Gold Prices and the U.S. Economy

Gold prices are a good indicator of how healthy the U.S. economy is. When the price of gold is high, that's when the economy is not healthy. Why? Investors flock to gold when they are protecting their investments from either a crisis or inflation. When gold prices drop, that usually means the economy is healthy. That's because investors have left gold for other, more lucrative, investments like stocks, bonds or real estate.

To understand the economy, it's helpful to understand gold. In this article, you can track recent trends in gold prices. You'll also learn about how gold should be used by investors, the history of gold, and more about the gold standard.

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Japan Stock Futures Gain as S&P 500 Advances on Economy

Japanese stock futures rose, after U.S. equities advanced for the first time in three days amid an unexpected increase inconsumer confidence. The yen was little changed against the dollar.

Futures on the Nikkei 225 Index added 0.5 percent in Chicago. The yen fell less than 0.1 percent to 102.28 per dollar as of 6:53 a.m. in Tokyo. The Standard & Poor’s 500 Index (SPX) added 0.4 percent to 1,865.62. The Stoxx Europe 600 Index climbed 1.3 percent after falling 1.1 percent the previous day, the most in two weeks. Ten-year Treasury yields increased 2 basis points to 2.75 percent. Copper jumped 2 percent on speculation demand will improve as China takes steps to bolster economic growth.

An index of U.S. consumer confidence rose in March to the highest level in six years, overshadowing a separate report showing a drop in February home sales. German business confidence fell for the first time in five months. The world’s top industrial powers threatened further sanctions to deter Russian President Vladimir Putin from taking over other parts of Ukraine and suspended Russia from participating in the Group of Eight.

“The U.S. economy seemed to have cooled off from the pace it’s on toward the end of last year,” Curtis Holden, a senior investment officer at Tanglewood Wealth Management in Houston, said in a phone interview. His firm oversees about $800 million. “There may be a little relief recently that things may be stable here. Things don’t look spectacular here, but they look OK. The market is trying to piece together about how concerned should we be about things going on overseas.”

Source : - Blomberg.com

Gold Up on Safe-Haven Demand, Bullish Technicals

P.M. Kitco Metals Roundup: Gold Up on Safe-Haven Demand, Bullish Technicals

(Kitco News) - Gold prices ended the U.S. day session moderately higher Tuesday, on some more safe-haven demand that surfaced amid the simmering geopolitical situation in Ukraine. Chart-based buying was also seen as the near-term technical posture for gold remains bullish.

Gold prices are hovering not far below their recent four-month highs. April gold was last up $6.20 at $1,347.70 an ounce. Spot gold was last quoted up $7.80 at $1,348.00. May Comex silver last traded down $0.07 at $20.84 an ounce.

The Ukraine matter is still a worry among traders and investors and has moved closer to the front burner of the market place. Russian president Putin has spurned a U.S. proposal to defuse the crisis, reports said. Last weekend Putin said he would back the Crimean region seceding from Ukraine. U.S. and German officials have rebuked Putin, and reports said the European Union is set to discuss this week sanctions against Russia. A vote on the Crimean secession is scheduled for March 16, and that could be the next flashpoint in the region. The Russian occupation of Crimea is a bullish factor for the safe-haven gold market.

U.S. economic data released Tuesday was on the light side and failed to move the markets. Traders are looking ahead to next week’s meeting of the U.S. Federal Reserve’s Open Market Committee (FOMC).

The London P.M. gold fix is $1,346.25 versus the previous P.M. fixing of $1,344.00.

Technically, April gold futures closed near mid-range Tuesday. A 2.5-month-old uptrend is in place on the daily bar chart. Bulls have the overall near-term technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the March high of $1,355.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,318.70. First resistance is seen at $1,355.00 and then at $1,360.00. First support is seen at Tuesday’s low of $1,337.80 and then at $1,330.00. Wyckoff’s Market Rating: 6.5

May silver futures prices closed nearer the session low Tuesday and closed at a fresh four-week low close. The bears have the slight near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the March high of $21.74 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $20.00. First resistance is seen at $21.00 and then at Tuesday’s high of $21.325. Next support is seen at this week’s low of $20.61 and then at $20.25. Wyckoff's Market Rating: 4.5.

