Gold Edges Slightly Higher

GOLD futures have settled near unchanged, edging slightly higher after data showing US inflation remains below the Federal Reserve's target.

The most actively traded gold contract, for February delivery, on Thursday rose $US1.90, or 0.2 per cent, to settle at $US1,240.20 a troy ounce on the Comex division of the New York Mercantile Exchange.

The consumer-price index, a measure of how much Americans pay for goods and services, rose by 1.5 per cent in December from a year earlier, the Labor Department said. Excluding volatile food and energy costs, prices were up 1.7 per cent.

Analysts say that while tame inflation could sap interest in gold as a hedge against rising costs, it may also push the Federal Reserve to reassess the pace of the rollback of its bond-buying program. The US central bank has set an inflation target of two per cent. More muted price rises, along with a potentially slowing labour market, could suggest to Fed officials that the economic recovery isn't strong enough to further reduce its stimulus.

Slowing price rises "may add upward pressure to gold," Standard Bank analyst Walter de Wet said in a note.

Still, many market watchers expect gold to remain under pressure should economic growth remain on track. A separate report on Thursday showed new US claims for unemployment benefits fell by more than economists had expected last week.

The Fed's bond buying programs in recent years have drawn investors, looking for a hedge, to gold. Worries that a recovery in the US economy would spur a reduction in the central bank's bond buying helped send gold prices to a 28 per cent loss in 2013.

"If you see a better economy, the bet is the Fed is going to continue with the reduction in its asset purchases," said Ralph Preston, a market analyst with Heritage West Financial.

Settlements (ranges include open-outcry and electronic trading):

London PM Gold Fix: $1,241.50; previous PM $1,236.00

Feb gold $1,240.20, up $1.90; Range $1,235.80-$1,244.90

Mar silver $20.054, down 8.0 cents; Range $19.970-$20.250

Apr platinum $1,431.50, up $2.90; Range $1,418.20-$1,437.30

Mar palladium $743.90, down 10 cents; Range $738.00-$746.55

Source : News.com

My gold fund has fallen by half. Should I sell?

Ask the experts: Investors lost thousands last year backing gold funds. Should they sell or hang on?




Some gold funds lost 50pc in 2013, will their fortunes change this year? Photo: Alamy


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It is the ultimate investment conundrum. Last year you backed an investment fund that has tanked and as a result have racked up huge paper losses. What should you do?

Those savers who backed gold funds last year suffered more than most. Some funds, such as Way Charteris Gold Portfolio Elite and BlackRock Gold & General, lost half of savers’ money.

But even worse was the Junior Gold fund, which declined by 65pc. This was the worst performing fund in 2013 out of the 1,500 available to UK savers, turning a £10,000 investment into £3,500.

The reason behind the heavy losses was the gold price plummeting by 30pc. The precious metal was trading at around $1,700 an ounce last January but by the end of the year had slumped to just over $1,200.

As a result, gold and natural resources funds suffered. These funds invest in both gold itself and the shares of gold mining companies.

Investors who have money in gold funds face a difficult decision. Selling now will effectively lock in losses, and you could miss out on bumper returns if the gold price reverses. On the other hand, the gold price could fall even further, meaning you will lose even more money.

We asked Nik Stanojevic, who buys fund and shares for wealth manager Brewin Dolphin, whether investors should hold their nerve and stay invested or sell out of gold funds. Here is his answer.

"We expect the investment case for gold funds to be driven mainly by the direction of gold prices. On this point, we believe that the starting point for any rational investor must be negative.

"The outlook for inflation is low, and there are good reasons why this is likely to remain the case over the medium term as there is still plenty of spare capacity in the global economy.

"Given that central bank money printing, or 'quantitative easing', is starting to slow down in the US, interest rates are likely to rise. Meanwhile, with inflation down and interest rates up, 'real' returns on cash should benefit.

"Gold prices tend to do poorly in an environment of rising real interest rates because the cost of avoiding other assets in favour of gold rises. As gold prices are driven by investment (as opposed to industrial) demand, there is no theoretical floor to the gold price.

"Funds exposed to small mining companies such as the Junior Gold fund are particularly vulnerable. In a falling gold price environment, shares in these companies typically under perform, for technical reasons to do with the way new mines are financed.

"Therefore we would advise cutting losses and selling these funds, unless investors have a strong conviction in rising inflation expectations."

