Upheaval in Egypt shakes Global Markets (Washington Post)

Sunday, January 30, 2011

A violent uprising in Egypt captured the world's attention and rattled global financial markets. U.S. stocks took a sharp hit Friday after pressing steadily higher for weeks. The dollar, gold and Treasury bonds all increased sharply as investors moved to safety.

In Egypt, economic troubles, government corruption and restraints on political freedom stoked street protests in Cairo and cities beyond and challenged the three-decade rule of President Hosni Mubarak, who ordered his government to resign. When the military was deployed to put down the effort, investors grew unnerved.

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Are Gold Prices Ready to Return to Record Run? (CNBC)

Published: Wednesday, 26 Jan 2011 | 3:53 PM ET

By: Sharon Epperson
CNBC Senior Energy Correspondent

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Gold has certainly had a lackluster start to 2011, but there are many reasons not to expect the recent slack to last.

AP

Risks of further crises in the euro zoneremain high, as well as the risk of a fiscal crisis in Japan and trade war between the U.S. and China, says Capital Economics' chief international economist Julian Jessop. He expects gold prices will rise to $1,600 an ounce by the end of the year—even if investors' appetite for risk starts to fade.

Gold may already be on its way higher. Gold futures ended the floor trading session in New York in positive territoryWednesday for the second straight session. After Tuesday's "bullish reversal", traders say the "hot" money that wanted out of the gold markets has found the exits.

After a huge drop in open interest in Comex gold futures on Monday and steep declines in precious metals ETF holdings earlier this week, open interest has returned and gold prices seem to have found solid footing above near-term support levels.

"We saw indications of massive liquidations and hedge funds getting out, but now it appears that liquidations are complete. I'm looking for gold to resume its prior trend to the upside," says MF Global precious metals analyst Tom Pawlicki, as gold has stayed above $1,317 an ounce, a key technical support level.

Gold priced in euros is another way to look at the recent price move as the "great trade" of 2010 has turned south. That trade was even better bet in 2010 than gold in dollar terms. Gold priced in euros gained 37 percent last year, as traders opted to go long gold and short euros as a way to mitigate U.S. dollar risk.

Yet in the past two weeks, the price of gold has fallen nearly 100 Euros an ounce—an 8.5 percent decline since January 12.

There are indications there too that "the bottom is in" as gold priced in euros bounced off its intraday lows Wednesday, says trader John Netto, president of M3 Capital.

"The unwind contributing to the velocity behind the rally in the Euro and sell off in gold appears to be over, making it a great spot to now go long gold/short Euros after this recent shakeout,” Netto said.

Robert Lenzner

STREETTALK

 

Gold At $1342 Is Taking A Breather

Jan. 22 2011 - 3:40 pm | 978 views | 0 recommendations | 2 comments

The price of gold has fallen from a peak of $1425 an ounce to $1342 an ounce– a modest drop of  6%– not yet a real correction of 10% or more.

But, the speculative furor  about gold has quieted down;  as the market’s theme has been to focus on stronger economic data in the U.S. and stocks continue their climb,  there is not the same intense  passion to use gold as a refuge.

Then, too, the story has passed from the gold gurus like  Frank Giustra,  and  the central banks of China, India and Russia, among others,to the hedge fund giants like George Soros and John Paulson, among others,  to mutual fund groups like US Global Resources to pension funds, wealthy families.

Now what to expect? Gold is still only 0.38% of total global financial assets. And GLD, the popular ETF that owns some $60 billion of gold bullion, traded 19.5 million shares Friday, 50%  greater  volume than the average trading session.

An excuse for the promotional sharks, both bull and bear,  and stir up the waters. Crazed bloggers are talking $4000-$5000 an ounce in 2011, while technicians  like Stockcharts.com are looking for a step down to $1300, then possibly $1248 and “it can get to $1,076.”

From inner Mongolia, where he’s onto some coal deal, my number one gold adviser, Frank Giustra, who has about 30% of his worldly wealth in gold, waxes wise and comfortable.  He emailed yesterday; “It’s had a spectacular run on the back of all kinds of concerns which have all been well documented. It is having a good and overdue pullback due to a lack of “crisis dejour.” The fact that there has been been no fundamental change in the underlying reasons for golds rise in the first place, has been temporarily lost on goldbugs.”

Meaning; the dollar is still under pressure and gold is on its way as a store of currency reserve around the world. Hold your positions.

From Boston investment manager Jim Joslin, an old and wise friend comes a note of caution; “the price of gold today appears to be managed by speculators, not determined by investors, or end-users with a long-term view.” Well, maybe, if you mean the hedge funds will dump and run if a financial crisis spikes gold prices to fantasy prices.

Every firm on Wall Street has a view on gold; BNP Paribas looks for $1565 by yearend 2011.  Goldman Sachs is targeting $1650 an ounce. Others try to get our attention by flagging $2000 an ounce  this year.

  http://blogs.forbes.com/robertlenzner/2011/01/22/gold-at-1342-overdue-pause-or-major-correction/  

(FP) Unstoppable gold could hit US$2000 this year

David Pett  January 7, 2011 – 10:24 am

The recent pullback in gold prices that has seen the yellow metal fall 3.5% this week will prove shortlived, according to the latest outlook from Nick Barisheff, president and CEO of Bullion Management Group Inc.

Mr. Barisheff believes the price of gold will climb to US$1,700 to US$2000 per ounce over the next twelve months, representing a gain of at least 20% from the Dec 31 close of US$1420.

“Without any new financial crisis, both mid-term and long term trends are in place to ensure gold and silver will continue rising through 2011 and well beyond,” he said Wednesday at the Empire Club of Canada’s 2011 investment outlook luncheon in downtown Toronto,

The catalysts that will impact gold nearer term include a weaker U.S. dollar, increasing demand for gold in China, both official and public, and more central bank buying by most of the BRIC nations.

“[They] need to acquire gold to bring their gold reserve ratio to outstanding currency closer to Western central banks,” he said.

Longer term, Mr. Barisheff noted three irreversible trends that will continue to boost demand for gold; an aging population, outsourcing and peak oil.

“These three mega trends will continue to lower the GDP, lower the tax revenue, create higher trade deficits, create higher unemployment, resulting in the need for further currency creation,” he said.

“This will cause inflation to rise as currencies depreciate in value and create higher universal debt. All of this means the gold price will continue to rise.”

Read more: http://business.financialpost.com/2011/01/07/unstoppable-gold-could-hit-us2000-this-year/#ixzz16OMpnQWf