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Gold & Silver Stocks – A Dramatic Change in Fundamentals or a Short Term Anomaly?

Gold & Silver Stocks – A Dramatic Change in Fundamentals or a Short Term Anomaly?

Stock exchange is a very volatile, emotion-driven place. Even though most of the time one can predict future moves in particular assets with decent effectiveness, every once in a while abrupt and unexpected market moves take place. And we have just seen such violent and heavy declines in precious metals mining stocks. Sadly, no one is able to foresee the future with 100% certainty and this is why diversification is such a crucial concept in investing. It would have certainly protected gold & silver investor’s profits or at least diminished their losses had they invested not only in mining stocks but also in metals themselves. Now, the following question arises – is […]

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Gold & Silver Mining Stocks Hold Well Despite Metals’ Correction

Gold & Silver Mining Stocks Hold Well Despite Metals’ Correction

Based on the October 12th, 2012 Premium Update. Visit our archives for more gold & silver analysis. Despite a lukewarm, lackluster first half of the year, Gold has so far risen by 13 percent in 2012, nothing to sneeze at. The price of gold rose by about $215 in 2012, with most of the gains, $165 worth, having materialized in the last two months. This was after the U.S. Federal Reserve announced its plan to resume buying bonds to prop up the economy. The underlying bullish case for gold remains intact, given the prospect of indefinite loose monetary policy. Central banks have been supporting gold this year and it’s no […]

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The USD October Mystery and Its Influence on Precious Metals

The USD October Mystery and Its Influence on Precious Metals

Right now all currencies on the planet are backed by debt. If you need a refresher course in why fiat money can become toast, here are some words published this week on the website of Texas Congressman Ron Paul about fiat money and gold standard : Fiat money is not good money because it can be issued without limit and therefore cannot act as a stable store of value. A fiat monetary system gives complete discretion to those who run the printing press, allowing governments to spend money without having to suffer the political consequences of raising taxes. Fiat money benefitsthose who create it and receive it first, enriching government and its cronies. And […]

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Junior Mining Stocks Could Soon Outstrip the Senior Ones

Junior Mining Stocks Could Soon Outstrip the Senior Ones

It would behoove those who still cling to a misguided faith in fiat currencies to pay close attention to what is happening in Iran. The rial swooned in a free fall as much as 18% on Monday to a record low against the US dollar. The collapse was so steep that Iranian currency websites blanked out the rate. The currency has reportedly lost 80% of its value since the end of 2011. It is literally getting to a point that it will not be worth the paper on which it is printed. The economic sanctions imposed on Iran over its disputed nuclear program are hitting Iran where it hurts. Inflation […]

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Recent Rally in Silver – A Sign of Strength or a Mere Correction?

Recent Rally in Silver – A Sign of Strength or a Mere Correction?

In its latest Gold Demand Trends report, the World Gold Council reports that gold buying by the world’s Central Banks hit a new record of 157.5 tons, more than double the level of Q2 2011 and accounting for 16% of overall global demand. Among them are the National Bank of Kazakhstan, and the central banks of the Philippines, Russia and Ukraine. If the Central Bank buying continues at the current pace this could be a record year for Central Bank buying. That’s the good news. The bad news is the WGC estimates that global gold demand in Q2 2012 was 990.0 tons, down 7% from the demand for the yellow […]

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In What Direction Will the Stock Market Head and How Could It Influence Gold and Silver?

In What Direction Will the Stock Market Head and How Could It Influence Gold and Silver?

People put too much store in central bankers and hang on their every word as if they are prophets with a direct line to the divine. It seems that no one does this more than gold investors. In the past gold has shown itself to be super sensitive to monetary policy announcements and investors hope that any indication of further easing would give gold a joy ride. We have had enough evidence that central bankers are no super heroes able to leap tall buildings at a single bound and save the economy. There are plenty who contend that if the Fed had not stimulated the economy with zero percent interest […]

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Gold: Technical or Fundamental Analysis?

Each week we reply to questions from our subscribers and include them in our Premium Updates. Today’s essay is dedicated entirely to commenting on one of the letter that we received this week. It touches several interesting points and shows us that there are still some controversies and doubts regarding two most popular approaches to analyzing financial markets, i.e. technical and fundamental analysis, that need clarification. For clarity’s sake we decided to put our comments alongside it, in addition to answering the reader’s final question. Q: I appreciate greatly your regular analysis, but cannot help but have doubts on one aspect of your technical analysis. It is significantly influenced by the […]

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Are Lower Stock Prices in the Cards and What Would it Mean for Gold?

