NEW YORK (TheStreet ) — Gold prices failed to stand their ground Monday as hopes that Europe can contain and solve its sovereign debt crisis faded.

Gold for December delivery closed down %6.40 at $1,676.60 an ounce at the Comex division of the New York [...]]]>

By Alix Steel

NEW YORK (TheStreet ) — Gold prices failed to stand their ground Monday as hopes that Europe can contain and solve its sovereign debt crisis faded.

Gold for December delivery closed down %6.40 at $1,676.60 an ounce at the Comex division of the New York Mercantile Exchange and prices were continuing lower in after-hours trading. The gold price has traded as high as $1,696.80 and as low as $1,677 an ounce while the spot gold price was shedding $9, according to Kitco’s gold index.

 Silver prices lost 35 cents at $31.82 an ounce while the U.S. dollar index was up 0.72% at $77.16.

 Hope is the key for gold and hope faded away on Monday. Eurozone leaders have one week to come up with a viable plan to contain the sovereign debt crisis — saving Greece, recapitalizing banks, and determining the fate of sovereign bondholders.

The original plan for Greece was another 109 billion euro bailout, which had been agreed upon at a July meeting. But that figure is now too small to save the country, leaving Eurozone leaders trying to figure out how big of a loss they can force bondholders to take.

As a result, officials must consider how to recapitalize European banks to protect them against such losses as well as how to expand the European Financial Stability Fund, or EFSF, to provide financial support for sovereign nations, bondholders and banks.

Although European leaders are committed to coming up with a plan, which was supported by the G-20 over the weekend, they still have to find one and the devil will be in the details. A spokesperson for German leader Angela Merkel on Monday warned that progress would be slow and a definitive solution might not show itself this weekend at the European Union meeting Sunday.

The disappointment led investors to dump stocks and gold as the two have been moving side by side of late. Disappointment drags on the euro, boosts the dollar and hurts gold prices or vice versa. If investors feel less confident about stocks then they might have more need to liquidate good performing assets like gold. When investors feel better about their risk tolerance then they have less need to sell gold.

This tug-of-war will likely dominate trading in the week ahead. “Open interest shows traders are in and out at the drop of a hat or remark from Europe,” says George Gero, senior vice president at RBC Capital Markets.

Net long positions only increased by 3,737 contracts in the week ending October 11th, according to the latest Commitment of Traders report. Speculative short positions decreased by 2,856 contracts, which means part of last week’s rally can be attributed to short covering, traders unwinding positions where they were betting against the gold price.

Kitco’s Gold Index, however, points to stronger physical demand with the gold price actually up $2.75, but with those gains tempered by a stronger U.S. dollar. India’s famous Diwali season starts next week. The festival of lights marks a tradition of gift exchanges and shopping particularly for gold jewelry. Buying goods, especially during the first five days of the festival, is considered good luck and many experts are looking for a ramp up in physical gold purchases.

“For the moment gold continues to build a base above the $1650 mark with physical demand, particularly from India,” says James Moore, research analyst at FastMarkets.com. “Inflation remains stubbornly high in India, over 9% for the 10th month in a row,” says Mark O’Byrne, executive director at GoldCore, a bullion dealer, “and this is leading to continuing store of wealth demand from Indian buyers.”

 Read more on The Street

Gold Forecaster

Many have contemplated adjusting their precious metal portfolios in light of the fall of the gold price from $1,900 to the current $1,600+ level. Many gold shares haven’t performed as well as the gold price. Why? Will they in the future? Should investors hold just the metal, or [...]]]>

By Julian D.W. Phillips

Gold Forecaster

Many have contemplated adjusting their precious metal portfolios in light of the fall of the gold price from $1,900 to the current $1,600+ level. Many gold shares haven’t performed as well as the gold price. Why? Will they in the future? Should investors hold just the metal, or will shares now outperform the gold and silver prices? What are the criteria for choosing a share in the precious metals, mining industry? How do I design my own portfolio to suit my investment goals and emotional tolerance?

Each answer will be unique for every investor. 

In this the first part of this series we first look at you, the investor. Understanding your own behavior in the extremely volatile times is crucial. After all, it’s likely that the world’s financial markets have entered a new era of risk. One fund manager put it this way, “The future is not going to be like a past we knew. There’s no exit from this morass.”

