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Super-rich seen buying gold, selling hedge funds

 

By Steve Lodge

Financial Times, London

Friday, November 13, 2009

 

The investment preferences of the world's wealthiest families have shifted significantly in favour of gold and other commodities and away from hedge funds in the wake of the financial crisis, according to a survey of family offices and advisers of the super-rich.

 

Two-thirds of the 100 respondents to a survey by the Family Office Channel, a new website, said that super-rich families are now more likely to invest in gold and other commodities. They are also more interested in bond investments and in holding higher amounts of cash as part of an "instinctive retreat to ultra-safe asset classes."

 

By contrast, two-thirds of respondents said the wealthiest families are less likely to invest in hedge funds and structured products -- investments offering capital protection -- with one in three reporting "greatly reduced" interest in these holdings.

 

Private equity and commercial property are also much less popular asset classes, while attitudes to residential property investment remain largely unchanged.

 

The findings confirm reports of a flight to "safer" asset classes, says the survey. Wealthy families' risk appetites have suffered from frauds uncovered in the financial crisis as well as the poor performance of investments. More than nine out of 10 respondents said the level of trust in financial institutions and investment advisers has been hit by the Madoff and Stanford frauds.

 

"Madoff, Stanford, and bank failures are not necessarily seen as one-offs -- families clearly feel they cannot rule out the idea that the failings symbolised by these events are systemic," according to the survey, which was conducted last month.

 

It also found that more than half of wealthy families have recently reviewed their tax position and structures as a result of increased scrutiny from tax authorities.

 

Two-thirds of respondents said their philanthropic activities have suffered in the downturn, but some wealthy families are said to be giving more to try to counteract the impact of recession on charities.

 

 

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From a traders viewpoint platinum has made some impressive moves at over 2000 to around 1000 and now 1300 and every chance it will be over 2000 before gold is.

 

In an economic recovery where there is less fear of collapse gold will fade in favour of stuff people require.

 

And in 2004 $850 was nowhere to be seen anytime soon

 

It seems if:

 

1. you are certain of economic collapse then trade wholely with gold

 

2. If you are optimistic of economic recovery then trade mainly with something that is required.

 

IMO If you are certain of economic collapse you should not trade but should aquire gold, silver and anything that can be bartered.

 

 

MUST Read here:

 

http://www.marketoracle.co.uk/Article15013.html

 

Quote:

Anyone who has studied prior secular bull markets knows that a 4 fold gain over ten years is not a bubble and is not anywhere a secular top, but "bubble" calls are everywhere in the mainstream financial community regarding Gold. First, they don't see it coming and say it can never happen and then they call "bubble" the second it does! I love it because Gold is still climbing a wall of worry. Yes, the short-term speculative froth is a little high, but long term (I am not a day trader), Gold has a long way to go regardless of what paperbugs think.

 

gold-13-1.png

 

The 2000 low in the gold price was an extreme low and was IMO caused primarily by the new rising economic powers unlike those in the past choosing to accumulate American debt instead of gold. The fourfold increase in value has got gold to more or less the value it should be in normal times; IMO it is still a screaming buy if you believe your fiat currency will fail.

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Gold near record highs as dollar weakens

Bullion has hit record highs for six out of the past eight sessions

Rebekah Curtis

 

 

London — Gold rose on Friday, hovering below the previous session's record high and building a base above $1,100 an ounce as the dollar edged lower and analysts predicted further losses in the currency,

 

Bullion has hit record highs for six out of the past eight sessions, touching an all-time peak of $1,122.85 on Thursday on the view the dollar would remain weak.

Spot gold was at $1,106.65 per ounce at 1102 GMT, up 0.3 per cent from New York's notional close of $1,103.60.

 

The U.S. currency was 0.3 per cent lower against a basket of major currencies and has lost about 7 per cent so far this year, making commodities priced in the greenback cheaper for holders of other currencies.

 

“It's tracking the dollar,” said David Thurtell, an analyst at Citi, adding that Citi predicts further losses in the dollar.“There's so much bullishness now about gold,” he said. “It's hard to see any real reasons why you'd want to sell it.”

 

Gold was poised finish the week with a 1 per cent gain after rising 4.9 per cent last week, which was the biggest weekly gain since late April.

U.S. gold futures for December delivery were up $1.1 at $1,107.70 per ounce. They rose to a record high of $1,123.40 on Thursday.

 

Investors are also betting on more central bank buying after news last week that the International Monetary Fund had sold 200 tonnes of bullion to India's central bank.

