2012 could be a good year for the markets

Commentary: With incumbent in presidential race, stocks gain

By Howard Gold

NEW YORK (MarketWatch) — Greece is burning, Italy’s imploding, and the U.S. economy is limping along in a recovery so weak it’s barely stronger than a recession. And investors are reeling after Wednesday’s sell-off in stocks, gold, the kitchen sink, what have you.

But next year may turn out to be pretty good for stocks.

 

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Why gold is a bad investment

Precious metal lures susceptible buyers into a Midas crush

By  Jonathan Burton, MarketWatch

SAN FRANCISCO (MarketWatch) — Gold does not always glitter, but you wouldn’t know that from surging worldwide interest that has turned the yellow metal red-hot.

Gold has become highly prized bling, as anxious and astute buyers alike, from hedge-fund players to central bankers, flock to the “currency of fear.” Gold at around $1,400 an ounce is almost double what it commanded two years ago, and gold’s price is up almost 25% so far this year alone.

It’s been a great ride. Except gold is a bad investment.

Gold’s feverish run has made a lot of people a lot of money, and though the rally has taken a breather in the last few days, there’s no shortage of flag-waving supporters who claim gold is on a march to $1,600, $1,800, $2,000 and beyond. After all, gold is still well below its 1980 peak, when it was worth around $2,300 an ounce in today’s dollars.

 

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SAN FRANCISCO (MarketWatch) — The allure of gold is thousands of years old, but nowadays the precious metal has a youthful look.

Gold’s spectacular, decade-long run, coupled with the sovereign-debt crisis in Europe, an uncertain outlook for the U.S. dollar, and worries of worldwide recession, has tapped a new vein of investors in their 20s and 30s.

The popularity of gold among young investors speaks to the metal’s impressive role as a storer of wealth — and says a great deal about a generation that has seen its share of stock market booms-and-busts, a housing market collapse, and, over the past few weeks, government debt of Greece and Italy trading at yields more akin to junk bonds.

Generation Au

Accordingly, many of these gold buyers have little faith in equities and, unlike older investors, are more inclined to consider alternative investments. Others seek tangible, hard assets as a counterweight to stocks, bonds and cash in the aftermath of the 2008 U.S. financial crisis.

“It was only a matter of time,” said Divnain Malik, head of retail sales at Gold Bullion International, a seller of physical gold in New York. While around half of his clients are baby boomers and more established gold investors, the “younger demographic seems to be catching on.”

Indeed, the 25-to-35 year-old age bracket is the firm’s fastest growing segment of buyers, he said. Over the past two months, about half of the hundreds of new accounts opened at his firm were from people in their 20s and 30s, he noted, adding that younger investors are increasingly sophisticated, do not want to repeat others’ mistakes, and are protective of their investments.

Said Malik: For them, “it’s not about the risk in gold, it’s the risk anywhere else.”

Gold’s strong track record, of course, is clearly a big draw. Gold has enjoyed a string of nominal record highs for the better part of two years, as investors have fretted about currency debasement, potential for inflation, and unbridled government spending.

Recently, though, the deepening of the euro-zone crisis has skewed gold’s generally inverse relationship with stocks, with gold losing some of its allure as a safe haven. Some large investors, pressured by steep tumbles in global equity markets, have sought refuge only in cash.

But gold is still comfortably ahead this year. For example, SPDR Gold Shares  (NAR:GLD)  , an exchange-traded fund that is a proxy for the metal, was up 23% for the year through Nov. 10, according to investment researcher Morningstar Inc.

Wizards of oz

For U.S. investors, there’s a sense with gold of better late than never. Unlike Europeans and Asians, Americans don’t have a long tradition of owning gold.

Yet contrary to stereotype, most U.S. gold investors are not guns-and-bunker renegades, hoarding physical gold to fend off the collapse of civilization.  Read more: Gold and bonds are all that's left.

Demographic studies on precious-metals investing done in the 1970s and 1980s actually showed a large percentage of college-educated buyers, with only a small portion owning gold for “doomsday scenarios,” said Jeffrey Christian, managing director of CPM Group in New York.

Studies in the 1990s offered similar findings, he added, and also detected rising participation of women in gold investing, consistent with broader trends of women taking the lead in family investing decisions.