We’re looking at an anemic global economy, the systemic European sovereign debt crisis, U.S. unemployment stuck above 9%, and swooning stock markets, which have sapped the euphoria that swept Wall Street in 2009 as it rebounded to record profits after the credit crisis. The benefits of a $700 billion taxpayer bailout and $1.2 trillion in emergency funding from the Federal Reserve have faded. This fund manager believed that the whole capitalist system is being called into question. So, if you want to make money in the future, you have to adjust your entire outlook.

You, the Investor

When any investor is looking to restructure their portfolio, they must first look at themself. An investor’s journey is never as simple as he thinks. The investment road is not a new highway, easy and fast to travel on. It’s like driving across land with no roads –the unexpected usually happens, so like an off-road driver, investors must be prepared for the different problems they will encounter. How will you handle a sudden reversal of the price to which you thought your investments would go? How do you handle an unexpected interruption in the performance of your investments? When the economic climate changes, are you able to adjust? Was the portfolio constructed for all seasons or just the summer? What are your emotional thresholds? Will you panic if what you planned to happen doesn’t, or have you set goals that accommodate major change? This is the starting point in the life of an investor.

Of course, like any driver, you need to know where you’re going and why. What are your goals in investing? The long-term professional investors need enough wealth to retire or leave for his heirs. He’s driven by the concept of Total Returns. These are the sum total of income, returns, on reinvested income and capital appreciation. Translated, Total Returns is the wealth you’ve accumulated at the end of your journey. This involves far more than just the investment itself.

Different Types of Investors

The Trader

Many people believe that a person who dives in an out of the market on a daily or weekly basis is an investor, but nothing could be farther from the truth. We feel he’s a gambler, investing in his own skills and emotions. The best traders have a success rate of around 52%. The professional weathered trader hopes this will allow him to make more money than he loses and to end up pretty rich. What’s not often realized is that The Trader is not investing in a manufacturer, miner, investment house, or any other sector for that matter. The Trader is investing in himself and his ability to buy low and sell high, or short. The Trader is guided almost completely by the charts. Often time, it’s heavily stressful and Traders frequently burn out emotionally.

He only consults the Technical picture [the charts]. He has an absolute belief that the charts are the only thing that matters and that all investments follow the ways the charts point. Indeed, he has such confidence that he goes in and out in a day, sometimes. He is a ‘day-trader’. He often heightens his risk by leveraging himself in the belief that this will lead to greater profits, but it often increases the losses.

The Investor

A real investor can be one of two types.

Read more on KITCO

The trade metrics released today by China revealed a notable deceleration in trade growth. The country’s exports to Europe contracted sharply as fading demand for goods became manifest recently. It is worth noting that China’s imports also declined even in the face of an appreciating yuan. It is thought that the [...]]]>

By Jon Nadler

The trade metrics released today by China revealed a notable deceleration in trade growth. The country’s exports to Europe contracted sharply as fading demand for goods became manifest recently. It is worth noting that China’s imports also declined even in the face of an appreciating yuan. It is thought that the general trend at work here is in part the result of concerted efforts on the part of China’s leadership to avert the deleterious outcomes of popping various bubbles that have infested its economy and markets.

Now (as in: next week) comes the crucial indicator to parse: did loan growth also undergo a contraction, or is money still being handed out hand-over-you-know-what to anyone who can fog up a mirror? That, as well as China’s inflation numbers for September, will be the focus for China watchers come next week. Despite an “at the ready” Fed indicator that was gleaned in the FOMC meeting minutes, the precious metals complex showed signs yesterday afternoon that the morning’s lift turned a tad less energetic after it dawned on buyers that one Slovak vote does not make for the resolution of the European crisis or of the problems the region’s banks continue to face.

Yesterday’s EC outline of a comprehensive plan aimed at fixing Europe’s banks was quickly shelved by those who showed optimism about it, when this morning’s Credit Suisse-issued analysis revealed that no fewer than 66 of the region’s financial institutions would not receive a passing grade in the event of a fresh stress test. Only eight out of 90 tested banks failed to make the grade in July, when the test involved a critical line of 5% core Tier 1 capital ratio. The latest computation uses a 9% core Tier 1 capital ratio. Among those needing the most capital in such an event would be Royal Bank of Scotland, BNP Paribas, Barclays Plc, and Societe Generale.

