Gold Hits New Record – Central Bank Buying

Posted by Jordan Roy-Byrne - Richard Russell comment

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From today’s Financial Times: Gold prices have pushed to a fresh record amid forecasts that central banks will be net buyers of bullion this year for the first time in two decades, the clearest signs of rehabilitation of bullion after the financial crisis.

The shift marks a turnaround after disposals by European central banks over the last 10 years., when gold was seen as non-yielding unattractive asset. Monetary institutions then swapped their bullion for yielding sovereign debt.

Russell Comment –– The know-nothings at the central banks sold their gold at multi-year low prices. Now they are buying back gold near record highs. And these are the yo-yos who are charge of our money. Dow Theory Letters


Precious Metals: Your Game Plan Going Forward

In my last commentary I quickly covered the current outlook of gold, silver, the mining shares and the juniors. The breakout in the sector continued today as gold reached a new high and the mining shares (as per the HUI or GDX) closed near a nine or ten month high. The juniors (GDXJ) and silver continued higher. Most important, both GDX and GDXJ gapped higher and made strong closes and on large volume. Everything is on track and there is little reason to think otherwise.

However, to keep things on track one should have a plan.

… the plan HERE


Soros Sees Upside in Gold, Warns of Volatility

In an exclusive interview on Sep. 15 with Thompson Reuters (clip below), Soros says that gold is the ”ultimate bubble,’ and that “this is a period of great uncertainty so nothing is very safe.”

“[In a deflationary environment], Gold is the only actual bull market currently. It just made a new high yesterday. In the present circumstances that may continue. It will be very interesting to see if there is a decline in the next few weeks because practically everything that makes a new high almost immediately afterwards reverses and disappoints.”

“I called gold the ultimate bubble which means it may go higher but it’s certainly not safe and it’s not going to last forever.” – George Soros

Soros first made the “ultimate bubble” comment on gold back in January at the World Economic Forum in Davos, Switzerland. However, his hedge fund–Soros Fund Management LLC–still held 5.24 million shares of the SPDR Gold Trust (GLD), a stake worth about $650 million, and equity holdings in miners of gold and other minerals worth almost $250 million as of June 30. Soros was the third-largest fund in the Gold Trust ETF at the end of the second quarter.

So, it seems Mr. Soros still sees upside in gold, but was warning of the metal’s volatility instead of a bubble burst. Fundamentally, the current global macro environment–prospect of a synchronized slowing growth coupled with ongoing financial turmoil– and supply/demand are also quite supportive of gold.

From a technical standpoint (see chart), $1,300 range looks to be the next resistance with support at around $1,255.

Gold Bubble? Think Again

With gold hitting all-time highs, some are calling gold a bubble. Oh, really?

Gold is a currency. And just like other currencies, we cannot talk about gold in isolation from other currencies. For example, we do not say the yen is expensive. Rather we say the yen is expensive relative to the dollar. So when people say that gold is high or in a bubble, I say, ‘relative to what?’. To see if gold is in a bubble relative to the U.S. dollar, let us look at some historical stats:


….read more HERE