Category — Gold

George Soros has built a $20 billion personal fortune from scratch, over a fifty-five year career.

And it’s just been reported that he has been buying one of the most deeply unloved parts of the market…

…Resource stocks.

When one of the wealthiest and most experienced investors in the world is buying something, it often pays to do the same…

Resource stocks don’t have many friends right now. After two years of falls, in terms of ‘excitement factor’, resource stocks currently rate close to having a root canal.

But Soros knows a thing or two about investing. One of these things is that you should buy when no one else wants to. Understanding this fact helped Soros’ own fund notch up an incredible average of 20% a year for 40 years.

But not only is Soros buying into the unloved sector of resources, he’s buying into possibly the most despised subsector within it… [Read more →]

As a sector, gold mining stocks have taken some beating in recent years.

Frankly, it’s been justified. When the price of your key product just keeps on rising, it really shouldn’t be that hard to make money off the back of it. But somehow, the management teams of many gold miners have proven more than capable of squandering their good fortune.

Shareholders are fuming. And with the gold price faltering, and the future less certain, miners can no longer rely on an ever-rising product price to keep them afloat.

But the good news is that this squeeze could be just the thing that gold miners need to kick them into shape.

Here’s why now could be the time to buy… [Read more →]

On the 18th of April, I wrote to you in Money Morning about the huge sell-off in gold. I said that:

‘A collapse like the one we’ve seen will bring a lot of latent demand to the fore. In fact my expectations are that we’ll see a vicious bounce in the gold price, sooner rather than later.

‘I think it’s a bit like jumping on an inflated ball in the pool.  The further you push it down the quicker it will whip back in your face.’

Fast forward two weeks and the gold price has bounced over US$150 from the intraday lows near US$1,320. That’s a 10% bounce in the price of gold in a couple of weeks.

The latent demand that I was talking about did come out of the woodwork and there was plenty of anecdotal evidence from dealers that physical gold demand went through the roof. The Perth Mint has even been staying open over the weekend to refine gold in order to fill a huge backlog of orders.

If you bought when I suggested a couple of weeks ago then now would be a good time to take a bit of money off the table here, because there is nothing saying that gold is completely out of trouble yet…

The next hurdle for gold to overcome is the US$1,530–1,550 area where gold initially broke down from in April.  A major support level will often become stiff resistance once it is broken so I could imagine gold will have a tough time getting above that level in the short term. [Read more →]

‘Buyers Scour Asia for Physical Gold’, proclaimed a headline in the Financial Times — in a story buried on page 18, because it relates favourably to goldand gold bugs.

Though it was exiled to newspaper Siberia (Section II, to be precise), theFinancial Times article vividly detailed a scramble across Asian markets for yellow metal.

Indeed, per the FT report, ‘Asia is witnessing one of the strongest waves of physical gold buying in thirty years.’The FT article used terms like ‘feverish buying’, as well as ‘gold rush’, just a week after a massive sell-off of paper gold…

News of Asia’s frantic gold buying raises a legitimate question. What happened to the ‘gold is dead’ meme from the week of the crash?

Wasn’t the apparent selloff supposed to mark a turning point for gold? Isn’t the tide receding for what every good student of Economics 101 has learnt is merely a ‘barbarous relic’, per John Maynard Keynes?

Yet strong Asian gold demand is contrary to Western convention. When the price of something falls, goes the rule, it’s because people are selling product, not buying it, right? Then again, what exactly tumbled in price last week? [Read more →]

ABN Amro, the Dutch state-owned banking giant, recently revised its global macro and gold outlook, forecasting a $1,300 gold price by the end of this year.

Moreover, the bank forecasts $1,000 gold by December 2014, and $800 gold in 2015. Why?

‘The authorities — especially in Europe — have acted to reduce systemic risks and inflation is going down rather than up. . . Other assets will become increasingly more attractive as the growth outlook improves.’

