Precious Metals to Lead Commodity Returns in 2011, Goldman Sachs Predicts

Precious metals will probably give investors the best returns among commodities in the next year, and livestock the worst, Goldman Sachs Group Inc. said.

Precious metals will advance 28 percent over 12 months and livestock 4 percent, London-based Jeffrey Currie, Allison Nathan and other Goldman analysts said in a report today. The team raised its 12-month forecast for the S&P GSCI Enhanced Total Return Index to 18 percent from 16 percent, mostly because of changes to agricultural estimates.
“Extreme weakness in U.S. demand over the past two years has allowed China to grow unconstrained without any competition for raw materials,” the Goldman analysts said in the report. “This is likely to change in 2011 with a stronger U.S. that is likely to bump up against a China that is consuming dramatically more commodities than pre-crisis.”
Commodity assets under management rose $19 billion to a record $340 billion in October, led by demand for index-linked investments, Barclays Capital said in a report last month. Gold rose 27 percent this year, heading for a 10th consecutive annual advance. Investors are seeking hard assets as governments and central banks led by the Federal Reserve pump more than $2 trillion into the world financial system.
Chinese Demand
Higher commodity prices will be needed to slow U.S. consumption, “to make room for further Chinese demand,” Goldman said. The raw materials most affected will be those with the tightest supply, including crude oil, copper, cotton, soybeans and platinum, the analysts said. The S&P GSCI Enhanced Total Return Index gained 7 percent this year

[CONTINUED]

 http://www.bloomberg.com/news/2010-12-13/goldman-sachs-predicts-best-commodity-returns-for-2011-in-precious-metals.html

Gold coin sales increase by 400%

 

19 November 2010 Last updated at 11:25

Sales of gold coins have soared by 400% so far this year compared with 2009, according to the Royal Mint.

With the price of gold hitting record levels, the Mint says commemorative coins are in strong demand.
Sales of silver coins have also risen, though by a comparatively modest 20%.
"In these days of economic uncertainty people look for something they can see as being a bit more secure," Dave Knight, director of commemorative coins at Royal Mint, told the BBC.
The price of gold, currently at about $1,400 an ounce, has consistently reached new highs during 2010 as investors have sought a haven amid economic turmoil.
Mr Knight said it was not part of his role to comment on whether gold is a good investment, but he added: "Gold coins are something that have been around a long time and people have a lot of confidence in them.
"We sell a lot to the big institutions, which are presumably for investment. But there's also a big growth in the desire to collect coins.
"These coins are works of art. And they are something that can last forever," he said.
Last week, a limited edition silver £5 coin commemorating musician John Lennon sold out in five days.
Mr Knight said that to sell the 5,000-coin issue in such a short space of time was "extraordinary".
Royal wedding The sales growth is not confined to the UK.
The Royal Canadian Mint has said that sales of silver coins for 2010 are "very strong" and expects them to be at least 50% higher than in 2009.
A spokesman said: "We also do not anticipate a reduction in sales for 2011, and could see an increase.
The Royal Mint's next major issue is expected to be a £5 gold coin to commemorate next year's royal wedding.
It is thought that the coin has already been designed and is awaiting Buckingham Palace's approval.
 

Bond Market Implosion & Gold Tactics

Graceland Updates

By Stewart Thomson

              

1.      “I cannot overemphasize the critical importance of factoring the bond market into any analysis of the crisis now.”  That was the sentence I started yesterday’s update with, and it’s probably the sentence I should start every update with, for the next six months!    

2.       I see a lot of gold analysts trying to gauge the “gold market correction” but they are seemingly unaware that the bond market just imploded, and Bill Gross basically issued a massive sell signal on his own fund, the world’s largest bond fund.  For the past few months I’ve urged you to understand that when the bond implodes, there would be initial weakness in gold followed by tremendous strength.  Here and now, the words “Gold” and “Bond” must be mentioned in the same sentence, or you are out to gold market analysis lunch.

3.      The conventional view in the public, and a view held by many institutional money managers, is that lower rates produce higher gold prices (correct), and higher rates produce lower gold prices.  Well, sometimes, yes.  Sometimes, no.  Sometimes higher rates produce an upside gold parabola.

