Gold to hit $2150/oz by year end: TDS

LONDON (Commodity Online):  Gold  to hit north of $2,150 an ounce later this year, particularly after this week’s uber dovish Federal Open Market Committee statement and a news conference by the Fed chairman signaled easy money is here to stay for a long time, said TD Securities in a research note.

According to TDS, Wednesday’s rally of the FOMC meeting a preview for the rest of 2012.

“As the Fed augments its stimulus, and if the economy continues to recover, investors will be increasingly worried that the U.S. central bank is behind the inflation curve. Real interest rates should trend even lower, reducing opportunity costs of holding zero-yielding assets, and thus increasing demand for real assets such as commodities, particularly gold,” TDS added.

The continuation of the Fed’s so-called Operation Twist program will mean lower long-term real interest rates, as will a new round of quantitative easing later in the year. Continued record-low interest rates will also undercut the dollar over the longer term.


TDS has upped its 2012  Gold  forecast to $1,925 from $1,855 and its  Silver  forecast to $38.50 from $36.45. 

Why gold may be a better investment than a pension for retirement?

The word ‘pension’ never seems to be far from the headlines at the minute. Pensions were obviously the cause of the recent industrial action at the end of 2011, whilst pensions were also at the heart of George Osborne’s autumn statement last year as the news that the rise in the state pension age to 67 was to be brought forward to 2026 from 2034.

Indeed the days of your pension maintaining a particular type of lifestyle when you retire are well and truly over. It has come to be accepted that retirement brings frugality.

Most pensioners are struggling to make ends meet today simply because the inflation in the economy is so high that monthly pension payments cannot keep up with the higher prices of basic goods and services. This is something that the public sector strikers are passionate about. If you consider that if you start work at 16 and retire at 65 then you will have a career lasting 49 years. Inflation will change a huge amount over that time.

According to the AA Motoring Trust, a litre of petrol in 1983 was 34p per litre. Today a litre of petrol will set you back 1.32p. Inflation shows no sign of stopping but there is a way around it which could see you, not only effectively buy back those extra two years of your retirement but also see you live your retirement years in extra comfort.

Precious metals retain their value in spite of inflation. In fact the value of precious metals is often at its highest during a struggling economy. For example if you had 1 oz of  Gold  (value of $35) in 1970, you could have purchased a tailor-made suit. The same amount of gold today will still buy you a tailor-made suit. However, $35 today probably wouldn’t cover the cost of the buttons.

If you compare the performance of gold to the performance of pensions, you can see how you could effectively head into retirement early and buy back the two years that you will lose with the change of the retirement age.

For instance at the beginning of 2004 if you were a 62 year old and wanted to make another £16,000 before you retired and were putting away £4,000 per annum for your pension, it would take you until the end of 2007 to reach your target. However in that period if you were investing £4,000 per year in gold instead, you would have 62.28 ounces of gold worth £28,800 giving you a mean saving of £7,200 a year, meaning you could hit your target around early 2005, saving you nearly two years on your retirement age.

By comparison the same investment in the FTSE would give you £18,400 over the same period, whilst a savings account would give you £17,200.

Obviously over time the price of gold will change and other areas of investment may be more fruitful. However, given gold’s strength against inflation, it should be considered more seriously as an alternative to pensions to give you a secure future.



Source:  Myfinances.co.uk 

A surprise rally in gold and silver

By Jeb Handwerger
At the end of 2011, Merkel and Sarkozy got together for an unusual emergency meeting. They pledged to come up with economic salvation. Immediately the equity markets mounted a year end " Halleluyah" rally. Bernanke followed Europe's footsteps in 2012 and expanded the horizon of record low interest rates from Mid-2013 until Late 2014.

We respond judiciously to this euphoria. Politician's promises are usually a thin blanket for an upcoming cold night. We have concluded since October that a surprisingly potent rise may occur which would be in reaction to the application of the stimulative paddles.

The European resolution was a response to the Franco-Belgium travails of the widely held Dexia Bank, which has tentacles into France and Germany's economic foundations. If this were not enough, the chronic Greek malaise indicated that Zorba was in need of another oxygen mask to rouse him from his hedonistically induced torpor.