Source :-  Telegraph.co.uk

2014 Australian Silver and Gold Coin Releases for January

The Perth Mint of Australia expands its numismatic offerings for 2014 with the January release of several collector products that are now available for ordering.

Some of the coins released by the Perth Mint of Australia in January

New products include options that will excite many collectors. Among them, gold and silver high relief coins with a reverse design by American sculptor and engraver, John Mercanti, the 12th Chief Engraver of the US Mint.

Also making debut appearances are two new koala silver coins. One is enhanced with gilding and the other is featured in an affordable 1/10 ounce size. Additional offerings include 2014 Year of the Horse products and special occasion coins.

Below is information on Perth Mint January 2014 product releases.

2014 Australian Koala 1 oz Gilded Silver Coin

In limited quantities, the Perth Mint made available its one ounce 2014 Australian Koala Gilded Silver Coin. As indicated by the name, its reverse has a gilded koala design which shows the head of a single koala along with a spray of gum leaves.

2014 Australian Koala 1 oz Gilded Silver Coin

An issue limit of 5,000 is in place for individual sales with a maximum mintage of 10,000 allotted. Each ships in a Perth Mint display case along with a numbered Certificate of Authenticity.

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2014 Australian Koala 1/10 oz Silver Coin

The one-tenth ounce 2014 Australian Koala Silver Coin is available as a less pricey koala silver coin option. The same basic reverse image of the head of a single adult koala is shown.

2014 Australian Koala 1-10 oz Silver Coin

This one is struck from 99.9% pure silver and features a diameter of 20.60 mm. These koala coins are attached to an illustrated presentation card.

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2014 Year of the Horse 1/10 oz Gold Square Ten-Coin Collection

The 2014 Year of the Horse 1/10 oz Gold Square Ten-Coin Collection includes ten 1/10 ounce 99.99% pure gold coins each showcasing a different colored image of a horse. The Chinese character for horse also appears on the design.

2014 Year of the Horse 1-10 oz Gold Square Ten-Coin Collection

A stylish case accompanies each ten-coin set. The product limit of the collection is listed as 1,500 with a mintage of up to 7,500 for each individual coin.

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2014 Year of the Horse 1 oz Silver Square Ten-Coin Collection

Similar to the gold coin set, the 2014 Year of the Horse 1 oz Silver Square Ten-Coin Collection depicts a different colored image of a horse on each coin’s reverse. Each is struck from one ounce of 99.9%pure silver.

2014 Year of the Horse 1-10 oz Silver Square Ten-Coin Collection

The issue limit is capped at 5,000. Up to 10,000 of the individual coins will be struck.

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2014 Newborn Baby 1/2 oz Silver Proof Coin

Presented in an Australian-themed gift card, the one-half ounce 2014 Newborn Baby Silver Proof Coin is minted as a gift option for newborns of the year. Found on the coin’s reverse is a colored image of a kookaburra carrying a sleeping newborn baby — an Australian take on the traditional stork folklore.

2014 Newborn Baby 1-2 oz Silver Proof Coin

Each is composed of 99.9% pure silver to proof quality. The coins are produced on a mint-to-order basis with the final mintage declared after twelve months.

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2014 Forever Love 1/2 oz Silver Proof Coin

Available with a mintage of up to 7,500, the one-half ounce 2014 Forever Love Silver Proof Coin showcases the theme of love with two colored Major Mitchell Cockatoos perched on a heart-shaped branch.

2014 Forever Love 1-2 oz Silver Proof Coin

Each coin is struck as legal tender of the island nation of Tuvalu. A Perth Mint display case is included along with an illustrated shipper.

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2014 Australian Megafauna – Diprotodon 1 oz Silver Proof Coin

Issued as the second release in the Australian Megafauna series is the one ounce 2014 Diprotodon Silver Proof Coin. A colored image of the giant Diprotodon from the Pleistocene period is shown on the reverse.

2014 Australian Megafauna – Diprotodon 1 oz Silver Proof Coin

The Perth Mint strikes them in 99.9% pure silver to proof quality. A maximum mintage of 6,500 applies.

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2014 Year of the Horse Stamp and Coin Cover

Horse lovers may want to consider the 2014 Year of the Horse Stamp and Coin Cover. Included is one 2014 Year of the Horse Coin with two official Australia Post stamps on the outside.

2014 Year of the Horse Stamp and Coin Cover

The stamps have been postmarked for the first day of issue with the Australian Post’s Seal of Authenticity and official number. Mintage is unlimited.

