Gold Prices: Now or Next Year?

Gold prices are not setting new records, but they are not going downward, are they?  The precious metal closed the week at $1049.20.   It is obviously a difficult time in the economy; the recession may be over and signs of recovery being seen (at least according to Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner), but to many Americans, it doesn’t feel like a recovery is underway.

Personally, I am still feeling a bit chilled.   Unemployment levels have hit 20 year record levels, the market is still jittery and easily spooked, and in talking to those around me, I see unhappiness in their eyes.  The latest painful new number is that there are at least six applicants for every job available.  When you consider that some of those jobs are high paying and others extremely low paying, the chances of any applicant getting what they were accustomed to can seem very bleak.

But I am determined to feel better about the future of our economy. I see from various indicators that recovery is, indeed, underway in the United States and many parts of Asia.  The most developed countries in the Mideast are also well on their way to recovery.  The professionals who like to suggest what is ahead say that European nations are falling behind, but expected to eventually recover, too.

I’m finding this to be good news because even though I can still see the unhappiness of those affected by difficulties in their job track, I see that recovery is ahead.  The old saying “This too shall pass” has always been one of my favorites.   I hope we shall see some benefit from what we are currently going through and that, too, seems to be underway.

They say that Americans are cutting down their use of credit.  We are learning to pay for things as we go, instead of putting off our obligations.  We are learning to value the things that we have instead of constantly running out to buy the newest, latest, most flashy, most hyped items.

Gold is an investment of both real worth and emotional value as well.   So, is it time to buy or sell gold?  If you are looking to sell, this might be a good time to do that.   A true recovery (even a “jobless recovery”) has the potential to reassure investors about the U.S. dollar, which might influence the price of gold downward.  The price of gold could inch upwards a little more, but if recovery does take hold, it will likely start to slowly dwindle.

If you are going to buy gold jewelry for special occasions including the holiday season, this is an equally good time.  The price could still hike slightly, and currently jewelers like many other types of retailers are interested in moving their products.  Special prices, free shipping and other accommodations are more likely now than they are when the economy is on firmer footing.

I encourage you to look around at the “experts” on the economy and decide for yourself whether this is the moment for you to make a truly worthwhile investment in gold.

Jittery Gold Market Effecting Gold Jewelry Prices?

It’s a jittery time in the gold market.  Prices go up.  Prices go down.   And what does that really mean for lovers of fine gold jewelry?

Two weeks ago, the price was at a peak: $1011 per ounce.  It was a heady time as one analyst predicted that the price “could go as high as $5000 per ounce” in the unsteady market.  I must admit, I reported that here in the gold prices section of the blog because I enjoy watching the wild swings of so-called “experts.”

Gold, as we’ve discussed many times here, is seen as a hedge against inflation and a stable shelter from a market that is unsteady.  It’s a place to put cash that will retain its value and in very uncertain times, even grow.  You can easily understand why its a point of heavy interest during an economic recession such as the one we have just experienced.

In the last month, the price jumped on news about the economy.  First the price seemed to ease back.  That was on reaction to the head of the Federal Reserve suggesting that the recession was over.  The markets seemed to lap that up like a cat with a saucer of milk.

Then the news about unemployment.  We seemed to be having a “jobless recovery.”  That is a situation where the American economy moves forward, begins to expand and grow again, but companies are producing more without calling employees back to work or making additional hires.  The Fed Chairman allowed that “jobs will lag behind,” but this time of “recovery” is discomfiting to most people watching the markets.  And the price of gold went up.

Now economic news seems to show some stability.  And the price softens just a little.

It does somewhat hit you where you live, if you live in a jewelry store.  Prices at ApplesofGold.com have held fairly steady through this.  But what if the price did spike again?  And what if it spiked more than a few dollars?

Apples of Gold prefers to hold its prices steady.  Like most merchants, we’d like to offer high quality product as reasonable prices and serve our customers needs and desires.  If the price of gold skyrockets, if it perhaps doubled, then yes, the prices would reflect that.  So while it’s enjoyable to report on speculative talk from imaginative “experts” on gold, we are glad to see the price trending downward again.

And we hope you are enjoying that view as well.

Gold Prices Trending Upward

Gold, the bellwether of market and economic trends, has opened slightly higher this week.  The reason?  A somewhat weaker dollar.

There has been a five week slump in gold prices, but as last week closed, the price jumped up by about $24.  The precious yellow metal reopened on Monday at $952.40 and then started a slow, penny by penny, climb upward.  The dollar is being tugged downward by oil prices, which are almost always troublesome.

