AU, ABX, NEM, GLD

Gold’s 12-yr rally, the longest in about 100 yrs decades is set to continue to rise in Y 2013 as central bank stimulus causes investors big and small to accumulate the precious Yellow metal.

Gold will rise every Quarter next year and average 1,925 oz in Q-4, or 11% more than it is now, according to the median of 16 analyst estimates.

Paulson & Co. has a $3.66-B bet through the SPDR Gold Trust GLD, the biggest Gold-backed exchange traded product, and Soros Fund Management LLC increased its holdings by 49% in Q-3, US Securities and Exchange Commission filings show.

Central banks worldwide from Europe to China are pledging more steps to boost growth, raising concern about inflation and currency devaluation.

Investors bought 247.5 metric tons of Gold through ETPs this year, exceeding annual US mine output.

Savvy participants see Gold as a hedge against the follies of politicians, and believe that a good time to put on some protection real asset like Gold in portfolios.

Gold advanced 11% to 1,728.85 in London this year, headed for a 12th consecutive annual gain, the longest streak in data going back to Y 1920.

Prices tapped a record 1,921.15 in September 2011.

For your reference: The Standard & Poor’s GSCI gauge of 24 commodities slipped 0.3% and the MSCI All-Country World Index of equities climbed 8.2%. US Treasuries returned 2.7%, a Bank of America Corp. index shows.

Gold bullion held through ETPs, the 1st of which listed in Y 2003, reached a record 2,604.2 tons Tuesday, valued at $144.9-B. That exceeds the official reserves of every nation except the US and Germany, according to World Gold Council data. The SPDR Gold Trust GLD alone holds 1,342.2 tons.

Investor George Soros, 82 anni, increased his investment in GLD to 1.32-M shares in Q-3, the most since Y 2010, a 14 November SEC filing shows. The stake, with each share representing about a 1/10 oz is valued at $221.4 -M. Prices advanced 60% since January 2010, when Mr. Soros called Gold the “ultimate asset bubble.” A spokesman for Mr. Soros in London declined to comment.

Paulson & Co. has a $3.66-B bet through the SPDR Gold Trust, the biggest Gold backed exchange-traded product.

Mr. Paulson, 56 anni, who became a billionaire in Y 2007 by betting against the subprime mortgage market, owns 21.8-M shares in the SPDR Gold Trust, making him the biggest shareholder, a 15 November SEC filing shows. He raised his stake by 26% in Q-2 and his holding of about 66 tons exceeds the official reserves of nations from Brazil to Bolivia.

The New York-based hedge fund company reduced its investments in Anglogold Ashanti Ltd. NYSE:ANG and Gold Fields Ltd. NYSE:GFI, the 3rd and 4th biggest producers.

Armel Leslie of Walek & Associates, a spokesman for Mr. Paulson’s fund, declined to comment.

Q-3 demand for Gold fell 11%, the most since Y 2009, as China’s slowing growth curbed purchases, the London-based World Gold Council said on 15 November.

India, the biggest buyer in the quarter, consumed 24% less in the year’s 1st 9 months as Gold bullion priced in Rupees reached a record in September.

The Washington-based International Monetary Fund cut its Y 2013 forecast for world growth twice since July, to 3.6%.

Gold prices rose 25% since November 2010, while the futures market, based on contracts outstanding, fell 30% bourse data show.

The precious Yellow metal, down 3.7% from this year’s high, has not yet exceed previous records when adjusted for inflation, with its Y 1980 record of $850 equal to $2,398 today, data compiled by the Fed Bank of Minneapolis show.

Hedge funds and other large speculators pared bets on a rally in futures traded on the Comex exchange in New York by 29% since 9 October, US Commodity Futures Trading Commission data show. They hold a net-long position of 140,162 futures and options, about 10% more than this year’s average, and increased wagers by 7.7% last week.

The US Fed said on 24 October that it will maintain $40-B in monthly purchases of mortgage debt and probably hold interest rates near Zero until mid-Y 2015. The European Central Bank said it’s ready to buy bonds of indebted nations and the Bank of Japan raised its asset-purchase program for the 2nd time in 2 months on 30 October.

Gold rallied 70% as the Fed bought $2.3-T of debt in 2 rounds of quantitative easing from December 2008 through June 2011.

Investors buying Gold bullion as a hedge against inflation and a weaker USD generally earn returns only through price gains, increasing its allure as interest rates decline. It rose 600% since the end of Y 2000, beating the 34% advance in the S&P 500, with dividends reinvested, and the 91% return on US Treasuries. The US Dollar Index fell 26%.

The 1st face-to-face meeting between Obama and leaders from Congress on the F-Cliff showed optimism and few details about how it would be resolved. The $607-B of automatic spending cuts and tax increases is scheduled to take effect in January. US equities and Treasuries rose on 16 November, Gold futures were lflat.

Credit Suisse Group AG’s NYSE:CS Tom Kendall, the most accurate Gold forecaster tracked over the past 2 yrs, sees prices averaging 1,880 oz in Q-4 of Y 2013 and UniCredit SpA’s Jochen Hitzfeld, ranked 2nd, expects 1,950 oz in that same frame. Deutsche Bank AG’s Daniel Brebner, the 3rd most accurate, predicts 2,300 oz in Q-3.

Options traders are Bullish too, with the 7 most widely held contracts conferring the right to buy at prices from 1,800 to 2,200 between November and March, Comex data show.

Central banks added to reserves for 19 consecutive months through August, the longest streak since Y 1964, IMF data show.

Nations from Russia to South Korea to Mexico bought more to bring combined holdings to 31,461 tons, equal to about 18% of all the metal ever mined.

Barrick Gold Corp. NYSE:ABX, the world’s largest producer, will report a 41% gain in profit to a record $5.04-B next year, the mean of 10 analyst estimates show. The Toronto-based company’s shares fell 25% this year and will gain 43% in the next 12 months, according to the average of 23 forecasts.

Analysts predict Newmont Mining Corp. NYSE:NEM and AngloGold Ashanti, NYSE:AU the next-biggest, will also report the record next year.

That being the case, it looks to me as though global monetary stimulus will continue, particularly in the wake of growing fiscal austerity. That puts pressure on the monetary authorities to stimulate the economy and that will debase the fiat currencies and put a bid under Gold. Stay tuned…

 

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.

Copyright Live Trading News All rights reserved.