Money & Company

Tracking the market and economic trends
that shape your finances.

Category: Gold

Real Estate | Autos | Consumer | Economy

Wall Street: Stocks and gold bounce

Wall Street
Gold: Trading now at $1,622 an ounce, up 0.3% from Wednesday. Dow Jones industrial average: Trading now at 11,178.20, up 1.5% from Wednesday.

Good morning. Investors are feeling hopeful this morning after a vote in Germany and new data in the U.S. on unemployment and economic growth.

HP turns to Goldman. To deal with potentially hostile activist investors, Hewlett-Packard has hired a company that has experience with hostile activist investors, Goldman Sachs. 

Disappointed by banks. Investor Stephen Ross collected money to invest in banks, but his analysis of banks has disappointed him so much that he has given the money back.

Lewis on California. After providing probing analysis of what is wrong with the economies of Iceland and Greece, Michael Lewis now turns his attention to California.

A picture of protesters. Can't make it to the Wall Street protests yourself -- here is a photo gallery of 50 of the protesters camped in lower Manhattan.

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Gold and other metals get pounded

Gold1
Gold may not be quite the safe haven that some investors had hoped.

The price of gold skidded to its lowest level in almost two months today, and other precious metals such as silver and copper suffered big drops, amid an intense global selloff. Silver endured its worst day since 1979, according to Bloomberg.

The selloff came as U.S. stocks recouped a fraction of their heavy losses from a day earlier. The Dow Jones industrial average rose 37.65 points, or 0.4%, to 10,771.48.

Heavy selling by hedge funds and fear of a global recession prompted a rush out of precious metals, with many investors cashing in the profit they made in their gold portfolios over the last three years.

Hedge funds have been heavy sellers in recent days, as they raise money to offset losses in other assets, such as stocks. In some cases, hedge funds need extra cash as collateral for loans on souring investments.

“It’s a money flow out of commodities in general,” said William O'Neill, a partner at Logic Advisors in Upper Saddle River, N.J. “We’re seeing a lot hedge funds needing to sell winning assets.”

Near-term gold futures in New York plummeted $101.70, or 5.8%, to close at $1,637.50 an ounce, the lowest closing price since Aug. 1.

Silver got hit far worse. Silver futures dived $6.49, or nearly 18%, to end at $30.05, the lowest since February.

The specter of a deeper economic downturn has caused investors to wonder whether demand for industrial metals, such as copper and aluminum, will recede sharply.

Copper futures slid 21 cents to $3.27 a pound, a 13-month low.

For the week, gold plunged almost 10% and silver dived 26%.

Gold and silver have been hurt in part by the rebound of the U.S. dollar, which typically moves in inverse relation to the two metals. But the dollar was down modestly on Friday against many other currencies.

RELATED

U.S. dollar is a weakling no more

Wall Street: Stocks mixed; gold falls again

Dollar soars while gold and silver fall on recession fears

-- Walter Hamilton

Photo credit: Arnd Wiegmann / Reuters

Wall Street: Gold and stocks are up; European banks are down

WallStreet-GettyImages-StanHonda

Gold: Trading at $1,821.50, up slightly from Monday. Dow Jones industrial average: Up 12 points to 11,073.49, after recovering from an early morning slide.

European woes. Investors are avoiding European banks for fear of exposure to the Greek debt crisis.

AOL blogger leaves. AOL is parting ways with the founder of the popular TechCrunch blog in a protracted spat over journalistic ethics.

New aide for Warren Buffett. The Oracle of Omaha adds a seasoned investment manager at Berkshire Hathaway Inc. as he lays the groundwork for an eventual succession plan.

No go on business schools. Applications to business schools have fallen as the prolonged economic slump makes potential candidates think twice about the time and costs involved.

-- Walter Hamilton

Photo: Stan Honda / Getty Images

Gold, silver rocket as recession fears deepen

Goldbars92
Gold and silver zoomed again Friday, ignoring strength in the dollar, as the dismal U.S. jobs report for August drove some investors back into haven-seeking mode.

Near-term gold futures in New York closed with a gain of $47.70, or 2.6%, to $1,873.70 an ounce. It was the metal’s biggest one-day advance since early August, and left it just 0.8% below the record closing high of $1,888.70 set on Aug. 22.

