Monday, January 20, 2014

Gold in 2014 Buy, Sell, or Hold?

The price of gold took a drop in 2013 which could point to an opportunity to pick gold up at a valuable price in 2014, or it could signal that gold has been overpriced and it is now coming back to normal.  Which one is it?  That is the big question.  In my opinion, I look for gold to stay relatively even throughout 2014 and end the year close to where it is at now at $1254.10 per ounce or maybe slightly higher.  I think we will see gains and drops throughout the year but in the end it will stay relatively close to where we are starting out and hit no more than $1450 as the high for the year before settling back down to end between $1250 and $1300.  I believe gold as a long term investment is questionable and personally I chose not to include it in my portfolio.  I guess I see it as an "old school" investment that isn't usable other than to sell it to another speculative investor.  It doesn't do anything, doesn't generate a profit through wise business decisions, it can't be any more than it already is - which is speculation on future value to other speculators. With the world economy the way it is, the ability to transfer funds across the world in an instant, and even new types of world currency such as BitCoin surfacing, gold just seems out of date.  I look for gold to hold on for a few more years, staying relatively close to the current price within the next 10 years or so.  And ultimately becoming less and less valuable in the more distant future.  I think you could buy under $1250 with the intention to sell within the year and come out ok, hold what you have if you already have holdings in gold, but I wouldn't sell until the price takes an uptick later in the year.  Wait for $1300 to $1350 to sell.  Here is an article from Market Watch on the topic.

UPDATE: Gold up, but improving flows don't convince all

MarketWatch - 4:18 PM ET
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- Gold prices moved higher in electronic trading on Monday, building on gains seen last week amid signs of improving investment flows, though some analysts worried that those gains could short out if Chinese demand doesn't come through as expected.

Gold for February delivery (GCG4) rose $2.20, or 0.2%, to $1.254.10 an ounce, after gaining $11.70 to settle at $1,251.90 an ounce on Friday.

March silver (SIH4) added 1cent to $20.31 an ounce, adding to a gain of 1.3% on Friday and a 0.4% rise for the week.

In observance of the Martin Luther King Jr. holiday, trading floors were closed for Monday. Electronic trading for metals and energy futures ended at 1:15 p.m. Eastern and will reopen again at 6 p.m. Eastern.
Gold ETFs tracked by Bloomberg saw inflows of 7.4 tons on Friday, the highest daily amount since October 2012, said analysts at Commerzbank in a note on Monday. They added that much of that gain was driven by the SPDR Gold Trust (GLD).

"If this turns out to signal a trend reversal, it is likely to lend buoyancy to the gold price," said the Commerzbank analysts in a note. "The high outflows from the gold ETFs observed since the beginning of last year were one major reason for the weak gold price." 
The analysts also noted that speculative financial investors are more optimistic about gold again. In the week ending Jan. 14, those investors expanded their net long positions for the third consecutive week to 28,300 contracts, the highest level in eight weeks.

There are some shaky signs to this potential rebound for gold, though.
"The metals continue to track the performance of the equity markets, which despite posting a green print on Friday, the breadth was limited to a few large cap stocks," said Peter Hug, global trading director at Kitco Metals. "Overall, the equity market is struggling to validate value and capital flows have again 'ebbed' into the metals."

Fawad Razaqzada, technical analyst with, said in a note that after a 28% drop in gold last year, gold has probably been boosted by expectations cheaper prices will result in higher demand from China ahead of the Lunar New Year holidays, which begin Jan. 31.
Data on Chinese imports due midweek will be analyzed to determine the strength of that Chinese appetite.
Net long positions were also built up for other metals as well, noted Commerzbank, but also investors were looking ahead to a looming strike.

Platinum for April delivery (PLJ4) jumped $14.90, or 1%, to $1,469.00 an ounce. Members of South Africa's Association of Mineworkers and Construction Union (AMCU) over the weekend reportedly voted to strike this Thursday at the world's top platinum producer, Anglo American Platinum Ltd. , as well as Lonmin PLC (LNMIY) and Impala Platinum Holdings Ltd (IMPUY). .
"The strike action will see effects on palladium and rhodium supplies as well, while the AMCU has indicated to their members involved with gold production that they will also be given a strike mandate.," said Kitco's Hug. "The story has potentially profound issues in a market where the PGMs (platinum-group metals) are expected to be in supply deficits, pre-strike, but caution is urged as historically these actions have been short lived."

At the moment, noted Commerzbank, platinum costs over $200 per troy ounce over gold, and the last time the price gap was this wide was July 2011.

March palladium (PAH4) rose to $748.55 an ounce, while high-grade copper for March delivery (HGH4) was ended at $3.34 a pound, little changed on the day.


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  4. Looking to the yesterday's news about Gold, we came to know that the Gold trading range for the day was 27663 to 27983.