Is Gold considered as investment or insurance?

Gold prices touch eight-month low
AAP SEPTEMBER 18, 2014 7:45AM

Gold prices have extended their losses as the US dollar strengthened and traders mulled the Federal Reserve's policy statement.

Gold for December delivery, the most active contract, was recently down $US12.40, or one per cent, at $US1,224.30 a troy ounce in electronic trading on the Comex division of the New York Mercantile Exchange.

The December contract had settled at $US1,235.90 an ounce when gold trading on the Comex floor ended roughly half an hour before the Fed's policy statement was released.

Fed officials cut monthly bond purchases by $US10 billion ($11bn), advancing the central bank's plans to conclude the stimulus effort at its next meeting, in October.

Most officials, 14 of 17, said they continue to believe the first increase in short-term interest rates will occur in 2015.

In response, the US dollar rallied against other currencies while gold prices fell to $US1,222.80 in electronic trading, a fresh eight-month low, extending earlier losses.

Gold is traded in dollars and becomes more expensive to foreign buyers when the greenback strengthens.

"That liquidity is coming to an end and it's going to have a negative impact on gold," Rob Kurzatkowski, a senior market strategist with optionsXpress in Chicago, said.

The tapering of the Fed's bond purchases and the eventual rise in interest rates would end a unique time of accommodative monetary policy that kept US interest rates near zero to spur economic growth.

Gold had benefited from the Fed's stimulus efforts, as many investors bought the precious metal as a hedge against high inflation or a weaker dollar, two risks associated with loose monetary policy.

Gold vs. the S&P 500
By Selena Maranjian | More Articles | Save For Later
September 28, 2007 | Comments (6)
I recently ran across a chart pointing out that gold -- represented, in this case, by the streetTRACKS Gold Shares (NYSE: GLD ) exchange-traded fund -- has outperformed the S&P 500 over the past two years. It made me worry that the chart might inspire some people to move some -- or even most -- of their money from the broad stock market into gold.
In case you're one of those folks, here is some food for thought: Even though gold has spiked sharply in value recently, it hasn't been a long-term winner for most investors. According to University of Pennsylvania finance professor Jeremy Siegel in his seminal book Stocks for the Long Run, here's what a dollar invested in various things would have grown to, from 1802 to 2001. (Amounts have been adjusted for inflation.)
• Stocks: $599,605
• Bonds: $952
• Bills: $304
• Gold: $0.98
Did you catch that? Over 200 years, you would have lost two cents of your dollar if you had invested in gold.
OK, so if your personal investing timeline is less than 200 years, here are some compound average annual returns to consider:
Period Gold S&P 500
1982-2007 (25 years) 3% 11%
1987-2007 (20 years) 2% 8%
1992-2007 (15 years) 5% 9%
1997-2007 (10 years) 8% 5%
2002-2007 (5 years) 18% 13%
Sources: Yahoo! Finance, MeasuringWorth.com
Gold may indeed be trading high right now, and it has certainly rewarded investors who bought at the right time. But "the right time" is clearest only in retrospect. Over most long periods, gold hasn't been the most spectacular investment, while stocks have generally done rather well.
If you still want to invest in gold, a smarter way is through mutual funds. The Vanguard Precious Metals and Mining (VGPMX) fund, for example, sports an average annual return of about 33% over the past five years, and it's invested in companies such as Barrick Gold (NYSE: ABX ) , Gold Fields (NYSE: GFI ) , Arch Coal (NYSE: ACI ) , and Aber Diamond (Nasdaq: ABER ) . It's closed to new investors at the moment, but such funds often reopen after a while. In the meantime, for mutual funds that we at the Fool have recommended, you can take a free test-drive of our Motley Fool Champion Funds newsletter service.
You may also want to check out these articles:
• Dueling Fools: Gold
• Is It Time for Gold?
• The Glitter of Gold ETFs
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. Try any of our investing services free for 30 days. The Motley Fool is Fools writing for Fools.

NB:-
So another 200 years can Gold behave differently?
That's the question you ask on behalf of your descendants.

Gold prices tumble, ‘no compelling reason’ to buy
PUBLISHED: 0 HOUR 1 MINUTES AGO | UPDATE: 0 HOUR 0 MINUTES AGO

Gold prices tumbled to an eight-month low on September 19 after the Federal Reserve raised its outlook for interest rates. Photo: Peter Braig
Hedge funds extended this year’s longest exit from bullish gold bets as slumping prices and investor outflows since June erased $US6.7 billion from the value of exchange-traded funds backed by the metal.