Silver also rocketed, rising $1.54, or 3.7%, to $43.02 an ounce. Silver remains below its 30-year high of $48.58 reached on April 29.

The government’s report that the economy created no net new jobs last month stoked fears that recession is becoming a self-fulfilling prophecy, after the global market turmoil in August. With stocks crumbling worldwide Friday, gold and silver attracted frightened money, just as they did for much of last month.

“This economy is in real trouble,” said Matt Zeman, a market strategist at Kingsview Financial in Chicago. What’s more, even though the Federal Reserve is expected to try another rescue by aiming to pull long-term interest rates lower, falling rates could help the case for gold by making bond yields less attractive as an alternative investment.

Gold and silver also got a boost as Europe’s never-ending debt crisis took another bad turn, as Greece fell behind on austerity measures it must meet to qualify for more euro-zone aid.

While the Dow Jones industrial average slumped 253.51 points, or 2.2%, to 11,240.26 on Friday, the average blue-chip stock in Europe fared much worse, tumbling 3.7%.

Europe’s latest mess helped bolster the dollar. The euro fell 0.4% to $1.419, its lowest level since Aug. 10. The dollar also gained against a number of other currencies.

Historically, what’s good for the dollar usually is bad for gold, its archrival. But gold has been in its own bullish world for much of the summer, paying little attention to the dollar’s moves.

The metal now looks primed to try another run for $2,000 an ounce. Gold reached $1,917 intraday on Aug. 22, then was slammed by profit-taking that took the price as low as $1,707 on Aug. 25.

With the economic backdrop worsening, “I think we’re going to see $2,000 gold here very, very shortly,” Zeman said.

The bigger question may be this one: If gold does top $2,000, does that spark another round of profit-taking -- or a panic rush in by investors who've so far missed gold's 11-year bull market?

RELATED:

Job growth grinds to a halt

World stock market tally for August: 2 up, 43 down

2011 shaping up to be worst year ever for new home sales

-- Tom Petruno

Photo: Gold bars at gold and silver separating plant in Vienna. Credit: Lisi Niesner / Reuters

Gold halts two-day slump, awaiting Bernanke's speech

Gold slumped almost to the $1,700 level early Thursday, then clawed its way back to close higher -- halting a vicious two-day sell-off that followed seven straight weekly gains.

The next test for the metal’s bull market comes at 7 a.m. PDT Friday morning, when Federal Reserve Chairman Ben S. Bernanke gives a speech on policy at a bankers’ gathering in Jackson Hole, Wyo. Gold buyers could swarm again if Bernanke strongly hints at more economic stimulus.

Near-term futures in New York ended regular trading Thursday up $5.70 to $1,759.80 an ounce, after losing nearly $135, or 7.1%, in the previous two sessions.

Money moved back into gold after the stock market was unable to sustain its three-day advance, said Adam Klopfenstein, senior market strategist at commodities trader MF Global in Chicago.

Goldbarz Gold futures fell as low as $1,707 early in the day, then rebounded as stocks slumped. The Dow Jones industrials closed off 170.89 points, or 1.5%, to 11,149.82, giving back one-third of the 504-point rally from Monday through Wednesday.

Silver, the "poor man's gold," gained $1.58 to $40.74 an ounce.

Gold, the classic haven, had been on a hot streak since late July as stocks plunged worldwide amid wild volatility. The price surged from $1,587 on July 21 to a record $1,888.70 on Monday. In intraday trading Monday gold briefly crossed $1,917.

But the latest wild rush into the metal also triggered warnings that profit-taking was overdue, with the price up 33% year to date through Monday.

“This was a necessary flush because everyone wanted to own gold,” Klopfenstein said of this week’s selling wave.

Bernanke may hold the key to gold’s short-term trend.

With the U.S. economy again struggling, Bernanke is expected to say Friday that the Fed stands ready to provide more help if necessary. That could mean another round of pumping cash into the financial system (a.k.a. money printing) -- which could be bullish for gold by raising the specter of further devaluation of the dollar.

Still, most economists say Bernanke won’t do more than lay out some possibilities. Whether that's enough to excite gold’s fans remains to be seen.

