Posts Tagged price of gold
Gold mining stocks and precious metals stocks did not perform very well last year (compared to recent years), but that doesn’t mean there is no value in them. Usually, when a sector like this is beaten down or forgotten by the market in general, value players come in and buy it up (myself, when gold bullion prices dip, I try my best to buy gold-related investment to average down my overall investment cost).
Analysts who follow the mining sector and who have earnings forecasts for these gold mining stocks typically value them as if the price of gold bullion was trading well below its current level. This means that, not only are the gold mining stocks cheap, they are also trading on the assumption that the price of gold bullion will fall to within the range of $1,200-$1,500 an ounce in a few years. why buy gold bullion when you can buy a quality gold mining stocks at a discount to the price of gold bullion ?
It’s been a frustrating time for investors of the gold mining stocks , but if the value players are hesitant to jump in feet first, there are other players who will.
Pan American Silver Corp. (NASDAQ/PAAS), the world’s second-largest primary silver miner, has just offered $1.5 billion in combined cash and stock deal to acquire Minefinders Corp. ltd. (ASE/MFN), a medium-sized silver producer whose primary assets reside in Mexico. The price tag is a 36% premium to where Minefinders traded last Friday.
This, in my opinion, is just one of the many mining deals that will take place in 2012. The larger mining companies like Barrick Gold Corporation (NYSE/ABX), sitting on $3.0 billion in cash, Newmont Mining Corporation (NYSE/NEM), with over $1.0 billion in cash, and Goldcorp Inc. (NYSE/GG), with almost $1.5 billion in cash, are always searching for ways to grow their businesses.
It is a very attractive proposition for the large miners to buy quality junior and medium-sized gold mining companies, who are trading very cheap in terms of the price of gold bullion today. if the large gold mining companies believe the price of gold bullion will trade much higher, then the acquisitions become even more inexpensive and the value of gold mining stocks that much more attractive.
Be careful, dear reader; the wheat truly needs to be separated from the chaff. there are many promising junior gold mining stocks that will, in the end, offer up just that; promises. The companies that have proven assets, in my opinion, will earn a rich premium for their gold mining stocks in a buyout as the large firms look to improve their growth rates.
In 2012, if the value players in the gold mining industry don’t buy the gold mining stocks aggressively, the large gold mining companies flush with cash will. This will spur other hedge funds and asset managers to take a look at the mining sector more carefully and, in my opinion, will cause a stampede into the gold mining stocks, driving their prices much higher.
Sometimes patience is required in a market. but if there is one thing I’ve learned, it’s that value has always produced winners in the end.
Michael’s Personal Notes:
Another startling statistic that gave me pause: government benefits are now required for nearly half of Americans.
In the latest census data, covering the period of the second half of 2010, 48.6% of Americans received social security, unemployment insurance or another type of government benefit payout (Source: Wall Street Journal).
This past recession has hit harder than most. only seven percent of Americans who lost their jobs during this recession have attained their previous financial position (Source: Rutgers University).
Without government assistance, imagine where we would be. The fact that the government has to help so many people illustrates the damage that this great recession has caused America and shows how far we still need to climb to get ourselves back to where we once were.
Researching these statistics gave me an idea. what if we removed government benefits (government transfer payments) from personal income to see how the average working American is doing?
This is a more pure form of the data, because it calculates income from work—the jobs market—with government assistance excluded.
To give us some perspective, let’s go back to the 1960s and look at personal income excluding government transfer payments. during this period of economic growth, this measure gained anywhere from 10% to 25%—people enjoyed strong personal income growth in a strong jobs market.
How did people do during recent recessions? In the late 1970s recession, the personal income growth rate slowed to just six percent. In the recession of the late 1980s and early 1990s, the personal growth rate dropped to merely three percent, while the recession that visited us in the early 2000s saw a personal income growth rate of five percent in a very difficult jobs market.
How about today and since 2008? here comes the shock-and-awe part. Not in 50 years has this statistic once showed negative personal income growth, despite having experienced four recessions in that span. Is it different this time? You bet.
In the middle of 2011, real personal income excluding government transfer payments fell 5.1%. Currently it stands at negative 3.6%. Translated, salaries for the average worker are 3.6% lower than they were in 2008. what jobs market?
