Gold Group News: IRA Investors See Golden Opportunity – WSJ

By John Jameson on April 29, 2008 9:29 AM | Permalink

  

 

 

 

Interest in Metals Picks Up as Hedge Against Inflation

Wall Street Journal

By ALLEN SYKORA
April 25, 2008

Demand for precious metals in self-directed Individual Retirement Accounts is growing for many of the reasons other investors have been drawn to the metal — a hedge against inflation, dollar weakness and credit-market worries.

Purchases of gold and other metals for IRAs make up a minute portion of overall investment demand, and observers said many investors don’t realize they can use gold for IRAs. Nevertheless, there has been a significant pickup in gold IRAs over the past half year.

“Even though it was available, it was not very well promoted by anyone,” said David Morgan, an independent precious-metals analyst. “It’s rather cumbersome for bullion dealers to set it up.”

But with the credit crisis, investors are looking for ways to buy gold, and retirement accounts make it possible to do so with funds they already have, he continued.

George Cooper has been handling gold IRAs for 17 years. Back in the mid-1990s, he said he might get one such call every month or two. Now he said he gets up to 50 inquires daily.

Interest in IRAs using precious metals began picking up around 2000, as the ratio of the Dow Jones Industrial Average versus gold hit a record, Mr. Cooper said. Interest further picked up after the Sept. 11 attacks.

The combination of gold hitting $1,000 an ounce (it has since pulled back to $886.80 in New York trade Thursday), the Bear Stearns Cos. bailout, and the arrival of the April 15 income-tax filing deadline spurred further investment.

Hugh Bromma, chief executive of Entrust, said investment in metals IRAs is “small but growing.” He said metals inquires are now five to 10 times greater than a year ago.

All of the precious metals — gold, silver, platinum and palladium — can be purchased for IRAs. However, Mr. Bromma said, probably 90% of the interest is in gold.

 

Capital Gold Group, gold group, gold, gold prices, gold

Gold Group News: Demand for Gold Surges Despite Rising Prices

27 Apr, 2008, 1135 hrs IST, PTI

BANGALORE: This price rise has raised no heckles, on the contrary the market is as glittering as ever with both buyers and sellers scrambling to make maximum out of the prevailing situation.

Yes, we are talking about the bullion market where gold prices have zoomed by about 35 per cent in a short span of five months. But such a sharp jump in prices astonishingly has not had any dent in physical buying of the metal.

Jewelers say the age-old notion of high prices deterring sales have been proven wrong in the case of gold. They said high prices are attracting even more buyers as they see gold as the safest investment options with attractive returns.

“In fact, whenever there is volatility, sales go up. The sales being inversely proportional to the price is very old phenomenon, which does not hold good today,” Bangalore Jewellers’ Association President Mahesh Pati told PTI.

With returns being assured, gold in increasingly seen as the safest bet and its traditional role as ornaments is a bonus.

“With globalization and IT revolution, people have deep pockets and they are spending on gold not just for adornment but as an investment also,” Pati said.

Capital Gold Group, gold group, gold, gold new, gold prices, gold bullion, gold coins, IRA gold, gold IRA

Gold Group News: Gold and the US Stock Market

April 23, 2008 by Corey Rosenbloom

Intermarket analysis is a fascinating branch of market research, and I wanted to show you the performance of gold and the US Stock Market.

There’s been an inverse relationship, such that when gold rises, the market is generally falling and vice versa.

Gold is traditionally seen as a hedge against inflation, and inflation typically is seen as being negative for the stock market.

Also, in uncertain economic times (especially with a falling US Dollar), gold is a more attractive investment than US Stocks and so the two asset classes, much like stocks and bonds, compete for your investment capital.

This correlation holds on the longer time frame charts as well:

Notice that gold prices in 2006 around $600 were not a problem for the stock market. As signs of recession began to emerge, and investors began to be ’spooked’ by deteriorating financial conditions, larger investors likely began rotating out of the US Stock Market and into other markets such as gold, bonds, etc.

We see the rotation accelerate as the stock market began to fall going into 2008, when the price of gold ’skyrocketed’ from just under $700 per ounce to over $1,000 per ounce in March 2008. The S&P fell from a peak of 1,575 to just above 1,250 during the same period.

The recent fall of gold prices has contributed – with other factors – to a rise in the current stock market since March.

While there may be some correlation between gold prices and the US Stock Market, gold prices are much more inversely correlated with the US Dollar Index.

Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, Gold IRA, IRA Gold

Gold Group News: Gold and the US Dollar

By John Jameson on April 24, 2008 9:12 AM | Permalink

April 23, 2008 by Corey Rosenbloom

Let’s look at two markets with a powerful negative correlation: The US Dollar Index and the Gold Market.

Gold traditionally is a hedge against inflation, and inflation often is correlated with a weak dollar and higher commodity prices across the board (which is the environment we see now).