There was some good news for the dollar last week, which was why the price hike, however slight, was surprising.  Both Goldman Sachs and JP Morgan Chase reported their earnings and surprised Wall Street.  Goldman Sachs had earned roughly twice as much as expected, over $3 Billion in this lengthy bear market.  While JPMorgan Chase reported its own happy news.  The recovery of these two banking giants was good news in this period of long faces and boosted morale of investors while the larger market waits to see what good, if any, this news will do.

But while bankers celebrate the appearance of financial health, the dollar still hasn’t made much of a move to recover.  The Dow Jones Industrials had their best week in months last week, but there is still more confusion over exactly what is going on.   While investors await this week’s additional earnings reports, (American Express, Boeing, and Caterpillar, to name a few of those slated) the dollar has continued to slide, hitting  a six week low against the euro.   What will happen next is anyone’s guess.

When times of such great uncertainty, gold is generally considered a safe haven for investors to stash some of their (potentially) unreliable cash.  And they may yet do that.

On Tuesday and Wednesday of this week, another indicator of the economy’s health will proceed to take center state.   U.S. Federal Reserve Chairman Ben Bernanke will go to Congress to make his semiannual report on the economy.  Investors will be keenly watching what goes on there for indications of how soon any recovery might be seen or more importantly felt.  They will also want to learn from Bernanke how the government intends to wean the economy off all those government dollars that shored it up last Fall.   The Fed slashed interest rates, offered rock-bottom prices on loans to keep banks afloat, and purchased government debt to ratchet down the costs of borrowing.  It also pushed the Treasury to simply print more money.

The markets “thumbs up” or “thumbs down” will be swift and potentially quite painful to watch.  But those who have purchased gold may know a little stability in what could be a sea of disappointment.

Gold Regains Stability

The price of gold, slipping and sliding through the economic slushiness we’ve had of late, appears to have stabilized as the week begins.

Gold, which had been falling as the dollar steadied on world markets, has now reversed itself.  The price was holding steady as the dollar weakened against the euro and oil prices continued to recover after losses in the last several weeks.  The precious metal climbed only cents on the day, from where it left off at $912.15 on Friday (with a dip earlier $908.20) to $912.60, but even that has been enough to reassure traders of the metal’s longterm value as a hedge against the weak and weaker dollar.

The week ahead has many traders holding their breath.  On Tuesday, the gigantic American bank of Goldman Sachs is expected to announce its earnings report and many are breathlessly wondering if the huge Wall Street firm will announce bigger than expected profits.

In the previous quarter, Goldman Sachs announced profits of $1.6 Billion.  Since many banks are suffering right now, Goldman Sachs has been a bright spot on the economy.  The huge company has returned the stimulus cushion given to it by the U.S. government and some on the street are predicting that this quarters profits could go as high as $2 Billion.  If that happens, it will certainly turn heads and be a market-maker, although the per share price of Goldman Sachs is already up 68%, so perhaps buyers will be wary of spending further on the already high price.  (Although the price, which closed Friday at $141.87 is still well off its “bubble high” of $250.70, which was reached in 2007 before the onset of the recession.)

This may signal some life left in the economy, which has struggled now for more than a year.  Some hope is always a good thing, but in the case of gold, it is a signal of a downward trend in prices that may benefit buyers.  If the economy recovers, the dollar will strengthen, and the price of gold weaken.  Good news for buyers, but as always, someone gains and someone loses.  Those who bought high may be waiting a long time to sell again.

End of the Gold Bull Market?

Watching gold prices again?  They are still down.  In fact, some are calling the end of the bull market on gold.  I saw this headline when I look around the internet to see the mood of the market:

How the Gold Bull Market Ended

That’s pretty stunning, isn’t it?  It was posted on a website that claims to be watching the gold market as well as other precious metals and commodities.  (You really have to watch who you are getting your “news” from on the Internet these days, don’t you agree?)

Some of the information in the article is true; some parts are speculative and seem to be from a somewhat reactionary writer.  Let’s discuss what we know about gold prices and how they relate to the rest of the market.

We are in the midst of one of the more disconcerting times we’ve known in recent years.  Financially, it’s frightening, worrisome, depressing, and yet at some moments, exhilarating as we get a glimpse of the economy struggling to regain strength.

In the case of gold, the price shot up earlier this year to $1000 per ounce, months ahead of market predictions, which said the price would reach the $1000 mark by September or perhaps even October.  But there it was in the first 3 months of the year.

What did those within the market say?  They were aghast.  They were particularly shocked to see some retailers selling gold at prices that were below the market as they unloaded their stocks to show profits, but those profits would be eaten up by items sold below “replacement stock value.”

Ouch.  The jewelers couldn’t maintain that for very long and with the demand goosed upwards by frightened investors fleeing the stockmarket for the (relative) security of the precious metals market, the price went up until it simply couldn’t sustain itself.

Also we are seeing some improvement in consumer confidence that is buoying up the market prices and making everyone feel a little bit calmer and perhaps less interested in buying gold at over-inflated prices.