4.      On the second situation, higher rates and gold, in a commodity demand-related gold bull market, higher rates are a negative for the price of gold.  In such a situation, gold functions as a commodity, and the economy gets higher prices as demand for goods increases.  The cost of borrowing increases as the demand for loans increases because business conditions are solid.  As the cost of borrowing rises, that hurts demand.  Prices (int rates) for money and the price for goods both fall.

5.      Look out your market window.  Do you see a booming economy, or potential economic Armageddon?  My message to you: the new bankster game is in play, and it’s a big one; the bond market.  Bond market chaos that could send gold stocks parabolic on the upside.  Here’s why:

6.      I coined the term, “The Institutional Awakening”.  The awakening is a bankster game to create a mass mindset of terror amongst institutions, a mindset that further QE won’t work to continue the markets recovery, and instead further QE will see bond market prices stagnate or even fall, while the US dollar falls like a rock.  All in all, a nightmare situation, given the backdrop of the marked to model OTC Derivatives quadrillion dollar.  Marked to model is:  Marked to Lies.

7.      In practical terms, meaning flows of liquidity by institutions, what the institutional awakening means is a mass panic out of bonds and into…?

8.      What the gold community needs to understand is the LAW.  Institutional money managers have written mandates as well as unwritten mandates on what they can and cannot do with their assets.  Pouring money into gold is not on their “oh yeah, let’s do it!” list.   It’s on their “if we dump our assets into gold, then our investors pull out, we get no pay, and we could get charged with securities violations” list.

9.      The history of institutional money flows in a currency and bond panic is a massive flow of liquidity into the stock market.  Having said that, what do YOU think happens to the Gold Price Thermometer of global financial health what that occurs, or is thought to be about to occur?  I don’t think most in the gold community really understand what just happened to the bond market, and what this event means for gold. 

10.  I know that because, other than Bob Moriarty at www.321gold.com and Trader Dan Norcini at www.jsmineset.com, almost nobody is even mentioning the imploding bond market, yet they are conducting one study after another as to why gold “could be in a correction”.  Translation:  “Here’s all the reasons why I just sold all my gold and you should do the same.”  Thanks, but no thanks.  In regards to the bond market, to quote John “Sir Johnny” Templeton, who uttered these words after the first phase of the markets crisis began in 2000,
[CONTINUED]
http://news.goldseek.com/GoldSeek/1289922503.php

Consider Gold in Overhaul of Bretton Woods, World Bank Head Writes in FT

By John Simpson - Nov 7, 2010 10:27 PM GMT 

 

The development of a monetary system to follow on from 1971’s Bretton Woods II will take time, but it’s time to start, World Bank President Robert Zoellick writes in the Financial Times.
This week’s summit of the Group of 20 leading economies in Seoul presents a test of international cooperation offering an opportunity for a key group of G20 countries to agree on parallel agendas of structural reform, Zoellick writes.
For instance, the U.S. and China could reach agreement on mutually reinforcing moves to stimulate further growth, such as a course for yuan appreciation, or a move to wide bands for exchange rates, the World Bank chief writes.
Other major economies should agree to forgo currency intervention, except in rare situations agreed to by others, Zoellick says. These moves would help emerging economies to deal with asymmetries in recoveries by applying flexible exchange rates and independent monetary policies, he writes.
The system should evaluate using gold as a reference point of market expectations about inflation, deflation and future currency values, Zoellick writes, noting that while textbooks may view gold as “old money,” markets use it today as an alternative monetary asset.
 
http://www.bloomberg.com/news/2010-11-07/g-20-should-start-work-on-new-monetary-system-world-bank-s-zoellick-says.html

 

 

 

 

More Stealth Gold Buying, This Time it’s Iran to the Tune of $15B

11/02/10 Stockholm, Sweden – Perhaps the only thing more common these days than central banks increasing their gold holdings, is their ability to do it on the sly. Much like Saudi Arabia came out of nowhere to announce it more than doubled its gold reserves to 323 tonnes, Iran recently came out of the blue to announce it’s added about $15 billion worth of gold to its foreign exchange reserves.
According to Mehr News Agency:

“[Central Bank governor Mahmoud Bahmani] said that the country’s foreign currency reserve has gained several billion of dollars as a result of the rise in global gold prices. Bahmani said on October 23 that according to World Bank statistics Iran has $100 billion in foreign exchange reserves.