May N.Y. copper closed down 760 points at 295.55 cents Tuesday. Prices closed nearer the session low and slumped to a fresh contract and nearly four-year low. Weak economic data coming from China over the weekend has helped to sink the copper market. Prices are in an accelerating 10-week-old downtrend on the daily bar chart. Bears have the solid near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at this week’s high of 307.75 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 290.00 cents. First resistance is seen at 297.50 cents and then at 300.00 cents. First support is seen at Tuesday’s contract low of 294.20 cents and then at 292.50 cents. Wyckoff's Market Rating: 1.0.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff

Source :  Kitco.com

Getting Started In Stocks

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So you've decided to invest in the stock market. Congratulations! In his 2005 book "The Future for Investors," Jeremy Siegel showed that, in the long run, investing in stocks has handily outperformed investing in bonds, Treasury bills, gold or cash. In the short term, one or another asset may outperform stocks, but overall stocks have historically been the winning path.

But there are so many ways to invest in stocks. Individual stocks, mutual funds, index funds, ETFs, domestic, foreign - how can you decide what is right for you? This article will address several issues that you, as a new (or not-so-new) investor, might want to consider so that you can rest more easily while letting your money grow.

Risk Taker, Risk Averse or in the Middle?
You may be eager to get started so that you, too, can make those fabulous returns you hear so much about, but slow down and take a moment to contemplate some simple questions. The time spent now to consider the following will save you money down the road.

What kind of person are you? Are you a risk taker, willing to throw money at a chance to make a lot of money or would you prefer a more "sure" thing? What would be your likely response to a 10% drop in a single stock in one day or a 35% drop over the course of a few weeks? Would you sell it all in a panic?

The answers to these and similar questions will lead you to consider different types of equity investments, such as mutual or index funds versus individual stocks. If you are naturally not someone to take risks, and feel uncomfortable doing so but still want to invest in stocks, the best bet for you might be mutual funds or index funds. This is because they are well diversified and contain many different stocks. This reduces risk - and doesn't require individual stock research.

Have much time and interest do you have for investing?
Should you invest in funds, stocks or both? The answer depends on how much time you wish to devote to this endeavor. Careful selection of mutual or index funds would let you invest your money, leaving the hard work of picking stocks to the fund manager. Index funds are even simpler in that they move up or down according to the type of company, industry or market they are designed to track.

Individual stock investing is the most time consuming as it requires you to make judgments about management, earnings and future prospects. As an investor, you are attempting to distinguish between a money-making stock and financial disaster. You need to know what they do, how they make their money, the risks, the future prospects and much more.

Therefore, ask yourself how much time you have to devote to this enterprise. Are you willing to spend a couple of hours a week, or more, reading about different companies, or is your life just too busy to carve out that time? Investing in individual stocks is a skill, which, like any other, takes time to develop.

Eggs In One Basket
It is best that you not be exposed to only one type of asset. For instance, don't put all of your money in small biotech companies. Yes, the potential gain can be quite high, but what will happen to your investment if the Food and Drug Administration starts rejecting a higher percentage of new drugs? Your entire portfolio would be negatively impacted.

It is better to be diversified across several different sectors such as real estate (a real estate investment trust is one possibility), consumer goods, commodities, insurance, etc., rather than focusing on one or two or three, as above. Consider diversifying across asset classes, as well, by keeping some money in bonds and cash, rather than being 100% invested in stocks. How much to have in these different sectors and classes is up to you, but being invested more broadly lessens the risk of losing it all at any one time.

A Portfolio for Beginners
If you are just starting out, think seriously about investing most of your money in a couple of index funds, such as one tracking the broad market (e.g. the S&P 500) and one that gives some international exposure. Maybe adding one that tracks small companies (e.g. the Russell 2000) would give your portfolio a boost.

A portfolio consisting of those three would give plenty of diversification, provide the steadier performance of large companies and be spiced up a bit with both international companies and small caps.

A Portfolio with Individual Stocks
If you are investing in individual stocks, a portfolio of 12-20 well-chosen ones will give you plenty of diversification and probably will not be too many to follow regularly. However, you will need to ensure that you fully understand each company, from their businesses to their risks. If you plan on investing in only stocks, make sure to spread the funds across different sectors such as healthcare, technology, small cap and big cap.