A potent upward move in  Gold  and  Silver  in addition to the oversold miners (GDX) is just beginning to occur. Our scenario was to maintain our long term core precious metal positions even though such a posture was temporarily painful as many analysts concluded wrongly that deflation, bonds and the U.S. dollar were the only safe harbors.

What about the U.S. dollar now? Note all the media hoopla that regaled us with strength of the dollar recently. News from Europe and Washington appears to be melting the U.S. Dollar under the cover of all of this stimulative warming. We have called for this surprise rally we are observing in the face of all this dollar and treasury hoopla. How uneasy must be the shorts who have been caught by this recent rise. Short sellers went into October's market with the largest short position since 2008. Such a one-sided posture is often punished as the shorts run to cover and thereby add to the upward move.

Technically there have been gaps from 2011 that need to be filled on the upside in precious metals and miners. We note that institutions have been hit hard by the gold's price decline. Hedge funds must've been selling stocks that they held in common in order to meet margin calls. Additionally this consideration may have influenced collateral damage among investors. Perhaps the current rise may indicate the recent downtrend has been broken to the upside.



Silver (SLV) appears to have found support at its 2011 lows. There are downside gaps that should be filled to the upside.  Silver  will encounter resistance around $38. Silver has reached a record oversold level indicated by the RSI and MACD in 2011. This indicated an interim bottom in silver. Monitor the bullish crossover on the MACD which confirmed the already constructive reversal on the stochastic and RSI.



Gold appears to be making a reversal at oversold and long term support levels breaking a 5 month downtrend. Notice the strong volume accumulation as The Fed announces negative interest rates until late 2014. This is bullish for precious metals. In early August through October we advised a hold and urged caution. Since it pulled back it provided two secondary buypoints where we said it is buying time while others preached that the  Gold  and silver market bull market had ended. Now gold appears to be bouncing off our buypoints similar to January 2011 and regaining its 50 and 200 day to the upside. Now the weak hands will come back at much higher prices.



Source:  SafeHaven 

Would return of the gold commission raise gold prices?

By Julian D. W. Phillips

Newt Gingrich
The answer to this question is threefold

It depends on him being elected to a position where he can put this into action.It depends on how serious he is on the matter.It depends on what his objective really is.

With trust in governments dropping to a new low according to some polls, the words of President Hoover come to mind,
" We have  Gold  because we cannot trust governments!"

And why should they trust governments, when they look at a residual value of the dollar at 15% of its value since the U.S. left the link to gold? It's this depreciation that is becoming more and more important. The importance of the issue has risen in line with the globalization of the dollar, particularly now that the U.S. is utterly dependent on the investment of foreign dollar surpluses being reinvested back into the dollar and U.S. Treasuries. Unless this is properly and effectively handled in time, there will be a day when foreign investors say that enough is enough. At the moment, foreign governments are working hard to neutralize the damage a dollar, lacking credibility, will do. So it's only a matter of time before a major dollar financial accident takes place. The invigoration of gold in the monetary system is long overdue, but now it is receiving some serious initial attention. Hopefully, it is not just a political ploy to take the wind out of Ron Paul's campaign?

What has happened by his raising the subject onto the political stage is that it is no longer a side-lined academic issue. From now on as it follows the fortunes of Gingrich and his success it will impact the gold price inside the U.S. of A.

Why Gold's return to the monetary system been blocked?
Government and bankers currently believe that gold places to great a restraint on them and their management of the monetary system. They will not accept a lump of metal at a fixed price limiting the money supply. The Gold Standard set a dollar price to gold that did not change from $20 an ounce to $35 an ounce until 1935. It held that level until 1971 when it was raised to $42 an ounce. Since then like the proverbial ostrich with it head in the sand, the gold price has been ignored in 'official' circles.

