DEZ
Gold to hit $800: JPMorgan
By ROMA LUCIW
from
Gold $800 - JPMorgan.....
by: a5a22406 01/31/06 10:21 pm
on the DEZ Yahoo board
Tuesday, January 31, 2006
Globe and Mail Update
JPMorgan Chase & Co. said the price of gold could surge to $800 (U.S.) an ounce in the next two years, as central banks curb their selling of the metal.
The forecast came as gold shot to a 25-year high Tuesday, with investors piling into the precious metal as a refuge from escalating concerns over Iran's nuclear program.
The JPMorgan analysts said gold will rise to $600 an ounce by the end of 2006.
“While we expect gold prices to be increasingly volatile, we believe that the primary risk is to the upside, and our commodity group has already pointed to the potential for slowing Central Bank sales to drive gold higher towards $800 an ounce,” JPMorgan Chase analyst John Bergtheil wrote in a note to clients.
The JPMorgan team cited
falling supplies,
strong demand from India,
the deregulation of China's gold market,
market uncertainty in the wake of the retirement of long-time U.S. Federal Reserve chairman Alan Greenspan,
a gold market that has room to grow
and the risk of a terrorist attack,
among others,
as factors that will keep gold prices elevated.
Chinese demand could spike this year as the number of weddings are likely to “rise significantly in the lucky year of the dog” that began on January 29, 2006, the report said.
In a distinctly less bullish call,
UBS Securities analysts in Toronto are calling for gold to closed 2006 at $560 an ounce,
and 2007 at $600 an ounce.
Geopolitical worries, combined with Tuesday's widely-expected U.S. interest rate hike,
sent gold futures for April delivery up $3.50 to $574.10 an ounce on the Comex division of the New York Mercantile Exchange. Earlier it traded as high as $575.10, the highest price since January, 1981.
Gold has been flirting with 25-year highs for several months now, a run that shows no sign of slowing down.
Silver futures for March delivery gained 11.5 cents to $9.89 an ounce on the Comex. It hit an intraday high of $9.915 an ounce, a level not seen since April, 1984. Silver prices have risen 40 per cent in the past 12 months and 11 per cent this month.
Tensions between Iran and the U.S. and Europe have provided the latest boost to gold prices.
Iran edged closer to a run-in with the United Nations' Security Council, with the U.S., the U.K., France, Russia and China all agreed that the United Nations Security Council should consider Iran's situation at a Feb. 2 meeting of the International Atomic Energy Agency.
Iran, the world's fourth-biggest oil producer, denies U.S. assertions that it is gearing up to create nuclear weapons, arguing that its research is solely aimed at generating energy for civilian purposes.
Iran and the European Union are scheduled to resume talks on the nuclear program in Brussels today.
The Fed, meanwhile, raised its key interest-rate target by another a quarter basis point to 4.5 per cent on Tuesday, its 14th straight increase.
It is was expected to be one of the last U.S. interest rate hikes, a move that could undermine the greenback and make gold — priced in U.S. dollars — even more attractive to overseas buyers.
The Fed, however, signalled Tuesday that further rate hikes could be necessary to keep inflation at bay.
Gold, which tends to trade inversely to the U.S. dollar, often rises in times of economic or geopolitical uncertainty.
Investors have traditionally seen the precious metal seen as a safe haven in times of crisis.
In addition to Iran-related concern, the unexpected election of a majority Hamas government in last week's Palestinian elections also boosted demand for gold.
Increased demand for the metal — particularly from jewellery makers in India and China — as well as speculative demand from investors, and persistent worry that soaring energy costs will stir inflation in the world's largest economies, have contributed to gold's rally.
The gold sector was the biggest gainer on the S&P/TSX composite index Tuesday. Agnico-Eagle Mines Ltd. had the biggest rise, climbing $1.96 (Canadian) or 7.25 per cent to $28.98, its highest level in at least five years.
© The Globe and Mail
globeinvestor.com
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Additional information:
Sources of the Demand for Gold in 2005
from Barrons Round Table
Zulauf:
Lets look at supply and demand.
2005 (tons)
Demand
------
2,950 jewelery
300 central banks in emerging countries
250 hoarding
300 ETF
130 Coins
200 Hedge Funds
Supply (tons)
----------
DEFICIT of 280 tons
The mean ratio price Gold to Oil - last 25 years
Over the last 25 years the
mean ratio of gold prices to
oil prices has been around 18.
Its now at NINE.
