goldheaven.com

Reuters

Gold Futures Decline From Two-Week High With Rally 'Out of Gas' BusinessWeek Demand for gold coins and holdings in exchange-traded funds backed by bullion has surged on concerns that Europe's sovereign-debt crisis may spread. … SPDR Gold Shares (NYSEArca: GLD)- The Gold Bug is Breaking Out All OverBeacon Equity Research (blog) PRECIOUS-Gold eases as risk appetite picks upForexyard all 339 news articles »

Source:Gold Futures Decline From Two-Week High With Rally 'Out of Gas' – BusinessWeek

Gold looks good right now, thanks to sub-zero real rates of interest…

"SO WHERE’S the big Gold bull market?" I asked John Doody over lunch yesterday, writes Steve Sjuggerud in his Daily Wealth email.

John writes the excellent Gold Stock Analyst newsletter, where he takes a deep look into gold and the major Gold Mining stocks every month. Before starting the newsletter in the early 1990s, John was an economics professor. This week, John and I are at a conference on Maryland’s Eastern Shore.

"John, if Gold is so great now, then why hasn’t it soared this year?" I asked him. "It’s only up like 5% against the Dollar…"

"That’s a good question," John replied. "In my opinion, the primary driver of the Gold Price is real interest rates that investors earn on their cash."

In short, if investors earn nothing on their cash, then gold goes up. If investors earn high rates of interest on their cash, then gold goes down. As the chart below shows, that’s the only gold indicatory you need to know.

Importantly, we’re talking about the "real" rate of interest – after inflation. John defines the real interest rate as the interest rate on risk-free 90-day Treasury bills MINUS the inflation rate.

That’s a good estimate of your "real" return on cash. And as John explained, when the real interest rate is negative – when inflation is higher than risk-free interest – "cash loses purchasing power and buys fewer goods than it bought earlier in the year.

"When that happens, for protection, investors Buy Gold and drive its price higher."

Now, take another look at the chart. John explained:

"Today’s gold bull market and 1970s gold bull market were eras of negative real interest rates. But importantly, for 2010 to date, the real interest rate has been barely negative, as shown by the chart’s red-circled area."

With the real interest rate at about 0%, gold isn’t moving anywhere. And John pointed out that the Fed rarely raises interest rates as elections approach. So interest rates should stay where they are.

But eventually, John says, "A pickup in the economy will be the key to higher inflation. With the US economy slowly on the mend, we could see inflation. Real interest rates would go negative and gold would rise."

One thing I like about John is, he’s not the typical gold bug. He’s not taking some moral stand against the government or digging a bunker full of freeze-dried food.

John simply looks at the facts. The facts say you need to own gold when the "real" interest rate is negative…almost regardless of the what’s in the news.

His work shows that gold goes up when the bank’s paying you nothing. That’s where we are now…and that’s what you need to know. John believes if the economy starts to recover before the election and inflation shows its head, the situation could get better from here for Gold.

In short, gold looks good now, with rates low and inflation likely to rise faster.

Ready to Buy Gold today…?

Source:Not Your Typical Gold Bug

Telegraph.co.uk

Confessions of a (Non) Gold Bug NASDAQ On May 1, 1933, by executive order 6102, the President Franklin D. Roosevelt ordered all citizens to turn over their gold coins, bullion and gold … Gold hits 4-month high on Greece fearsThe Australian all 507 news articles »

Source:Confessions of a (Non) Gold Bug – NASDAQ

Emerging-market nations hoarded new gold reserves at a near-record pace in 2009…

SEEING WASHINGTON’S belligerence over how Beijing pegs the price of its Yuan, three unsettling facts are buried amongst the latest central-bank gold data compiled by the World Gold Council…

• Central banks worldwide grew their physical gold reserves at the fastest pace since 1965 in 2009, adding bullion for the first time in two decades as a group;
• Emerging economies added a near-record volume of metal to their official reserves, putting more than 21% of all the gold held by sovereign states outside the control of developed-world OECD members;
• Western central banks, in contrast, shrank their reserves by more than 1% last year. Since the end of 2004, they have sold almost twice-as-much gold as non-OECD members have acquired (1881 vs. 994 tonnes).

