Gold Drops to Lowest Price in Almost Two Weeks as Dollar Rallies\r\n\r\nNov. 16 (Bloomberg) – Gold fell to the lowest price in almost two weeks as the dollar rallied, eroding the appeal of the precious metal as an alternative asset.\r\n\r\nThe dollar advanced for a second straight day, rising as much as 1.2 percent against a basket of six major currencies. Before today, gold gained 25 percent this year, touching a record $1,424.30 an ounce last month on speculation that the Federal Reserve’s program to buy back bonds to bolster the economy would erode the U.S. currency.\r\n\r\n“The dollar’s strength continues to surprise, which takes away the flight-to-quality bid from gold,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago.\r\n\r\nGold futures for December delivery fell $30.10, or 2.2 percent, to settle at $1,338.40 an ounce at 1:50 p.m. on the Comex in New York, after touching $1,329, the lowest price for a most-active contract since Nov. 3.\r\n\r\nThe dollar gained after a report showed factory production in the U.S. increased in October by the most in three months, a signal that the economy may be recovering. Another report showed wholesale costs rose less than forecast last month.\r\n\r\n“We’re not seeing drastic price increases, and that’s deflated the gold balloon a little bit in terms of an inflationary hedge,” Zeman said.\r\n\r\nGold assets in exchange-traded products declined 0.7 metric ton to 2,087.52 tons yesterday, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on Oct. 14.
Wide Range of Gold Forecasts for 2011\r\n\r\nSome forecasts say gold will reach as high as 5,000 dollars per ounce (yes, you read that right) while others feel it will dramatically retreat. Why the wide range of gold price forecasts?\r\n\r\nFirst we have the group that feels the prices will drop. What is the reason for this prediction? As the economy improves, the dollar will strengthen. In time confidence will return to the local currency and people will begin to de-hedge themselves from gold. Consider the drop in gold in 1980-81 where prices fell in half. If the same happened in 2011 or 2012 this would mean a price retreat to 500 – 600 dollars per ounce.\r\n\r\nNext we have the group that still feels gold is undervalued. Market volatility has only been exacerbated by globalization; just look how the problems in Greece affected the entire European Union! Also, if you adjust for inflationary levels, gold would need to be around $2,200 per ounce just to be on par with 1980 highs. And if you factor in other criteria such as economic output… well they have the gold price forecast for 2011 or later at a whopping $5,000 per ounce.\r\n\r\nThese are the varying forecasts from the ‘experts’. What do you think the price of gold will be in 2011? I’d like to hear from you.\r\n\r\nsilahkan milih :hug:
Price of Gold Forecast and Prediction for 2011?\r\n\r\nThere is no definitive answer to where the price of gold will be in 2011. The best an investor can do is to look at possibilities based on historical data. If an investor assumes that paper currency will continue its debasing trend, what would be a high estimate on gold prices per ounce? To answer that one needs to look for the highest that gold has been in the past.\r\n\r\nJanuary 21st, 1980 saw the price of gold reach 850 US dollars per ounce. To understand how much money this is worth today one would need to adjust the figures according to the Consumer Price Index. 850 dollars in 1980 is worth 2,250 US dollars in the year 2010. If gold were to repeat the value of a previous high it could double from the price it is trading at in June of 2010.\r\n\r\nOther analysts suggest that because the current economic output is many times greater than 30 years ago, the peak price of gold could even reach 5,000 dollars per ounce.\r\n\r\nOn the other hand the argument could be made that markets are based on mass psychology and trader emotions. Some might suggest that the average person would not believe that the price of gold could ever reach up to 5,000 dollars, thus creating a resistance to that level ever being achieved. Some analysts believe that as the market recovers in 2011 and beyond, the price of gold will retreat dramatically as the economic woe gets pushed to the backs of people’s minds and their hedging tactics are tossed aside.\r\n\r\n\r\nRead more at Suite101: Gold Price Forecasts and Predictions for 2011 http://www.suite101.com/content/gold-price-forecasts-and-predictions-for-2011-a253330#ixzz15ixwX5hG