As the dollar declines, commodity prices (including gold) often rally, linking the inverse relationship. Let’s zoom down from a monthly chart down to the daily chart:

Notice the shift that occurred at the ‘turn of the century’ where gold prices were at their lowest levels of the last decade and the US Dollar Index (along with the Stock Market) was making new highs. The market shifted in 2001 (as the recession began) and the price of gold (per ounce) has never looked back.

The US Dollar, on the other hand, is another story. The Dollar index peaked at 120 and is now 41% lower than it was at its peak. Gold, on the other hand, rose from $250 (per ounce) to a peak above $1,000 an ounce, rising 400% in the same 8 year period.

This also means that the value of a US dollar is worth much less in terms of gold prices than it was in 2,000. In 2000, if you were offered $1,000 in gold that you stored away, if you cashed in today, you would get back $4,000 (if converted into dollars). Of course, those dollars are worth less today than they were then, so it may be better to keep the investment in gold! But that is for another lesson.

Let’s keep our focus on these two markets for the meantime.

Weekly charts show the same strong inverse relationship:

Again, the picture is the same. Since early 2007, gold prices have almost doubled while the US Dollar Index fell 20 points (weakening against other currencies).

If the US Dollar Index reverses trend, then expect gold’s trend to pause or reverse as well. Until that happens, the current trend remains in force.

Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold

Gold Group News: India May Soon Be Fixing Prices for Global Market

MUMBAI: India, one of the leading gold consumers in the world, may soon manage to move from being a mere “price taker” to a “price maker” in the world of royal metal.

Tired of the wild fluctuations of gold price in the London Bullion Market and its impact on Indian market, Bombay Bullion Association (BBA), in collaboration with Bombay Stock Exchange (BSE), National Multi-Commodity Exchange (NMCE), IT People (India) and Reliance Money, has decided to set up its own trading platform for gold.

Though the representatives of the respective partners of the proposed joint venture (JV) denied that the decision had, “anything to do with the recent pole-vaulting of gold price”, they agreed with the fact that “it’s time we moved from price taker to price maker”.

Asked whether the yet-to-be formed limited company has obtained the requisite permission from the authorities including the Reserve Bank of India (RBI), director and CEO of Reliance Money Sudip Bandyopadhyay said here yesterday, “We have not approached them so far but we will be intimating the authorities for necessary clearances. After all, we want to launch it in a month’s time.”

Talking about the trading platform, he said the Bullion Spot Market (BSM) will be an over the counter bullion trading platform which would “help jewelers not only in monitoring the international bullion price fluctuations on real time basis, but will also facilitate retail investors in the purchase of gold coins and bars”. Price fluctuation is a thorny issue for the gold traders. Though India is a leading consumer of gold, a “total helplessness” has gripped the traders in controlling the prices, he added.

Capital Gold Group, gold, gold prices, gold news, gold bullion, gold IRA, IRA gold, gold coins

Gold Group News: Newly rich Chinese consumers take a shine to gold

By Fran Wang, AFP

Monday, April 21, 2008

Shoppers examine gold jewelry at a department store in Beijing in this Dec. 2, 2007 file
photo.  Figures from the World Gold Council showed sales of gold jewelry in China hit
a record high of 302.2 tons in 2007, up 34 percent on the previous year.
(Bloomberg News)

BEIJING — Li Zhixin spent weeks planning his one-day family tour of Beijing’s historic sites, but instead found himself in one of the city’s shopping malls, watching his wife happily trying on gold necklaces.

