Capital Gold Group Report: GARTMAN BULLISH ON GOLD

Dennis Gartman, Editor, The Gartman Letter

Bloomberg Television Interview

October 30, 2009

Bloomberg: We know you’re a reluctant gold bull.  Do you have gold bars in your basement?

Gartman: I have some coins and we’ll let it go at that.  Yeah, I actually have a little gold bullion.  I think everybody should have a little bit just in case.  But do I like that?  No.  Do I like being bullish of gold?  And I am bullish.  I have been long of the gold market for a long time in dollar terms, in euro terms, in British pound sterling terms.  But am I happy when I’m bullish of gold?  No, because its really not a bet on all things great.  It’s a bet on inflation.  It’s a bet on monetary policy going awry  It’s a bet on the things that John [earlier interview] was just saying that my old friend Paul Tudor Jones owns gold for.  Because one, it’s its time and as Einhorn [David Einhorn, manager of hedge fund Greenlight Capital which holds physical gold] says, it’s a monetary circumstance.

Bloomberg: How much farther does the dollar have to go, because you can’t talk about gold without talking about the dollar?

Gartman: Well actually, you can talk about gold going up in terms of other currencies and that’s what’s important.   Great bull markets in gold are not just predicated in dollar weakness.  Great bull markets in gold are predicated in monetary policies going awry everywhere.   Gold has become, for all intents and purposes, the second or third reservable asset, and I think that’s what’s taking it higher. Obviously people that think gold goes up when the dollar gets weak, and it does indeed go up in dollar terms.  But if you looked at a chart of gold in sterling terms, if you looked at a chart of gold in euro terms, they would look very similar to a chart of gold in dollar terms.  Gold’s going up in all terms.

Bloomberg: Can we see $1,300 oz by March?

Gartman: By March?  I guess you can.  I like to say that the trend is moving from the lower left to the upper right.  We’ll go higher.  I think we’ll be higher a month from now than we are now. I think we’ll be higher six months from now than we will be a month from now, but if you say will it get to a price by a certain time and if you miss either one, people come back and call you a fool.  So having been in this business for 35 years, I’ll simply say that [you should] take a look at the chart you have in front of you now.  It’s moving from the lower left to the upper right.  It’ll probably continue to do that.

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Capital Gold Group Report: Hedge Fund Manager and Legendary Trader, Paul Tudor Jones: “GOLD’S UNDERVALUED. NOW IS GOLD’S TIME”

SeekingAlpha.com
October 30, 2009

In his latest letter to investors, hedge fund manager and legendary trader Paul Tudor Jones outlines his firm’s thoughts on the topics of equities, bonds, and currencies. Tudor’s letter is one of those ‘must reads’ as his macro sense is phenomenal and he is one of the greatest traders of all time (performance returns summary here). What’s interesting about his latest letter is the fact that they included a special section addressing the all too talked about precious metal.

Gold

The macro perspective section of their letter notes how gold is not consumed but rather accumulated as a store of value as it has been a ‘medium of exchange for over 5,000 years.’ What’s interesting is that they plot out inflation-adjusted gold prices and note that we are still far off from the highs seen over 2 decades ago. Tudor puts the inflation-adjusted peak price of gold to be between $1,600-$2,400, with the previous high coming in at $2,422. While Tudor says he has never been a gold bug, he says all assets have a time and a place. And conveniently enough, he says now is gold’s time. Tudor joins an army of other prominent hedge fund managers bullish on the precious metal including David Einhorn of Greenlight Capital who has gone as far as storing physical gold. Additionally, John Paulson of Paulson & Co has $4 billion in gold investments, among many other managers.