As the gold-bug’s Golden Rule says, "He who has the gold makes the rules" – an historic fact proven by the United States’ own dominance of world finance and politics since the end of WWII.

And now that Congress is threatening trade sanctions against China for under-valuing its currency, the Yuan, Washington might want to take note of how its Dollar came to be the world’s No.1 currency.

Last year marked a "changing pattern" says the World Gold Council, pointing to slower West European sales and "accelerating" purchases by emerging-economy states.

But even noting Moscow’s frantic expansion of its gold reserves – primarily bought from domestic mine output, and taking Russia to 9th position in the sovereign league table – the WGC’s comments underplay the deeper, political shift of monetary intent, if not power.

In full-year 2009, emerging-economy states grew their reported reserves by 17.8%, adding 868 tonnes of bullion to build a new record hoard of 5738 tonnes. Yes, China’s announcement in April that it had added 454 tonnes to its reserves over the previous six years accounted for a big chunk of that move. But Beijing and the Kremlin weren’t alone in Buying Gold. By the end of 2009, non-OECD members held half-as-much gold again as they did on average over the previous six decades.

Trying to force fresh Dollar-devaluation on today’s Treasury bond holders is only likely to spur this underlying trend still further.

Ready to Buy  Gold…?

Source:"He Who Has the Gold…"

"I hope gold falls to $1000 an ounce," writes one Gold Mining stock analyst…

AS A SELF-PROFESSED gold bug, why would I possibly want my favorite investment to fall in value? asks Jeff Clark, senior editor of Doug Casey’s Gold & Resource Report.

Have the long hours finally caught up with me? Au contraire; my near-constant devotion to all things gold has only served to crystallize one of the things I really want out of this.

Here’s a hint…

I had lunch with a reader at a conference recently, and while talking about one of my favorite subjects – Gold Mining stocks – I asked why he was invested so heavily in them.

"Greed," he said bluntly and with little hesitation. I appreciated the honesty.

Let’s be frank: I’m here to make money, and so are you. And that’s why I hope gold falls to $1000 again.

Let’s say Bob has taken our advice and has been storing cash. I’ll use $1000 as an example. If Bob buys Yamana Gold now, he’d get about 93 shares as I write (at $10.73 per share).

Now, let’s say gold drops to $1000…about a 10% fall from here, and due to its leverage, AUY sells off by a 2-to-1 margin, meaning 20%. So with that same $1000, Frank, who’s waited for the downturn, buys 116 shares at around $8.58. Thus, instead of owning 93 shares at $10.73, he owns 116 shares at $8.58.

When Frank sells, he doesn’t just make the difference between $8.58 and $10.73 (an extra 25%), he also makes 125% on the extra 23 shares he owns if Yamana doubles in a couple years, which I expect it to. So two years from now, Bob would have $2000, but Frank would have $2500 because he bought more shares and at a lower price.

Frank makes 25% more than Bob on the same Dollar investment simply by buying when gold and Gold Mining stocks fall in price.

Got $5000 saved up? Multiply the profit by five. And with larger amounts, you can see we’re talking serious money.

I don’t know if we’ll see $1000 gold again or not, or if Yamana will fall that low, but I would point out that corrections in the Gold Price can range as high as 20% (2008 notwithstanding), so a further sell-off in price would not be out of the ordinary. A 20% correction from gold’s peak at $1,212.50 on December 2 would equal $970. That’s not necessarily a prediction, but it shows you that price is certainly possible.

Don’t like my wish? Remember, it’s called a bull market for a reason; it’s not a cow market or a puppy market. It’s going to try and buck you off. But a correction to $1000 or even lower can give you the chance to buy more, cheaper. Don’t view sell-offs as a bad thing but rather as an opportunity.

Bring on $1000 gold!

How best to Buy Gold today? "If there’s an easier way, I’ve yet to find it," says one BullionVault user…

Source:Why I Hope Gold Falls