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2014 Australian Wedge-Tailed Eagle Gold and Silver High Relief Coins

2014 Australian Wedge-Tailed Eagle Gold and Silver High Relief Coins are each struck to proof quality from either one ounce of 99.99% pure gold or 99.9% pure silver. These high relief coins feature a reverse design of a single Wedge-Tailed Eagle in flight.

2014 Australian Wedge-Tailed Eagle High Relief Coins

This common reverse was commissioned by the Perth Mint from John Mercanti, the 12th Chief Engraver of the United States Mint. Of his many works, the heraldic eagle with shield currently found on the American Silver Eagle is perhaps his best known.

Maximum mintage for the gold proof coin is listed as 1,000 with up to 10,000 of the silver coin issued.

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Moody’s Lowers Downside Targets to $900 on Gold and $15 on Silver

If a prediction from Moody’s Investors Service turns out to be true, gold and silver are going to have a bad year. Moody’s reduced its forward views for the average prices of gold and silver in 2014 and beyond. This could have another negative impact on the SPDR Gold Shares (NYSEMKT: GLD), but it could be a boon for the DB Gold Short ETN (NYSEMKT: DGZ).


Moody’s sent its average per-ounce price of gold down to $1,100 from $1,200, and the average per-ounce price of silver was reduced to $18 from $20 previously. The ratings agency’s price target previously offered were deemed over a time period of “over the next couple of years.”

What is more important than the average price here is the downside price targets. This was lowered to $900 per ounce from $1,000 for gold. Silver’s downside price target was lowered to $15 per ounce from $17 previously. Again, these are the downside price targets rather than the average price targets.

We would warn readers that the iShares Silver Trust (NYSEMKT: SLV) is now less than $1 above the 52-week low. After a drop of $0.11 to $18.72 on Thursday, the 52-week range is $17.75 to $31.41.

The lower price expectations are based on significant deterioration in the spot price of gold and silver and on fundamentals that seem unfavorable over the next couple of years. Some headwinds include forward momentum in the global economy, the unwinding of various government stimulus programs and the subdued threat of inflation in most major economies.

Moody’s had previously indicated that it could lower its forward view if the price of gold was to persist below $1,300 per ounce. This is really bad news for gold and silver companies involved in mining and production. Moody’s said that the key credit metrics of certain producers are stretched for current ratings in the absence of mitigation through cost reductions or other actions.

Moody’s also said that it plans to evaluate the impact of lower gold and silver prices for each company over the coming months. A key issue was that operating costs for gold producers increased significantly over the past several years with companies chasing new production because of higher prices. Mining lower-grade ore came at the same time as wage hikes, higher power costs, higher exploration costs, higher environmental spending and other factors.

Here is the real rub for gold miners and producers. It said, “Moody’s believes the rated-industry’s all-in average cost of gold production is currently at least $1,100/oz comprised of about $850/oz of cash operating costs and a minimum of $250/oz of sustaining capital costs.”

Moody’s showed that this review was regarding gold and silver companies such as AngloGold Ashanti Ltd. (NYSE: AU), Barrick Gold Corp. (NYSE: ABX), Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), Goldcorp Inc. (NYSE: GG), Hecla Mining Co. (NYSE: HL) and others in the sector.

Almost all investors know the SPDR Gold Shares (NYSEMKT: GLD) as the largest gold exchange-traded product out there, but the DB Gold Short ETN (NYSEMKT: DGZ) is the short bet as it aims for the inverse of the daily performance of the Deutsche Bank Liquid Commodity Index — Optimum Yield Gold Excess Return, but investors know by now that short ETFs have erosion, particularly when they use futures contracts.

By :-  Jon C. Ogg

Source : - 247Wallstcom

Two Lessons for 2014 Gold Investors

2014 finds gold investment shunned by trend-following money managers in the West...

 

GOLD has had worse years than 2013, but not many, writes Adrian Ash atBullionVault, in this article first published at ThisIsMoney.

 

Dropping more than 27% this year against the US dollar, gold suffered its worst year since 1981 (down 32%) and worse yet than 1975 (down 25%). But perverse as it sounds, 2013 proved gold's role as financial insurance.