 

“It can get to $1,250 before we get a really serious correction,” Mr. Thurtell said of bullion.

 

“That might not happen this year, it might be early next year.”

U.S. crude oil rose above $77. Gold often moves in line with crude, both because it can be used as a hedge against oil-led inflation and as rising crude prices often increase interest in commodities as an asset class.

 

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, on the other hand, said its holdings stood at 1,114.443 tonnes as of Nov. 12, unchanged from the previous day.

 

South Africa, previously the world's top producer, said gold output fell 9.3 per cent in volume terms in September compared to a year earlier.

 

There was also a revival in interest in silver with holdings in the world's largest silver-backed exchange-traded fund hitting a record high.

 

The holdings in the iShares Silver Trust rose 183.37 tonnes, or 2.1 per cent, from the previous day to an all-time high of 8,923.52 tonnes as of Nov. 12.

 

Silver traded at $17.27 from $17.21. Platinum was at $1,353.50 from $1,350.50 and palladium was at $350.50 from $346.95.

 

“The market is bullish and, combined with our view on the US dollar – $1.60 against the euro towards end of Q1 2010 – downside seems well contained,” Standard Bank analyst Walter de Wet said in a note.

 

But he added: “Gold's ascent will slow in the next eight weeks as jewellery seasonal demand tapers off.”

 

 

 

 

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Gold showing good bounce-back-ability at the week close - nearing $1120 again. Silver again struggling a bit at $17.4.

G-to-S ratio now 64.

 

That monthly dip in gold price around the 28th shows up well here. Look how a 22 dma (thats a month in workdays, right?) acts as this support. A buying op on this 28th (Fri 27th/Mon 30th) at around $1080 maybe ?

 

jl16ci.png

 

 

 

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Gold showing good bounce-back-ability at the week close - nearing $1120 again. Silver again struggling a bit at $17.4.

G-to-S ratio now 64.

 

That monthly dip in gold price around the 28th shows up well here. Look how a 22 dma (thats a month in workdays, right?) acts as this support. A buying op on this 28th (Fri 27th/Mon 30th) at around $1080 maybe ?

 

jl16ci.png

 

Bullish IMO a silver spike and crash at the end of a gold run is usual is it not?

 

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Looks like we could be on for a nice strong close for the end of the week on another all time high :)

Well we did it, massive show off strength to close at another all time high, the commercial signal failure is on IMO. Makes sense for it to be happening while there is so much bearishness around.

 

Wake up people this is what you have all been waiting for!!!

 

gold-1-2.gif

 

 

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Iran to Supply 5 Million New Coins to Gold Market

 

Iran's central bank plans to inject 5 million newly-minted gold coins into the domestic market in order to control rising gold coin prices, according to the official IRNA news agency.

 

At Thursday's price of 2.8 million rials (about $280) for a standard gold coin in Iran, the total value of the planned intervention would amount to $1.4 billion, Irna reported on Thursday.

 

The price of gold coins in Iran has risen sharply in line with developments on international markets where gold bullion has risen 28 per cent this year to a record high $1,122.85 an ounce.

 

Many Iranians buy gold coins as wedding gifts and also as a long-term investment. A standard gold coin weighs around 8.13 grams. It is also sold in smaller denominations of half a coin and a quarter of a coin.

 

'Five million gold coins, minted by the Central Bank of Iran, will be supplied to the market beginning on Saturday,' Central Bank Governor Mahmoud Bahmani said.

 

The Irna report did not give more details on the reasons for the central bank's planned gold market intervention, but it appeared in part to be an attempt to help bring down inflation and reduce liquidity in the economy.

 

Iran's year-on-year inflation stood at 7.6 percent in October, continuing a downward trend that began in late 2008.-Reuters

 

 

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Central Banks Join a New Gold Rush

 

The world's central banks are likely to be net buyers of gold in 2009 after two decades of selling, sparking a race among analysts to figure out which country will step in with the next big purchase.

 

Since 1991, central banks have reduced their gold holdings by 10%. It is a trend that has long been cited as keeping an overhang on gold prices. Developed countries like Switzerland, the U.K. and the Netherlands all sold significant amounts of gold to diversify into other assets in pursuit of higher returns.

 

India's $6.7 billion purchase of 200 metric tons of gold from the International Monetary Fund last month, absorbing half the amount the IMF put up for sale, was the largest purchase by a central bank in 30 years. Now the market is engaged in a guessing game about which central bank may buy the rest.