The net-long position in New York futures and options fell for a fifth straight week, with speculators boosting short bets to the highest since June, US government data show. Investors sold 7.75 metric tons of gold held in ETPs last week, sending holdings to the lowest in five years.

Prices tumbled to an eight-month low on September 19 after the Federal Reserve raised its outlook for interest rates, crimping demand for an inflation hedge. The appeal of gold also is waning as the U.S economic recovery sends the Standard & Poor’s 500 Index of shares to a record and the dollar to the highest since 2010. Gold’s 60-day volatility is near a four-year low, and open interest was almost the lowest since 2009.

“There are no compelling reasons to be in gold,” said Brian Levitt, a New York-based economist at OppenheimerFunds Inc., which manages $US251.4 billion. “There are no inflationary pressures. You have a central bank that’s going to tighten sooner than most of its trading partners. That to me portends a strong dollar and weaker gold prices.”

Futures fell 1.2 per cent last week to $US1,216.60 an ounce on the Comex, the third straight decline. The Bloomberg Commodity Index of 22 raw materials slipped 1.5 per cent, dropping to a five-year low on Sept. 19, while the MSCI All-Country World Index of equities climbed 0.5 per cent. The Bloomberg Dollar Spot Index rose 0.5 per cent.

SHORTS JUMP
The net-long position in gold declined 22 per cent to 55,716 futures and options in the week ended Sept. 16, the lowest since mid-June, US Commodity Futures Trading Commission data show. The holdings are down 58 per cent in five weeks, the steepest and longest reduction since December. Short positions, or bets on a price decline, increased 18 per cent last week to 69,243 contracts.

Assets in the SPDR Gold Trust, the biggest ETP backed by bullion, slipped last week to 776.44 tons, the lowest since December 2008. The holdings are down 2.3 per cent in September, heading for the biggest monthly drop since April. Worldwide ETP holdings fell 3.2 per cent this year to 1,706.47 tons as of Sept. 18, the lowest since October 2009.

Gold is heading for its first quarterly loss this year. The Fed on Sept. 17 reduced monthly bond purchases to $US15 billion, keeping it on track to announce an end to the program in October. Policy makers also raised their median estimate for the federal funds rate at the end of 2015 to 1.375 per cent from 1.125 per cent in June.

In 2013, bullion fell 28 per cent to halt a 12-year rally as some investors lost faith in the metal as a store of value. Inflation expectations, measured by the five-year Treasury break-even rate, last week reached the lowest since December.

SPUR BUYING
Lower prices may help to spur physical demand for the metal. Sales of gold coins by the US Mint reached 39,500 ounces so far in September, heading for the best month since June and topping August’s total by 58 per cent.

The expansion of trading hubs in Asia will help boost demand in China by 20 per cent in three years, Aram Shishmanian, chief executive officer of the World Gold Council, said in a Sept. 18 statement. The country, which overtook India as the biggest buyer last year, last week gave foreign investors direct access to its bullion market for the first time.

“We are seeing a gradual return of retail buyers,” said George Gero, a New York-based precious-metals strategist who helps manage $US500 million at RBC Capital Markets LLC. “These prices are very attractive, and we will see more buying out of China and India ahead of the festival and marriage season. This year has witnessed a lot of political turmoil, and people want to hedge against the bad things happening in the world.”

COMMODITY BETS
Net-wagers across 18 US traded commodities dropped 2.2 per cent to 500,421 contracts as of Sept. 16, the lowest since August 2013, CFTC data show.

Bets on higher oil prices rose 9.1 per cent to 203,648 contracts, the second straight advance. West Texas Intermediate crude advanced 0.2 per cent last week to $US92.41 a barrel.

Copper wagers were net-long 805 contracts, after being net-short 2,077 a week earlier, the data show. The world’s biggest user of the metal is China, where the People’s Bank of China is injecting 500 billion yuan ($US81 billion) into the nation’s five biggest banks, according to a government official familiar with the matter.

CROP HOLDINGS
A measure of net-long positions across 11 agricultural was at 244,803 contracts, up 3.2 per cent from a week earlier, the government data show. Holdings are down 78 per cent from this year’s peak in April.

Investors have the most-negative outlook on wheat since July, with a net-short holding of 67,266 contracts. Wheat, corn and soybean prices fell to four-year lows last week on signs of ample global supplies.