Tudor’s econometric model has determined that gold is 20% undervalued over the next 24 months. This takes into consideration real rates on the price of gold, inflation, and M2 growth. Tudor expects the velocity of money to rise over the next two years, enhancing the bullish case for gold. Additionally, they also cite the supply/demand equation and prudently bring up the fact that a new class of investors has arrived: retail investors gaining access to the metal through exchange traded funds (most notably GLD). Tudor then presented these amazing facts: “The trailing 12-month ETF accumulation has “bought” the equivalent of 25% of new mine production consistently since the beginning of the year. By year-end 2009, the total ETF gold position will hold 3% of global available supplies, making ETFs the sixth largest holder of gold in the world.” Tudor expects inflows into these vehicles to continue, furthering the case for a position. Lastly, Tudor highlights another important factor in the gold equation: central banks. He notes that in the second half of this year, the ‘official sector will become a net buyer of gold.’ We also yesterday posted up an excellent technical analysis video on gold which concurs that gold is in a long-term uptrend. The video outlines $1000 as a key level to stay above and outlines buy points at support as well as price targets going forward.

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Capital Gold Group Report: Gold to Rise to $2,000 Amid ‘Massive’ Inflation, Superfund Says

By Kim Kyoungwha

Oct. 28 (Bloomberg) — Gold may rise to a record $2,000 an ounce in the next three years as investors hedge against “massive” inflation sparked by governments printing money, according to Superfund Financial Singapore Pte’s Aaron Smith.

“In the next few years, after the deflation cycle, we’ll see massive inflation,” Managing Director Smith, 30, said in an interview. “Soon, when you go to buy a cup of coffee, you’ll pay $20 or $30 because the dollar won’t be worth anything.”

The company’s Superfund Green Gold A Fund, which has more than doubled since its inception in 2005, has lost 15.6 percent this year because of higher volatility, said Smith, who joined in 2002. Gold rose to an all-time high this month as governments including the U.S. boosted debt to combat the global recession.

“When the U.S. dollar crashes, all the paper currencies have to crash, otherwise if their currencies are too strong, their economies will be weak,” said Smith, who issued similar gold forecasts in May and earlier this month. “Another excellent buying opportunity for investors is silver.”

Gold for immediate delivery, which touched a high of $1,070.80 an ounce on Oct. 14, traded at $1,039.32 at midday in Singapore. The metal has strengthened 18 percent this year, while the Dollar Index, a six-currency gauge of the dollar’s strength, fell 6.4 percent.

Gold Forecasts

Smith joins investors including Shayne McGuire, director of global research at the Teacher Retirement System of Texas, and Jim Rogers in forecasting higher gold prices. Pension funds will increase gold holdings as currencies decline, McGuire said on Oct. 22. Gold will probably top $2,000 in the next decade as the dollar weakens, Rogers said Oct. 7.

Superfund, founded in 1995 and backed by $1.6 billion in assets, specializes in so-called managed futures, using its own trading system to generate buy and sell calls on stock, bond, currency and commodity futures. Still, the company’s flagship Superfund A, which gained 35.4 percent last year, has lost 24 percent this year, Smith said.

The ratio of silver to gold, currently at 62.35, will be “cut in half” in the next three to five years as millions of people in South Asia and China buy the metal as an alternative because they can no longer afford gold, Smith said. Silver has soared 46 percent this year to $16.65 an ounce.

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Capital Gold Group Report: BANK CLOSINGS SURPASS 100

October 23, 2009
Bank closings for the year have surpassed 100 as regulators shut down small banks in Florida and Georgia.
The FDIC took over Partners Bank in Naples, Fla. American United Bank in Lawrenceville, Ga., also failed. They boosted to 101 the number of bank failures so far this year.

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gold

Capital Gold Group Report: Watershed Moment for Government Intervention in Private Sector

October 22, 2009

The U.S. Treasury and the Federal Reserve unveiled a set of curbs and rules for executive compensation at U.S. banks that mark a watershed moment for government intervention in the private sector.

The Fed is proposing that it more aggressively regulate compensation practices at U.S. American banks under its control. The central bank “is working to ensure that compensation packages appropriately tie rewards to longer-term performance and do not create undue risk for the firm or the financial system,” Fed Chairman Ben Bernanke said Thursday.

The policies would become part of the supervisory process, the Fed said, noting large, complex organizations would face special “horizontal” reviews that compare one bank’s pay practices with those of its peers.

