Chinese Gold
Stocks jumped again today. It seems the markets think things are back to normal – Stocks up, bonds down, the Dollar down, Gold up and oil/gasoline up.
That’s what happened.
My personal opinions……
As most of you know, I tend to say it like I see it. You probably think that I am stuck on certain possible investments – for example, gold – when in reality, I don’t think that way at all. I try to keep abreast of all markets and look for opportunities in all market. Those opportunities come and go over time. Right now gold appears to be the “hot” market, and I really like it. However, I just want to assure you that I continue to look at other markets for possibilities.
The one market that I really don’t like is the stock market. The reason for my skepticism – even though you can really make money in that market – is that you must do a massive amount of study and analysis to have an educated investment, rather than just a gamble – like in Las Vegas. The stock market is made up of thousands of companies, and if you own a mutual fund, do you know everything there is to know about every company in that fund? If not, why are you investing in it?
I recommend that you become overly educated in your investments. Your investments represent your past efforts, and they deserve as much attention as your effort in obtaining them in the first place.
In the news today……
Irish banks buy into bailout – The Bank of Ireland (IRE) and Allied Irish Banks ( AIB) said Monday they will start transferring about €40B in risky loans to Ireland’s government, signaling their intent to take part in a bailout – and warning that if they don’t, full nationalization could be the result. I added this article just to show you that this financial crisis has crept into every part of the world.
Tonight’s Dinner Conversation – GOLD ……
Here is an article from David Rosenberg that should make you think about what’s going on in the Gold market. My personal perspective is that the gold market has gone crazy and something is behind it. No one really knows what’s behind it. It doesn’t appear to be rampant speculation – like the oil and gasoline markets were (and are?)
“Gold just capped off its best month in a year — up 14% in November and 34% so far in 2009. Not even the S&P 500 can compete with that. Helping drive the latest gains was the news out of the China Gold Association that the country’s gold demand is on pace this year to exceed 450 metric tonnes, a 14% increase over the 395.6 tonnes in 2008. (In contrast to India, jewelry sales are up double-digits in China so far this year.) By way of comparison, China, which recently surpassed South Africa as the world’s largest producer, is on its way to 310 tons of newly mined output this year, or more than 30% below its level of demand.
It’s not just the middle-class in China that is starting to buy gold, but the central bank, which has very deep pockets, is going to do likewise. We just came across a Bloomberg News article quoting an official from the state-owned Assets Supervision and Administration Commission (Ji Xiaonan, the Chief) as saying “we recommend China increase its gold reserves to 6,000 metric tons within three-to-five years and possibly to 10,000 tons in eight to 10 years.” China’s reserves, after a 76% buildup since 2003, currently stand at 1,054 tons, so we are talking here about the prospect of some pretty heaving buying in coming years.
If China were to lift their gold reserves to 5,000 tonnes, which is equivalent to about two years of global production, that shift in demand would boost the gold price by $800/oz to around $2,000 ($1,978) based on our models. If China moves towards 10,000 tonnes, well, that would end up taking the gold price to $2,623/ounce if our calculations are in the ball-park.”
So where do you think the gold price will stop?
Here are the last numbers for today:
Dow Jones 30 Industrial – 10,472 (up 127 points)
10 Year Treasury Bond – 3.28% (up 0.07%)
Euro – $1.5076
Gold – $1197 (up $17)
Oil – $78.10 (do2n $0.27)
Gasoline – $2.05 (up $0.04)