Farmers worldwide will harvest a record 719.95 million tons of wheat, helping to boost global stockpiles to a three-year high, the US Department of Agriculture estimated September 11. The agency expects growers will collect the biggest domestic corn and soybean crops ever.

“Everything comes back to fundamentals in the agricultural sector,” said Mayer Cherem, who helps manage $US9.6 billion as head of opportunistic investments at Pacific Alternative Asset Management Company LLC. “There is a lot more downside in the soybean market, and corn prices will also weaken. The global crop situation is very comfortable, and there are expectations of big harvests this year for most of the crops.”

The Australian Financial Review

Gold demand in China and India on the rise
FERGUS RYAN & APP OCTOBER 24, 2014 12:15PM

China and India are driving a significant amount of physical gold demand in recent days as buyers take advantage of low prices.

According to trade data cited by the Wall Street Journal, Switzerland exported 95 tonnes of gold to mainland China, Hong Kong and India in September.

Exports to China had been averaging around three tonnes is pervious months before spiking to 12 tonnes in September.

Analysts say Chinese demand for gold rose sharply once the price fell under US$1200 an ounce this month.

India’s Diwali festival which was celebrated Thursday, saw demand for gold rise around a third from last year.

Meanwhile, gold futures retreated on Thursday as upbeat economic data pushed US equities higher, reanimating investor appetite for risk and damping interest in haven assets.

The most actively traded contract, for December delivery, fell $US16.40, or 1.3 per cent, to settle at $US1,229.10 a troy ounce on the Comex division of the New York Mercantile Exchange.

This was the lowest settlement since October 10, when futures closed at $US1,221.70 an ounce.

Gold and other haven assets gave way to pressure from upbeat economic data. Manufacturing activity in China and Europe improved in October, while US economic activity grew at above-historic trend.

"As the fear comes out of the market, the investment comes out of gold," said Frank McGhee, head precious metals dealer with Integrated Brokerage Services LLC in Chicago.

Investors tend to hoard protective assets like gold, Treasurys and the yen during periods of uncertainty, but cut back on such holdings in favour of stocks and other investments that benefit from economic growth when the outlook brightens.

The shift away from gold comes as the US stock market continues to recover from a swift downdraft that saw equities post four straight weeks of declines and the Dow Jones Industrial Average erase its gains for the year.

Gold extends four-year low
DOW JONES NEWSWIRES NOVEMBER 04, 2014 8:00AM

Gold extended its four-year low in overnight trade as the US dollar advanced against other currencies and stocks briefly hit new record highs.

Gold for December delivery, the most active contract, fell $US1.80, or 0.2 per cent, to $US1,169.80 a troy ounce on the Comex division of the New York Mercantile Exchange. This was the lowest settlement since July 29, 2010.

Gold prices continued to give way to the greenback, which climbed against other currencies amid expectations of stimulus by foreign central banks. Last week, the Bank of Japan surprised markets with plans to boost its bond-purchasing efforts. This week, the European Central Bank is due to meet, with investors hoping to see a more proactive stance from officials.

By contrast, the Federal Reserve concluded its bond-purchasing program last month and is drawing closer to raising interest rates.

The shifts in global monetary policy trends have bolstered the US dollar and weighed on gold. As the greenback strengthens, dollar-denominated gold becomes more expensive for buyers who use other currencies to fund their purchases. Moreover, gold doesn't earn interest or dividends and has a tougher time competing with bonds and stocks when interest rates climb.

"With the interest rate hike anticipated next year, there's a fear that everyone will run to cash and so far, they are," John Payne, senior market analyst with Daniels Trading in Chicago, said. He added that gold has become one of the main casualties of this shift.

Fresh records in US stocks further tarnished gold's appeal.

A steady stock market also weighed on gold's appeal to investors. The S&P 500 index touched an intraday record of 2024.46 and was recently up 0.2 per cent at 2,021.

While some investors buy gold on the belief it will hold its value better than other assets during periods of economic upheaval, they tend to shed the precious metal in favour of riskier investments like stocks when the economic outlook brightens.

Meanwhile, platinum and palladium prices got a shot in the arm from stronger US car sales, with auto makers reporting company figures throughout the day. Edmunds forecasts US car sales will rise 6.3 per cent in October, though several carmakers predicted stronger results.

While most investors are familiar with platinum and palladium's use in jewelry, the white metals are also widely used in car-exhaust filters where they help break down pollutants.

