Buying physical gold or silver
as an investment is not always as straightforward as it sounds. Novice
investors often get lost in a variety of options: “Should I buy minted bars or sovereign coins?” “Maybe that limited edition coin would be a good investment?”
Sensible investors evaluate bullion options by the price and premium on the gold spot price. But the premium is only one part of the equation. It doesn’t necessarily mean that you’ll get that premium back upon the sale.
Worse, there are unscrupulous dealers out there. They will try to
trick you into buying numismatics and other collectibles that have a
huge premium and won’t retain their value over time.
As a result, it’s essential to get an understanding of precious metals before dipping your toes into this market.
In this article, I’ll answer some of the most important questions you should ask yourself before buying precious metals.
(Kitco News) – Gold
and silver prices are posting moderate corrective gains in
early-morning dealings Friday, following the sharp losses suffered
Thursday. Overnight, gold did drop to a three-week low, while silver
hit a three-month low. Some mild U.S. inflation data just released is
also helping out the precious metals market bulls. April gold futures
were last up $6.10 an ounce at $1,295.90. May Comex silver was last up
$0.122 at $15.09 an ounce.
The just-released U.S. personal income and spending report for
February came in at up 0.2%, which was in line with market
expectations. The January personal consumption expenditures price index
came in at down 0.1% from December and up 1.8%, year-on-year. Personal
spending in January came in below expectations, at up 0.1% from
December. These numbers fall into the camp of the U.S. monetary policy
doves, who do not want to see U.S. interest rates rise anytime soon.
Metals prices did up-tick after hit report hit the news wires.
Asian and European stock indexes were mostly firmer overnight. U.S.
stock indexes are pointed toward slightly higher openings when the New
York day session begins. Today is the last trading day of the week, of
the month, and of the quarter, which makes it an extra important
trading day from a charts and technical perspective. Traders and
investors are exhibiting a bit more risk appetite late this week, which
has buoyed world stock markets but has helped to sink the safe-haven
gold and silver markets.
The U.S. and China held high-level trade talks in Beijing late
Thursday and Friday. U.S. Treasury Secretary Steven Mnuchin said those
talks were productive. However, Larry Kudlow, President Trump’s
economic advisor, said on Thursday any final U.S.-China trade accord is
likely to come months down the road. There is no clear consensus in
the marketplace on the eventual outcome of the U.S.-China trade talks,
which means that when any final result is announced it is likely to
cause at least some volatility in some markets.
The U.K. Parliament is likely to vote Friday on another option
offered by Prime Minister Theresa May to break the Brexit deadlock.
There are not high expectations for her latest plan to be approved by
the MPs. Today is the day the U.K. was set to leave the European Union.
May’s options moving forward on the matter are increasingly limited,
with speculation of a general election being held in the near future.
The key outside markets today see the U.S. dollar index higher and
hitting another 2.5-week high today. The USDX is back near its recent
multi-month high. Meantime, Nymex crude oil prices are higher and
trading around $60.00 a barrel. Oil prices are still trending higher on
the daily bar chart even though price action has been sideways this
Big moves will be there in metals, energies and the US dollar Index only after the outcome of US-China trade talks are known. Till then, the consolidation phase will be there. Focus of the world in on a Chinese slowdown. Long term metal investors are on the sidelines as they expect slower and lower Chinese demand. If the trade talks succeed and all issues comes to an end once and for all, then also, the Chinese economic growth will not happen overnight. It will take at least another quarter to see actual higher and sustained growth.
This month’s rally in gold prices may not be over.
That’s because investors are still heavily betting on a decline in the value of the precious metal. When speculators overwhelmingly bet in one direction then a move in the opposite way is often the result.
Bars of gold bullion. Rob Bennett/AP Images for APMEX
Investors wanting to profit from a likely upward move in prices might consider buying the SPDR Gold Shares exchange-traded fund (ticker: GLD) which hold bars of solid gold bullion. Alternatively, try buying December-dated futures contracts on the CME futures exchange.
On October 1, I wrote that speculators were betting so heavily on a further decline in gold prices that we’d likely see a rally. You can read the story here. Starting late January gold prices tumbled until they reached a recent low in mid-August.
However, even as the price stabilized traders held onto those so-called short positions, also known as bets on a decline in prices, and kept betting on further falls in the price.
By early October the negative bets became extreme and hence increased the likelihood of a gold price rally.
The cost of acquisitions has now fallen below the cost of exploration for major miners, and gold prices could benefit from a dwindling resource supply, this according to a recent report from the Edelson Institute.
Sean Brodrick of the Edelson Institute said that if gold prices don’t advance higher from here, many miners are likely to go out of business.
“If companies go out of business, and the only ‘new’ gold ounces come through acquisitions, that means gold supply will go down. And as surely as dawn follows night, prices will go up,” Brodrick said.
His comments come as Barrick Gold recently announced a merger with Randgold, forming the world’s undisputed largest gold miner.
According to the report, the cost of finding gold through exploration has climbed eight-fold since 2007, and gold miners are using up the resources in the ground.
Gold futures eked out back-to-back gains Tuesday as the dollar index softened ahead of the Federal Reserve decision, which could yield a third rate increase of the year—a negative development for gold because it can bolster the dollar.
December gold GCZ8, -0.91% rose 70 cents, or less than 0.1%, to settle at $1,205.10 an ounce, gaining as the dollar index DXY, +0.54% traded little changed at 94.155.
The dollar and gold, which is chiefly priced in the U.S. currency, tend to move inversely. Gold prices based on the most-active contracts have declined by 8% so far in 2018 while the dollar index is up about 2.2%.
