HSBC lifts gold price forecast on higher physical demand

Friday, September 13, 2013 10:25:51 AM America/Toronto

Moneycontrol.com | September 13, 2013

The bank lifted its gold price outlook for this year to USD 1,446 per ounce from USD 1,396, and kept its 2014 forecast unchanged at USD 1,435 an ounce. Spot gold was trading at USD 1,330.66 at 17:36 GMT on Thursday.

HSBC Global Research raised its 2013 gold price forecast and said physical demand is becoming a major driver for the yellow metal. The bank lifted its gold price outlook for this year to USD 1,446 per ounce from USD 1,396, and kept its 2014 forecast unchanged at USD 1,435 an ounce. Spot gold was trading at USD 1,330.66 at 17:36 GMT on Thursday.

"Physical demand for jewelry, coins, and bars from China, especially, are supportive and becoming a key driver," HSBC said in a note on Thursday. The bank said investment demand for gold will remain weak as gold's use as a safe haven ebbs. Expectations that the US Federal Reserve will reduce stimulus measures will continue to weigh on the gold market, HSBC said. "We expect gold's near-term direction to be highly data dependent and is likely to be volatile." The prospect of a stronger US dollar as a result of Fed tightening is likely to present headwinds to further gold rallies, the bank said.

 

Comments | Posted By Jamie Cohen

Gold Inventories at COMEX Decrease by 36%

Wednesday, September 11, 2013 10:39:37 AM America/Toronto

To date this year, gold inventories at the COMEX have dropped by more than 36% which means the COMEX is holding the least amount of gold it has in the past 9 years.  The inventories are down from about 11 million ounces to 7 million ounces.

What does this all mean?

It is definitely in line with what is happening in the physical market.  The supplies are tight, the market is in backwardation and it is likely that the premiums will rise soon considering all of the above.  On top of that we are entering a strong seasonal pattern for gold and silver.

Comments | Posted By Jamie Cohen

Gold Bulls Increase Their Positions to the Highest in 9 Months

Thursday, September 5, 2013 2:40:43 PM America/Toronto

Although, physical buying of precious metals never backed off; money managers are finally waking up and putting money into gold and silver. Although, the catalyst might be the possibility of a Syria strike, gold and silver are showing higher lows and higher highs which is a very strong technical indicator.

Out of the 23 analysts surveyed by Bloomberg, 12 are bullish and 6 are neutral which is refreshing positive change for the precious metals sector.

Comments | Posted By Jamie Cohen

Gold in Backwardation

Monday, August 12, 2013 3:44:32 PM America/Toronto

There has been lots of talk about gold being in backwardation or contango.  What that means is that the spot price of gold is higher than the futures prices of gold.  This is an extremely rare occurrence and is usually a very bullish signal.  In layman’s terms, there is a great demand for physical gold right now….no kidding…considering where the prices are….

Lately, there have been stories about companies not getting their gold…most recently, Grafite Capital ordered gold for themselves, we are now 8 weeks later and they still have not received their gold.

We believe there is a major shortage of gold out in the market.

 

Comments | Posted By Jamie Cohen

GOFO- You Don't Want to Miss This

Friday, July 19, 2013 11:50:50 AM America/Toronto

Gold Forward Offered Rates (GOFO) or the cost to borrow gold remains negative.

The lack of liquidity in the interbank London Good Delivery gold market (400 ounce gold bars) has pushed gold forward rates, known as “gofo”, into negative territory, meaning that gold for future delivery is trading at a discount to physical market prices – a rare situation that has occurred only after the Lehman Brothers collapse and near 
the bottom of the gold market in 1999.
 
The last time forwards were negative was in November 2008, when a scramble for physical 
gold led a sharp price rally of 46% from $682/oz to over $1,000/oz between October 2008 and February 2009.