“Provided that the World Bank statistics are true any country with this amount of reserves would never hit a dead end, ISNA news agency quoted Bahmani as saying.

“It may be possible to exert pressure on a small country with $4-5 billion reserves, but the situation in regard to Iran is different, he said in a reference to efforts by Western countries pressure Iran financially.

“He pointed to Iran’s gold reserves and said it had multiplied several times in the past two years. Bahmani went on to say that currently gold consumption in the country is 30 tons per year and if the Central Bank doesn’t add to its gold reserves there will remain ample supplies for the next 10 years.”

Now, along with Saudi Arabia, Russia, and China, Iran is joining the club of surreptitious gold-hoarding nations. There appears to be ample evidence this club won’t stay too exclusive for very long. You can read more details on the story in Mehr News Agency’s coverage of how Iran now has no need to import gold for about a decade.

Bloomberg Television interview with Mr T.

Price of gold continues to rise and shine

16TH OCT Price of gold continues to rise and shine

By Ellen Kelleher
Published: October 15 2010 18:07 | Last updated: October 15 2010 18:07

The gold price hit another high this week as concerns mounted about the economic outlook, leaving investors facing the question whether to buy gold bullion or shares from the mining companies themselves.
Mining companies across Australia, South Africa and Latin America are drawing attention from buy-and-hold investors who subscribe to the theory that metal prices will be driven higher for decades to come, thanks to soaring demand from the emerging middle-classes in China, India and Brazil. Scores of speculators, meanwhile, are buying into gold-backed exchange-traded funds, hoping to see further upside in the gold spot price, which set another high of $1.387 a troy ounce this week.

Opinions vary on whether mining or bullion is the superior bet. “At times, mining stocks and the gold price behave in very different ways,” points out Justin Urquhart Stewart, director with Seven Investment Management, who has turned bearish on the gold price. While rising spot gold prices push up mining companies’ revenues, their profit margins can be impacted by new taxes and regulations, higher costs and production problems. Just this week African Barrick Gold, the FTSE 100 miner, drew attention to the difficulties miners face when it cut its gold production forecast again after uncovering “organised and systematic” fuel theft at a Tanzanian mine.

---

Indeed, the rally in gold is helping other precious metals, with silver hitting a 30-year high of $24.90 per troy ounce this week. Base metals have also performed well, with forecasts for the copper price looking increasingly rosy thanks to shrinkage in supply.

http://www.ft.com/cms/s/2/e5a7cfb6-d87d-11df-8e05-00144feabdc0.html

4. Silver To Outperform Gold? Why Gold & Silver? - The Movie (Buy Gold a...

2. Why Gold & Silver? - Gold Accounts For Expanding Fiat Currency (Free ...

3. $15,000 Gold? Here's Why. Why Gold & Silver? - The Movie.

BIS taking in more gold - who are the counterparties this time?

Author: Rhona O'Connell
Posted:  Wednesday , 13 Oct 2010 

The latest figures from the IMF show that the Bank for International Settlements' declared gold holdings are on the increase again.  The BIS hit the headlines earlier this year when analyst Matthew Turner spotted figures in the BIS' Annual Report that showed the Bank's holdings of gold had soared as the Bank had carried out swaps with what turned out to be commercial counterparties (the initial interpretation was that it had come from other central banks).  By the end of April, the BIS' net gold holdings stood at 468 tonnes, having been just 119 tonnes as recently as the end of November.
The BIS' gold holdings were more or less unchanged over the next three months, but they have been increasing again since June, rising from approximately 467t to 512t over the months to end-August, an increase of 45t.
As shown in the chart below, the nominal value of the gold at the end of August stood at almost $21 Bn, more than five times as much as at the end of October 2009, reflecting a four-fold increase in the tonnage held, allied to a 20% increase in the gold price.


