Gold prices have been used as a store of wealth for centuries. Gold prices can be quite erratic and have a history of massive swings. One issue with gold prices is that supply can and does come back into the market. Unlike other commodities that are used up, such as oil, when gold prices move up, people can sell their holdings, which can be melted down and added to the world supply again. High gold prices are usually a sign of a lack of faith in paper money, usually due to inflation, which erodes the value of fiat (paper) money.
While the stock market has been struggling this year, under the radar, gold has been moving higher. The tense stand-off in Crimea is clearly adding some support to gold, as an outbreak there could drive the precious metal much higher in the short term. The geopolitical risk also includes the tensions between Israel and Iran in the Middle East. On the fundamental side, we have China continuing to amass significant positions in physical gold, as the country looks to diversify its massive $3.0 trillion in reserves away from U.S. bonds. Buying in India has stalled, but the country continues to be the world’s largest market for ... Read More
Technically, the Federal Reserve’s job is to oversee the monetary policy (short-term interest rates) of the world’s biggest economy. Obviously, it does, but it’s also important to remember that its opinion and carefully chosen words also have a major impact on the global markets and world economies. If the Federal Reserve says the U.S. economy is doing well, investors flood the markets. If, on the other hand, the Federal Reserve says the U.S. economy is having difficulty gaining traction, investors turn their attention to precious metals to hedge against a weak U.S. and global economy and inflation. It’s worked like clockwork since the Federal Reserve stepped in to help kick- ... Read More
This week, I went to one of the world’s biggest mining and exploration conventions, which was hosted by the Prospectors and Developers Association of Canada (PDAC) and was held in Toronto. There were hundreds of gold mining and exploration companies showcasing their projects and making their case for how they could be the next big investment. Saying the very least, it was an interesting experience. From time to time, I go to conventions like the one I went to a couple days ago. I go to gauge the sentiment of those who are very close to the industry, to see where Read More
Nothing helps create volatility on the stock market like the threat of war. And just a few short days after the close of the bloated $52.0-billion behemoth in Sochi, Russia has embraced its ne’er-do-well Olympic spirit and invaded the Ukraine. Or, according to Putin, “pro-Russian soldiers” have simply moved into the Ukraine to defend Russian interests. With a growing threat of war/retaliation on the horizon, investors have been pulling their money from riskier assets, like stocks—sending global financial markets reeling. Crude oil and gold prices, on the other hand, have been on the rebound. While it seems utterly crass t ... Read More
Just like any other commodity, natural gas prices are affected by supply and demand metrics. If demand increases and supply remains the same (or declines), you have a perfect recipe for higher prices. Since the beginning of the year, this commodity’s prices are up more than 40%! Before you start judging where the prices will go next, you have to see what kind of factors can affect the demand or supply. Consider gold prices, for example. If the demand for gold increases and, at the same time, there’s a discovery of a major mine—the prices may not move as much as anticipated if the mine wasn’t discovered. The ... Read More
The one thing that savers and investors have these days is choice. More and more securities come to the marketplace every day and the kinds of investments available to individuals have really improved over the last few years. One of the most useful, more popular investment vehicles nowadays consists of exchange-traded funds, otherwise known as ETFs. An ETF is a security that trades on a stock exchange, but follows a commodity, an index, or a basket of assets (e.g. an index fund). ETFs can be very useful in diversifying your portfolio as well making a bet without using derivatives. Fo ... Read More
We have the fiscal cliff and national debt to contend with, along with jobs, manufacturing growth, and economic renewal. Moreover, there’s a recession in the eurozone that is negatively impacting the global economy, including China, Japan, and the U.S. My view is that stock values could falter in 2013, so you need a safe haven to park your capital, which many of you know is in gold. There has been plenty of talk in these pages regarding gold and whether the precious metal is headed for $2,000 an ounce. In my view, the current global risk will support and drive gold prices higher. For you, the question is whether to buy the physical bullion or gold mining stocks. For the average investor, I favor gold stocks over ... Read More