Remember me on this computer.
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S&P/TSX +23.80 (12,577.28)
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On The Gold Price - StockReserchPortal.com
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January 25, 2010
Good Morning:
On The Gold Price
Five More U.S. Bank Failures
Following from my e-mails last week on prospective 2010 U.S. bank failures, it was
reported this past Friday that 5 more U.S. Banks failed, bringing the total to 9
for the first 3 week of 2010 - click here. 2 of these 5 banks are
reported as having assets of more than U.S.$1 billion.
On The Gold Price
An article January 22 titled 'Is gold price set for crash below $1,000?'
written by David Lew (a precious metals commentator with Commodity Online. You can
contact him at info@commodityonline.com) asks the question "is (the) gold price
climbing down to $1,000 per ounce, to confirm to the controversial prediction that
noted economist Nouriel Roubini made some weeks back? Lew comments that "It
looks so as gold is going bearish, in the weight of economic nervousness coming
from the two important countries that matter - United States and China", and says
that "Now, as gold sank to a three-week low on Friday (January 21) across the global
markets and commodity bourses, some bullion analysts warned that gold price could
plunge below $1,000 per ounce if the talks on property bubbles from China and financial
risk taking concerns in the US are going to intensify". He also references
'overhype' by some bullion analysts and commentators - where that hype lacks "basic
fundamentals like gold mine supply, demand and possible emergence of other commodities
like platinum, palladium and silver as equality challenging investments like gold."
Lew attributes three reasons the gold price dropped in the days preceding January
23:
· there are more paper gold (ETF's and the like) traded in the
world than there is adequate physical supply to compensate for it;
· gold has been under pricing pressure as President Obama's plans
to limit financial risk taking raised concerns about diminishing capital flows from
banks - which banks have provided liquidity for gold investors;
· the gold price fell prey to what may be a property price bubble
in China - where some analysts have warned Chinese real estate investments have
ballooned without any proper fundamentals and demand.
While I find all this to be interesting, and worth thinking about, I see it all
as of short-term interest. That does not mean such things, and a volatile
gold price, are unimportant to those who trade physical gold on its short-term price
swings. I don't do that. I see physical gold as nothing more or less
than a 'safe-haven' longer term 'purchasing power' protectorate in uncertain and
volatile economic times. Several years ago - when the equity markets were
booming, and if you knew what you were doing, you only had to get out of bed in
the morning to make high annual returns - a wealthy friend of mine told me:
I have always owned physical gold (not paper representing
physical gold, but the 'real stuff') and kept it in a safe place. While the
amount I hold varies from time to time, I always hold an amount that I believe will
enable me to have a serious chance of rebuilding my wealth if I lose everything
else.
Obviously only a few people are in the fortunate position of my friend, but to me
that does not mean the concept of 'holding some physical gold' as a safe haven or
'rainy day fund' in uncertain economic times is something investors of more modest
means ought to overlook.
Notes to Readers
This email and its content is in no
way to be interpreted as an endorsement of one or more of the companies mentioned
herein, a suggestion as to the future direction of the stock price of one or more
of them, or a suggestion or recommendation to buy or sell the shares of one or more
of them. Rather this email is simply a short overview commentary and tutorial
demonstrating the type of information available on StockResearchPortal.com and how
to access it.
The owners of Stock Research DD Inc. (the owner of StockResearchPortal.com and StockResearchPortalBlog.com)
or their families, entities in which they have ownership interests, and officers,
directors, employees, agents, partners, affiliates and partners of Stock Research
DD Inc. may beneficially own securities and participate in Private Placements of
companies referenced in this E-mail. The fact that one or more companies are
referenced or discussed in this E-mail should not be construed as an endorsement
or investment recommendation with respect to those companies or their securities.
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