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Capital Gold Group Report: Gold turns higher as dollar falls to new low vs. euro

Oct. 21, 2009, 12:45 p.m. EDT

By Laura Mandaro & Nick Godt, MarketWatch

SAN FRANCISCO (MarketWatch) — Gold futures turned higher Wednesday as the U.S. dollar slid to a fresh 14-month low against the euro, breaching a key psychological level and making hard assets more attractive.

Gold for December delivery rose $1.60 an ounce, or 0.2%, to $1,060.10 an ounce. The thinly traded October contract gained $2.40 an ounce, or 0.2%, to $1,060.2.

Bullion had slipped in early U.S. trading as the dollar was only modestly lower.

But the greenback, which has been the dominant force in precious metals trading recently, deepened its slide as U.S. stocks headed higher.

These trends in what’s known as risk appetite, or investor demand for equities, commodities and currencies from countries with higher interest rates, have knocked off more than 7% of the dollar index /quotes/comstock/11j!i:dxy0 (DXY 74.97, -0.59, -0.79%) this year. A weak dollar makes gold, often viewed as a currency that holds value when paper currencies falter, more valuable.

Prominent in currency trading Wednesday, the euro rose to $1.50, a psychologically important level that Jon Nadler, a senior analyst with Kitco Bullion Dealers, said is a “pivot point that may force more language from policymakers” on the strong dollar. The level “has obviously been good for gold.” See Currencies.

Other precious metals also turned higher. December silver tacked on 13 cents, or 0.67%, to $17.69 an ounce. January platinum, the most active contract for the metal, gained $15.70, or 1.2%, to $1,372 an ounce. December palladium rose $2.45, or 0.2%, to $340.10 an ounce.

Copper for December delivery gained 7 cents, or 2.2%, to nearly $3 a pound.

Also buoying metals, crude-oil futures rose to their highest level of the year, touching $80.70 a barrel, helped by a report of a smaller-than-expected build in U.S. inventories and the dollar’s slump.

Last week, the benchmark gold contract gained 0.3% and briefly topped $1,070 an ounce, a new intraday high.

Ahead, the Fed will release its Beige Book of economic anecdotes from across the country at 2 p.m. Eastern.

“In the latest edition, the Beige Book noted that ‘credit standards ranged from unchanged to tighter in most Districts,'” said Benjamin Reitzes, analyst at BMO Capital Markets, in a note.

“That assessment might improve with underlying financial conditions,” he said. “Meantime, expect commercial real estate to remain a source of weakness across the country.”

The S&P 500 Index /quotes/comstock/21z!i1:in\x (SPX 1,096, +4.50, +0.41%) rose 0.4% to 1,095.

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Capital Gold Group Report: Regulators Seize the 99th Bank

By Stephen Grocer

October 19, 2009

The number of failed banks this year inch one closer to 100 Friday.

Regulators seized San Joaquin Bank, of Bakersfield, Calif., marking the 99th bank to fail this year and the 124th since 2008. San Joaquin Bank, which had $775 million in assets and five branches, was acquired by Citizens Business Bank of Ontario, Calif., in a government-brokered deal, according to the FDIC. The regulator said the failure is expected to cost the agency’s already-strained insurance fund approximately $103 million.

The deal marks only the fourth failure this month, a drop from the past three months. September, August, and July saw 11, 15 and 24 failures respectively.

Is the rate of bank failures slowing? Not yet, says FDIC chairman Sheila Bair. She told CNBC last week that she would need to see several more quarters of slowing failures before determining that the situation was improving. “Our projections are that bank failures will continue through 2010,” Bair said.

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Capital Gold Group Report: US GOLD RISES TO RECORD HIGH ON DOLLAR WEAKNESS

 NEW YORK, Oct 8, 2009 (Reuters) - U.S. gold futures rose to
record highs for a third straight day on Thursday as a bearish
outlook for the U.S. currency prompted investors to buy the
metal as a hedge against losses in dollar-denominated assets.