These days, young buyers’ interest in gold is hampered by the metal’s high price, Christian said.Student loans, the financial pressures of a young family and other obligations, leave little money for investing or speculation, he noted. An ounce of gold currently fetches around $1,800.

Yet despite such obstacles, the financial crisis three years ago was severe enough to make the younger generation re-evaluate their investments, Christian said.

Kurt Brouwer, chairman of Brouwer & Janachowski, LLC in Tiburon, Calif., and a contributor to MarketWatch’s Trading Deck commentary, added that he’s noticed greater interest in gold across all age brackets.

“Anytime you have something doing well people get interested in it,” he said. 

 

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kingworldnews.com
NOVEMBER 11, 2011

 

Closing Gold & Silver Market Report – 11/11/2011

Gold rises as dollar loses out to euro

    * Greece, Italy move closer to enacting austerity measures
    * Euro zone crisis far from over, should support longer term
    * Spot gold technical signals mixed

    By Maytaal Angel and Amanda Cooper	

    LONDON, Nov 11 (Reuters) - Gold rose on Friday in line
with a pick-up in the euro, which gained on the back of investor
optimism that new governments being formed in Italy and Greece
will swiftly enact austerity measures in a bid to stave off the
region's debt crisis.	

    Italy approved austerity measures needed to reduce its debt
burden and regain the confidence of capital markets, which this
week have pushed the yields on its benchmark 10-year bonds into
what economists perceive as a " danger zone"  above 7.0 percent.	

    Spot gold rose 0.7 percent to $1,770.79 an ounce by
1525 GMT and was on course for a third straight week of rises
with a 1.0 percent gain.	

    U.S. gold rose 0.8 percent to $1,775.00.	
    " Gold is starting to consolidate above $1,750. For
sure, there will be more profit-taking from those people that
went long ... it could come off to $1,705 but I think we will
settle here for a while,"  said VTB Capital analyst Andrey
Kryuchenkov.	

    " The downside in gold is more protected because that is well
supported at the moment,"  he said, adding: " The broader market
clings to any sort of good news and to anything that is mildly
positive. What the FX and bond markets are telling us right now,
with Italian 10-year yields, and the spreads of France and Italy
versus Bunds, coming off is that there is a bit of improvement
in sentiment." 	

    Italy has overtaken Greece as the main focus of the euro
zone debt crisis this week, with yields on its benchmark 10-year
bonds rising on Wednesday as high as 7.5 percent, which is
considered to be an unsustainable level. 	

    They have since retreated below 7 percent, though investors
remain concerned that Euro zone's third-largest economy could
buckle under its 2 trillion euros of debt. Unlike Greece, Italy
is too big to bail out.	

    In Greece, the prime minister designate, Lucas Papademos,
will name a new crisis cabinet to roll out austerity plans.
 	
    	
    " GOOD FOR GOLD"   	

    " The European Central Bank will have to create more money to
assist the debt burden in Europe, and that will be good for
gold,"  said Standard Bank analyst Walter de Wet, who said he
expected the gold price to rise to $2,000 an ounce.	

    Increasing liquidity can aggravate price pressures, making
gold more attractive as an asset seen to hold its value better
than paper currencies during times of high inflation.	

    " It is still unclear whether a new government in Italy will
be able to successfully consolidate its budget without external
help. Gold should therefore continue to profit from the
persisting high uncertainty,"  said Commerzbank in a note.	

    The euro was slightly higher on the day, changing hands at
$1.3641 and staying above a one-month low of $1.3484
touched on Thursday. For the week, the euro is still down about
1.5 percent. 	
    	
    Investment flows into gold-backed exchange-traded funds
continued this week. SPDR Gold Trust, the world's largest
gold ETF, reported a fifth straight day of gains in its holdings
-- reaching 1,268.666 tonnes by Nov. 10, the highest since late
August. 	

    In other precious metals traded, spot platinum rose
0.8 percent to $1,631.24 an ounce, spot palladium rose
nearly 2 percent to $655.22, tracking a rebound in industrial
metals. 	

    Silver rose 0.7 percent to $34.33 an ounce.	


  

  

kingworldnews.com 
NOVEMBER 10, 2011

 

express.co.uk 
NOVEMBER 10, 2011

 

 

 



 

Italy at breaking point fears grow of euro zone split