[Continued]

WIN SILVER BULLION! 'Why Gold & Silver?' Giveaway

Gold moves higher as investors bet on QE2

By Carole Vaporean and Jan Harvey

NEW YORK/LONDON | Tue Oct 12, 2010 2:32am IST

 

NEW YORK/LONDON (Reuters) - Gold moved back toward its all-time high on Monday, despite late gains in the dollar, as investors prepared for what many see as a likely second round of economic stimulus by the U.S. Federal Reserve.
The U.S. dollar regained strength against the euro and yen in late buying by investors who viewed its recent decline as too far, too fast.
But gold buyers looked past the short term, betting instead that the Federal Reserve would almost certainly implement so-called QE2 -- a second round of quantitative easing to stimulate sputtering economic growth.
By 3:40 p.m. EDT (1940 GMT) spot gold had risen to $1,353 an ounce, above Friday's closing bid at $1,343.25 but below the all-time high of $1,364.60.
In New York, COMEX December gold futures closed $9.10 higher at $1,354.40 an ounce, setting a session peak at $1,356.30 as they approached their record at $1,366.
Many players think the Fed will implement QE2 at its next meeting after mid-term congressional elections, said Sterling Smith, a Country Hedging Inc analyst in St Paul, Minnesota.
To boost the economy, the Fed is expected to print money in order to buy U.S. government debt, which would be dilutive to the dollar, Smith said.

THE FEDERAL RESERVE is SELLING PAPER GOLD and BUYING PHYSICAL GOLD

Monday, 4 October 2010

By Rob Kirby

A couple of weeks ago, I pitched an idea to some associates of mine who are involved in SERIOUS [tonnage] PRECIOUS METALS procurement – physical metal only – let’s just say HUGE money.  I asked them if they would be interested in purchasing an “option” – cash up front - for the exclusive rights [first right of refusal on off-take] of a gold producer [miner] for a set number of ounces for 3 – 5 years “at the market” – using LBMA pricing [a.m. / p.m. fixes] in the future.  The answer I got back from my associates was “show us a terms sheet, we definitely have interest”.

So, I spoke to a friend who is very close to an intermediate producer who is in the mode of raising money right now.  I had them ask the producer if they would have interest – the producer said, “YES, we are interested - but just to let you know – J.P. Morgan has been asking us if we would sell them the same option”.  So, while gold producers have shuttered their “gold hedge books” – the Bullion Banks are ‘synthetically’ trying to keep physical output captive – I would suggest FOR THE EXPRESSED REASON THAT THEY SELL EVERY PHYSICAL OUNCE AT LEAST 100 TIMES OVER.

Gold is going to get EXTREMELY scarce in the future folks.  Big money interests are now cutting off [or bidding for / gaining exclusive access to] the traditional bullion supply chain “at the pit”.

The shorts of ‘paper gold’ at J.P. Morgan [the Fed in drag] are selling the daylights out of the paper market and simultaneously buying exclusive rights to producers’ future production so they can try to fudge their way through an unmitigated fraud and settle a big enough chunk of their bad bets to keep this ‘systemically ruinous’ precious metals ponzi-scheme alive.  

Price of Gold and Interest Rates Are Joined at the Hip

The academic research that outlines the inter-relatedness of gold and interest rates is succinctly laid out in a 2001 treatise, Gibson's Paradox Revisited, by Reg Howe.  From this one can deduct that ANY rigging of the gold price must go hand-in-hand with simultaneous rigging of interest rates.

Folks would do well to realize how neatly emerging details of Fed surrogate Morgan’s  ‘stealth’ activity in the bullion market dovetails with their obscene, obsequious activity elsewhere in their derivatives book – particularly their JUMBO TRILLIONS sized interest rate swap positions.  

[continued] http://news.goldseek.com/GoldSeek/1286223866.php

09/29/10 - European Central Bank Gold Sales Down 96%

09/29/10 Stockholm, Sweden – The year to September reporting is in for the European Central Bank Gold Agreement (CBGA), the group that controls the aggregate gold sales for the eurozone, Sweden, and Switzerland. The results are not that surprising — the group sold only a meager 6.2 tonnes. However, the precipitous drop in sales from the year prior period is staggering… the members’ gold sales are down 96 percent.



