Barrick and gold

Something becomes very clear: gold prices will rise. The biggest miner, Barrick, is offering shares – the biggest inCanadian history – in order to elminate all of his fixed hedges and partly its floating hedges.
This is telling us that they are serious this time about a rising gold price.
How?
The Chinese, my dear Watson….

From the FT:

Barrick Gold said on Thursday that proceeds from its pending equity offering will total around $4bn, making the stock sale the biggest in Canadian history, reports Reuters. The world’s top gold miner said underwriters exercised in full their option to purchase an additional 14.21m shares at a price of $36.95. The offering is expected to close on or about Sept 23. Barrick announced an equity sale of at least $3bn on Tuesday, to be used to eliminate all of its fixed-price gold hedges and a portion of its floating hedges.

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Inspiration

From the FT:

The dollar fell to its lowest level in almost a year on Tuesday as a rally in gold prices above $1,000 an ounce and fresh concerns over its reserve status weighed on the US currency. Derek Halpenny at Bank of Tokyo-Mitsubishi UFJ said the dollar's near-term prospects did not look particularly encouraging. "Gold has just broken through the $1,000 level and this along with the dollar index approaching its lows may well encourage another wave of speculative dollar selling," he said. The dollar index, which tracks its progress against a basket of six major currencies, fell to a low of 77.398, breaking through the lows it hit in early August to fall to its weakest level since September 30 2008.

• Gold mining ETF GDX rockets 12%... gold jumps over $1,000 an ounce.
• Teen retailers Gap and Aeropostale hit new highs... Abercrombie drops 12% last week.
• Semiconductor makers extend gains... Silicon Labs, Advanced Semi, and others reach 52-week highs. Sphere: Related Content

Inspiration

If pigs could fly this place would be a busy airport, says the sign in my local pub.
But the price of gold is flying. And Hong Kong will open a new precious metal depositary at its international airport.

A discussion was started by Michael Lewis and is now getting wings. Also Paul Krugman has written a piece: How Did Economists Get It So Wrong?
If you want to read something this weekend… well here you go

• Huge day for gold and silver miners... majors Goldcorp and Kinross reach new 52-week highs. Jaguar, Eldorado, Goldfields, Minefinders, Silvercorp, and Silver Wheaton at new highs.

• iShares silver surges to new 52-week high.

• Don't forget the bull market in lead... lead ETF at new 52-week high.

Enough said. It's time to switch off the PC and walk to the pub to enjoy a good Guinness and some songs

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Inspiration

A lot is going on.

• Gold surges past $970... moving closer and closer to $1,000.
• Gold stocks enjoy huge spike with gold... big gold stock fund up 7% to reach highest high since early June.
• No rest for natural gas... more miserable new lows for natural gas funds.
• Muni bonds continue amazing rally... scores of muni bond funds reach another round of 52-week highs.
• ECB keeps rate unchanged at 1% and gives money in the one year at 1%. Sphere: Related Content

Gold

Gold shines.
The start of the new month is triggering strange things in this market
From Elliot Wave International we borrow this remarkable chart:

Fascinating, those waves...

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Monday, mergermania and gold

Two big mergers are hitting the newslines. BJ Services (ticker: BJS) is being acquired by Baker Hughes and Marvel entertainment (ticker: MVL) is merging with Disney (ticker: DIS). Now look to DreamWorks Animation (ticker: DWA) for secondary action.

All major US Exchanges will be closed next Monday for Labor Day.

We’re looking to gold: since February the gold price has been squeezed in an ever tightening range. Sooner or later we will see action coming in this department. The perfect set up for a strangle.

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To liquidate

Everything seems to be under attack these days. Now it is the ETF department where regulators are asking questions about leveraged ETFs and commodity ETFs. These have become so big that they start to dominate the underlying markets. What do we read?
From Reuters:

It was the second day in a row in which holdings had fallen. [GOL/SPDR] SPDR has shed about 53 tonnes over the past month, the largest drop ever for the fund.
"The rise in SPDR holdings has been a major factor driving the market higher and if the fund is now turning around to be a seller, that would be a major bear factor,

But there is more.

A US legislative plan to regulate the near-$600,000bn market in OTC derivatives suggests that lawmakers debate the idea of banning so-called “naked credit default swaps”, which allow investors to speculate on the creditworthiness of companies. The proposal by key congressional committees would push most derivatives on to an exchange or clearing house but leaves open the issue of whether to outlaw CDSs, in which the buyer does not own the underlying asset.

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Almost weekend

While all European countries are selling gold within the boundaries of the Washington Agreement, there is one country which didn’t sell one ounce and still sits on 2451 Tonnes gold That’s Italy.

And than this one:

From The Telegraph

Events have already forced Premier Brian Cowen to carry out the harshest assault yet seen on the public services of a modern Western state. He has passed two emergency budgets to stop the deficit soaring to 15pc of GDP. They have not been enough. The expert An Bord Snip report said last week that Dublin must cut deeper, or risk a disastrous debt compound trap.
"A further 17,000 state jobs must go (equal to 1.25m in the US), though unemployment is already 12pc and heading for 16pc next year.

