Tag Archives: gold bullion

Switzerland said no to Gold

The central banks are holding the gold prices up, and without their buying power the prices would probably trade lower, so the central banks are one of the greatest demand components for the gold prices.

Gold

Yesterday, Switzerland could boost the gold price, but they didn`t. Switzerland had a referendum yesterday, and voters rejected a referendum requiring the Swiss National Bank to hold 20% of its 520 bullion franc balance sheet in Gold. Switzerland already have the worlds highest amount of bullion per capita.

If they voted yes, they would have to purchase at least 1,500 metric tons of gold over the next five years, and could have helped the gold price to skyrocket. Two third of the population in Switzerland voted no, and with lower oil prices, and imminent raising rates in the U.S, the demand for gold is declining as a hedge against inflation.

There was some support for the gold right before the vote, and there is some pressure on gold now. Right now, the gold is trading at $1,171,00 and is down followed by silver which is plummeting at the moment. The outlook for gold is not looking good right now, and signs of dangerous deflation have also made the gold less attractive.

Gold is also a reliable safety net that a country can have against an impending crises or a currency meltdown, but that is not the scenario right now, because the U.S dollar is increasing. The U.S dollar has been your safe heaven for months, not the gold which I talked about months ago.

The investor sentiment is negative and gold prices are once again headed for the trading area at $1,150, which is a support level that have been in focus for a while now.

It shouldn`t be like that, because what we see now is massive quantitative easing, Ebola, turmoil in the Middle East and rebellion in Ukraine. This is normally enough to make the gold prices to skyrocket, but not this time.

The question is when the gold price will start to climb, not if. Unfortunately, I don`t think that the price will increase next week or in the near future. I like gold, but I can`t hide the fact that the gold has been in a bear market for years.

We are at levels putting many producers in a dangerous zone which is below break-even. We know the demand for gold is there. Huge demand from China and India, but more important is to look at the supply.

You buy gold when there`s less supply than demand. You buy gold when the U.S dollar and other currencies are doomed to lose value due to inflation. You buy gold when the money printing machine is heating up, and you buy gold when the debt is increasing.

This is the key. Take a look at the supply, and you know that this will change in the future. It is the opposite of what we see in the oil market right now. The oil shale revolution added billion of barrels of supply to the oil market that have pushed the oil prices down.

The supply in the gold market will not increase. Many gold miners will face problems when the gold price is declining and it is too expensive to start a new mine which cost hundreds of millions. I will look for bold bullion, gold ETF and quality gold stocks as a solid play in the future. Bearish in a short-term, bullish in a long run.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Referendum for gold in Switzerland

The market never stand still. It moves up and down from day-to-day. November 30, 2014 is a day that can move the gold market forever. The Swiss people will vote on a referendum that`ll refresh the country`s centuries-long affinity for gold and restrain paper money.

Gold

According to Switzerland`s first opinion poll, some people in the country said they will increase and hold on to their gold reserves. Switzerland`s biggest daily newspaper, 20 Minuten, released this week the results of its online survey.

45% said they would support the initiative, but it also showed a high number of undecided voters. Some analysts say it is a clear victory for the «yes» side.

Swiss Central bank sold about half of its gold reserves in 2000 – 2003. Like the Bank of England, they sold the gold at the bottom price of $200 an ounce. Until then, Switzerland used to have the highest gold reserves per-capita in the world.

Switzerland holds about 1,040 tons of gold in reserve, and that`s 7,7% of the central bank`s assets. If the people in Switzerland vote yes, it will have a widespread effect.

For Switzerland it would be to hold the gold and not sell any more in the future, repatriate all their gold from overseas and require that at least 20% is physical gold bullion.

Many people still belive that gold is the foundation of a strong currency. Switzerland will be the first country this century to restrict the central bank`s ability to print money and expand government, but the gold market will be the first to feel the tremors. Analysts at UBS predict that Swiss need to buy about 1,500 metric tons of gold the next three years. It will cost the central bank between $67 and $83 billion. Last year, China purchased 1,176 metric tons of gold, according to China Gold Association. It`s not small amounts!