So, dear reader, not only are close to half of Americas receiving some form of government benefit, but also real personal incomes for those working is actually falling, which means that the average working American is being squeezed by inflation (through higher food and gas prices), while purchasing power is being further eroded by salaries that are below 2008 levels in a stagnant jobs market.
In case we dare to look outside, this is 2012. So I ask, where is the growth in consumer spending going to come from if the average American is witnessing the first post-recession decline in personal income in 50 years?
Where the Market Stands; Where it’s Headed:
Joe Granville came out yesterday and said that the stock market is going to dive 4,000 points this year. (Can you believe he is past 80 years of age?) I’ve been reading other reports that say the bottom is about to fall out of stocks, because the market is oversold and volume is thin.
But when I look at the number of stock market advisors who are bullish vs. bearish (a reliable stock market indicator I follow), it’s not a frightening spread just yet.
We are in a bear market rally in stocks that started in March of 2009. This bear market rally has further upside potential.
What He said:
”for the economy the message from retail stocks is quite clear: Consumer spending, which accounts for roughly 70% of U.S. GDP, is in jeopardy. after having spent like “drunkards” during the real estate boom years, consumer spending is taking the same trend as housing prices, slowing down faster than most analysts and economists had predicted. as news of the recession continues to make headlines in the popular media, the psychological spending mood of consumers will continue to deteriorate, lowering earnings at most high-end retailers and bringing their stock prices down even further.” Michael Lombardi in PROFIT CONFIDENTIAL, January 28, 2008. according to the Dow Jones Retail Index, retail stocks fell 39% from January 2008 through November 2008.
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The Dollar Index, which measures the value of the greenback against a basket of major currencies, increased 0.31 percent to 80.28. the euro hovered around $1.30 but remained extremely vulnerable to negotiations among Greece, its creditors and Eurozone officials aimed at avoiding a default.
Global stocks, which also influence the price of gold among investors who see it as another risk asset like equities, were mixed.
The yen fell after Japan said it had become a net importer, boosting the Nikkei Stock Average to a three-month high. Japanese stocks were also lifted by Toyota Motor Corp., which increased its 2012 sales plan and a huge quarterly profit report from Apple Inc.
Many other Asian exchanges remained closed to mark the start of the Lunar New Year.
Stocks in Europe were most lower as fears that Greece would default on its massive sovereign debt heightened concerns about the health of the continent's major banks, many of which hold large amounts of debt from such struggling nations as Portugal, Italy, Greece and Spain.
U.S. stock futures were mixed.
Gold for February delivery declined $9.10 to $1,656.20, while spot gold fell $21.60 to $1,655.13.
Silver for March delivery was off 21 cents to $31.77, while spot silver was off 54 cents to $31.85.
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(Kitco News) - Gold stocks are generally undervalued compared to the price of gold, but there are numerous factors that will determine what the highs and lows are in 2012.
The poor state of the global economy had the starring role in gold stocks dismal performance, while rising debt and political unrest also played their own parts. The price of gold rose 10% in 2011, while the Amex Gold Bugs Index (NYSE: HUI), a basket of unhedged gold stocks, fell 16%. Gold stocks were down even compared to the broader stock market, as the S&P 500 stock index ended 2011 about flat.
“Gold stocks are dramatically undervalued,” said Jeff Clark, senior precious metals analyst at Casey Research. “When stocks of any nature are this cheap and this undervalued, sooner or later they revert to the mean, and simply reverting to the mean would imply that they’re going to catch up with gold.”
Some gold stocks saw significant drops, such as Agnico-Eagle Mines Ltd. (NYSE:AEM, TSX:AEM), which tested 52-week lows at $34.50 in late December after peaking at $76.46 in February 2011.
“We do believe that at some point they’re going to return to bring their leveraged performance that they had in the past,” Clark said. “The undervalued nature that they have right now simply can’t last. Their valuations are low, their dividends are going higher, cash flow is going higher, profits are going higher so all these things bode well for gold stocks.”
Kenneth J. Gerbino, head of Kenneth J. Gerbino & Company, also said gold stocks are undervalued and tipped them to have a solid upcoming year.
“The money in the ground is worth a whole lot more than the money that’s being printed,” Gerbino said. “I would think that the gold mining stocks should have a decent year this year. if gold is anywhere above $1,300 this year, the mining stocks will probably be fine.”
