Today, the church of gold is full of believers.
Don't you think it ridiculously overpriced ?
Why many investors absolutely love gold ?
Here Why: All media tell you that paper currency is worthless because too much printed and circulated. With so much paper floating around, Inflation will surely follow.
That's mean hard assets like GOLD will be the only thing that retains any value. However, if you take a look at gold price historical chart; its price stable and did nothing for 20 years until all changed with FEAR of INFLATION and HEDGE FUND SPECULATION several years ago (See the price of Gold from 2002-2009). No wonder there has been a flight of gold because global recession and financial crisis nowadays.
The trouble is that the gold rush is not likely to last. In fact, there has been tremendous resistance for gold at $1000 per ounce. You really want to buy at the top ? It's not a good idea I guess ^_^ So what resistances I'm talking about just now; let's see
Reason 1: No Inflation now. The Gold bulls state is inflation as we has been seen in the last bull market that occurred due to massive amounts of capital leverage because the Federal Reserve keep interest rates too low for too long in the early decade. Nevertheless, the ultimate goal of the central bank is to fight inflation. In additional, the numbers today such as unemployment rate, housing value, stock prices and other asset across the board, do not support an inflationary environment. Inflation is gone for now.
Reason 2: Gold price can be easily manipulated because gold is a limited supply. The price swing could be volatile because minimal margin requirements on commodities market. Although the likelihood is low, investors should be cautious.
By the way, If you desperately love GOLD and must buy some more or less. One thing you need to recognize is that majority of gold stocks are extremely volatile. They are often small, thinly-traded companies. They are typically located in undeveloped regions of the world, where industrial infrastructure is bad and political instability is common. Moreover, supply and demand issues can turn on a dime.
GoldCorp is one of the largest precious-metal mining companies in the world, operating mainly in Canada and South America. The company produces more than 2.3 million ounces of gold annually and has about 45 million ounces in proved and probable reserves. They also owns 1.2 billion ounces of proved and probable silver reserves and 1.4 billion pounds of copper reserves.
In the second quarter, GoldCorp's production rose 5% over the same quarter a year ago. GoldCorp is the lowest-cost precious metal producer. GoldCorp spend only $310 per ounce to mine gold in last quarter, which is the lowest of all its major competitors. As the rise in gold prices over the long term, the company's operating margins and cash flow should increase accordingly. GoldCorp is an against-inflation gold stock that we recommended as long as dollar is still weak.
IME Suggested Buying Price: $37-41
IME Target Selling Price: $50-55
The trouble is that the gold rush is not likely to last. In fact, there has been tremendous resistance for gold at $1000 per ounce. You really want to buy at the top ? It's not a good idea I guess ^_^ So what resistances I'm talking about just now; let's see
Reason 1: No Inflation now. The Gold bulls state is inflation as we has been seen in the last bull market that occurred due to massive amounts of capital leverage because the Federal Reserve keep interest rates too low for too long in the early decade. Nevertheless, the ultimate goal of the central bank is to fight inflation. In additional, the numbers today such as unemployment rate, housing value, stock prices and other asset across the board, do not support an inflationary environment. Inflation is gone for now.
Reason 2: Gold price can be easily manipulated because gold is a limited supply. The price swing could be volatile because minimal margin requirements on commodities market. Although the likelihood is low, investors should be cautious.
Gold Bullion
Reason 3: Strong Dollar is likely to destroy the price of gold. Once the economy stabilizes and we get a return to normalcy with respect to the business cycle (An Ending of the Boom/Bust period), gold will go back into hibernation because the jewelry demand can't absorb the current bullion supply. Recently, Mr. Timothy Geithner the Treasury Secretary declared his belief in a strong dollar policy so we all learn that don't fight the Federal Reserve and the Treasury Department.By the way, If you desperately love GOLD and must buy some more or less. One thing you need to recognize is that majority of gold stocks are extremely volatile. They are often small, thinly-traded companies. They are typically located in undeveloped regions of the world, where industrial infrastructure is bad and political instability is common. Moreover, supply and demand issues can turn on a dime.
Real Gold Mine in Africa
So how can you invest in gold without all the drama ? One company might fit your taste; Canadian-based GoldCorp (GD).
GoldCorp is one of the largest precious-metal mining companies in the world, operating mainly in Canada and South America. The company produces more than 2.3 million ounces of gold annually and has about 45 million ounces in proved and probable reserves. They also owns 1.2 billion ounces of proved and probable silver reserves and 1.4 billion pounds of copper reserves.
In the second quarter, GoldCorp's production rose 5% over the same quarter a year ago. GoldCorp is the lowest-cost precious metal producer. GoldCorp spend only $310 per ounce to mine gold in last quarter, which is the lowest of all its major competitors. As the rise in gold prices over the long term, the company's operating margins and cash flow should increase accordingly. GoldCorp is an against-inflation gold stock that we recommended as long as dollar is still weak.
IME Suggested Buying Price: $37-41
IME Target Selling Price: $50-55
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