Gold Bullion
Gold bullion is pure, physical gold that can be bought or sold as an investment. Gold bullion is 99.9% pure gold. Back in 2002, the editors of Profit Confidential started telling their readers it was time to jump into gold-related investments. This gold investing guidance and analysis proved to be extremely timely. Yes, back in 2002, we started offering gold analysis to our readers and we still do it today.
Gold Bullion Trading Hitting Record Levels; Chinese Leading the Pack
By Sasha Cekerevac for Investment Contrarians | May 10, 2013
The massive sell-off in the price of gold bullion has certainly shaken up some investors. However, it seems there are others whose investment strategy has been to wait for a pullback in gold to continue accumulating the precious metal.
Recent data has shown that China imported gold bullion from Hong Kong at a record-high level in March. Net imports into China of gold from Hong Kong were 130,038 kg, compared to 60,947 kg of the yellow metal in February, according to Bloomberg. (Source: “China’s Gold Purchases From Hong Kong Expand to Record,” Bloomberg, May 7 2013, last accessed May 8, 2013.)
While these imports happened prior to the sell-off in the price of gold bullion in April, China has clearly been using an investment strategy to continually accumulate the precious metal whenever it can. With the price of gold in April dropping 14% in just two days—the biggest sell-off in 30 years—this led to an increase in demand for jewelry and coins in China.
Essentially, gold transactions have increased as many more participants use the metal for trading purposes as an investment strategy. Exports of gold from China into Hong Kong were 93,481 kg, a huge jump from February’s exports of the yellow metal of 36,159 kg. Profiting from the volatility, trading in gold continues to skyrocket globally.
The volume of gold bullion on the Shanghai exchange hit a record high on April 22 of 43,272 kg. As more traders use gold in their investment strategy, transactions continue to increase substantially. Following the sell-off in gold bullion prices on April 15 and 16, the China Gold Association reported that retail … Read More
Is It Time to Look Away from Gold?
By George Leong for Investment Contrarians | May 9, 2013
Lately, I’ve been reading about all of this buying of gold bullion by central banks around the world.
Some would say the move is bullish for the precious metal, but I’m not convinced. I was encouraged by the recent bounce after the price fell below $1,400 an ounce, but it has since stalled, based on my technical analysis.
To tell you honestly, I’m not sure in which direction the yellow metal will move. The recent rally was more technically driven than based on fundamentals.
There are many factors involved that could encourage the precious metal’s future direction.
If the Syria-Israel conflict intensifies into something more, we could see some traders and institutional money move into the yellow metal as a safe haven.
There is a direct relationship between the yellow metal and interest rates. In other words: follow the global central banks and you’ll get a sense of where the metal may be headed.
And as long as interest rates remain low, we could see some buying support for gold, but when rates begin to rise, prices will likely fall.
Currently, the central banks are printing money, which will keep interest rates low, and this should give the yellow metal some buying support.
Of course, for the yellow metal to move higher, we will need to see major risk surface, such as inflation, a major conflict, or a sell-off in the stock market.
As long as the stock market holds and moves higher to new records, the precious metal will be under some pressure. The fact is that as stocks move higher, investors will prefer to invest in stocks.
The … Read More
Physical Gold Bullion Charged Large Premiums as Demand Increases
By Sasha Cekerevac for Investment Contrarians | May 7, 2013
An investment strategy can take many forms. For long-term investors, one investment strategy is to wait for significant pullbacks and enter positions when the price declines.
The recent sell-off in gold bullion has created a substantial increase in demand for the precious metal around the world. It appears that many long-term investors globally are using the investment strategy of buying on dips when it comes to gold.
Following the biggest sell-off in the price of gold bullion in 30 years, international investors are taking the pullback as an opportunity in their investment strategy to accumulate the metal. A sign of demand is the premium that gold buyers are willing to pay.
In many parts of the world, such as Dubai, physical gold bullion prices paid by wholesalers are trading at a premium of $6.00–$9.00 an ounce over the spot rate in London, versus a premium of only $0.50 prior to the sell-off, according to precious metals service provider MKS (Switzerland) SA. (Source: Sim, G., “Gold Rush From Dubai to Turkey Saps Supply as Premiums Jump,” Bloomberg, April 30, 2013, last accessed May 3, 2013.)
The gold bullion trade in Dubai was worth approximately $56.0 billion in 2011, up from only $6.0 billion in 2003. The premium for physical gold is even larger in Turkey. Gold traded as much as $25.00 per ounce higher on the Istanbul Gold Exchange versus London’s price for gold.
The increase in demand for physical gold bullion is a sign that many long-term holders have the investment strategy of buying when the price dips. Considering that the recent sell-off in gold was so significant, long-term bulls … Read More
Has Gold Bullion Hit Rock Bottom?
By Sasha Cekerevac for Investment Contrarians | Apr 29, 2013
As is quite evident from the past couple months, investing in gold can be rather volatile. Clearly, the huge sell-off in the price of gold bullion over the past couple of weeks has shocked some people; an interesting result has been the reaction from the retail public, as many are now buying gold bullion in record amounts.
Last week, the United States Mint actually ran out of the smallest American Eagle gold coin, and sales to India were 20% higher than the previous record, according to Standard Chartered PLC. Clearly, physical demand remains strong for gold bullion. (Source: Roy, D., et al., “Gold Rout for Central Banks Buying Most Since 1964: Commodities,” Bloomberg, April 25, 2013.)
Here is a key question for those who are considering investing in gold: what are your goals? Is a person investing in gold to diversify his or her assets or to trade and generate profits?
Having gold bullion as part of one’s portfolio can make sense as long as it’s understood that volatility will continue to be present. Since larger investors have added gold bullion as another asset to trade, determining the price of gold bullion has become increasingly difficult.
A chart for gold bullion is featured below:
Chart courtesy of www.StockCharts.com
The recent drop in gold bullion erased an estimated $560 billion in the value of central banks’ holdings, and it was one of the largest drops in 30 years. The huge spike in volume and the massive move indicate several large stops were triggered, causing the holders to liquidate their positions.
The question now: is the selling in gold bullion completed? Since … Read More
Correction in Gold Mining Sector Close to a Bottom
By Sasha Cekerevac for Investment Contrarians | Mar 15, 2013
The recent pullback in gold bullion has certainly hurt gold mining stocks. While one can develop a sound investment strategy, if the price of the stock continues moving downward, it makes it extremely difficult to step in and buy.
Gold mining stocks have seen a serious sell-off over the last few months. So what about gold mining stocks as a long-term investment strategy?
To begin with, looking at the commodity from an investment strategy point of view, gold has pulled back and has bounced off a key support level. Obviously, whatever direction the price of gold moves, the majority of gold mining stocks will move in tandem.
No one can predict the price of a commodity for certain. However, we do know that there remains strong demand for physical gold and that central banks around the world continue to have easy monetary policies.
While that is a sound investment strategy, it does not guarantee that gold will see an increase. The market could continue declining, as more sellers of paper gold emerge.
Assuming that gold prices will increase, gold mining stocks are beginning to look attractive, because they’ve declined to such a level that many are trading at a discount to book value. This means that if the company were to be bought and sold in pieces, the sum of the parts is worth more than the current stock price.
This type of investment strategy, looking for value, is one approach that an investor can take when trying to determine which gold mining stocks might be suitable for their portfolio. Momentum is not bullish for gold mining stocks at the … Read More
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