Republished with permission from Mike
Fuljenz, specialist in U.S. gold coins and gold market analyst,
who provided the following information on gold market trends in his
October, Week 3, issue of
Metals Market Report.:
predicted long ago that Wall Street would probably give up the first
$100 gain in gold before they got on the gold bandwagon, since they
are basically 'trend followers,' not contrarian analysts. Sure enough,
last week’s bullion holdings in 'GLD' (the largest gold exchange
traded fund, or ETF), representing the net new purchases of gold for
that fund, reached their highest levels since July 24, when gold was
trading around $1,080. Gold-backed ETFs have increased their gold
position in four of the last five weeks. In just two days in early
October, GLD increased its gold position by 12 metric tons, to a total
of over 700 tons.
of gold’s recovery is due to a flat dollar. (Since the Fed has delayed
raising rates, currency investors are impatiently selling their
dollars, since they are growing tired of waiting for an interest rate
increase.) Whenever the dollar falls, gold gains a currency 'tailwind'
for U.S.-based investors in gold.
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week, we wrote about France’s bank, Societe Generale, turning
favorable on gold. This week, we heard from Germany’s Deutsche Bank,
which now says that the prospects for gold are looking 'rosier.' They
now expect gold and silver to benefit from weaker economic data, which
is causing 'a longer pause before FOMC members can credibly signal a
first policy rate hike, thereby keeping interest rates low.'
Asia, the Development Bank of Singapore (DBS Group Holdings) is
currently holding an 'overweight' position in gold bullion. They
upgraded gold to 'overweight' in mid-August.
addition, billionaire hedge fund manager Paul Singer said in a
financial seminar in Tel Aviv: 'I like gold. I believe it’s
under-owned. Every institutional portfolio should be 5-10 percent
invested in gold to protect against zero interest rates that are
degrading the value of paper currency.' He also said that 'Gold is the
only real money.' More specifically, he said that gold is a 'real
asset to protect against inflation, government policy and/or
diversification from stocks and bonds.' By contrast, he said major
developed economies are 'hopelessly and utterly insolvent once
long-term entitlements are added in.' "