th June above $1375 per ounce.

 World stock markets slipped, with Indonesia dropping 5.5%, as major government bond prices also fell, driving interest rates higher.

 Ten-year US Treasury yields rose to 2.86%, a fresh two-year high.

 Alongside the gold price, now some 16% above late-June’s two-year low and recovering nearly all that month’s plunge, industrial and agricultural commodities also slipped back from their recent rally.

“The rest of the precious complex is starting to confirm the price action in gold,” reckons Bank of America-Merrill Lynch analyst MacNeil Curry, pointing to the 13% rise in silver prices last week – the best Friday-to-Friday since 2008 according to BullionVault data.

 Secondly, Curry adds – and forecasting a short-term rally in the gold price to $1410 or $1450 per ounce – “the rampant unwinding” of gold investment through the giant SPDR Gold Trust is now “stabilizing” after the fund shed 20% of its bullion between April and July.

 During the second quarter hedge-fund manager John Paulson halved his leading position in the New York-listed SPDR Gold Trust (ticker: GLD). That one-million ounce exposure was re-opened, however, through a series of derivative contracts according to a “source” quoted by the Financial Times.

 Last week saw the GLD add bullion for the first week out of 33 so far in 2013, growing 0.4% from the previous Friday’s four-and-a-half-year low of 911 tonnes.

 “If ETF holders aren’t selling and other holders aren’t selling then the price will have to rally to curb some of this jewellery and small bar and coin demand,” says Matthew Turner at Australia’s Macquarie Bank, noting the greater than 50% jump in global gold jewelry, coin and bar demand reported for the second quarter by market development organization the World Gold Council.

 “[Gold] has generated a buy signal on the weekly chart,” says the latest technical analysis from London market-maker Scotia Mocatta, “with [last week’s] close above former July weekly high of 1348.”

 “Gold is currently lightly overbought,” said long-time bull, wealth manager Marc Faber to CNBC on Friday.

 “About 10 days ago, gold mining shares became incredibly cheap in terms of gold. [But] I have a preference for physical gold owned in a safe deposit box outside the United States.”

 Data released late Friday showed speculative traders in US gold futures raising their net bullish position – as a group – by a massive 18% in the weekending last Tuesday.

 “Is gold overdone on the upside?” asked Tocqueville Gold Fund manager John Hathaway, also on Friday.

 “It was ridiculously oversold…If you take a longer view, the rationale for being in gold is the prospect of monetary debasement.”

 Former SocGen strategist and long-time gold advocate Dylan Grice, now at London-based investment company Edelweiss, writes that “Money is the primary toy of today’s naive interventionists. They will play with it until they break it.

 “Now consider gold. In ten years’ time, gold bars will still be gold bars. In fifty years too [and] in a thousand years from now, and [with] roughly the same purchasing power.”

 Looking ahead to the Denver Gold Forum in four weeks’ time, “We’d encourage shorter-term investors to consider getting long” of gold, says a recommendation from analysts at investment bank J.P.Morgan, noting the metal’s typically strong performance in September.

Adrian Ash

BullionVault

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Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich or Singapore for just 0.5% commission.

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Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By HY Markets Forex Blog

Gold prices hit a two-month high as Gold futures extended gains on Monday. The yellow metal extended gains were assisted by the weak US data and last week’s rise in the world’s biggest gold-backed exchange traded fund SPDR Gold Trust.

Gold Prices Extend Gains on Increase In SPDR Holdings

Gold futures rose 0.26% higher at $1,374.60 per ounce at the time writing, while silver lost 0.19% at $23.280 per ounce at the same time. Earlier today, Silver reached a three-month high at $23.605 an ounce.

The globe’s largest gold-backed ETF SPDR Gold Trust, posted an increase of 0.4 in holdings to 915.32, its highest increase since November 2012. Volume of the holdings in SPDR fell below 1,000 tonnes in June, lowest in over four years.

According to reports, this year the fund has seen approximately $19 billion in outflows, which has weighed on metal prices.

Analysts that attended the India Gold Convention last week are predicting precious metals could reach $1,405 an ounce by the end of the year. The World Gold Council said that the overall second-quarter gold demand dropped to its lowest value in over three years. Demand in gold dropped 12% and was down 23% in dollar terms, while the demand in jewelry remain strong, hitting a 37% high in tonnage terms.

The Investment Company Paulson & Co cut out 53% of its stake from the SPDR Gold Trust in the second quarter because of the lower bullion prices.

Economic data’s expected and released have been closely monitored by investors to gauge when the U.S Federal Reserve would begin to scale back on its bond-buying program later this year.

An economic data released last week showed that the jobless claims dropped from 15,000 to 320,000 in the week ending August 10, the US Department of Labour reported.

The US central bank’s monthly bond-buying program has helped gold prices to reach its highest record in the past years to improve and maintain the labour market. The bank’s Policymakers stated earlier this year that if the unemployment rate continuous to drop, they would consider when it would start to scale back on its $85 billion monthly bond-purchasing program.

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