Here are 10 compelling reasons why gold is going to do well this year.\r\n\r\nThe Stimulus Effect: Including $1 trillion in cash infusions, the stimulus plan will pump $9.7 trillion into the economy, according to Bloomberg. As the Globe & Mail reports flatly, “Many believe that the monetary stimulus efforts will cause a spike in inflation,” driving gold higher.\r\n\r\nCOMEX Traders Predict $1,600 Gold… by December: If gold trades at or above $1,600 by December, some 100,000 call option contracts will be “in the money.” Big-money players Goldman Sachs and JPMorgan are reportedly helping to drive the action, ahead of a huge purchase of gold futures contracts.\r\n\r\n“Big Money” Inflows: In 2008, NYC-based hedge fund Paulson & Co’s flagship fund returned 37%, as the world markets burned. Paulson’s bullish on gold, big time, including the Mar. 17 purchase of 39.9 million shares of AngloGold, worth $1.28 billion. Other major hedge funds are piling into gold, too, including Eton Park Capital, Green light Capital and Hayman Advisors.\r\n\r\nChina’s Doubling Down! China just revealed that it has doubled its gold holdings to 1,054 tons. Yet that still only equals 1.6% of its overall reserves. As China moves out of U.S. Treasuries and into gold, this will help fuel the next leg of the run-up.\r\n\r\nDemand Building across the Board: Worldwide demand for gold jumped by $29.7 billion in the first quarter, a 36% bolt, according to the World Gold Council. Demand for gold ETFs (Exchange Traded Funds) rocketed 540%… another trigger for the coming gold boom.\r\n\r\nThe Paper Dollar’s 30% Drop: Since 2001, the U.S. Dollar Index has tanked 30%… while gold has risen 300%. With all the downward pressure on the dollar, and inflation on the way, this trend is about to pick up steam.\r\n\r\nGold/Dow Ratio Signals $8,000 Gold: During major gold bull markets (and corresponding equity bears), gold and the Dow converge at a 1-to-1 ratio. During the last gold bull, the Dow sank to 850 and gold rose to $850. The Dow is now over 8,000… But even if it fell to 4,000, we could see $4,000 gold before this bull run is over!\r\n\r\nU.S. Treasury Dept. Signals $5,468 Gold: Currently, the U.S. government holds about 286.9 million ounces of gold. It has printed about $1.569 trillion worth of paper dollars. If each dollar were backed by gold, that would put the price at $5,468.80 an ounce.\r\n\r\nRiding the “Commodity Super Cycle”: Jim Rogers expects the Commodity Super Cycle to drive commodity prices higher for another eight years… including gold. And he’s stockpiling the yellow metal by the day. Every pullback, says Rogers, is another buying opportunity. Considering he’s been dead right on every major trend of the past 40 years, we wouldn’t bet against him.\r\n\r\nHistoric Model Predicts $6,214 Gold: During the last gold bull, the yellow metal ran from $35 an ounce to $850, a 24-fold increase. This bull started with gold at $255.95, meaning that if historic trends hold, the price target would be $6,214 an ounce.
Northwestern Mutual Makes First Gold Buy in 152 Years\r\n\r\nNorthwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales, has bought gold for the first time in the company’s 152-year history to hedge against further asset declines.\r\n\r\n“Gold just seems to make sense; it’s a store of value,” Chief Executive Officer Edward Zore said in an interview following his comments at a conference hosted by Standard & Poor’s in Brooklyn. “In the Depression, gold did very, very well.”\r\n\r\nNorthwestern Mutual has accumulated about $400 million in gold, and Zore said the price could double or even rise fivefold if the economy continues to weaken. Gold gained 10 percent last month, the most since November. The commodity has more than tripled since 2000, rising for eight straight years. Gold futures for August delivery slipped $4.80 to $975.50 at 4:03 p.m. in New York.\r\n\r\n“The downside risk is limited, but the upside is large,” Zore said. “We have stocks in our portfolio that lost 95 percent.” Gold “is not going down to $90.”\r\n\r\nPolicyholder-owned Northwestern Mutual, based in Milwaukee, ranks third by 2008 life insurance premiums according to data from the National Association of Insurance Commissioners. The data excludes annuities.
8 Reasons to Own Gold
Gold is respected throughout the world for its value and rich history, which has been interwoven into cultures for thousands of years. Coins containing gold appeared around 800 B.C., and the first pure gold coins were struck during the rein of King Croesus of Lydia about 300 years later. Throughout the centuries, people have continued to hold gold for various reasons. Below are eight reasons to own gold today.
1. A History of Holding Its Value
Unlike paper currency, coins or other assets, gold has maintained its value throughout the ages. People see gold as a way to pass on and preserve their wealth from one generation to the next.