"No doubt Ireland has been the victim of a savagely tight monetary policy - given its specific needs. But the deeper truth is that Britain, Spain, France, Germany, Italy, the US, and Japan are in varying states of fiscal ruin, and those tipping into demographic decline (unlike young Ireland) have an underlying cancer that is even more deadly. The West cannot support its gold-plated state structures from an aging workforce and depleted tax base.

Oh dear. Can I stand this?

Time to turn off this thing and running to the local pub.

Friends and tourists all together: lets sing and have a pint

And you, dear reader, a good weekend and take care.

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Gold and Euro

Most of the times the price of gold is function of the strength/weakness of the dollar. A good proxy to measure this relationship is the EUR/USD.
The last few weeks however we observe a divergence between the Gold ETF (ticker: GLD) and the Euro ETF (ticker: FXE)

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a bottom in gold in the maing?

Nobody seems to notice but last week has the Obama administration pushed a bill through the US House of Representatives approving 106 bln USD supplemental ‘security’ funding for Iraq and Afghanistan but attached to it was a 108 bln USD credit line to the IMF on condition that the American members of the IMF Board agreed with the proposed 400 tons of IMF gold. On a total of 3217 ton. On its balance sheet they are booked on the basis of the historical cost or 8.7 bln USD, while the market value amounts to 95 bln USD.

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Time to be bearish on gold?

Also this time the gold price will not go through the magical barrier of 1000 USD/oz. Almost a classical retreat to the low 900’s is coming . Our renko-charts are not positive. Neither the metal nor the mining stocks are performing well from a short term perspective.

Seasonality is pointing to a subdued market action the coming weeks. It ‘s only later in the year that the gold price normally receives a boost.
In my archive I found this chart which is averaging the price of the gold spot future over 30 years (from 1974 to 2003 to be precise) from Moore Research.

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Gold and silver

The gold price is rushing to the magic 1000 USD/oz limit. Once more. After one year of hesitating and supported by fund buying, gold is catching the public eye again.

But the real winner is not gold but his buddy, silver. If we take the ratio between both we observe how much stronger the orice of the latter is.

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Silver shines

There goes gold.
And silver. Is it the weakening dollar or the buying of hedge funds?
Difficult to say, but we have to mention that the 1000 USD/oz barrier is coming in sight again.
But silver is the real high flyer.

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Gold shines

It started.
The rumor mill. If the UK can lose the triple A status, why not the States?
It started.
As venom it’s spreading. The dollar is sliding. Central Banks are sneaky selling their Treasuries. Ben will have to announce much more QE.
The de-leveraging continues.
And it looks uglier by the day.

A part of Europe was enjoying a holiday, yesterday. Next Monday the States are not in. A light Friday. As it is all week. Volume is light. Dollar weakness is met with strength of oil and gold.
The strength in the gold price is met with a good performance of the goldminers. The ratio between those two is favoring the latter. This is a good sign for the ongoing rally.

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Anglogold Ashanti

Yesterday this South-African goldminer lost more than 5%. Although we're up a little today, the trend as measured by our 60-minute renko charts, became negative. Is this the start of a decline or is gold and this group of stocks able to reverse course again?

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The ECB is on the move

The ECB cut rates with an unsurprisingly 25 bp. But Jean-Claude T launced afterwards some very remarkable proposals: additional repo operations, Repo ops with 12 month maturity, quantitative easing, purchase of covered bonds, EIB is becoming a counterparty.
Unconventional measures for the ECB? Remarkable.
Apparently, things are not that rosy as (European) exchanges think.
Gold is soaring.
Na why should that be…

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An odd couple

What’s this?
It’s a very odd relationship.
What could be the relation between the ratio of long term yields versus short term yields and between gold and silver?
On a monthly basis - and maybe this is a complete coincidence – we observe that as the yield curve is inverse, silver is rising more quickly in price than gold. And vice-versa.

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Well, just a last one...

All the intelligence and talent in the world can't make a singer. The voice is a wild thing. It can't be bred in captivity. It is a sport, like the silver fox. It happens.
(Willa Cather)

Yesterday we mentioned the gold vectors ETF (ticker: GDX). Yes, this thing is flying...
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Gold on the move

The gold price is moving again. Going higher. It goes like clockwork. Until now, we never revisited the 823 USD some were predicting.

Also the Market Vectors Gold Miners (ticker: GDX) seems to move higher on our 60-minutes renko charts. Is a break-out in the making?

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End of month movements?

What’s happening with the gold price today?
First there was a dip in the NY morning trading from 920 USD/oz towards 907 USD/oz and then suddenly the price rocked skywards to 928 USD/oz.
Somebody is buying because he has a problem or because he wants it.
We heard this weekend a lot of stories.
The IMF would have to sell some gold. The Russians want a new gold standard.
In the mean time we observe that the Toronto Ventures Index, loaded with small goldmine producers is really making a come-back.
Even today is not especially a day to buy, after losing 75% of its value in five months, this index is poised for a rally.

But also elsewhere a break-out can be observed. The Market Vectors Gold Miners ETF (ticker: GDX) staged last week to break through its 200 moving average, while being on the verge of a new six-month high.

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