Nymex palladium for December delivery rose $US12.60, or 1.6 per cent, to $US804.40 a troy ounce, the highest settlement since September 24.

Platinum for January delivery climbed $US7.60, or 0.6 per cent, to settle at $US1,242.80 a troy ounce.

Sometimes I cannot comprehend. With stimulus printing and ultra low interest rate environment... how can the currencies be strong.

Chinese gold demand cools
FERGUS RYAN & AAP NOVEMBER 04, 2014 2:45PM

Demand for gold in China is cooling even as global prices slumped to a four-year low on Monday.

The precious metal hit a four-and-a-half year low of $US1,165 per on Monday night, but prices on the Shanghai Gold Exchange were at a rare discount.

Gold prices are normally at a premium in China due to capital controls.

Only last week, the premium in Shanghai was US$2 to $3 an ounce to London prices.

Some analysts predict the price of gold could sink below $US1,000 per fine ounce by the end of 2015 as the American economy recovers.

The value of gold is expected to fall deeper as speculators turn to the greenback.

"We're in the phases of a multi-year cyclical bull run for the US dollar," IG chief market strategist Chris Weston said.

"If the US dollar's going to strengthen, I personally believe the gold price is going to suffer as a consequence."

The US Federal Reserve is now forecasting an upswing in the world's biggest economy, with stimulus measures discontinued.

A lift in US interest rates during the second quarter of 2015 would weigh on the gold price for the rest of the year.

"In the third quarter, fourth quarter, it will come down to test that $US1,000 mark," Mr Weston said.

Gold hasn't traded below $US1,000 since September 2009, when concerns about Greek debt saw investors buy it as a hedge against inflation.

Within two years, it climbed to a record $US1,900.

David Lennox, a resources analyst with markets research group Fat Prophets, said gold mines that opened during the GFC would close if the price dropped below $US1,100.

"A lot of mines would have to shut - there would be no doubt at that price level," he said, adding diversified miners would end gold production to focus on their main commodity.

"That would significantly reduce primary production."

This would reduce the supply of gold and push up prices again as jewellers, rather than speculators, bought the precious metal.

"You'd start to see again that increase in the appetite for gold from its real sources," Mr Lennox said.

"We haven't, at this stage, seen a lot of mine closures but there's certainly been production curtailment."

For that reason, he is "comfortably" forecasting a gold price of $US1,200 by the end of 2015, even as a rise in US interest rates puts some short-term dents in its value.

Gold has previously hit record highs before sliding.

It did so in early 1980, only weeks after the Iranian hostage crisis and the Soviet invasion of Afghanistan.

The precious metal steadily rose again following the September 2001 terrorist attacks in the US, and kept on climbing until the worst of the GFC was over.

HISTORIC FALLS IN GOLD

* $US835 per fine ounce in January 1980 to $US485 in April 1980, down 42pct

* $US1,772 per fine ounce in September 2012 to $US1,234 in June 2013, down 30pct

(Source: Bloomberg and Iress)

Gold price tipped to fall further after hitting four-year low
AAP NOVEMBER 04, 2014 2:01PM

Gold is poured at the old Perth Mint in Western Australia. Source: News Limited
AN American economic recovery could sink gold below $US1000 a fine ounce by the end of 2015, analysts warn.

The precious metal hit a four-and-a-half year low of $US1165 overnight.

FALL: Gold extends four-year low

Its value is expected to fall deeper as speculators turn to the greenback.

“We’re in the phases of a multi-year cyclical bull run for the US dollar,” IG chief market strategist Chris Weston said.

“If the US dollar’s going to strengthen, I personally believe the gold price is going to suffer as a consequence.”

The US Federal Reserve is now forecasting an upswing in the world’s biggest economy, with stimulus measures discontinued.

A lift in US interest rates during the second quarter of 2015 would weigh on the gold price for the rest of the year.

“In the third quarter, fourth quarter, it will come down to test that $US1,000 mark,” Mr Weston said.

Gold hasn’t traded below $US1000 since September 2009, when concerns about Greek debt saw investors buy it as a hedge against inflation.

Within two years, it climbed to a record $US1900.

David Lennox, a resources analyst with markets research group Fat Prophets, said gold mines that opened during the GFC would close if the price dropped below $US1100.

“A lot of mines would have to shut — there would be no doubt at that price level,” he said, adding diversified miners would end gold production to focus on their main commodity.