“I can’t complain — we just like gold,” said the 30-year-old steel plant worker from Tangshan, an industrial city southeast of Beijing. “Gold is a better store of wealth than platinum,” he added, as his mother-in-law counted a wad of cash beside him. “Of course, diamonds are lovely. But we can’t afford the big ones and are not interested in small stones.” They finally bought a pendant necklace for more than 3,000 yuan (US$439), more than two months’ income for an average Chinese urban resident. With per-capita disposable income in cities up 17.2 percent to 13,786 yuan in 2007, gold jewelry is no longer beyond the reach of masses of Chinese consumers on the lookout for something luxurious. “People buy gold jewelry for anniversaries, weddings, or as gifts for holidays,” said Daisy Yan, a saleswoman at the Xin Dong An Department Store in downtown Beijing. “First it’s a pretty adornment, also I think it’s maybe about vanity, a way to show how rich the wearer is.” Figures from the World Gold Council showed sales of gold jewelry in China hit a record high of 302.2 tons in 2007, up 34 percent on the previous year. China has now overtaken the United States to become the world’s second largest buyer of gold jewelry after India. But behind the remarkable growth lies a deep Chinese traditional appreciation of the precious metal as a hedge against social and economic risks. “I’m more confident in gold — we’ve been buying it for so many years in the past anyway,” said 78-year-old Wu Peifen, who was selecting a wedding gift for her grandson at Beijing’s Wangfujing Department Store. High inflation and a 41-percent slump in the domestic stock market this year have added further momentum to China’s drive to buy gold. “The stock market is not as good as before, and people do not feel safe parking all their savings in banks,” said Lin Yuhui, an analyst with the China International Futures in the southern city of Shenzhen. “So they tend to buy gold as a means to hedge inflationary risks.” Spurred by strong demand and international price rises, one gram (0.035 ounces) of pure gold jewelry sold at a new high of 242 yuan in Beijing in March, up nine percent in just two months, earlier state media reports said. On the London Bullion Market, the price of gold rose to US$944.13 per ounce Friday, up more than 37 percent from a year ago. But Chinese consumers are not deterred by rising prices, experts said. Rather, they increasingly view gold as not only a means to protect wealth but also as an efficient part of their investment portfolio. “In fact, higher gold prices helped to stimulate investment purchases of the metal… as consumers were attracted by the strong returns generated by the metal,” the World Gold Council said in a recent report about the China market. It said investment demand for gold at the retail level amounted to 23.9 tons in 2007, a rise of 60 percent compared with 2006. However, for young Chinese, fashion appears to be more important than potential return. “What I want is something fashionable and special,” said Zhang Xiangyu, a 25-year-old beauty parlor worker, as she browsed gold earrings and bracelets in a jewelry store with her boyfriend. “I won’t waste time thinking too much — I’ll buy it as long as I like the look of it.” Capital Gold Group, gold group, gold, gold news, gold prices, gold coins, gold bullion, gold IRA, IRA gold

Gold Group News: Commodity prices keep moving upward touching record highs

Daily Times

Sunday, April 20, 2008

LONDON: Commodity prices struck new record highs this week, led by oil which surged above $116 for the first time, as investors favoured raw materials, including metals, over a tumbling US dollar.

The weak US unit stimulates demand for dollar-priced commodities because they become cheaper for foreign buyers holding stronger currencies.

Oil: Prices soared to record levels once more, drawing strength from the struggling dollar and sliding energy stockpiles in key consumer the United States. Unrest in Nigeria, Africa’s biggest producer of crude, also lent support.

On Friday, the price of New York’s light sweet crude hit an all-time peak of $116.10 per barrel, while London’s Brent oil scored a lifetime pinnacle of $113.57. Crude oil prices crossed $116 a barrel for the first time after a pipeline attack in Nigeria. The most prominent militant group in Nigeria’s southern oil-producing region said Friday it had sabotaged a major oil supply pipeline belonging to Anglo-Dutch oil group Shell.

The Movement for the Emancipation of the Niger Delta (MEND) said in a statement that it had carried out the sabotage operation late on Thursday in Rivers state. Crude futures had meanwhile crossed $115 a barrel for the first time earlier in the weak as investors reacted to events in foreign exchange trading. “The weakening in the dollar against a basket of major currencies has created opportunities for investors to seek better returns in commodities,” said analysts at energy consultancy John Hall Associates.

“As such, further weakening of the greenback is likely to mean further increases in oil prices. It remains to be seen though when the dollar might break through the 1.60 dollar/euro mark,” they added. In the foreign exchange market, the European single currency had struck a record-high of $1.5984 on Thursday.

Precious metals: Gold prices began the week strongly, boosted by the weak dollar. But they ended lower on profit-taking.

“Further weakness in the dollar is likely to prompt additional safe haven buying, and in turn add upward pressure to gold prices,” said analysts at Barclays Capital.

Gold had struck an all-time peak of $1,032.70 an ounce on March 17, four days after the yellow metal breached $1,000 for the first time. On the London Bullion Market, gold dropped to $908.75 per ounce at Friday’s late fixing from $927.75 a week earlier.

Silver climbed to $18.18 per ounce from $17.95. On the London Platinum and Palladium Market, platinum rose to $2,026 per ounce at the late fixing on Friday from $2,019 a week earlier. Palladium decreased to $451 per ounce from $469.

Capital Gold Group, gold group, gold, gold prices, gold news, gold bullion, gold coins, gold IRA, IRA gold

Gold Group News: “Gold’s Best Friend Stagflation is a Real and Growing Threat”

by Polya Lesova
Last update: 11:41 a.m. EDT April 16, 2008

NEW YORK (MarketWatch) — Gold futures rallied Wednesday, propelled by sharp weakness in the U.S. dollar, which fell to a new low against the euro.

Gold for June delivery rose $15 to $947 an ounce on the New York Mercantile Exchange.

Other metals prices also posted strong gains.

“With oil and commodities surging, the dollar continuing to weaken and economic growth slowing, gold’s best friend stagflation is a real and growing threat to much of the global economy,” said Mark O’Byrne, executive director at Gold and Silver Investments Ltd., in a research note.