Newmont Mining Corp. (NYSE:NEM) was one of the mining companies that did well last year, trading at $61.48, up from 52-week lows of $50.05 in March, but down from a 52-week high of $72.42 in November.
John Person, president of National Futures Investment Advisory, suggested that Market Vector’s Gold Miner’s ETF (NYSE: GDX) will finish 2012 lower than its close of $53.65 on Jan 9.
“I think that gold went as high as it did and miners went as high as they did based on uncertainty of leadership from U.S. fiscal policies,” Person said. “Some cycle work (technical chart analysis) that I have shows a market peak for the next two years. I’m not establishing any long positions at least up in here and I think by year’s end we’ll see the GDX lower.
“I don’t know if it’ll be a substantially lower price level but I think we will absolutely see it in the low to mid-$40 range.”
While Clark forecasts gold stocks to have a strong showing in 2012 due to them being undervalued, he also said that other factors will play into driving gold stocks higher.
Today the metric system presides: gold is always weighed in grams. This is most inconvenient because the basic price of gold is still quoted in Troy ounces. to make matters worse, the novice weighs gold on his kitchen scales and wonders why his local jeweller suddenly doesn’t seem to understand ordinary pounds and ounces. so, how to weigh gold?
This is how gold is weighed today:
32.2 ounces = 1 kilogram
An important number to remember is 31.1 (to be more exact 31.1035), it is the key to all grams/ounces and ounces/grams conversions.
Kitchen scales weigh in ounces Avoirdupois:
If only kitchen scales are available deduct 10% from the weight to get an approximate answer in Troy ounces. Spring-loaded scales are not very accurate, especially kitchen scales which are not designed for weighing very light objects. the pan-and-weights scale (the beam balance) is more accurate though the smallest kitchen weight is likely to be oz. Providing a kitchen beam balance is sensitive enough it is well worth buying a set of jewellers’ gram weights down to gram. All gram weights are the same, whether used for weighing scrap gold per gram or food per gram.
1 Troy oz = 0.911 Avoirdupois oz
When selling scrap gold it is always worthwhile to determine accurately the weight of your jewellery prior to handing over the items to a prospective buyer. If necessary request more than one quote to compare weights from prospective buyers.
Article by Nigel Martin – pounds4gold by scrap gold
After last night the past (9 Jan), gold is down near the base of U.S. $ 1605, which came from the meeting.To resolve the debt crisis in Europe between the President and Prime Minister of France, Germany, Greece has warned that it may be.Not support the next installment. Without rapid progress on debt restructuring, Greece. Gold prices today.
Began to recover, but also not too far away. while the price of gold bars and gold futures prices due to currency stability.Baht appreciation.the gold price is expected to move within a track, because investors are waiting for issues in particular.·Auctions of government bonds of Italy and Spain. after the auction of government bonds of Germany in the early weeks.Very low yields. this implies that investors are not confident to hold government bonds of other countries are provided.interest in the holding of the German government is very special. if the bid bond, Spain and Italy do not.the attention of investors is very negative pressure to weaken against the euro. the price of gold will be forced through the solid.the value of the dollar further. However, in the gold price started moving in opposite directions, with the euro. it is also possible.the demand for gold as a safe asset return.
Buy and sell gold jewelry:
Five More Reasons to Sell Gold
Whether you are younger, older, male or female, you are likely to possess or know someone close to you in possession of a small or large amount of jewelry that has just been hanging around for years, decades, or half a century. there have been and still are countless reasons to purchase and countless reasons to sell gold that have been evident throughout history and individual circumstance. However, with this article we will only cover a few of the reasons private jewelry owners seize the opportunity to sell gold and take advantage of a financial gain for alternative reasons. it may be the jewelry that they no longer want, the memories associated, or the enticement of a lucrative exchange that appeals to the men and women who sell. Regardless of the reasoning, the more reputable the purchasing company the more they are offering a service to the public that see the benefit of it. a few of the reasons to sell gold deserve a little bit of exploration. for example, some men and women simply don’t want to hang onto old out of date jewelry from their youth or a relative. or, some may be looking into an unloading option because of how the jewelry connects them with the gift giver, the relationship has ended and so should the connection or memories.buy and sell gold jewelry