Are Lower Stock Prices in the Cards and What Would it Mean for Gold?

The Federal Reserve will hold a two-day policy meeting on July 31 that is expected to yield no change in U.S. interest rates, but markets will analyze and dissect every word of Chairman Ben Bernanke for any clues that the central bank will do more to promote economic growth. Already it seems that three top Federal Reserve policymakers on Monday laid the groundwork for a third round of bond purchases by saying the U.S. recovery was weak and unemployment too high, but at the same time they said the situation is not bad enough to warrant another QE right now. In the June 22, 2012 Premium Update we wrote that […]

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Betting On Mining Stocks’ Higher Prices May Not Be Such A Good Idea

Betting On Mining Stocks’ Higher Prices May Not Be Such A Good Idea

All the fundamental factors that have made gold such a stellar investment for the last decade are still intact. Fiat money is still being produced on easy street around the world, which in turn fuels worries about the dwindling purchase power of the currencies; central banks are still accumulating gold; real interest rates are still negative so investors don’t give up any interest rate by investing in gold. However, there are several things that have been affecting gold negatively over the past few months, much to our dismay. One of them is the dollar’s strength against the euro and gold’s recent tendency to move inversely to the dollar and in […]

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Currencies Don’t Make Gold Look Good

Currencies Don’t Make Gold Look Good

Let’’s start by stating that the title of this essay refers to the current situation on the gold market – not to the long-term fundamental picture. In fact, up to this day, no paper currency has survived in its original form while gold has been used as money since time immemorial. Every fiat currency since Roman times has ended in devaluation and eventual collapse, of not only the currency, but often of the host economy. The usual course of events is that paper currencies are inflated away until worthless. The purchasing power of the US dollar, for example, has declined by 90% since 1950, also true for most currencies. The […]

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Precious Metals Mining Stocks: Long- and Short-Term Outlook

Precious Metals Mining Stocks: Long- and Short-Term Outlook

Today’s market session is very volatile, not only in case of euro, dollar and stock indices, but also in case of precious metals. The rally in the mining stocks is much less significant than one might expect based on gold’s and stocks’ rally. Should this be of concern to precious metals investors? In today’s essay, we will provide you with two mining-stock-related charts: one focusing on the long term and one that provides a short-term signal. Let’s begin with the former (chart courtesy by http://stockcharts.com) In the Toronto Stock Exchange Venture Index (which is a proxy for the junior miners as so many of them are included in it), we have […]

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Is Gold About to Rally? USD Index and Crude Oil Prices Suggest Otherwise

Is Gold About to Rally? USD Index and Crude Oil Prices Suggest Otherwise

Congratulations. Let’s all take a collective deep sigh of relief. Instead of a new crisis, we’re just going to keep having the same old one. Greeks voted to stay in the European Union with a narrow victory for the center-right New Democracy party. A global crisis has been averted—for now. But as we take a deep sigh of relief let’s keep in mind that the euro is already on a slippery slope to oblivion. Let’s face it. A Greek exit is already a forgone conclusion for many. Now it’s Spain’s turn to headline with its bond yields soaring to new euro-era highs. Spain’s economy is almost twice the combined size […]

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Is Silver Currently Riskier Than Gold?

Is Silver Currently Riskier Than Gold?

Gold futures closed higher edging past the $1,600 mark Wednesday, extending their advance to a fourth session – perhaps traders considered prospects for further quantitative easing by the Federal Reserve and other central banks, including the Bank of England, the European Central Bank and the Bank of Japan. Thursday Comex gold futures prices ended the U.S. day session near unchanged in subdued trading and today Gold edged up extending its winning streak to a sixth session as sluggish U.S. data boosted hopes for monetary easing. With an agreement last weekend to bail out Spain’s struggling banks, Europe again avoided financial chaos but it still faces far bigger challenges that threaten […]

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Dollar Still Makes a Negative Impact on Gold

Dollar Still Makes a Negative Impact on Gold

Remember the disaster movie, “The Day After Tomorrow,” in which melting polar ice causes disruption to the north Atlantic currents precipitating a new Ice Age? The main character, a paleoclimatologist played by actor Dennis Quaid, warns government officials of the approaching disaster, but no one heeds his warnings. One of the fears of global warming is a disruption to the nature of ocean currents that could bring profound and possibly destructive changes to our weather patterns. In economics there are also great currents that have natural patterns and it looks like they are undergoing profound changes. Weather patterns can take centuries or even eons to evolve, but in economics, things […]

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