 

Eugen Weinberg, an analyst with Commerzbank AG, is looking to China. Jeff Christian, managing director of CPM Group, a New York-based precious-metal research firm, says other Asian and Middle East countries may be likely candidates.

 

Wei Benhua, a former Chinese official, was cited by Chinese-language magazine Caijing on Monday as saying China, Brazil or Russia may follow India in buying IMF gold.

 

India's purchase has thrown central banks back into the spotlight as a potentially powerful force behind gold. Even relatively small changes in the balance of a central bank's reserves could have a drastic impact on gold prices because of the relatively small size of the market.

 

 

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That monthly dip in gold price around the 28th shows up well here. Look how a 22 dma (thats a month in workdays, right?) acts as this support. A buying op on this 28th (Fri 27th/Mon 30th) at around $1080 maybe ?

Around that time is when options expire each month, so is when the cartel are trying their hardest.

 

 

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Ganesha and the Price of Gold

 

Friday, 13 November 2009 | Source: GoldSeek.com

 

By Ron Hera

November 13, 2009

©2009 Hera Research, LLC

 

The fact that investors around the world are turning to gold is remarkable. Unlike a bond, stored gold offers no yield and, unlike a stock, gold provides no leverage to the performance of an enterprise. Buying gold is not an investment per se, compared, for example, to buying a gold mining stock, where a company’s financial performance is linked to its resources and production, at the same time providing leverage to the gold price. In fact, industrial applications for gold consume far less than the annual supply, thus investing in gold is fundamentally different from other commodities. According to the World Gold Council (WGC), investment demand for gold, e.g., from Exchange Traded Funds (ETFs), was up 46% in the third quarter of 2009.

 

Gold is commonly viewed as an inflation hedge and, because it is the only financial asset with no counterparty risk, as a safe haven, but the spectacular rise in the gold price indicates more than caution on the part of investors. Gold hit a low of $713.50 per troy ounce on November 13, 2008 (London Bullion Market Association PM Fixing) and closed at a 52-week high of $1,115.25 on November 11, 2009, up an astounding 56.31% from its 52-week low.

 

More.....

 

 

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Gold “Undergoing Correction”, Signals “Forex Crisis Fears”

By resourceINTEL · November 13, 2009 · 10:40 am

 

“Gold is undergoing a slight correction, as the market is very long and the rise has been quite fast over the last few days,” says a note from MKS Finance in Geneva.

 

“Gold’s surge may indicate that investors fear the next stage of the crisis will occur in the foreign-exchange markets,” says Philip Coggan in his Buttonwood column for this week’s Economist.

 

“Developed-country governments have attempted to control bond yields through quantitative easing and to support stock markets through ultra-low interest rates. But they cannot support their currencies as well without risking problems in the bond and equity markets.”

 

New data today showed US import prices falling faster than analysts forecast in October, while the monthly trade deficit widened by nearly a fifth to $36.5 billion.

 

The 16-nation Eurozone reported an end to its 15-month recession, but with weaker-than-expected GDP growth of 0.4% in the third quarter.

 

Thursday saw the US Treasury report a record October deficit, the 13th monthly shortfall in a row. The Federal Reserve last week vowed to hold its key interest at next-to-zero for an “extended period”.

 

The Bank of England here in London has now created £200 billion of new money since March, using it primarily to buy government bonds as Whitehall’s deficit hits a peace-time record equal above 14% of GDP.

 

China’s central bank reported record gold reserves this spring of 1054 tonnes. The Reserve Bank of India bought 200 tonnes of gold from the International Monetary Fund at the start of November. Russia’s gold reserves have risen by more than 71 tonnes since January.

 

“[Thursday's] price action shows as a large outside day,” says Scotia Mocatta’s technical analysis today, “typically good reversal warnings.”

 

A lower close would be needed on Friday for technical analysis to “confirm” a change in short-term direction. The gold price in Dollars has risen 6.0% since the start of November.

 

However a higher close for the week did not confirm a change in short-term direction.

 

http://www.resourceintelligence.net/gold-u...isis-fears/3897

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Gold Breakout Targets $1500

By Jason Hamlin, on November 10th, 2009

 

You will notice the 2007 consolidation period was the longest and the subsequent breakout was the most powerful to date at about 54%. If this trend continues, the current upleg has the potential to outpace the previous gain as it is coming off the heels of the longest correction/consolidation phase to date. Thus far gold has gained 10% from the $1,000 mark or about 15% from the right shoulder line at $950. If the upleg continues and mirrors the magnitude of the previous breakout, we should easily reach the price target somewhere in the $1450 to $1,550 range. This target also matches the $1,500 gold prediction made by Merrill Lynch at the start of the year.