Wait, hang on; they lost me with the ‘all is well in Europe’ argument.

Across the continent, the dominoes are falling far faster than Angela Merkel, the European Central Bank, and even the IMF can stand them back up again.

Slovenia is now in need of a banking sector bailout. Even according to the OECD’s latest economic survey of the country, ‘Slovenia is facing a severe banking crisis’. [Read more →]

‘Gold Plunges as Fears of Inflation Fade,’ noted the Wall Street Journal last week. And yes, the gold-silver decline was nasty, taking down nominalprecious metal prices, as well as the share price for many a mining firm, large, medium and small.
So, why are ‘Fears of Inflation’ fading? It helps that oil prices are moderating and likely will stay moderate for a time. Control over energy costs is good for many a business. No complaints from me, on that point.

Then again, for all the moderation in energy prices, we still see wild immoderation — call it utter profligacy — in government spending across the globe. That’s raw inflation, being cooked into the books.

Governments everywhere — certainly in the US — spend more than they take in, and run up future obligations that they’ll never be able to pay, no matter how many Cyprus-like haircuts governments give to savers and investors.

So can someone explain to me why the fading fear of inflation? I don’t get that. Indeed, as governments spend, spend and spend some more, many investors still buy all manner ofgovernment bonds — which as one wag notes, are the latest form of ‘return-free risk’.

Really, when the government can’t repay you, it won’t repay you. If governments can nick your savings accounts, what else can they do to ‘their’ bonds that you were kind enough to buy? What did P.T. Barnum say? ‘There’s a sucker born every minute.’ [Read more →]

Gold soared 650% from August 1999 to August 2011.

But it’s down 24% from the $1,885 peak and in recent days has whipsawedgold investors in a way they haven’t experienced in 30 years.

The bear market has gold bugs reaching for the Dramamine. But we reached for the telephone instead and dialed Singapore — and legendary investment guru Jim Rogers.

Many of Wall Street’s biggest investment banks are calling for additional blood-letting — meaninggold prices have a lot more room to fall. But in his usual contrarian manner, Rogers dismissed the consensus.

Indeed, the former hedge-fund manager and best-selling author believes this is a badly needed — even healthy — price correction.

And that will set the stage for a new bull market in gold — and a run to record prices that are sure to come in an era of cheap-money policies by the world’s central banks.

‘Gold was setting us up for some kind of correction,’ Rogers said in a Sunday night telephone interview from his home. ‘Gold needed a correction — it still needs a correction — and I hope this is the proper correction which gold needs. Then gold — somewhere along the way — will make a bottom and we can all join in the bull market as [it] goes higher and higher.’

And make no mistake: The shiny metal is going higher — much higher. [Read more →]

Last was a tough week for hard assets. Prices plummeted for gold, silver, platinum, copper, oil and more. It was a broad, market-wide retreat — helped along by the ‘usual suspect’ market movers, who likely wanted to knock things down for their own nefarious reasons.

At some moments, the sell side was in a panic. People apparently bailed from large positions — although I believe that as things quickly evolved (too quickly, actually), many jumpers were forced to exit due to margin calls.

Lower prices for ‘long-term’ wealth-protection ideas like gold, silver, etc., have knocked down the share price for many a producing company.

All in all, many hard asset portfolios have taken tough hits, especially those of investors who bought in over the past year, and certainly in recent months. What happened? Where do we go? Has the hard asset train derailed? Let’s think it through.

I have to admit that a few weeks ago I did not foresee the sharp asset dive that we’ve just experienced. I’m more than aware that gold and silver prices go down as well as up. But I didn’t see a super-sharp selloff coming.

For example, Freeport-McMoRan Copper & Gold shares dropped from the $33 range to the vicinity of $29. Barrick shares dropped from over $25 to just under $19. These levels are five-year lows — as low as the respective companies have been since late 2008 and early 2009, during the worst days of the last crash. [Read more →]