Monday Morning Gold Updates
Good Monday morning – Gold updates!
Its nice to wake up and see the very firm uptick in the price of all precious metals today. At the same time I find it odd that last week we were down (through out the week) by about the same amount we are up today. Of course I have opinions about the actual economy based on the “macro environment” I deal with but that has very little to do with the economy and how “they drive it” (and they certainly DO drive it) question is, are you heading in the same direction they say? I am accumulating gold and silver as I expect the price to continue upwards until about October based on historical data. So GET YER pans out, go beat some rocks, go to yard sales and find and buy gold and silver however you do!
Gold Vs. Silver: Better Fundamental Value In Silver, But More Short-Term Price Risk?
Gold has outperformed silver on a risk-adjusted basis since the GFC. Our fair value model suggests that neither gold or silver are overpriced, with greater relative value in silver. We see some short-term price risk in both commodities: slightly more in silver.
Gold and silver have been in an overall uptrend since 2008. Over the last 6.5 years, gold has returned an average 9.0% p.a. with a volatility of 18.8%. Silver
We thought we would investigate which of the two commodities currently represents better value, based on a fair value assessment. The fair value of the commodities is based on a multiple regression analysis of their price on 22 driver variables including interest rates, stock indices, other commodities and exchange rates. The database is 6.5 years of daily prices sourced from eoddata.com.
The current fair value of gold using this model is $1251, which is 4.8% above the current price of $1194. The fair value of silver using this model is currently $18.08, which is 14.2% above the current price of $15.83.
This analysis suggests that silver is currently better fundamental value than gold, with neither being assessed as overpriced.
We can also make an attempt at estimating the short-term price movement in each commodity using a lead indicator approach. The PHLX Gold/Silver Sector index has fitted reasonably well in this regard (to both indices) over the last 6.5 years. We assessed the relationship between six-week returns on XAU and subsequent six-week price movements of gold and silver. Based on the movement in XAU over the last six weeks, we have a projected decrease in the gold price over the coming six weeks of 1.7% with 4.0% decrease in the silver price. Gold Vs. Silver: Better Fundamental Value In Silver, But More Short-Term Price Risk? | Seeking Alpha
Gold is good investment in the present depressed market
Gold is good investment in the present depressed market – At this time should you as an investor purchase gold?
Gold has during the last score of years moved exponentially. In 1990, the price of 10 gm was Rs 3,200. By 2000, the price had risen to Rs 4,400. The ascent then took place. In 2005 it was Rs 7,000 but after the global depression of 2008, it doubled to Rs 14,500 in 2009, Rs. 26,400 in 2011 and hit a high of Rs 34,900 in 2013. Gold then was the flavour, and gold schemes floated by mutual funds were very popular.
At present, India is buying more gold (42% more) at a time when the other large importer China’s imports fell by nearly 40%. Why?
The demand during the quarter to September 2014 for gold jewellery rose 60% even though investment demand fell 10% on account of softening prices and a weak price outlook. This trend continues.
In this scenario, I believe that with the present depressed market, gold is a good investment to make. One should aim to have initially about 4% to 5% of one’s portfolio invested in gold. Gold should be used in portfolios to protect purchasing power, reduce portfolio volatility and minimise periods of market shock. It can also be used as a high-quality liquid asset to be used when selling other assets would result in a loss. Gold is good investment in the present depressed market | Latest News & Updates at Daily News & Analysis
Central Banks Would Love to Abolish Cash
April 23, 2015by Mike Finger42 The war on cash is a growing collection of laws and banking regulations that discourage or prevent citizens from doing business in physical currency. Last month, we reported on new laws in France that will limit the size of cash transactions. On a smaller scale, the state of Louisiana has recently made it illegal to use cash when transacting secondhand goods.
According to lawmakers, these regulations ostensibly ensure that business transactions are properly reported and taxed. They don’t want any potential tax revenue slipping through the cracks. They tell the public that these laws will help to prevent white collar crime, organized crime, and terrorism.
However, the privacy of financial transactions is simply the tip of the iceberg when it comes to the war on cash. Grabbing more tax revenue may be the reason smaller entities like Louisiana are enacting such laws, but on a grander scale the war on cash leads back to the problems of central banking.
The idea is that by charging depositors to store money, depositors are more likely to not leave that money sitting in an account doing nothing. Bankers hope that savings will instead be used to borrow more money for investments, thereby stimulating business activity and the economy.
An added benefit of a cashless society (at least for the financial elite) would be to prevent bank runs. If a financial crisis spooked the populace, citizens would simply be incapable of pulling their money out of the system. Even irresponsible financial institutions would therefore be protected from a bank run that could destroy their business. Central Banks Would Love to Abolish Cash – Peter Schiff’s Gold News