So if you sold while the market was high, we are very pleased for you.  If you bought while the market is high, we suggest you enjoy those pieces for a very long time to come.

Good News for Gold Buyers: Prices Level Off

There is good news and bad in gold prices this week.  It all depends on your point of view and position in the gold market.

As we’ve discussed here several times, the price of gold is firmly tied to the strength of the U.S. dollar and what goes on in the American economy.  When the economy is strong, the price of gold is, well, lackluster.  When the American dollar is strong, the price can actually fall.

Hence in the last year or so, we’ve seen increases in gold prices that have surprised and delighted some people as they sold unwanted gold items and pieces that perhaps were out of style or for some other reason, no longer wanted or needed.

The per ounce price of gold was expected to top $1000 by sometime this coming Fall.  But it hit that mark a couple of months ago.  It seemed that investors were hungry for the stability provided by gold as the economy seemed to be rolling on waves that threatened to take us all under.  The more the future seemed to shake, the more gold came out of safes, jewelry boxes, and anywhere else it had been hidden to re-enter the market.

The price of gold hovered there for awhile, but then it plateau’d.   Investors seemed to be thinking things over.   As we waited and held our breath wondering what effect, if any, the new U.S. President and the economic team under his administration would have on the financial futures of millions of people.  What would they decide?

The polls show that President Barack Obama enjoys a personal approval rating of 67% and job approval at 61%, but that a majority of Americans do not approve of the way he handles federal spending.  51% disapprove.  And at 48%, which is a statistical “even split” (because all polls have a margin of error at “plus or minus 3-6%”), half the country doesn’t like the way he’s handling the U.S. budget deficit.

But in spite of that, and maybe because he promised on Monday to create 600,000 new jobs over the next 100 days, the dollar is holding strong and the price of gold is wavering.  Gold futures have now slid to a 2-week low, at $945.40 per ounce.

The economy is cyclical.  Gold prices are cyclical.   But overall, investments in the market as well as gold have grown in recent years.  So… is gold going up good news for you?

Gas Up? Gold Up!

By now, you’ve noticed the price per gallon of gas inching, no vaulting up at the pump once again.  Just in time for vacations and summer fun, the price of gas skyrockets to heights not seen in months.

And with it, the price of gold.

The price of gas, we are led to believe, is increasing because of course, the OPEC ministers stranglehold remains in place.  There is no shortage of oil. In fact, storage tanks at refineries all around the world are said to be full and waiting to be shipped to greedy consumers, ready to purchase it.

But those customers are suffering through the worst recession in more than 30 years.  And gas prices starting an upward trend again is never good news, but in fact is particularly bad news in a struggling economy.   It depresses American consumers who were only beginning to feel good again about their economy, about their prospects for returning to financial health, and about their future.

The price of gold has been tied to the economy because of its status as a safe haven in tough economic times.  Experts thought that gold would raise to $1000 per ounce later this year, but it reached that height early, when consumers reached a near-frenzy level of concern about the economy.  It sank back down to teeter just above the $900 per ounce level where it stayed for some time.

Now they have found some level of calm and confidence, however halting, has been restored.  But the price of gold is inching up again.

Two weeks ago, it reached the $950 per ounce barrier.  Now it is at $960 per ounce.

What this says to me is that while American consumers may wish to see a return to economic health, they are still far from certain of it.  They are being given conflicting messages.

They are told they need to get out of debt, and the government just enacted new credit card laws that will protect consumers from some credit card companies increasing interest rates and doing other predatory actions against consumers who struggle with controlling their spending.

But at the same time, experts know that for the economy to recover, the joyful spending by consumers must resume.  It must start again and become plentiful.  New cars have to roll off lots.  Homes have to be purchased.  And the dollars have to begin to circulate in the economy again for it to return to health.

I have always heard that it’s best not to worry about what someone says, but instead to focus more on what they do.  In this case, consumers seem to want to believe, but their investments in gold, which are fueling an increase in the price, are what says more to me.  We may see more increases in gold prices ahead before the economy returns to a healthy state of operations.

Zoom, Zoom, Zoom…. Up Go Gold Prices!

I hope you enjoyed a great Memorial Day Weekend with a wonderful get-away and are ready to return to work because we definitely have something worth looking at, as we get into the summer season.

The price of gold is back up again.  Gold shot up to over $950 per ounce in the last week, roaring to nearly it’s 12 month high once again as there are signs that the United States economy is beginning to bloom again.

The price of crude oil fell once again, which was startling to many in the market, but it only dropped .99 cents on the full price of $61.05 per barrel at the New York Mercantile Exchange.  Don’t expect too much good news too fast, though.  The Federal Reserve predicts that the worst has been seen, but that the American economy will continue to shrink through the rest of 2009.