 For the latest detailed report, click on [GOL/].

 GOLD

 * Most-active December gold futures GCZ9 up $6.30 at
$1,050.70 an ounce at 10:58 p.m. EDT (1458 GMT) on the COMEX
division of the New York Mercantile Exchange.

 * Ranging from $1,043.80 to $1,059.60 - a new record high.

 * Gold continued to closely track currency market
movements.

 * The dollar fell broadly on Thursday as rising equity
markets fueled demand for riskier assets at the expense of the
safe-haven U.S. currency.

 * The euro rose to session highs against the dollar as
European Central Bank President Jean-Claude Trichet's comments,
after the ECB left interest rates unchanged at a record low of
1 percent.

 * Cheap interest rates make it easy to buy gold for
investors, as they prepare for possible future inflation -
George Gero, vice president of RBC Capital Markets Global
Futures.

 * Demand for gold-backed exchange-traded funds climbed,
with the largest, New York's SPDR Gold Trust GLD, reporting a
fourth straight day of inflows on Tuesday. [GOL/SPDR]

 * Investors in SPDR Gold Trust bought nearly 14 tonnes of
gold, lifting its holdings 1.3 percent, in the week to
Tuesday. XAUEXT-NYS-TT

 * Oil prices rose about $1.50 to $71 a barrel.

 * Gold-to-oil ratio at 14.79, up from the previous
session's 14.72.

 * COMEX estimated 10 a.m. volume at 114,315 lots.

 * Spot gold was at $1,048.30 an ounce, against its previous
finish of $1,043.70 quoted late in New York.

 * London afternoon gold fix XAUFIX= was at $1,045.

 SILVER

 * December silver SIZ9 up 22 cents, or 1.3 percent, at
$17.725 an ounce, up with gold.

 * Ranged from $17.530 to $17.930, the highest price since
August 2008.

 * COMEX estimated 10 a.m. volume at 21,360 lots.

 * Spot silver XAG= was at $17.68, versus its previous
finish of 17.55 an ounce.

 * London silver fix XAGFIX= at $17.80 an ounce.

 PLATINUM

 * January platinum PLF0 up $16.30, or 1.2 percent, at
$1,344 an ounce on improving physical demand.

 * Better jewelry buying supported platinum group metals -
Gero.

 * Spot platinum XPT= was at $1,333.50, compared with its
previous finish of $1,326.

 PALLADIUM

 * December palladium PAZ9 up $4.95, or 1.6 percent, at
$319 an ounce, up with platinum.

 * Spot palladium XPD= was at $314.50, against its
previous close of $311.
Prices at 10:58 a.m. EDT (1458 GMT)

                       Last  Change   Pct      2008   YTD

                                      Chg    Close  % Chg
US gold       GCZ9    1050.70    6.30   0.6   884.30   18.8
US silver     SIZ9     17.750   0.250   1.4   11.295   57.1
US platinum   PLF0    1342.00   14.30   1.1   941.50   42.5
US palladium  PAZ9     319.00    4.95   1.6   188.70   69.1
Gold          XAU=    1049.45    5.75   0.6   878.20   19.5
Silver        XAG=      17.72    0.17   1.0    11.30   56.8
Platinum      XPT=    1335.00    9.00   0.7   924.50   44.4
Palladium     XPD=     315.50    4.50   1.4   184.50   71.0
Gold Fix      XAUFIX= 1045.00   -9.75  -0.9   836.50   24.9
Silver Fix    XAGFIX=   17.80   40.00   2.3    14.76   20.6
Platinum Fix  XPTFIX= 1335.00    1.00   0.1  1529.00  -12.7
Palladium Fix XPDFIX=  317.50    1.50   0.5   365.00  -13.0

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gold

Capital Gold Group Report: GOLD RALLIES TO NEW RECORD HIGH ON RISING INVESTMENT DEMAND

Oct. 7, 2009, 1:57 p.m. EDT

NEW YORK (MarketWatch) — Gold futures soared to a record high just below $1,050 an ounce Wednesday, as investment demand rose and as the U.S. dollar remained relatively weak.

