Last Friday, gold closed at $1,776 an ounce, marking a 2.93% gain for the week. This was also the precious metal’s highest gain in four weeks. Clearing a technical hurdle of $1,760, gold also rallied to a three-month high last week. It was believed that the EU finance ministers’ approval of a bailout package for Greece earlier in the week had provided some confidence in the financial and commodities markets.
Gold Investing and Gold Stocks News
Last Friday, gold prices settled marginally lower at $1,725.90 an ounce, after a mixed performance during the week. (This marked a 0.04% gain for the week.) Given the general optimism that the Greek debt issue could finally be resolved in the coming days, markets across the board rallied on Friday, driving gold prices down. In addition, the long weekend also made many investors more cautious, and prone to profit-taking. (Since the beginning of February, gold has been trading around $1,700 to $1,760, as investors await the outcome of the Greek debt negotiations.)
Yamana Gold Inc. (NYSE: AUY) continued its downward slide last week, falling by about 5.25% to end at $16.30. The company stock has been on the decline since peaking in late January. With a market cap of about $12.2 billion and a P/E ratio of 22.80, Yamana Gold is a Canada-based gold producer engaged in gold mining and related activities, with significant properties involved in gold and other precious metal production throughout the Americas.
I just did this video with Dave Skarica of AddictedtoProfits.net at his place in Eleuthera, Bahamas. I just spent the past few days there visiting with him, having a good time, and of course talking about the financial markets and what is going on. I see him once or twice a year and every time I do we can't help but talk about the markets.
Gold continued its downward trend last week. Uncertainty over the outcome of Greek negotiations for a bailout package prompted investors to sell off gold and hoard cash instead, following losses in the euro and US equities. Last Friday, gold prices ended at $1722.10 an ounce, marking the second straight weekly loss. Investors also believe that gold is likely to experience a correction after rising about 11% so far this year, particularly on possible negative headlines related to the euro zone debt crisis.
The Market Vectors Gold Miners ETF (GDX) rose 2.5% last Friday to close at $57.14. This also represented a 9.5% gain over the preceding week. (GDX is an exchange traded fund that tracks the performance of gold stocks.) This week’s gains came about after disappointing GDP figures and the Fed’s announcement to keep near zero interest rates till late 2014. The unresolved European debt crisis also adds uncertainty to the world economic outlook.
Gold prices maintained their upward trend last week, ending last Friday at $1,658 per ounce, a 2% increase over the previous week. (Gold traded around $1,654 to $1,664 last week.) While gold has started off with a sharp gain early last week, the daily gains subsided in the course of the week, before rallying again on Thursday, after China announced better than expected economic growth in the last quarter of 2011.
Despite the recent rally in the stock market and in precious metals, gold stocks are continuing to act very sluggish and frankly I am worried about them.
The Market Vectors Gold Miners exchange traded fund (NYSE: GDX) made a peak in September and has been in a correction ever since. It has critical long-term support at 51, which repeatedly acted as strong support for GDX throughout 2011.
In the last few weeks of December GDX broke through this 51 level and then bounced back up in the first few days of 2012.
This morning before the US stock market open spot gold is trading up over $20 an ounce as rally that started in January continues. Gold prices were on the uptrend last week, rising above $1,660 an ounce at one point before falling to $1637.70 on Friday on the back of a stronger dollar, arising from the news of the S&P downgrade of several European countries’ credit ratings.
I just did an interview with Jordan Roy-Byrne of thedailygold.com about the current action in gold and gold stocks.
Jordan believes that a bottom has put in both gold and gold stocks and told me what he thinks they will now do going forward.
Click to listen to today's podcast interview with Jordan:
Since the start of December 2011, gold prices have fallen by about 7%, although it did post its biggest weekly gain in five weeks last Friday. Last year, gold gave a total return of 10.52% in dollar terms. After reaching a record $1,923.70 on 6 September 2011, gold prices subsequently fell to a five-month low of $1,523.90 on 29 December.
Gold is generally considered a “safe-haven investment” in times of economic turmoil and rising inflation. Given the ongoing uncertainty in the international economic climate, strong demand had pushed gold prices to an all-time high last year.
I just did an interview with Matt Frailey of BreakPointTrades.com.
In this interview we talked about the development of automated trading systems and Matt shared a trading system for the GDX gold stock index that anyone can get for free. All they have to do is click here.
For the charts referenced in this interview click here.
In 2011, gold prices increased almost 13%. Prices started the year at about $1,400 an ounce and are ending the year at about $1,550 an ounce. Will this trend continue or are gold prices preparing for a decline in 2012? Many experts disagree on where gold is heading in the upcoming year. Citing everything from the economy to crises to interest rates, experts in the gold market have a wide range of expectations.
Gold stocks broke through support yesterday and are rolling over. On Tuesday the Market Vectors Gold Miners ETF (NYSEArca: GDX) closed below its recent 51 support level to finish the day at 50.06. In pre-market action today it is trading down over one percent.
At the same time gold also saw heavy selling yesterday to fall to a three month low and is trading down this morning over 25 dollars an ounce. The SPDR Gold Trust ETF (NYSEARCA: GLD) closed yesterday at 151.03.
Gold and gold stocks have been in a correction since September. During this time the Market Vectors Gold Miners exchange traded fund (NYSE: GDX) has fallen over twenty percent. Some gold stocks have fallen more than that and others have fallen less, while the price of gold itself has declined sixteen percent since it peaked on September 6, 2011.
Both gold and gold stocks have tried to put in a bottom over the past few weeks and have bounced in the past few days, but I'm worried that the correction in both will likely continue over the coming months.
I am seeing some very eerie similarities between how the US dollar index, gold, and gold stocks are trading now and how they were trading in 2008 right before the stock market crash in the Fall of that year.
Now I'm not saying the stock market is going to crash in a few weeks. In fact I think the market is likely to continue to rally this year and into January, but the US dollar index appears to me poised to put on a big rally like it did in 2008 while gold and gold stocks are right on the verge of going into a further decline.
I explain this in this video:
With a lot of people proclaiming that the 11 year gold bull market is over and with the recent drop in gold it is time to sit back and think for a second. Yes as I posted yesterday it does look like gold is in a correction and I think that it is likely to continue until the Euro crisis is over and we get a final bottom in what to me is a global bear market. But after that I'd expect the gold and commodities bull market to resume.
It looks to me like a big correction in what is still a secular gold bull market.
As of noon gold is trading down over 50 dollars as the US dollar index has broken out of a base that it has been building since September. This move is coming after the Federal Reserve announced yesterday that it was standing pat for the moment on further easing of monetary policy.
The breakout should be no surprise to anyone, because just as the dollar has broken out the euro has broken down. It was obvious on the charts that some such move was in the cards and with the European debt crisis only growing more critical it should be expected.
I've gotten some emails the past few days from people asking about buying gold stocks so I decided to do this video overview of them for you. I don't think now is the time to buy gold stocks. Instead they look to me like they are likely to continue to lag the market and pullback for the next several weeks as they have been doing so far in December so one who wants to buy now is best to wait for a dip in them.