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.
With the stock market scrambling to find buying support and with the May West Texas Intermediate (WTI) back up around $50.00, I’d like to take a closer look at gold prices.
Why Gold Prices Are Catching My AttentionEveryone is aware the Federal Reserve will likely take the next steps and begin to raise interest rates either in July or by September, which will help drive up the dollar. A strong dollar translates into lower gold prices, which will help to keep some pressure on the demand side for the precious metal. Yet a look at the charts shows a potential trading opportunity in the works, despite the futures chain showing the price of gold staying around $1,200 to $1,215 an ounce for much o ... Read More
I have not talked about gold for some time, as there has been no reason to get excited about the yellow metal. Yes, it’s shiny, but it doesn’t appear to be sparkling at this time. After the gold bugs got excited about the opportunities in the precious metal, pushing prices to above $1,300 following the onset of geopolitical issues in both Ukraine and the Middle East, the aftermath has been dull. As I said back in June, the only reason I would trade gold would be to buy on weakness near $1,200 as the fundamentals, in my view, are irrelevant at this time. Gold still seems to be more of a geopolitical trade. (See “ Read More
A few weeks ago, I suggested that gold prices could likely head higher should the situation in Iraq escalate into a bigger conflict that brings in Iran and the United States. In my view, gold is simply a geopolitical trade at this time, contingent upon what happens in Iraq. There’s also the situation in Ukraine. At this time, though, it appears as though President Putin has no interest in escalating the conflict and making the country vulnerable to more economic sanctions. When I last wrote on the precious metal, spot gold was trading at $1,276 an ounce. The yellow metal managed to edge higher to $1,324, prior to the current stalling on ... Read More
Gold and oil are finally seeing some upward lift, but it has more to do with the geopolitical landscape than inflation and economic growth. As I said in recent weeks, the price of gold could be headed higher, but only if we see a rise in geopolitical tensions. That’s what we are witnessing at this time, so there could be quick money to be made. While the Ukraine situation appeared to be settling down, the destruction of a Ukrainian aircraft with soldiers on board will not help the already tense situation. Russia has also halted ... Read More
With money continuing to flow into the equities market and stocks, the gold market has seen an outflow of capital. The Ukraine situation appears to be under control, and with minimal geopolitical influences, the yellow metal has failed to gain any catalyst to move higher. The prices paid for goods and services, as measured by the Consumer Price Index, are under wraps, despite rising food and energy prices. The headline reading, including these two volatile items, jumped two percent in April in urban areas, which was the highest reading in 2014, matching the highest readings in 2013. Right now, inflation is not ... 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