“That would significantly reduce primary production.”

This would reduce the supply of gold and push up prices again as jewellers, rather than speculators, bought the precious metal. “You’d start to see again that increase in the appetite for gold from its real sources,” Mr Lennox said.

“We haven’t, at this stage, seen a lot of mine closures but there’s certainly been production curtailment.”

For that reason, he is “comfortably” forecasting a gold price of $US1200 by the end of 2015, even as a rise in US interest rates puts some short-term dents in its value.

Gold has previously hit record highs before sliding.

It did so in early 1980, only weeks after the Iranian hostage crisis and the Soviet invasion of Afghanistan.

The precious metal steadily rose again following the September 2001 terrorist attacks in the US, and kept on climbing until the worst of the GFC was over.

HISTORIC FALLS IN GOLD

* $US835 per fine ounce in January 1980 to $US485 in April 1980, down 42pc

* $US1772 per fine ounce in September 2012 to $US1234 in June 2013, down 30pc

(Source: Bloomberg and Iress)

AAP

Gold price sinks to fresh four-year low
DOW JONES NOVEMBER 06, 2014 8:47AM

GOLD and silver prices have sunk to four-and-a-half-year lows, weighed down by a soaring US dollar and expectations of more stimulus from the world’s largest economies.

Gold for December delivery, the most actively traded contract, closed down 1.9 per cent to $US1145.70 a troy ounce, its lowest level since April 22, 2010.

December silver fell 3.2 per cent to $US15.439 a troy ounce, after earlier touching $US15.120, its lowest level since February 10, 2010.

Bank of Japan Governor Haruhiko Kuroda defended last week’s unexpected increase in asset purchases and pledged to do whatever it takes to eliminate deflation and spark growth, putting the central bank on a different path from the US, which ended asset purchases in October and is expected to raise rates next year.

The news sent the greenback higher against the yen and other currencies, a negative development for precious metals, which are priced in US dollars and become more expensive to foreign buyers when the currency climbs.

Gold investors also kept an eye on the European Central Bank, which concludes its monetary policy meeting on Thursday. Some investors expect the ECB to eventually increase its stimulus measures, a move that could strengthen the US dollar against the euro and lead to more weakness in gold.

Tomorrow night (AEDT), the US Department of Labour will report non-farm payrolls. A strong US jobs report likely would lead investors to believe the Fed will raise rates sooner than expected, also benefiting the greenback.

The ICE Dollar Index, which measures the US dollar against a basket of currencies, was recently up 0.5 per cent to 87.456, its highest level since June 2010.

The strengthening dollar and more hawkish Federal Reserve are undercutting expectations for rising inflation, a key reason for buying gold and silver.

“Despite the trillions of dollars of stimulus over the past several years, most central bankers are worried about deflation, not inflation,” Edward Meir, a strategist at INTL FCStone, said.

“In addition, the roaring US equity markets continue to siphon off assets away from alternative investments, including gold.”

The Dow Jones Industrial Average hit a record intraday high overnight.

Silver, which is used for industrial applications, is hurt by slowing growth in China, Japan and Europe, Mr Meir said.

Gold prices have retreated about 17 per cent from their highest levels of the year, reached in March. Some investors believe the metal’s slide may halt when it declines to $US1,050-$US1,080 an ounce, the estimated cost for companies to produce an ounce of gold. At that level, producers may mine less of the metal, shrinking global supplies, according to Bob Haberkorn, a broker at RJO Futures.

“Until then, I wouldn’t touch it,” Mr Haberkorn said.

Platinum and palladium joined in the rout as well, with investors worried that demand for the two metals, which are used primarily in auto exhaust filters, will suffer as the global economy slows.

Palladium fell 4.2 per cent to $US757.85 a troy ounce, its biggest one-day drop since June 12. Platinum settled down 1.2 per cent at $US1,210.60 a troy ounce, its lowest level since July 30, 2009.

Dow Jones

(04-11-2014, 08:41 AM)Life is a game Wrote: Sometimes I cannot comprehend. With stimulus printing and ultra low interest rate environment... how can the currencies be strong.

GOLD is priced in USD, not jap yen or euros. Markets participants generally react according to how they think the future will be and how much uncertainty it is, not what the present or past will be.

Talking about Gold, i wonder whether Mr John 'I am the biggest winner of GFC2008' Paulson is still holding to his stance? Soros is still the best - when the facts change, i change my mind.