* Gold may fall to $1,190/oz -technicals
* Palladium hovers near 11-week highs hit on Monday (Recasts, adds comment) By Sethuraman N R BENGALURU, Sept 4 (Reuters) – Gold prices inched down on Tuesday as the dollar hit a one-week high on the back of intensifying global trade tensions and economic worries in emerging markets.
Gold prices are down about 8 percent this year amid rising U.S. interest rates, trade disputes and the Turkish currency crisis, with investors parking their money in the dollar which is being viewed as a safe-haven asset. Spot gold was down 0.1 percent at $1,199.20 an ounce at 0347 GMT, while U.S. gold futures had dropped 0.1 percent to $1,205 an ounce. “The emerging market economic crisis is making currencies very weak and benefiting the dollar, which continues to pressure gold,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. The dollar index , which measures the greenback against a basket of currencies, was up 0.1 percent at 95.182.
A firmer U.S. dollar makes gold more expensive for holders of other currencies, with safe-haven demand for gold this year overshadowed by the metal’s relationship with the greenback. “Gold should track the dollar’s movement very closely and interest rate expectations too are weighing on the metal,” Fung said. Markets are closely watching U.S. economic data, including a manufacturing survey on Tuesday and an employment report on Friday, which could influence gold’s moves as investors look for clues on the pace of U.S. interest rate increases. Meanwhile, worries over an escalation in trade conflicts between the United States and other countries have kept participants in broader markets on edge. “With all the noise building around the trade dispute, along with unsettling economic prospects for Turkey and Argentina that will likely drag on more emerging market economies … gold should be in demand,” said Stephen Innes, Asia-Pacific trading head at OANDA.
After a 16-percent slide in the peso last week, Argentine President Mauricio Macri on Monday announced new taxes and steep cuts to spending in an “emergency” bid to balance next year’s budget. Meanwhile, Turkey’s central bank signalled on Monday it would take steps to combat “significant risks” to price stability, comments seen as hinting at interest rate hikes. Spot gold may fall to $1,190 per ounce, as suggested by its wave pattern and a projection analysis, according to Reuters technical analyst Wang Tao. Spot silver dropped 0.2 percent to $14.43 on Tuesday, after falling to an over two-week low at $14.37 on Monday. Platinum was up 0.4 percent at $786.70, while palladium was down 0.1 percent at $977.50, after hitting an 11-week high of $985.50 on Monday. (Reporting by Nallur Sethuraman in Bengaluru Editing by Richard Pullin and Joseph Radford)
Gold looks like an attractive buy at the moment, with investor sentiment reaching the bottom in the marketplace, according to one European fund manager.
In a recent interview with Kitco News, Ronald-Peter Stoeferle, fund manager at asset-management firm Incrementum AG and author of last month’s latest In Gold We Trust annual report, said that from a risk-reward perspective, gold looks extremely attractive. He added that he sees several factors that will lead to higher prices by the end of the year.
“I think we have seen the lows in gold for the year,” he said.
Stoeferle’s comments come as the gold market has managed to bounce off its 12-month lows and is currently trading below the initial resistance of $1,260 an ounce. August gold futureswere last at $1,256.40 an ounce, up 0.24%.
The most significant factor driving gold prices higher is falling momentum in the U.S. dollar, said Stoeferle,noting that interest in the greenback is starting to wane as the Federal Reserve moves closer to the end of its interest rate hike cycle.
(Kitco News) –Gold prices are trading near steady levels in late-morning action Friday, and have recovered small losses seen overnight and in earlier U.S.-session trading. Short covering in the futures market and some bargain hunting in the cash market heading into the weekend are featured. There are also some geopolitical crosscurrents in play that could be limiting selling interest in the safe-haven gold market. Comex June gold was last up $0.10 at $1,289.60.
BENGALURU, May 7 (Reuters) – Gold prices edged up in early
trade on Monday as the dollar took a breather after climbing to
its highest level this year in the previous session.
* Spot gold rose 0.2 percent to $1,316.62 per ounce
at 0034 GMT.
* U.S. gold futures for June delivery were up 0.2
percent at $1,317.20 per ounce.
* The dollar index , which measures the greenback
against a basket of six major currencies, was steady at 92.547
after hitting its best since December at 92.900 on Friday.
* U.S. job growth increased less than expected in April and
the unemployment rate dropped to near a 17-1/2-year low of 3.9
percent as some out-of-work Americans left the labor force.
* Two Federal Reserve officials who are currently voting
members of the U.S. central bank’s rate-setting committee said
on Friday they were keeping an open mind on the total number of
interest rate rises needed this year.
* U.S. interest rate futures rose modestly on Friday, as
traders still expect the Federal Reserve to raise key borrowing
costs at its June 12-13 policy meeting in the wake of
weaker-than-forecast growth in domestic payrolls and wages in
* Euro zone business growth dimmed again in April but the
picture remained relatively bright as new business stayed
buoyant and firms managed to build up backlogs of work, a survey
showed on Friday.
* SPDR Gold Trust , the world’s largest gold-backed
exchange-traded fund, said its holdings fell 0.17 percent to
864.13 tonnes on Friday from 865.60 tonnes on Thursday.
* Hedge funds and money managers trimmed their net long
positions in COMEX gold contracts in the week to May 1, U.S.
Commodity Futures Trading Commission (CFTC) data showed on
* Demand for physical gold barely changed in major Asian
hubs last week even as global prices weakened, while a
correction in local rates in India prompted retail consumers and
jewellers to start purchases.
* The World Gold Council, owner of the world’s largest
gold-backed exchange traded fund (ETF), is launching a new fund
with a cut-price management fee to fend off rivals with lower
charges, a source familiar with the matter told Reuters.