Holdings in the SPDR Gold Trust /quotes/comstock/13*!gld/quotes/nls/gld (GLD 102.33, +0.05, +0.05%) , the biggest exchange-traded fund backed by gold, rose for a third straight session to reach the highest level in three weeks.

‘Gold has significant upside potential into 2010.’

Jason Kotick, Barclays Capital

In foreign-exchange dealings, the dollar rebounded slightly against the euro and the Japanese yen, but the dollar index /quotes/comstock/11j!i:dxy0 (DXY 76.51, +0.17, +0.23%) remained below the 77 mark.

Gold for October delivery surged to an intraday high of $1,048.20 an ounce, a new record for front-month gold futures. The contract was last up $3.90, or 0.4%, at $1,042.50 an ounce on the Comex division of the New York Mercantile Exchange.

Gold prices, as gauged by Comex front-month futures, have risen 18% this year.

Gold for December delivery, the most actively traded contract, gained $3.10, or 0.3%, to $1,042.70, a partial retracement after hitting an intraday high of $1,049.70.

“Gold has significant upside potential into 2010,” said Jordan Kotick, an analyst at Barclays Capital, in a note. Technical analysis indicated that “resistance currently is at $1,370; history suggests a run at $1,500.”

In the coming weeks, gold is likely to rise as high as $1,120 an ounce, he added. . . .

“The prime driver of the recent rally in the gold price … was the weakening of the U.S. dollar,” wrote analysts at Nomura International in a note to clients.

There is a very strong inverse relationship between the U.S. dollar and gold prices. When the dollar falls, gold prices tend to rise.

Gold’s Wednesday highs topped the earlier record hit on Tuesday, when the dollar slumped on a report suggesting the end of dollar-based oil trading and as Australia hiked interest rates.

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Capital Gold Group Report: Gold Is Just Getting Going

Melinda Peer
10.06.09, 05:30 PM EDT

Gold set a new record, and analysts expect it to set a few more as the dollar falters.

Gold hit fresh highs on Tuesday as it continued to take its cues from a weak U.S. dollar. The greenback tumbled as uncertainty over its global strength was triggered by a report from the U.K. alleging that certain Gulf states secretly met with Russia, China, Japan and France to discuss replacing the dollar with a basket of currencies to trade crude oil. The basket would include gold in addition to the euro, Chinese yuan, Japanese yen and a new currency for nations in the Gulf Cooperation Council, according an article The Independent that was later denied by the Gulf States. (See “Dollar Still A Good Bet For Oil.”)

Comex gold for December delivery peaked at $1,045 an ounce, surpassing the previous record for the most-active contract high of $1,033.90 an ounce hit in March 2008. December futures closed Tuesday’s session at a record $1,039.70 an ounce, up by $21.90. The SPDR Gold Trust ( GLD – news – people ) exchange-traded fund gained $2.28, or 2.3%, to $102.10 and shares of gold miners also traded higher.

Rick de los Reyes, a metals and mining analyst at T. Rowe Price, believes the gold rally still has a long run ahead of it. Pointing to similar trends observed during the gold rally that started in the late 1970’s, he said gold prices are in the early stages of a transition of being driven more by investment demand than by jewelry demand. Since investment demand is likely to remain strong with the market worried about inflation and investors buying on pullbacks, Reyes sees gold reaching new highs in the long-term.

While other commodities like oil and copper also guard against inflation and may have more room to grow, gold is the only commodity to offer additional protection against deflation.

“Other commodities will protect against inflation, if that ends of being the outcome of monetary policy, as expected,” Reyes said, “But if policies fail and deflation ends up being the problem, then those other commodities will suffer, too, since they tend to run on industrial demand.”

Whether investors buy gold bars, gold-backed exchange-traded funds or gold mining companies, Reyes recommends that all portfolios include some exposure to gold since it trades negative to the market in some periods.

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