As a result of the aforementioned China data and eurozone turmoil, the overnight action in precious metals turned towards moderate selling despite some decent regional physical offtake coming from Asia. This morning’s opening was really not much different; spot gold lost $7.10 to start the day off at the $1,667.00 bid level. In the background, the US dollar firmed a bit and remained well above the 77 level on the trade-weighted index. The greenback clawed back in the wake of the European banking-related news and speculators were once again showing that all might not be well in that system while also indicating that they are not quite as glum about the prospects for the American economy.

Crude oil slipped fairly hard, losing $1.50 and falling under the $84.10 mark per barrel. The Fed minutes also showed a US central bank that is less than sure that the US economy is fully on the mend. Meanwhile, the country’s trade deficits remained steady at $45.6 billion in August, albeit the gap with China came in at a fresh record ($29 billion).

Read remaining on KITCO

Anyone who wants direct exposure to the crude price can buy an exchange-traded fund (ETF). Available from companies such as ETF Securities and Lyxor, ETFs are traded just like shares but reflect the price [...]]]>

If you believe that oil price rises are inevitable, there are several ways to get exposure to “black gold”.

Anyone who wants direct exposure to the crude price can buy an exchange-traded fund (ETF). Available from companies such as ETF Securities and Lyxor, ETFs are traded just like shares but reflect the price of a particular asset or index.

However, buyers should beware an effect known as “contango”, which occurs when oil prices for future delivery are higher than the current oil price. This effect has caused erosion on funds that invest in near-term futures contracts based on the price of oil, so ETF investments may not be as simple as they seem. Do consult a stockbroker if you are keen on investing in ETFs.

Alternatively, you could buy shares in oil companies, which range from giants such as Shell and BP through mid-sized businesses such as Cairn to oil “minnows” such as Tullow Oil.

Shell pays a generous dividend – the shares currently yield about 6pc. The payout seems safe despite not quite being covered by earnings. BP suspended its dividend in the wake of the Gulf of Mexico disaster but the cost of the cleanup may be less than feared and the share price has recovered some of the lost ground.

BP, whose shares are currently trading at about 410p, is rated a buy by Evolution, the stockbroker, which recently raised its target price to 580p. “We believe there is further scope for the shares to recover,” it said.

More >>>

Commodities enthusiasts are investing five years too late, according to legendary fund manager Anthony Bolton.

“The best time for commodities was in 2006, when the whole world was growing above trend,” said Mr Bolton, who manages the Fidelity China Special Situations [...]]]>

It’s too late to join commodities party, the Fidelity fund star says.

Commodities enthusiasts are investing five years too late, according to legendary fund manager Anthony Bolton.

“The best time for commodities was in 2006, when the whole world was growing above trend,” said Mr Bolton, who manages the Fidelity China Special Situations investment trust.

“Western economies are anaemic at the moment, and I am not sure emerging market growth is enough to keep commodities going.”

Despite many managers believing that commodities are a key part of the emerging markets story, Mr Bolton holds only one commodities stock in his fund, a gold mine.

It is uncertainty about America that is keeping Mr Bolton from increasing his exposure to commodities. While China is experiencing a bull market, he warned that the “stars of one bull market are not necessarily the stars of another”.

More >>>

Euro-zone finance ministers discussed on Monday having more money in their rescue fund and cheaper emergency [...]]]>

Gold is trading steady today, holding on to gains made in the previous session, with a healthy physical demand out of Asia lending support, but an improving economic outlook threatens to dampen gold’s strength in the short term.

Euro-zone finance ministers discussed on Monday having more money in their rescue fund and cheaper emergency loans as part of a package of measures to end the sovereign debt crisis, but they made no firm decisions.

Spot gold was little changed at $US1363.35 an ounce in Asian trade, after dipping to an intraday-low just below $US1360.
Advertisement: Story continues below

US gold futures gained 0.2 per cent to $US1362.9.

This week’s US banks earnings, expected to be strong, could give investors more reason to be optimistic about the sector and the economy in general.

“Positive sentiment in the market could reduce some safe-haven demand for gold,” said Ong Yi Ling, an analyst at Phillip Futures. Ong said that $US1350 would be a strong hold for gold.

According to Wang Tao, a Reuters market analyst, spot gold will be rangebound between $US1354 and $US1370 for one trading session before plunging again towards $US1349 per ounce, as the downtrend is still intact.

More >>>