You are here
Mike Hartman: The stakes are very high
Gold May Fall on Expectations
Dollar Will Rally, Survey Says
By Claudia Carpenter
Bloomberg News Service
Monday, April 18, 2005
http://www.bloomberg.com/apps/news?
pid=10000081&sid=auxy1xLFjPHU&refer=australia
NEW YORK -- Gold may fall for a second week on speculation the
dollar will rally against the euro, eroding the appeal of the
precious metal as an alternative investment, a Bloomberg survey
showed.
Nineteen of 42 traders, investors, and analysts surveyed April 14
and April 15 expect gold prices to fall, after dropping $2.30 last
week to $426.50 an ounce on the Comex division of the New York
Mercantile Exchange. Eighteen predicted prices will rise, and five
expected little change.
Gold has dropped 7 percent from a 16-year high of $458.70 in
December as the Federal Reserve raised interest rates seven times
since June, boosting demand for the dollar. Foreigners in February
bought $84.5 billion of U.S. financial assets such as U.S.
government and corporate bonds and stocks, the Treasury Department
said April 15. Analysts expected $65 billion.
"I'm very bearish on gold and the reason is, simply, the dollar,"
said Leonard Kaplan, president of Evanston, Illinois-based
Prospector Asset Management, which oversees about $100 million,
including gold futures and options. "Gold really doesn't have much
going for it."
Gold's 0.5 percent decline in New York last week surprised the
majority of analysts surveyed April 7 and April 8, who expected a
gain. Bloomberg's survey has accurately forecast the direction of
gold prices in 30 of 51 weeks, or 59 percent of the time.
Gold has moved almost in lockstep with the euro's performance
against the dollar this year, at a correlation coefficient of 0.88.
The maximum reading is 1. The coefficient measures the degree in
which the two variables move in unison.
The euro may drop for a fourth week in five against the dollar on
signs that growth among the 12-nations sharing the common currency
is slowing, a separate Bloomberg survey showed.
In addition, the Reuters-CRB index of 17 commodities has declined
every day in April, matching the longest decline since March 2003.
The index has fallen 7.3 percent since reaching a 24- year high on
March 16. Copper fell 4.1 percent last week, gasoline dropped 3.4
percent and pork bellies plunged 7.3 percent. Some analysts said the
decline in commodities prices may ease inflation concerns and reduce
demand for gold.
"Our view is that a broader decline toward $370 is under way" for
gold, said Craig Ferguson, market strategist at Australia & New
Zealand Banking Group in Melbourne. "A stronger dollar, cracks
appearing in the global commodity story, and worries about reduced
demand and rising supply of commodities will weigh on gold as well."
Traders may be more focused on commodity prices as an indicator of
inflation than they are on government reports this week for producer
and consumer prices, said James Turk, the founder of Channel Islands-
based Goldmoney.com, which stores about $48 million of gold for
owners in 102 countries.
The risk of inflation remains, and that may boost gold, said Turk,
who predicted a gain this week and has been the most- accurate
forecaster tracked in Bloomberg's weekly survey.
"Gold is very undervalued," Turk said. Based on the historical
relationship between gold and oil, the precious metal should be
trading closer to $700 an ounce, he said. "It has not kept pace with
the rise in commodity prices, and particularly the jump in crude
oil," Turk said.
Some investors who are positive on gold may sell if prices fall
below the 200-day moving average of about $422, said Robert Cameron,
a gold trader in New York at Mitsubishi International Corp. "Gold is
going down to $415 at some point" this week, he said. Mitsubishi is
a unit of Japan's largest trading company.
Traders will probably buy gold if the International Monetary Fund
decides not to sell any of its gold, said Gregory Orrell, who
manages $100 million at Orrell Capital Management Inc. in Livermore,
California.
Gold fell to a three-month low on Feb. 3 after U.K. Chancellor of
the Exchequer Gordon Brown said he hopes the Group of Seven
industrialized nations will agree to revalue the IMF's gold reserves
to help pay debts of poor countries.
The U.S. has veto power against any sale. Thirty congressmen from
states including Nevada voiced their opposition to any sale in a
March 18 letter to U.S. Treasury Secretary John Snow. This followed
a Jan. 31 letter to Snow by 15 senators, who also opposed a sale.
"Clearly the gold market has been hesitant since the IMF gold-sale
proposal was put forth by Gordon Brown," Orrell said. "It seems
logical that by removing that threat the market will feel less
resistance to the upside."
A futures contract is an obligation to buy or sell a commodity at a
set price by a specific date.
----------------------------------------------------
To subscribe to GATA's dispatches, send an e-mail to:
gata-subscribe@yahoogroups.com
To unsubscribe, send an e-mail to:
gata-unsubscribe@yahoogroups.com
----------------------------------------------------
RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS
Free sites:
http://www.cbs.marketwatch.com
http://www.usagold.com/amk/usagoldmarketupdate.html
http://www.capitalupdates.com/
http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kereport.com
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)
http://www.resourceinvestor.com
Subscription sites:
http://www.lemetropolecafe.com/
http://www.interventionalanalysis.com
http://www.investmentindicators.com/
Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS
Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com
Centennial Precious Metals
3033 East First Ave., Suite 807
Denver, Colorado 80206
1-800-869-5115
http://www.USAGOLD.com
Michael Kosares, Proprietor
cpm@usagold.com
Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
http://www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net
El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net
Gold & Silver Investments Ltd.
Mespil House
37 Adelaide Rd
Dublin 2
Ireland
+353 1 2315260/6
Fax: +353 1 2315202
http://www.goldinvestments.org
info@gold.ie
Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com
Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com
Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
http://www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com
Lone Star Silver Exchange
1702 S. Highway 121
Suite 607-111
Lewisville, Texas 75067
214-632-8869
http://www.discountsilverclub.com
Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel
Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com
Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com
Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com
The Moneychanger
Box 178
Westpoint, Tennessee 38486
http://www.the-moneychanger.com
Franklin Sanders
1-888-218-9226, 931-766-6066
----------------------------------------------------
HOW TO HELP GATA
If you benefit from GATA's dispatches, please
consider making a financial contribution to
GATA. We welcome contributions as follows.
By check:
Gold Anti-Trust Action Committee Inc.
c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
Manchester, CT 06043-7541
USA
By credit card (MasterCard, Visa, and
Discover) over the Internet:
http://www.gata.org/creditcard.html
By GoldMoney:
http://www.GoldMoney.com
Gold Anti-Trust Action Committee Inc.
Holding number 50-08-58-L
Donors of $1,000 or more will, upon request,
be sent a print of Alain Despert's colorful
painting symbolizing our cause, titled GATA.
Donors of $200 or more will receive copies
of "The ABCs of Gold Investing" by Michael
Kosares, proprietor of Centennial Precious
Metals in Denver, Colorado, and "The Coming
Collapse of the Dollar" by James Turk and
John Rubino.
GATA is a civil rights and educational
organization under the U.S. Internal Revenue
Code and contributions to it are tax-deductible
in the United States.