If you don't have the time or desire to pick as well as follow that many stocks, consider investing in a mixture of index funds and individual stocks. Another consideration, especially if starting out with limited funds, is that investing in 12-20 stocks may not be feasible, so having the majority of your money in some funds would provide the stabler returns those tend to generate while maybe half a dozen individual stocks would give your portfolio an extra kick.

Time to Invest
Once you've determined the shape of your portfolio, it is time to invest. Find a broker you are comfortable with, either an online broker or one with a local office or both. Call and talk with this person, if necessary. Then, fill out the paperwork, deposit some money and open an account.

After deciding what to buy, don't buy all at once, but enter slowly. What if you invested all your money just before a market downturn? Being in the red that quickly wouldn't do much for your confidence. Plan to take several months to invest all of your money to minimize any market timing risk. Finally, remember to set aside time each week to review or catch up on the news for your investments.

Keep AddingAs your experience grows, your asset allocation decisions will probably change. You could adjust your portfolio on a regular basis, say every year or so, by selling some of one type of investment and buying more of another. You could also adjust your portfolio by adding additional funds to those areas in which you want to increase exposure.

These additional funds can be used to expand the number of securities you hold or can be added to existing holdings. Do this on a regular basis and before you realize it, you'll have a substantial portfolio that will help fund your retirement, pay for a second home, or meet whatever goals you set when you started you investing journey.

Conclusion
Before you jump into the stock market, spend some time thinking about what you want to accomplish and how to do that while staying within your risk tolerance levels. Also consider how much time you have to devote to investing. Doing this before committing those first dollars will go a long way toward protecting you from the emotional rollercoaster of investing first one way, then another, never really knowing why you are changing your mind. Careful thought before and during your investing career will do more to help your results than trying to chase the latest hot stock. After all, it's your money - you should know what you are doing with it and why.

by Jim Mueller
Jim Mueller started his career as a scientist, earning his advanced degree in biochemistry and molecular biology from Washington State University. He has since become a self-taught investor and financial writer. He is also a regular contributor to The Motley Fool.

Read more (Source): Nasdaq.com

Income Investing and Dividend Stocks

Quick Links: » Dividend Stocks » Dividend Funds » Preferred Stock Funds » REITs


Long-term investors may wish to consider dividend paying stocks as an alternative (or supplement) to fixed income investments. Dividend stocks can generate untold wealth for patient investors, and when reinvested, dividends offer investors a chance to exploit the miracle of compound interest. Unfortunately, the dividend yield of the S&P 500 is scraping along 120 year lows. More than ever, income investors must comb for opportunities in individual stocks, mutual funds, ETFs other investments with a margin of safety. We hope these articles and tools help you build a portfolio that provides sustainable income now, and into the future.

Source : TheStreet.com

Gold Corrects As Dollar Rebounds, Chinese Demand on Pause

Gold corrected sharply on Thursday, falling to a new low for the week at 1237.70, but support defined by last week's low 1230.85 remains well protected. The retreat is being attributed to the Fed's decision yesterday to taper further, and slackening demand for gold in China.

Despite the recent spate of weaker U.S. economic data, and the heightened volatility in emerging markets, the Fed opted to continue scaling back on asset purchases. The FOMC announced on Wednesday that they would taper by an additional $10 bln per month. That was in line with expectations, but $65 bln a month moving forward is still a pretty hefty addition to the Fed's balance sheet.

Gold initially held up well in the wake of that news, but then started to retreat in Asia. Reuters reported that volume on the Shanghai Gold Exchange was "just 1.5 tonnes on Thursday, compared with Wednesday's 8.4 tonnes and Tuesday's 14 tonnes."

This should come as no surprise as pretty much the whole of China goes into motion in the days before the Lunar New Year, which is Saturday, February 1. People travel to spend the two-week long holiday with family. It's sort of like equivalent of our Thanksgiving, Christmas and New Year's combined.

I would say this is more likely a pause in Chinese demand, rather than waning demand. This may make this pullback a pretty good buying opportunity.