2. Weakness of the U.S. Dollar
Although the U.S. dollar is one of the world''s most important reserve currencies, when the value of the dollar falls against other currencies as it did between 1998 and 2008, this often prompts people to flock to the security of gold, which raises gold prices. The price of gold nearly tripled between 1998 and 2008, reaching the $1,000-an-ounce milestone in early 2008. The decline in the U.S. dollar occurred for a number of reasons, including the country''s large budget and trade deficits and a large increase in the money supply.
Gold has historically been an excellent hedge against inflation, because its price tends to rise when the cost of living increases. Since World War II, the five years in which U.S. inflation was at its highest were 1946, 1974, 1975, 1979 and 1980 (as of 200. During those five years, the average real return on the Dow Jones Industrial Average was -12.33%, compared to 130.4% for gold.
Deflation, a period in which prices contract, business activity slows and the economy is burdened by excessive debt, has not been seen globally since the Great Depression of the 1930s. During that time, the relative purchasing power of gold soared while other prices dropped sharply.
5. Geopolitical Uncertainty
Gold retains its value not only in times of financial uncertainty, but in times of geopolitical uncertainty. It is often called the "crisis commodity", because people flee to its relative safety when world tensions rise; during such times, it often outperforms other investments. For example, gold prices experienced some of their largest recent movements during periods of tension with Iran and Iraq in 2007 and 2008. Its price often rises the most when confidence in governments is low.
6. Supply Constraints
Much of the supply of gold in the market since the 1990s has come from sales of gold bullion from the vaults of global central banks. This selling by global central banks slowed greatly in 2008.
At the same time, production of new gold from mines has been on the decline since 2000. According to BullionVault.com, annual gold-mining output fell from 2,573 metric tons in 2000 to 2,444 metric tons in 2007. It can take from five to 10 years to bring a new mine into production. As a general rule, reduction in the supply of gold increases gold prices.
7. Increasing Demand
Increased wealth of emerging market economies has boosted demand for gold. In many of these countries, gold is intertwined into the culture. India is one of the largest gold-consuming nations in the world, and gold has many uses there, including jewelry. As such, the Indian wedding season in October is traditionally the time of the year that sees the highest global demand for gold. In China, where gold bars are a traditional form of saving, the demand for gold has also shown rapid growth.
Demand for gold has also grown among investors. Many are beginning to see commodities, particularly gold, as an investment class into which funds should be allocated. In fact, the largest gold ETF, StreetTracks Gold Trust (PSE:GLD), became one of the largest ETFs in the U.S. and one of the world''s largest holders of gold bullion in 2008, only four years after its inception.
8. Portfolio Diversification
The key to diversification is finding investments that are not closely correlated to one another; gold has historically had a negative correlation to stocks and other financial instruments. Recent history bears this out:
* The 1970s was great for gold, but terrible for stocks.
* The 1980s and 1990s were wonderful for stocks, but horrible for gold.
* As of 2008, this decade has been a good one for gold, and an unfavorable one for stocks.
Properly diversified investors combine gold with stocks and bonds in a portfolio to reduce the overall volatility and risk.
Gold should be an important part of a diversified investment portfolio because its price increases in response to events that cause the value of paper investments, such as stocks and bonds, to decline. Although the price of gold can be volatile in the short term, gold has always maintained its value over the long term. Through the years, it has served as a hedge against inflation and the erosion of major currencies, and thus is an investment well worth considering.
Kontrak emas menguat ke dua minggu tertinggi di tengah meningkatnya utang eropa yang memicu permintaan logam mulia sebagai aset pelindung. Perak melonjak 3,7%, menutup bulan dengan penguatan terbesar sejak Mei 2009.
Keprihatinan investor mulai terarah pada utang Spanyol dan Portugal yang semakin bertumpuk setelah pemerintah Eropa menggelontorkan dana talangan untuk Irlandia dan Yunani. Sepanjang tahun ini, emas telah menguat 26%, tertinggi US$1.424,30 per ounce 9 November lalu. Perak telah terangkat 67% sepanjang 2010.
"Emas terus terangkat di tengah meningkatnya ketakutan utang di Eropa," ungkap Frank McGhee, kepala pedagang Integrated Brokerage Services di Chicago.
Emas untuk pengiriman Februari naik US$18,60 atau 1,4% menjadi US$1.386,10 per ounce pada pukul 1:33 di Comex New York.