 

For UK investors over the last 40 years, as this annual asset performance comparison shows, gold priced in Sterling has lagged the returns from the stockmarket (including dividends), gilts, cash savings and UK house prices 16 times. It has beaten those assets only eight times. In those years however, the gains on gold far outweighed its losses under better economic conditions, beating those other assets' average 3.8% return by 46 percentage points. Overall, gold has delivered 11% annual gains since 1973, second-only to the total return from the FTSE (15.4%) and comfortably beating the pace of inflation as the Pound has steadily lost purchasing power. But with stock markets surging this year, it was only natural that the price of financial insurance would fall.

 

2013 also proved that China's surging gold demand does not, as yet, set gold prices worldwide. Western money managers still hold the whip hand, and it was their about-turn in sentiment which sparked the crash in gold prices this spring. This change in sentiment had various roots. Boredom with six years of financial crisis. The sharp rise in equities. Growing expectation that the US central bank, the Federal Reserve, would start to reduce its QE money printing. Trend-following money managers ran for the exits from gold, shown clearly by the sharp fall in gold ETF holdings. From the record-high holdings of December last year these giant trust-fund vehicles shed one-third of their gold in 2013. That turned what had been around 250 tonnes of annual demand since the gold ETFs were launched a decade ago into 800 tonnes of supply. Turning over some 4,500 tonnes per year, the gold market buckled.

 

Yes, Chinese households and investors proved eager buyers, snapping up all that gold and more besides. Like a growing number of private investors in the West, they took the price crash to be an opportunity, adding to their gold holdings as a long-term investment. But their demand leapt as a result of the price drop, and it was the positioning of speculative traders in US gold futures and options which weighed heaviest of all. From a strongly bullish stance, hedge funds and other leveraged players as a group raised their betting against gold prices to the highest level since 1999, the very low of gold's two-decade bear market.

 

2013's deafening chorus of bearish forecasts from bank analysts also matches that historic turning point. All a bloody-minded contrarian would need now is for a Western government to start selling gold. But Gordon Brown is long gone. The idea of selling Cyprus' small gold reserves was merely discussed, not actioned in spring. Western central banks continue to hold gold close, and emerging-market governments continue to buy. When asked, they all name gold's insurance function as the No.1 reason. 

 

Looking to 2014, events in India could be important. Formerly the No.1 consumer nation, it is now locked out of the global gold market by import restrictions aimed at cutting India's trade deficit, in the hope of supporting the Rupee without stronger interest rates. Any relaxation of the government's rules could support prices if Western selling continues. But metal is still flowing into the former No.1 market regardless, but without any duty being paid and with criminals enjoying a 10% margin over legal suppliers.

 

The strategic question for gold bulls, and longer-term allocations, is whether the drop of 2013 will prove to have been 1981, when gold sank from then record-highs to begin a 20-year drop. Or was it more like 1975, when central banks talked tough in inflation but then failed to follow through with strong-enough interest rates? That reloaded gold's long bull market on the 1970s, clearing hot money out of the trend and then sending prices eight times higher as resurgent inflation saw stock markets and the returns to cash savers collapse in real terms.

 

Here sentiment amongst Western money managers and hedge funds will again prove decisive. Further tapering by the US Fed may already be priced into gold, but the mere idea of less QE helped spark the spring 2013 crash. Less money printing, however, won't change the zero interest rates or record peace-time debts being worn by savers and investors across the West as 2014 begins.

Buy gold at the lowest prices in the safest vaults today...

Adrian Ash runs the research desk at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern and FT Deutschland; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews, or get more from Adrian Ash on Google+

Please Note: All articles published here are 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. Please review our Terms & Conditions for accessing Gold News, RSS links are shown there.

Source : BullionVault.com

Gold Is No Longer A Safe Investment

The crash in gold prices was one of the biggest shockers of 2013. A correction had already begun at the fag end of 2012, but prices really crashed in 2013, triggered by fears that the US Federal Reserve would scale down and do away with the economic stimulus.

However, Indian investors in gold were cusioned against the crash due to the fall in the rupee. As the dollar became costlier, gold continued to fetch a higher price in India. Besides, the government introduced certain measures that pushed up the domestic price of the metal. Import duty on gold was hiked from 2% to 10%, increasing the landed cost of gold. Quantitative restrictions were also imposed on gold imports, such as the RBI's 20:80 scheme, which mandates that 20% of imports need to be re-exported .

As a result of these measures, domestic prices of gold have receded by only 4.3%, compared to the 28% drop in global gold prices during 2013.