The precious metal will likely challenge recent resistance at $950 in the coming days “as investors realize that inflation is not some short-term phenomenon, but rather a medium and possibly long-term problem yet to be priced into the market,” O’Byrne said.

On Tuesday, gold ended up $3.30, or 0.4%, to $932 an ounce.

On the currency markets, the dollar remained under pressure against most major counterparts, not getting much help from U.S. data after falling to a new record low against the euro earlier.

The dollar index, which tracks the performance of the greenback against a basket of other major currencies, fell 1% to 71.30.

In economic news, the Commerce Department reported Wednesday that U.S. home builders started the fewest homes in 17 years, as housing starts plunged 11.9% to a seasonally adjusted annual rate of 947,000 in March.

March’s rate was the lowest for housing starts since March 1991. Starts were down 36.5% compared with March 2007. The starts figure was much lower than expected on Wall Street, where economists were looking for a drop to 988,000 annualized units.
 

Separately, the Labor Department reported that inflation rose in March, as energy and food costs gained. After virtually no change in February, the consumer price index in March rose 0.3%, matching estimates from analysts surveyed by MarketWatch.

Capital Gold Group, gold group, gold, gold prices, gold news, gold IRA, IRA gold, gold coins, gold bullion 

Gold Group News: RECORD LOW FOR GOLD SUPPLY SAYS INVESTMENT VETERAN

Citywire

By Sara Smith | 15:30:54 | 15 April 2008

 

Gold supplies are at an all-time low and may drop by as much as 15% over the next five years, according to BlackRock’s precious metals investment veteran Graham Birch.

The Citywire AAA-rated manager, whose MLIIF World Gold Fund fund celebrates its 20th anniversary this month, said that a lack of new production is resulting in tension between jewellery and investor markets.

Birch said that during the 1990s growing mine supplies caused the jewellery market to surge ahead as the prime driver for gold. However, he said the decline in production has seen jewellery demand displaced by investor demand.

‘Investor demand has really come back to life as people have realized that gold is a rare commodity,’ he said.

Supply is low however, as gold exploration in the past 10 years has been minimal and although exploration spending has increased, it can take up to seven years for a mine to become fully functional.

He also pointed out world gold mine production peaked in 2001 but is now falling. It was down by 1% in 2007 and 3% in 2006.

Birch said: ‘During the 1990s, the price of gold was kept low by central banks selling off substantial parts of their reserves, adding to supply in the market. As gold prices fell, gold mining companies scaled back exploration and reduced spending on existing assets. Investment has not kept pace with the subsequent rise in the gold price, so new gold supply is hard to come by.’

Ongoing power shortage issues are adding to the problems seen in precious metal production added Birch.

In particular, power issues in South Africa have had a huge impact on platinum production as blackouts occur frequently and shuts down output completely.

The manager warned that the markets will be hearing more about commodities being affected by power issues in the near future.

Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold

Gold Group News: Gold Gains as Dollar Falls – MarketWatch

By Polya Lesova, MarketWatch

Last update: 11:09 a.m. EDT April 14, 2008

 

NEW YORK (MarketWatch) — Gold futures rose Monday, as weakness in the U.S. dollar boosted demand for the precious metal.

Gold for June delivery gained $5.80 to $932.80 an ounce on the New York Mercantile Exchange.

“Gold is stronger as the dollar has weakened, despite leaders of the G7 [Group of Seven] and IMF [International Monetary Fund] governing council saying they would do all in their powers to provide market stability,” said Mark O’Byrne, executive director at Gold and Silver Investments Ltd., in a research note.

“Continuing worries about the health of the international financial sector has led to declines in stock markets internationally and renewed risk aversion,” he said.

The dollar dropped against most other major currencies Monday, finding little lasting support from worries by the Group of Seven industrial nations about volatility in the foreign-exchange markets.

The dollar index, which tracks the performance of the greenback against a basket of other major currencies, fell 0.4% to 71.65. 

The lack of any explicit warning from the G7 about the dollar’s weakness and no expectations for meaningful intervention offered little prospect that the greenback would soon end its recent run of declines against the euro, analysts said. 

On Friday, gold fell $4.80 to end at $927 an ounce, but the metal posted a gain of $13.80 on the week.

In the short term, “gold seems set to spend more time consolidating in its current range as cash generating liquidation caps the metal, while strong support is found back towards $900 an ounce,” said James Moore, an analyst at TheBullionDesk.com, in a research note.

However, the long-term outlook remains positive, “as inflationary and recessionary pressures draw safe-haven demand, while the metal’s strong fundamentals provide background support,” he said. . . .

Capital Gold Group, gold group, gold news, gold, gold prices, gold bullion, gold coins, gold IRA, IRA gold