According to the Financial Times:

“The central banks of the eurozone plus Sweden and Switzerland are bound by the Central Bank Gold Agreement, which caps their collective sales. In the CBGA’s year to September, which expired on Sunday, the signatories sold 6.2 tonnes, down 96 per cent, according to provisional data.

“The sales are the lowest since the agreement was signed in 1999 and well below the peak of 497 tonnes in 2004-05. The shift away from gold selling comes as European central banks reassess gold amid the financial crisis and Europe’s sovereign debt crisis.

“In the 1990s and 2000s, central banks swapped their non-yielding bullion for sovereign debt, which gives a steady annual return. But now, central banks and investors are seeking the security of gold.”

[contunied]

http://dailyreckoning.com/european-central-bank-gold-sales-down-96/

Europe’s central banks halt gold sales

By Jack Farchy in Berlin Published: September 26 2010 22:08


Europe’s central banks have all but halted sales of their gold reserves, ending a run of large disposals each year for more than a decade.
The central banks of the eurozone plus Sweden and Switzerland are bound by the Central Bank Gold Agreement, which caps their collective sales.

In the CBGA’s year to September, which expired on Sunday, the signatories sold 6.2 tonnes, down 96 per cent, according to provisional data. The sales are the lowest since the agreement was signed in 1999 and well below the peak of 497 tonnes in 2004-05.
The shift away from gold selling comes as European central banks reassess gold amid the financial crisis and Europe’s sovereign debt crisis.
In the 1990s and 2000s, central banks swapped their non- yielding bullion for sovereign debt, which gives a steady annual return. But now, central banks and investors are seeking the security of gold.

The lack of heavy selling is important for gold prices both because a significant source of supply has been withdrawn from the market, and because it has given psychological support to the gold price. On Friday, bullion hit a record of $1,300 an ounce.

“Clearly now it’s a different world; the mentality is completely different,” said Jonathan Spall, director of precious metals sales at Barclays Capital.
European central banks are unlikely to sell much more gold in the new CBGA year, according to a survey by the Financial Times.

Greenspan’s Warning on Gold - “Fiat money has no place to go but gold,”

September 15, 2010Alan Greenspan spoke at the Council on Foreign Relations earlier today, and what was his advice? That central bankers should be doing what these columns, among others, have been rattling on about, namely that they should be paying attention to gold. “Fiat money has no place to go but gold,” the former Fed chairman said at the Council, according to economist David Malpass, who quotes Mr. Greenspan in one of Mr. Malpass’ emails on the political economy. Mr. Malpass writes that the former chairman of the Federal Reserve’s board of governors was responding to a question in respect of why gold was hitting new highs.

[Continued]
http://www.nysun.com/editorials/greenspans-warning-on-gold/87080/

AngloGold to Raise Capital - $1.37 billion to eliminate gold hedges

LONDON—AngloGold Ashanti Ltd., one of the world's largest producers of precious metals, plans to raise about $1.37 billion to get rid of forward gold sales contracts that are weighing on its earnings.
The Johannesburg-based miner is using the proceeds from an equity issue and a convertible-bond offering to eliminate gold hedges that locked the company into forward gold sales at an average price of less than $450 a troy ounce, compared with Tuesday's record high gold price of $1,274.80 a troy ounce.
"Removing the hedge book... [will] give us full exposure to the gold price, widening profit margins and improving cash flow," Chief Executive Mark Cutifani said.
AngloGold Ashanti, the world's No. 3 gold producer behind Barrick Gold Corp. and Newmont Mining Corp., is betting that gold prices will remain high in the future. London-based metals consultancy GFMS Ltd. forecast gold may rally close to $1,350 a troy ounce before year's end, supported by concerns about the pace and strength of the economic recovery....

http://online.wsj.com/article/SB10001424052748703743504575493550276702786.html?mod=googlenews_wsj

Gold price hits new record high

14 September 2010

The price of gold hit a record high on Tuesday, with analysts giving a number of reasons for its rise.