Most economists believe that when Americans started to feel better about their economy, then the economy would start to feel better and recovery also would pick up speed.  And there are signs that this is occurring.  Home sales are picking up again.   The prices are still down, but banks are slowly beginning to lend again and people do still need places to live.

Unemployment is still sky-high, particularly in hardest hit areas like Michigan where automakers have cut to the bone (and may yet cut further!) and California where the housing crisis is at its worst.  But the general mood is lifting, even if many financial numbers are still slumping.

This has many wondering if as Americans start feeling better about their futures and employment, will they start to recover their taste for acquring?   No other modern culture has ever had such a taste for enjoying the fruits of their hard work.

Most experts believe that the recession will have some long-term effects on shopping habits.  The U.S. Congress has just enacted laws to reform credit practices, to stop its citizens from over-borrowing and over-using credit.  The laws will also act to protect borrowers from credit card companies who would raise interest rates at such times, undermining the abilities of some people to repay what they have borrowed.

It’s hoped that we’re learning from our mistakes made in the current economic downturn, but it’s still likely that gold, always and ever the most popular precious metal in history, will be viewed as a commodity of lasting value.  And that when we do learn from our mistakes, our credit will once again be “good as gold.”

Buy, Sell, or Hold?

Every week when I write this blog, I research what is going on in gold trading around the world, along with what is being said about gold prices and trading in various media resources.  It’s an interesting process because who isn’t interested in gold, trading, and the markets, right?  I really enjoy reading up on the economy and what’s going on in the media anyway.

This week, when I began my research, I came up with two headlines: “Gold prices Too High for Jewelry Buyers.” That story is coming out of Reuters and Australia, where apparently a global commodities company felt compelled to state to reporters that “gold prices were too high to encourage buying from the key jewelry sector.”

To encourage jewelry buying, according to Reuters, the price of gold has to be around $800-850 per ounce in order to get buyers to pull wallets out of their pockets.  That’s a little glum, isn’t it?  But maybe they’re a little depressed down under?

Meantime in Arizona, the Arizona Republic headlines its story with the idea that “It’s Never a Bad Time to Buy Gold.” Whew!  I feel better already!  The article ponders whether gold prices would hold up well in a prolonged deflationary spell, such as would be possible in an expanded recessionary economy or if the current recession deepened into an economic depression.

This could be the chance to find out.  The economy’s inflation pressures have faded.  The U.S. Consumer Price Index has dropped in four of the past six months, and last year’s inflationary rate was the lowest reading since 1954.  If it’s going to happen, now is the time.

Gold is in an unusual position because it’s an asset that does well during inflationary times, according to experts.  And the precious metal has bounded back from a low of nearly $700 per ounce just last November.   It hit $1000 per ounce earlier this year, well ahead of predictions.

But for this metal, 68% of which is used in jewelry production, the demand isn’t a function of inflation and deflation.  Nor is it tied to American consumer prices, demand, or confidence.  Much of the demand comes from buyers in India and China (where they love and wear a lot of jewelry!), leaving any negativity produced by a bear market far behind.

Gold will always be a good buy.  You will always be able to read negative (or positive!) things about investing in gold whether it’s jewelry, coins, or bars.  But you are the only one who can decide for youself.

All That Glitters…

If you’ve been waiting to buy gold, this might be the moment.  Gold prices have fallen 8% in the last several weeks.  The downward glide seems to have halted, which is comforting to some.  Jewelers are considering whether it might be the moment to stalk up.  But so far, nobody knows.

And why?  Let’s look at the basics.  In the past week, the venerable Ben Bernanke, Federal Reserve Chairman and a key architect of any recovery that might be underway, said that he expects the economy to continue its painful twists and turns without hint of recovery until 2010.  That’s a departure from the past, when he said to expect the turn-around to begin in late 2009.

Not only that, but we’re also seeing signs of deflation.  Retailers are being hit so hard that they are dropping prices in desperation.  Some of those prices may force them finally out of the market.  Car dealerships, in particular, are struggling with the rules of car-buying now undertaking serious rewriting.  It’s a great time to be in the market for a new car.

But what about gold?  Gold almost always holds its value.  And although it has slipped a bit, the determination of whether to buy or sell has always been a personal one.  If you are finding yourself with additional cash, investment gold might be a good place to stash it.  If you are needing some cash, and have some extra gold, this is as good of a time as any to sell it for its value.  And if you don’t have a lot of cash, well, then let me steer you towards some of the rings and earrings on this website, which are particularly good values!

The decision to buy, sell, or stay out of the market must always be made in a careful way with consideration given to the personal situation at hand.  And this time, like every other difficult economy, we will all need to keep that at the forefront of our thinking.

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