A firmer dollar and a rebound in stocks is adding further weight to the yellow metal. The Dow registered it's lowest close in 13-week yesterday, and was more than 5% off the record high of 16,588 from late December. Despite today's modest bounce, stocks are still looking a little shaky.

We saw some mixed economic data this morning: Q4 advanced GDP came in at +3.2%, pretty much in line with expectations, showing a marked slow-down from the 4.1% pace in Q3. Initial jobless claims rose 19k last week to 348k. Hardly good news.

The NAR pending home sales index plunged 8.7% in Dec to 92.4, way below expectations of -0.3%. That's the lowest print since October 2011, when the home buyer's tax credit expired. Realtors blame weather this time around. However, the preponderance of recent housing market data is suggestive of renewed weakness in the sector, more likely attributable to higher mortgage rates triggered by the taper.

Emerging currency markets seem to be getting a bit of a reprieve today as well, following crazy volatility yesterday in the Turkish Lira and South African Rand specifically. It is very unlikely that rate hikes in both of those countries are panacea, so rather than declaring the storm has passed, I think this is just the eye of the storm.

Source : UsaGold.com/DailyQuotes

Gold Mines' Hedge Book Shrinks To A Decade Low

Gold hedging activity by gold mines has reached to a decade low level in quarter ended September 2013, according to latest quarterly Global Hedge Book Analysis by Societe Generale Thomson Reuters GFMS.

World over gold mining companies hedge their future production in derivatives market generally in options to lock their earnings and when prices fall the hedging activities also take a knock. “At end-September, the outstanding global hedge book stood at 2.94 Moz (92 t), the lowest volume since our quarterly series began in 2002,” said the analysis report released by the Thomson Reuters GFMS.

Mines have either allowed hedges to mature as scheduled or proactively to close out contracts for a profit and use the proceeds to pay down debt. “To date, fresh hedging in this lower price environment has remained comparatively modest,” said Cameron Alexander, Manager, Precious Metals Demand, Asia, GFMS Thomson Reuters in an email response to business standard query on hedge positions of mines.

Generally gold producers/mines refrain from hedging when they feel prices will fall further and in the rising [rice scenario they lock upper value by doing hedging. In the last phase of bull run many mnes who had sold or hedged future production had cut their position which is known as dehedging which further pushed prices. However a sudden crash in gold prices in april, 2013 tempted miners not to hedge when in September quarter prices averaged $1326 per ounce. However in subsequent months prices corrected further putting pressure on many mines as prices started trading below many of their cost of mining. GFMS global average gold mining cost including all corporate expenses is $1350 an ounce and even after considering write downs global average cost comes to $1200.

As reflected in the hedge book analysis, state of gold mining is not good. According to the hedge book analysis report, an industry wide cost containment effort has begun. Producers have cut back on non-essential capital expenditure, instituted wage freezes, cut corporate overheads and where possible, optimized mine plans for higher throughput and higher grade ore processing, leading to reduced mine lives. Furthermore, some of the larger multi-asset producers have already divested some of their higher cost mines and begun mine closures, which will afford these producers a certain degree of flexibility in this price environment. For non-cash generative juniors, it is likely that project finance will remain difficult to arrange.

While mines absence in hedging market would have given rise a belief that gold prices have bottomed out but that could be temporary as many of them may soon start looking at fresh hedging to lock current prices.

Cameron says, “If however, we start to gold prices wane further we believe this will lead to a growing willingness to hedge, and we therefore expect a return to net hedging this year, with larger-scale hedging activity in 2015 and 2016. Pressure may come from share holders to protect revenue streams in a declining price environment.”

The crisis began in mining industry doesn’t seem to be ending soon. Mines cutting down production (to cut losses when prices are lower and not covering costs) could support prices but that will depend upon whether demand contraction is lower than cut in production.

Cameron said, “mine supply is expected to edge lower this year before decreasing more rapidly in 2015 and 2016. Over 2014, a number of new operations will largely compensate for scheduled decreases in output from ageing mines elsewhere, as well as the supply lost due to the small number of operations closed so far on account of unsustainably high costs. However, from 2015 onwards, we expect to see more widespread closures or suspensions, as the declining gold price cuts more deeply into the cost curve for a sustained period.”

Source : Business-Standard.com