Both the price of the actual metal and the price for buying it at a future date rose more than 2% to $1,274.75 an ounce.
It was the biggest one-day gain for the commodity in four months.
One of the factors spurring investors is gold's traditional role as a so-called "safe-haven" investment at times of economic uncertainty.
On the physical market, demand for both bullion and jewellery has risen ahead of the seasonal Indian wedding period and the Hindu religious festivals that begin in September.
Another driver is more technical - gold is priced in dollars, and any fall in the dollar makes it cheaper to buyers using other currencies.
The dollar has fallen across a range of currencies, driven down by a range of factors.
Its most remarked upon slide has been against the Japanese yen. It is trading at a 15-year low against that currency.
The price of gold has risen 16% so far this year.
Analysts said there were no significant new reasons for this latest record.
"It's going up for all the same reasons. People are fearful still," ANZ head of sales, Peter Hillyard, told the Reuters news agency. "Little things come into the market, little factors that awaken people's interest in gold."
The World Gold Council's last report on the gold market predicted that continuing strong demand from jewellery buyers in the two fast-developing markets of India and China, would help keep the price high.

http://www.bbc.co.uk/news/business-11306751

IMF Sells 10 Tons Gold to Bangladesh; Sales to Central Banks Now 222 Tons

LINK

The International Monetary Fund, which set out a year ago to sell about 13 percent of its gold holdings, sold 10 metric tons to Bangladesh for $403 million.

The transaction brings total central bank purchases from the fund to 222 tons, according to fund data. India has bought 200 tons, Sri Lanka 10 tons and Mauritius 2 tons. A further 88.3 tons has been sold under the agency’s “on-market” sales program, it said in a statement yesterday।

Jim Sinclair - Strapping In For The Big Move

Now that expectations for Gold at very significant prices are being offered by various rational sources, there is one thing you can be sure of. That one thing is $1650.

I am getting many emails asking how it is possible for the gold price to reach $1650 by early January.

I suspect these are far out in time, out of the money call option buyers that have done exactly what I have warned against. That is the using of options with an investment outlook.

Options are speculations that you never hold past the half way to expiry point, but instead switch to further out months if you believe in what you are doing.

Those that pre-offer gold cannot trade it at $1650 in January because of the short time versus the big moves. They clearly have never experienced the gold run in late 1979 and early 1980.

I will stand with what I have said for nearly 10 years. Gold will trade at $1650 on or before January 14th, 2011. That never made me want to buy expensive in time call options.

It has given me the courage to invest in gold without margin both in shares and bullion.

There is no doubt in my mind that $1650 will occur in early 2011. I have told you that Martin Armstrong, a master timer, feels that gold will trade higher and face a reaction in middle to late June of 2011.

The gold banks are throwing blocks to the price as we approach $1262. This is a major waste of time and money as gold is going to and through that price. The only argument is whether gold will hit $1650 in January 2011 or $3000-$5000 in June 2011.

Do you have any idea how much money has been made by those that bought gold modestly and in cash only on every reaction and sold into the rhino horns? It sounded stupid when I suggested this tactic for the wannabe traders.

I ran 22,000 long gold contracts in the New York and London markets in 1978 to 1980. Back then that was a big number. Today if I have a conviction, I simply play with everything I have and screw credit. The only credit I would use as a pro trader is options.

Those of you who follow me closely know that I am NOT kidding. This is the time when PRICE and TIME meet each other.

This is the time now as it was in 1979 that I went throttle to floor.

This is the time now as it was in 1979 that I am committing 100% of all the cash I can accumulate to what I believe in.

This is the time when all I have planned for is falling into place for the final and enormous pay day. However, I will not and you should not violate discipline, as I have always tried to teach you.

Option are never held past 50% of time left when you purchased them.

If I am wrong about gold at $1650 on or before 14/01/11 it only means gold will trade much higher than $1650 five months later.

As far as being long and wrong, that is something I definitely am not.

Respectfully,
Jim