Today central bankers and government favour paper money as they use it to 'maintain price stability', to stimulate the economy through the expansion of the money supply, to pay import bills with freshly printed money, to increase money supply in line with global international trade -in its role as the reserve currency. Indeed if it had to pay for imports with gold, it would founder very quickly. The ability to print money is the principal reason why gold is to be avoided in anything like a repeat of the Gold Standard. With Gingrich's promise of a Gold Commission, will we see a serious attempt to return gold to the monetary system? Let's look at the last one.

The 1981 " Gold Commission"
Under Treasury Secretary Donald Regan, the subject came up, but as you can see from the following cutting from September 1981, the issue was not handled with a view to using gold again. It was a token gesture to proponents of gold to pacify them. Really it was just a sad mockery of the treatment of gold. Thereafter the subject was not treated seriously at all. It was not until the euro was created and limited gold sales were made by European central banks to help the establishment of the euro as a credible currency, was the subject of gold mentioned again.



In the Washington Agreement and successive agreements thereafter, gold was described as " an important element of global monetary reserves." It was at that point it ceased being mocked as " a Barbarous Relic" .

The Washington Agreement, despite its being an agreement to sell gold, was the most significant event responsible for gold's rising price. Once it became clear that the European central banks, who were the signatories to the agreements since the turn of the century, had lost their appetite for sellingGold  as the price started to rocket from 2005 onwards, even central bankers started to take gold seriously again.

The silence from the developed world on the subject is deafening now. Will this continue?

Politicians are adept at feeling out the public by leading from the front and Newt Gingrich is no fool. He has seen the public's reaction to the bait he threw out on the subject. Most Americans want to know that their dollar will hold its value in the future. They're fully aware that its current value is 15% of 1971's value and know that the Pension pay out they will get when they finish their working life may not be sufficient to cover their old age. So it's turning out to be a good electioneering ploy at least. But as the leader of the Republicans, can we really expect him to walk this road?

Gov't raising gold prices?
As one competent commentator projected, it will take a gold price of around $45,000 to compensate for the loss of value in gold and for it to be at a price that will allow the money supply to remain at present levels and for some time, sufficient to supply global dollar monetary needs.

Yes, it is a fact that if anything -like a return to a 'workable' gold standard--is to be contemplated then we will have to see a very substantial lifting of the gold price.

One of the neat tricks the Roosevelt government pulled back in 1935 was to expand the money supply by expanding its gold holdings quickly and massively. By not altering the dollar exchange rate against other currencies but devaluing the dollar by 75% against gold, the price of gold not only shot up in the dollar but in all other currencies as well. The bullion banks were quick to arbitrage the differential between the $20 exchange rate and the $35 price of gold and sell as much as they could find the world over to the U.S. So the U.S. bought in gold at $35 and boosted their gold reserves to around 26,000 tonnes. This was quite a coup and lifted the money supply to levels that lifted the U.S. out of its depression -while pulling in the developed world's gold ahead of the Second World War.

In the last few years we've seen a dramatic increase in the money supply in the developed world, but as is always the case with potential out-of-control inflation, money supply is increased this fast to fill the holes left by plummeting asset values in government and banking hands. The process can accelerate as the value of that money depreciates. This has and is happening now. Can this continue ad infinitum?

Of course not -even now emerging world central banks are buying annually, more than the Central Banks of Europe did at their most vigorous via the central bank gold agreements at 450 tonnes in 2011. Make no mistake -this is not just a swing away from the bloated dollar component of their reserves, but a counter to all currencies under the control of governments. It's more significantly an expression of central bank worries about currencies.

It will be recognized that this is not the gold price rising but the value of currencies (against gold) falling.

Gold confiscated again?
The second neat trick, before that, in 1933 under the gold standard, was to remove the danger of gold price manipulation by private gold owners by barring private ownership of gold. Thus gold became the sole domain of government. This was a key factor in the successful operation of gold's role in the monetary system.

It would have to be repeated in any future gold price dominated system, or would it?

But let's get one thing very clear -there is no chance of a repeat of the gold standard as it was in the past. Certain fundamental changes have taken place to prevent that from happening, so we have to look at a structurally-altered system for anything like the gold standard to work. Is that possible?



Source:  GoldForecaster 

Gold-S& P ratio indicates weak stocks and surging gold