John Paulson: Gold’s Bull Run Is Just Beginning

November 20, 2009 by · Leave a Comment
Filed under: Commodities News 

Mr. Paulson is not just talk but he is putting his and investors money where their proverbial mouth is.  These last couple days, gold has tried to sell off just to see it come back strong and eek out a small gain each day.  Even silver jumped over $1.00 in the same period.  The key is too see if the Dow Jones can make news highs, if it does not then we could be seeing a top and then a decline.  At this point it looks like the path is only higher for gold.

Seeking Alpha – John Paulson, lionized by many investors for his winning bet on the fall of the housing and financial markets, is now getting aboard the gold wagon.

The hedge fund manager told his investors that even at $1,150 an ounce, the bull run on gold is just beginning, according to the Wall Street Journal.

His firm, Paulson & Co., plans to launch a fund January 1st dedicated to gold mining shares and other bullion related investments, the newspaper reported.

Mr. Paulson, who is estimated to be worth about $6 billion. His bet against real estate and banks between 2007 and 2009 reportedly netted his hedge fund about $20 billion.

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Barrick Announces Plan to Eliminate Gold Hedges

September 10, 2009 by · Leave a Comment
Filed under: Stock Market News 

This is pretty big news in my opinion.  Barrick, being one of the world’s largest gold producers is now going “unhedged”.   If you don’t know what that means then here is short little lesson to help you understand the depth is this article.  Hedging works sort of like the futures market does for agriculture.   Mining is a very capital intensive process and it literally takes years to bring new mines online.  Mining producers need to lock in a price for the material they mine (in this case gold) so when they bring it to market, they get a price that is above the cost of production because of the lag time between digging it up and selling the finished product.

This is where the hedge comes in, they basically sell forward delivery commitments on the gold they are going to produce so they “lock” in the price.   This work great when the price drops below the contract value but in Barrick’s case, it has hurt their profitability because they had hedges that were way below the market price of gold.  Now that they are going “unhedged” and if they gold price continues at these levels, you should see more profits coming from this company among others with all things being equal.  DISCLOSURE: I am not a financial advisor and this article or any articles in this website should not be taken as a recommendation to purchase this or any other securities.  Please talk to a registered financial advisor before making any investment decisions.

News (MSN Money Central):

Barrick Gold Corporation announced today that it has entered into an agreement with a syndicate of underwriters, led by RBC Capital Markets, Morgan Stanley & Co. Incorporated, J.P. Morgan Securities Inc. and Scotia Capital Inc., for a bought deal public offering for gross proceeds of approximately $3.0 billion representing 81.2 million common shares of Barrick at a price of $36.95 per share.

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China alarmed by U.S. money printing

September 7, 2009 by · Leave a Comment
Filed under: Currency News 

Interesting news piece from the Telegraph.  The most interesting part was when Cheng Siwei was quoted with this little tidbit, “Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets.”  He was speaking to an alternative to the U.S. dollar.  China is very aware of the fact that any major public gold bullion purchases would “stimulate” the markets, I read this as drive the price to the moon and some.  I will close with this little interesting fact that gold as consolidated at $930.00/oz. during the traditionally lower demand part of the year.  Unless we see a major correction tomorrow morning in the New York Spot market, I predict we will finally see gold bust through $1,000.00 per ounce.  Does the smart money know something the average joe doesn’t?  Likely in my opinion.


Telegraph, London – Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to “credit easing”.  “We hope there will be a change in monetary policy as soon as they have positive growth again,” he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

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Video: Rep. Mark Kirk says China may be purchasing $80 billion in gold bullion to increase reserves

July 12, 2009 by · Leave a Comment
Filed under: Videos 

Editor’s Note: Admittedly, Fox News is not my favorite news organization.  This video of an interview on Fox is pretty good and Republican Representative Mark Kirk from Illinois gives a pretty solid perspective of some of the debate that are happening in Washington and globally about the U.S. dollar and China as our largest creditor.   The omission that China is going to buy $80 billion in gold bullion says a lot about their inflation expectations in itself.  To put that into perspective, if you purchased that amount a current price ($920.00/oz.), that would equal 2,717 tonnes of gold bullion.  According to the World Gold Council, that would outstrip an entire years mining production for the entire globe.  If that is not some indication about our current situation and what is expected for inflation, than what else do we need?  Enjoy the video.

Video:

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Chinese Increase Gold Bullion Reserve by 454 tonnes on Dollar Concerns

April 26, 2009 by · Leave a Comment
Filed under: Currency News 

This is a structural change in the perception of Gold’s role in the international finance community.  Gold has a track record of providing a safe-haven for wealth in times when governments are taking actions that devalue a countries currency (read: money).  This trend is sure to continue as long as these global policies of quantitative easing continue (read: money printing).  

The biggest threat is if we see a recovery from this massive stimulus is a heavy dose of inflation that changes the perception of the public’s thoughts on inflation.  This can lead an economy down the road to hyper-inflation as the public loses confidence in the currencies’ ability to hold value.

News (Business Wire):

News that China has increased its gold holdings by more than 75% is a clear indication of the critical role that gold plays in central bank reserves, World Gold Council said today.

Welcoming the announcement by China’s State Administration of Foreign Exchange (SAFE) that the country’s official gold reserves have risen from 600 tonnes in 2003 to 1,054 tonnes, the CEO of World Gold Council, Aram Shishmanian, said:

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