Barclays said that the supporters of the referendum face a difficult opposition. The Swiss National Bank and the Swiss government have been urging people to vote against the referendum, because it would impede the bank`s monetary policy.

Many people aren`t happy that the central bank has expanded its balance sheet to weaken its currency and stimulate growth, and many belive that debasing the currency is not a sound economic policy, but there is no evidence that a weak currency leads to long-term economic growth.

You can increase your export and benefit from that with a weaker currency, but does that outweigh the weaker purchasing power on imports? November 30, 2014. Mark that day in your calendar.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Gold strategy

Gold is a safe heaven in times of inflation because it retains its value much better than currency-backed assets, which may climb in price, but drop in value. Gold has been a popular investment for investors for centuries. The experts say you should spend 10% of your assets in gold.

Gold

It`s easy to buy stocks, but investing in gold is something different. There are a number of different ways to invest in the underlying movements of the precious metal. If you invest in the wrong type of gold investment you can end up with an underperforming asset, even if the price of gold is moving fast in your favor.

 

Some people will try to tell you the story that empires were built on gold and how the fiat currency of the U.S will plunge and be worthless. The fact is that gold need to be treated in the same way. So, be careful and try to invest in the right option available for investing in gold.

 

You can buy physical gold, derivates contracts, gold mining stocks or exchange traded funds. Which one is the best to put the money in? Don`t invest in gold with the idea it always go up. It doesn`t. It goes up and down like any other investment products.

 

You can buy physical gold and safe-keep it in you own house. This is the most traditionally way of investing in gold. But it is also the most inefficient way to own gold. You can buy coins or bars from an online dealer.

 

Unfortunately, you have to pay sales tax on their purchase and more inefficiencies come up when you go to sell the gold you have since the IRS consider gold bullion and coins «collectables» which are subject to a higher maximum tax rate of 28%.

 

If you plan to store all your gold in your own home there may ba another problem. The risk is high when it comes to theft, fire and natural disasters. Another plan is to put the bold in a box at the bank, but that will cost a fee and you will not be able to access your gold if you want to sell it short.

 

Investing in gold futures or options makes you leverage a lager amount of the precious metal. You can profit on the price move depending on whether you are bullish og bearish in the market. The downside is that this strategy is very volatile. It`s up to you: you can turn a small amount of money into big profit or you can lose everything you have very quickly.

 

Another risky business is investing in mining gold stocks. Pick the right junior or major stock. Junior companies are small companies which is very speculative hoping to find a big score. Major miners are more established.

 

As the price of gold goes up, the margins of the companies go up as well. This can be reflected in their stock prices, but like other stocks, if the mining company have a poor management tbe price of shares will suffer even if the gold price moves higher.

 

ETF (Exchange Traded Funds) is probably the smartest way of investing in gold. The most popular gold ETF is SPDR Gold trust (GLD). One share is about 1/10 of an ounce of the spot price of gold.

 

Another ETF is the Market Vectors Gold Miners ETF (GDX) which tracks the major miners and the other one with the symbol GDXJ which tracks the junior miners. GLD tracks the movement of gold and have low expenses.

 

It is liquid and you can sell it whenever the stock market is open. Investing in GLD eliminates the storage issues and lower your risk. This investment is better than putting all your eggs in one basket. GDX and GDXJ will not always track the price of gold as GLD by being proxy for the mining industry as a whole. GDX and GDXJ spread the risk across multiple companies in the gold mining industry.

 

Reports today:

 

08:30 AM ET Building Permits
08:30 AM ET Core CPI m/m
08:30 AM ET CPI m/m
08:30 AM ET Housing Starts
09:00 AM ET TIC Long-Term Purchases

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

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