This gap in the price of gold has created an opportunity for 'legal smuggling' of the metal. NRIs returning to India after spending more than six months abroad are allowed to carry up to 1 kg of gold. Jewellers are using NRIs as carriers , even offering to pay for their air fare if they bring in gold for them. Even if they pay the import duty of 10% on bars and coins or 15% on jewellery, the arrangement works out to be profitable (see table).

The wide difference in the domestic and international prices of gold have led to another anamoly in the capital market. The market price of gold ETFs, which is based on the domestic price of the metal, is far higher than their NAVs, which is based on the landed cost of gold. The difference is as high as 10%.

Since gold has rallied for more than a decade now, most investors had begun to believe that gold prices can only go up. However, the crash in gold prices has shattered this myth, at least for the global investors. This explains why they are now dumping gold. The gold holdings in SPDR Gold Shares, the largest gold ETF in the world, have came down from 1,351 tonne at the end of 2012 to just 814 tonne now, a fall of around 40%.

Lessons from 2013

1) Gold is no longer the safe haven it used to be. Its price can also come down, shattering a long held belief.

2) The currency dynamics and policy measures can lead to a significant variance in domestic and global prices.

3) Paper gold is not always the best way to invest in the metal. Gold ETFs are trading 10% above their NAVs.

Strategy for 2014

International gold prices may continue to correct in 2014. "We remain bearish on gold because it will underperform during tighter liquidity and rising interest rates scenario. It may go down further to the $1,050-1 ,080 range before March 2014," says Kishore Narne, associate director, Motilal Oswal Commodities Broker. Domestic gold prices have been cushioned from the global crash but this could change in the new year as the government rolls back some of the harsh measures introduced in 2013. A reduction in the import duty and other restrictions can bring down the domestic gold prices. "Domestic gold also looks bearish; the only risk is the currency," says Narne. Investors will have to monitor global developments and government policy measures more closely in 2014. Financial advisers have long advocated the benefits of buying paper gold. This conventional wisdom has been turned on its head by the differential in the market price of gold ETFs and their NAVs. It's better to stay away than get caught on the wrong foot. Getting gold from abroad for a jeweller may seem a great way to earn easy money, but there are several glitches in this arrangement. The tax department may want to know where you got the money to buy the gold. Since this involves profit, you would also have to pay tax on the gains. However, it makes sense for NRIs to bring in small quantities of gold.

Source : Times of India

Closing Update: Stocks Enjoy Bernanke-Bump Late In the Day

Stocks started losing steam midday and gave back most of their earlier gains but picked up momentum into the close as Wall Street grew more optimistic before Ben Bernanke's speech in Philadelphia. After yesterday's deep sell-off, investors returned to pick up bargains this morning, especially among airline stocks where Delta ( DAL ) led the entire sector higher thanks to strong December passenger traffic.

But without the benefit of economic data, the equity market took direction from Fed officials who generally warned of higher rates and more moderate economic growth, the implications of which caused stocks to slump. However, the mood improved later in the day when market players started positioning themselves in the event that Bernanke gave the financial markets one last reassurance. And Bernanke didn't disappoint stating that the Fed remains committed to an accommodative monetary policy that will continue to encourage economic growth without inflationary pressures. The resulting late price action helped the Dow Industrials close higher for the third consecutive week with yet another record high
Here's where the markets stood at the close:

US MARKETS
Dow Jones Industrial Index was up 28.64 (+0.17%) to 16,469.99
S&P 500 was down 0.61 (-0.03%) to 1,831.37
Nasdaq Composite Index was down 11.16 (-0.27%) to 4,131.91
GLOBAL SENTIMENT
FTSE 100 was up 0.19%
Nikkei 225 was up 0.69%
Hang Seng Index was down 2.24%
Shanghai China Composite Index was down 1.24%
UPSIDE MOVERS
FEYE, FireEye acquired Mandiant for $106.5 million and raised its guidance.
BIOD, Seeking Alpha report calls the stock "extremely undervalued" with a stock price that should be 2-3 times higher than the current price
PLUG, Announced on Thursday that it had met its projected order targets for 2013 with around $32 million in Q4 bookings.
DOWNSIDE MOVERS

DM, Appointed a chief restructuring officer and received a warning from the New York Stock Exchange that its stock fell below the exchange's minimum share price.
GM, Despite upbeat 2013 sales, December sales were down 6% from year ago levels.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright (C) 2013 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.


This article appears in: Investing , Commodities

Referenced Stocks: DAL
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