 

http://www.goldstockbull.com/articles/gold...t-targets-1500/

Breakout.doc

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Well we did it, massive show off strength to close at another all time high, the commercial signal failure is on IMO. Makes sense for it to be happening while there is so much bearishness around.

 

Wake up people this is what you have all been waiting for!!!

 

gold-1-2.gif

 

one of my favourite MAX vids an oldie but goldie!!!

 

Wake the F**CK up british people ! said Max Keiser

 

"B and B was eating its own faeces" :lol::lol:

"They wont wake up they will go down the pub" :lol::lol:

 

From:

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The new junior miners ETF GDXJ started trading on Wednesday.

New Junior Gold Miners ETF Launches: As Volatile As It Gets

 

Van Eck has launched a new ETF focused solely on smaller sized gold miners and explorers than the predominant gold miners ETF GDX. This new Juniors ETF will trade under the ticker GDXJ. According to Investors Business Daily, here are some key stats:

 

63%, of the components are based in Canada, followed by the U.S. with 22%, Australia 11%, South Africa 2%, China 1% and the U.K. 1%

expense ratio of 0.60%

GDXJ's underlying index spiked 92.4% this year through Oct. 30.

http://seekingalpha.com/article/172955-new...tile-as-it-gets

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The new junior miners ETF GDXJ started trading on Wednesday.

 

http://seekingalpha.com/article/172955-new...tile-as-it-gets

Be careful Wren...

 

Van Eck's New Junior Gold Miner ETF: A Preliminary Analysis

 

Unfortunately, the “small print” in the prospectus also gives potential investors in this fund a good reason for worry: the intention of the fund to invest in “derivative” investments. This category of investments is described as “swaps, options, warrants, futures contracts, and currency forwards.” The prospectus warns that investments in these instruments could result in losses exceeding 100% of the amount invested.

 

It gets worse. The fund intends to have at least 80% of its capital invested in the core assets around which the fund is based. However, this does not mean it will have at least 80% of those dollars invested in the shares of these companies. The company stated that these “derivatives” would be considered part of the core assets of this fund (meaning part of that 80% core). This means that theoretically the fund could hold 0% mining shares, and all derivative instruments.

 

Obviously, that is an extremely unlikely scenario. The point, however is that there is no possible excuse for deviating into these especially risky assets. In a recent dialogue with readers, I pointed out that one of the exploration “juniors” I'm currently holding has already registered more than a 20-fold gain in its share price off of last fall's lows (i.e. a return in excess of 2000% in one year).

 

Apparently, the people managing this fund don't think that they can achieve a high enough return through investing in mining equities alone. This certainly suggests that this fund lacks the expertise to identify the best growth “stories,” and so wants to be able to attempt to “juice” returns through the same, Wall Street, Ponzi-like investments which have caused most of the problems in financial markets.

 

 

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Be careful Wren...

Thanks for pointing that out.

 

Why don't they just buy company stocks? :(

 

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Yes, the GDXJ does have naughty potential - somewhat flawed... Still, I wouldn't disregard it totally on that report.

 

People could just do their own version of it by, say, picking 10 of it's listed stocks and investing directly. Some of the 'bigger' juniors may have US and CAD listings - if that makes things easier for people re. their brokers.

 

Doubt I'll bother as got most of em anyways...

 

Bubb should do one!

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Yes, the GDXJ does have naughty potential - somewhat flawed... Still, I wouldn't disregard it totally on that report.

 

People could just do their own version of it by, say, picking 10 of it's listed stocks and investing directly. Some of the 'bigger' juniors may have US and CAD listings - if that makes things easier for people re. their brokers.

 

Doubt I'll bother as got most of em anyways...

 

Bubb should do one!

Could buying an ETF instead of 10 different stocks save on transaction fees?

 

Just that I would like to buy a well managed basket of stocks, but if it involves extra risky derivatives I'm not so sure.

 

Let's face it real juniors are high risk anyway. Why add more risk?

 

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It looks like a new goldmine will open in Scotland:

Scotland's first goldmine offers villagers a glittering prospect

 

Scotgold bought the old mine in 2007, just as prices began to rise. The company had estimated that it needed a price of around $650 per ounce to have a viable business, but with the recession pushing the price to $1,113 it now has the prospect of reaping untold riches.

http://www.timesonline.co.uk/tol/news/uk/s...icle6913206.ece

 

 

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