Archive for the ‘precious metals’ Category
Precious metals markets are witnessing a slight pullback, but their long-term outlook remains positive as far as I’m concerned. Pullbacks in the prices of the precious metals are simply buying opportunities for me.
My two favorite precious metals—gold and silver—have marginally declined in price over the past few days as the U.S. dollar has been increasing in value against other world currencies.
In these pages, I have rigorously said that gold will keep climbing, but other precious metals, especially silver, may outperform it. Central banks can print more money and manipulate their currencies, but they can’t make more gold and silver.
According to Beijing Antaike Information Development Co., silver demand for China will increase 10% next year. (Source: Business Week, October 25, 2012.) The reason: Chinese investors are buying silver because their economy is slowing down and their wealth is declining. Key stock indices in China have relentlessly declined since 2011.
Below is the chart of Shanghai Stock Exchange Composite Index, which should give you a very good idea of what’s going on right now.
Chart courtesy of www.StockCharts.com
Together with increased demand from investors in China, silver holdings in exchange-traded funds (ETFs) have increased 6.5% this year alone to 592 ounces. The world’s largest silver ETF, iShares Silver Trust (NYSE/SLV), holds 9,918.67 tonnes of silver and reported an increase of 30.12 tonnes in its holdings on October 24, 2012. (Source: FXEmpire, October 25, 2012.)
Why are investors starting to prefer silver over gold?
Gold has become expensive for an average investor to own in physical form. But for big players like central banks, it’s still the only way … Read More
Gold bugs are feeling the pain, as precious metals continue with their slower-economic-growth correction. As well, the prospect of action on the Europe debt crisis is tempering the marketplace’s appetite for gold futures. My view is that gold and silver continue to represent some of the most attractive assets going forward over the next several years. We’re in a market where new trends take a long time to develop and we’ll likely see the spot price of gold trade around $1,600 an ounce for quite a while yet.
It’s pretty difficult to get enthusiastic about the stock market with sentiment so focused on the sovereign debt situation inGreece. Even in the face of solid earnings expectations for the third quarter, investors are looking into the future and seeing slow economic growth, translating into slower earnings. It’s the perfect storm for equities and it makes choices for equity investors very limited.
The recent stock market selloff was due to the U.S. Federal Reserve saying that the domestic economy faces some serious challenges over the next year. The central bank didn’t take much in the way of new policy action, because there isn’t much left their toolbox. Interest rates can’t go much lower; therefore, the economy is on its own.
There have been a lot of mergers and acquisitions in the mining industry lately and the consolidation is only going to increase with gold over $1,800 an ounce and silver over $40.00. The buying and selling of entire companies adds to the attractiveness of the mining sector, with the bonus of a potential takeover of one of your holdings at a premium price.
I view the stock market’s recent trading action as impressive. The S&P 500 Index has clawed its way back up to the 1,200 level, which is technically significant. Just last year, the index (and others) broke down after a strong run and then recovered meaningfully. While the past can’t predict the future, there is a strong similarity in the share price action.
One of the best things you can do as a serious equity investor is to review big stock market winners, even if you didn’t own them. It’s the same thing that professional athletes do. A golfer will review past golf tournaments. A race car driver will watch old races. The goal of the process is to improve your own game by seeing what has worked the best in the past. In the case of stocks, reviewing past winners helps an investor to hone his or her stock picking skills by helping him/her become familiar with what a big winner looks like and discover how it all came to be. It takes time and it takes effort, but then again, money doesn’t grow on trees.
Thank goodness for the spot price of gold. This is the one sector of the stock market (and global economy) that’s flourishing within all the turmoil. Not only are the fundamentals for gold very strong, but they are actually improving, as price inflation is going up in the world’s biggest economies.
I think it’s probable that the stock market will continue to convulse for the rest of the third quarter and into the fourth. The trend in economic news is down and so is investor sentiment. We still have a lot of problems with sovereign debt issues in Europe and this is an investment risk that isn’t going away anytime soon.
If you want to know what’s happening in the inflation department, all you have to do is go down to your local baker and he or she will tell you that the price of raw ingredients is getting a lot more expensive. There is price inflation out there and it’s slowly building in the global marketplace. It started with food commodities like sugar, cotton and coffee, and it’s increasingly likely that it will spread to other agricultural commodities throughout 2011. In fact, it’s already happening.
The S&P 500 Index has broken solidly below 1,200, and the trading action is the correction that the market’s required. I’d like the trading action to spread to commodities so investors could have another entry point. I think 1,150 seems likely on the S&P 500 index and an even 1,000 is a near-term possibility.
In this market, I want to be a bottom-feeder. I do not want to pay for growth. What I want instead is a real deal; a solid value. If you want to find some attractive trades in this market, I suggest you screen for stocks that are very close to their 52-weeks lows and have lots of cash in the bank.
It doesn’t really matter what’s happening in the broader market. If you own gold or silver, you’re a very happy investor. I think gold will run to $1,500 an ounce, perhaps by the end of the year. With investment risk high in equities and yields low in bonds, institutional investors are jumping on the golden bandwagon. The trend is definitely your friend in the futures market.
It really is boom time in the gold business and companies are easily able to raise equity funds to explore for the metal. The fundamentals for strong gold prices are solid. There’s a recovering global economy, a weaker dollar and big increases in money supplies among most Western nations. It really doesn’t get any better if you’re a gold bug.
Along with gold, plenty other precious metals are also going up in price and this sectoral price strength really helps mining companies. Even at a designated gold mine, companies often dig up a lot of silver, copper and other precious metals. The price strength in a group of metals just goes right to the bottom line.
Along with these record spot prices comes the risk of a major correction. These are commodity futures markets after all and volatility is the name of the game. But it seems probable that the longer-run price trend is intact for gold and silver. Copper will benefit from Asia’s economic recovery. I wouldn’t call my broker and load up on gold stocks right now. The big money has already been made. But, if we get a meaningful correction and you don’t already have some exposure to the sector of … Read More
The spot price of gold always gets the headlines, but equally as impressive has been the price spot performance of silver. The two metals tend to trade commensurately, but some of the most impressive capital gains in the stock market recently have been in silver resource companies.
There are a lot of new financings taking place in the junior mining industry and this sector is hotter than you think. With gold, silver and copper prices relatively strong, it’s a great time to be involved in mining. And, with the regular economy growing at a rate that’s mediocre at best, institutional investors are clamoring to invest in anything generating double-digit revenue and earnings growth.
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