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Are the ETF's Short Gold?
Published: Saturday, January 28, 2006
Bylined to: Bob Chapman
Last week the gold net long position was up only 80,000 ounces. Gold rose $12.00 again due to short covering ... the gold ETF only added 7.12 tonnes, which tells us they are short gold
Is Goldman Sachs Shorting Gold?
Goldman Sachs continues to be an aggressive short seller on TOCOM. Last Friday they increased shorts 2928 contracts to 35,297. This and their shorting on Comex were used to suppress mining shares. About 500,000 call option contracts on gold-mining shares were due for expiry with 75% in-the-money. They wanted to make sure they expired worthless. There can be no other reason except suppression of share prices, especially with the Iran situation going on and violence in Nigeria.
Goldman Sachs on Tuesday increased their net short position again on TOCOM by 1760 contracts to be net short 32,642 contracts.
The shorts for the major participants are:
Sumitmo or Sumitomo -64,396 contracts;
Mitsui -58,408;
Goldman -32,642
and Mitsubishi -31,419.
Out of 77 trading companies seven companies make up 94.2%.
If the general US market folds here, which we believe it will, these shorts and those on Comex will be destroyed.
We believe that is about to happen.
We see gold at $850 soon and then higher.
The European Banks have already stopped selling
For the first time since last September the ECB did not sell any gold from its banks’ reserves. We believe the Washington Agreement sellers realize they cannot stop the gold rally so they’ll wait for an overbought spot or weakness at higher prices and aggressively sell, which is to be expected. If $562.50 is broken on the upside, then we are in for an upward run to $610-$620.
Few talk about what central banks are going to do with their hoards of depreciating dollars or for that matter most currencies.
For starters there is only one thing they can easily do with them and that is buy gold. In China’s case they could put away 3,000 tonnes without even skipping a heartbeat.
America is essentially bankrupt.
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Gold Stock Summary on ClearStation
clearstation.etrade.com.
<World Gold Reserves 9/05>
As 22 September 2005, the largest gold holdings in tonnes as reported by the World Gold Council [1]. The United States holding of gold is worth approximately $150 billion at January 2006 prices.
1 United States 8,133.5
2 Germany 3,427.8
3 IMF 3,217.3
4 France 2,892.6
5 Italy 2,451.8
6 Switzerland 1,290.1
7 Japan 765.2
8 Netherlands 722.4
9 ECB 719.9
10 China, Mainland 600.0
11 Spain 493.3
12 Taiwan 423.3
13 Portugal 407.5
14 Russia 386.6
15 India 357.7
16 Venezuela 357.4
17 United Kingdom 311.3
18 Austria 307.5
19 Lebanon 286.8
20 Belgium 227.7
21 Philippines 187.9
22 BIS 185.3
23 Algeria 173.6
24 Sweden 155.4
25 Libya 143.8
26 Saudi Arabia 143.0
27 Singapore 127.4
28 South Africa 123.9
29 Turkey 116.1
30 Greece 107.9
31 Romania 104.9
32 Poland 102.9
33 Indonesia 96.5
34 Thailand 84.0
35 Australia 79.7
36 Kuwait 79.0
37 Egypt 75.6
38 Denmark 66.5
39 Pakistan 65.3
40 Kazakhstan 58.6
en.wikipedia.org
China may keep 200 tonnes of Gold off the
market in 2006 ....
Gold
Will China include Gold in this policy (“We want to ensure that the use of foreign exchange reserves supports a national strategy, an open economy and the macro-economic adjustment”)? We believe it will. We do not expect Chinese produced gold to be sold to the Chinese public for much longer. We would expect the Chinese public to buy gold that has been imported by banks in China, from the global market at market prices.
But to acquire gold for the country’s reserves, the purchase of local gold from local producers at market related prices would avoid the Bank of China being visible in the gold market. This would ensure they had access to gold without chasing prices and make certain they paid real market prices. China has shown a liking for gold in its reserves, but the percentage has dropped as $ reserves have grown. It remains to be seen, but is unlikely that China will enter the global market to buy gold for its reserves, unless it can do so without causing a price ‘spike’.
But the impact of this on global gold markets would be heavy. 200 tonnes of gold would not appear in the supply side of the market, with the Chinese market taking off that amount from the global market and more. This would exert more pressure on a market where supplies have dropped not only through lower gold supplies from Producers, but from fewer and smaller sales of gold into the market. As a result prices would continue on their upward path for some years to come.
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