Comments | Posted By Jamie Cohen

It’s all about inflation

Thursday, July 18, 2013 3:19:52 PM America/Toronto

John Paulson mentioned this week at the CNBC/Institutions Delivering Alpha conference in New York that “the consequences of printing money over time will be inflation, it is just difficult to predict when.”


It is widely known that if you are looking for a hedge against inflation and you have long term view of gold, gold and silver is an integral part of your portfolio.

Paulson has been one of the most bullish personas on gold as he has a big part of his wealth in gold.  This is the same person who correctly called the subprime mortgage in 2006, which is 2 years before the whole mess occurred.

Today he is buying more gold at these prices and believes that if you hold a long term view, you will prosper.

Comments | Posted in Blog By Jamie Cohen

Explaining the Difference Between the Physical and Paper Market prices

Thursday, July 11, 2013 10:04:14 AM America/Toronto

 
For all of us who read about gold and silver prices, you have inevitably come across articles and commentaries regarding the differences in prices between the physical gold and silver market and the electronic (paper) prices. As you know the price of gold and silver you see on TV represents the “paper” market. The actual prices paid for real silver coins/silver bars and gold coins / gold bars represent the physical or “real” market. It’s similar to comparing the price of a barrel of crude oil to the price of gas at the pump. While the crude market makes good headlines, it’s the price at the pump that matters most to people who want to buy and use the real commodity. 
 
Let’s compare this to crude oil and the price at the pump, we all know that a drop in crude oil prices doesn’t necessarily lead to a decrease in prices at the gas station; the same idea can be applied to precious metals products. When the electronic/paper market prices decrease, it does not necessarily mean the ask price of gold and silver in the physical market are following suit.
Comments | Posted in Blog By Jamie Cohen

Gold and Silver: Forced savings

Monday, July 8, 2013 11:19:55 AM America/Toronto

I have been to many seminars and have spoken to thousands of people who have bought coins and bars of silver and gold…..while most have bought; a very small proportion have actually sold off any of their savings.

Most people who invest in the physical asset will not flip it very often, like they would a stock, mutual fund or ETF-a paper asset.

Think real estate, yes, of course people buy and sell all the time, but how often do you see people buying and selling within days or even weeks….

Buying the hard asset encourages forced savings and the likelihood is that you will not sell it on emotion.

 

Comments | Posted in Blog By Jamie Cohen

Why the Major Slide in Gold Prices is Showing Signs of a Gold Bull Market

Tuesday, June 25, 2013 3:35:39 PM America/Toronto

Everywhere you look, on the internet, newspapers, radio and TV, it seems everyone is selling gold and silver.  This month alone the SPDR Gold Trust declined to levels below 1,000 tones and the expectation from 1 prominent banks in the world is that investors will sell another 285 tons this year.

As any contrarian knows, when everyone else is selling, when the news in the market is extreme in one directions, when there is an extreme amount of negativity, that is a bullish indicator to start seriously looking for a bottom in the market.

What gold excels at is providing safety from uncertainty.  Times are very uncertain currently:

  • The economic troubles are still here and haven’t gone away
  • The global economy is very shaky
  • The worries behind the Chinese credit crunch is escalating
  • Central banks are still using QE, especially the United States and the Bank of Japan

It is almost impossible to pick the exact bottom, but I would stick my neck out to say that we are very close!

 

Comments | Posted By Jamie Cohen

The divergence Between Paper and Physical Gold

Wednesday, June 5, 2013 3:04:41 PM America/Toronto

Gold ETF’s and futures contracts are going down, which is obviously controlled by Wall Street.  At the same time, every time there is a dip in the gold market price, the demand for physical gold is rising globally.

 

In addition you can see the divergence between Wall Street short term speculators who are shorting the market and the long term commercial investors who are heavy buyers. The speculative momentum players continue piling on shorts, while commercial interests are following a path 180 degrees opposite.

The question remains for those investors interested in gold as to who will be right in the end. The short-term Wall Street speculators or more long-term players?

Comments | Posted in Blog By Jamie Cohen