Carl Riccadonna, senior economist at Deutsche Bank Securities in New York, noted that the Fed chief in July said that two preconditions were necessary for the central bank to launch another big stimulus program. “One, economic weakness must prove more persistent than expected,” Riccadonna said in a report Thursday. “And two, deflationary risks must reemerge.

“The first condition is arguably already being met," he said, "but it is hard to make the case the latter is occurring in the present environment given that recent data have shown substantial residual inflation pressures.”

The consumer price index was up 3.6% in July from a year earlier, more than three times the annualized inflation pace of July 2010. Blame energy and food prices.

But then, rising inflation also has been good for gold. In fact, nearly everything has been good for gold over the last decade: The metal is on track to post its 11th straight annual gain, after ending 2000 at $274 an ounce.

-- Tom Petruno

RELATED:

Economic relapse could do lasting damage

Gold falls as some investors cash in gains

Regulatory group warns of gold scams

Photo: Gold bars. Credit: Paul Taggart / Bloomberg

Regulatory group warns of gold scams

Gold1

First came the boom. Then came the scams. Now comes the warning.

Individuals who have become enamored of gold amid the dramatic rise in the price of the precious metal should be on the lookout for investment traps hatched by con artists, according a warning issued Wednesday by a financial-industry regulatory group.

As the price of gold pushed to a series of record highs this year, various scams have been hatched to lure unsophisticated small investors, the Financial Industry Regulatory Authority said in a warning posted on its website.

“Even a cursory Internet search will pull up numerous websites, blog posts, investment newsletters and social media posts (including YouTube videos and Tweets) devoted to the topic of investing in gold,” the warning says. “But some of the stocks and opportunities being promoted have precious little value, and others are outright frauds.”

Authorities already have cracked down on a number of scams.

The Securities and Exchange Commission brought action against a Florida company that claimed a mining project in Ecuador had turned up gold reserves worth more than $1 billion.

In another case, the agency alleged that a Ponzi scheme bilked 3,000 investors out of $300 million. The six people charged with running the scam used free-lunch seminars to entice victims to invest retirement savings and home equity, according to the SEC.

Investors should be dubious of claims that a company’s stock price is certain to rise simply because gold prices are going up, according to the FINRA warning.

People also should be wary of companies that alter their names to associate them with gold, according to FINRA. For example, a company that claimed to do gold mining was formerly in the golfing business.

Perhaps the best disincentive could be a fall in the price of gold.

After surging dramatically over the last two months, gold fell sharply on Wednesday. Gold suffered the biggest fall in more than three years, sinking $103.60, or 5.6%, to $1,757.70.

RELATED:

Soaring gold prices trigger crime wave

Gold ETF's market value surpasses S&P 500 ETF

Gold slides from record high as profit-takers cash in

-- Walter Hamilton

Photo: Gold bullion at a smelting facility in India. Credit: Manjunath Kiran / EPA

Gold slides from record high as profit-takers cash in

Not so fast on those "Gold $2,000" T-shirts.

Some investors and traders finally decided to cash in their recent huge gains in the yellow metal, driving the price down Tuesday after a six-day rally to record highs.

Near-term futures in New York fell $30.40, or 1.6%, to $1,858.30 an ounce in the regular trading session, then slid to $1,835 in electronic trading.

Kanga The price had reached a record $1,917.90 in electronic trading late Monday.

Silver, which had been up for seven straight sessions through Monday, fell $1.04, or 2.4%, to $42.28 an ounce Tuesday. Silver had closed at $43.32 on Monday, its highest price since May 2, when the metal was beginning a steep plunge after hitting a 30-year high.

Precious metals have streaked higher this summer on fears of another global recession and as Europe’s government-debt crisis has worsened. The dive in stock prices since late July also has fed demand for gold as a haven.

Through Monday, gold had risen nearly $400 just since June 30.

But just as some analysts began to talk about a “parabolic” rise in prices, it probably was inevitable that profit-taking would hit.

Next up: Gold’s fans are counting on Federal Reserve Chairman Ben S. Bernanke hinting at another economic-stimulus program when he speaks at a banking conference on Friday in Jackson Hole, Wyo.

Any new money-printing campaign by the Fed could further devalue the dollar and keep gold’s bull market raging.

But note: Bernanke is merely expected to say the Fed stands ready to help, if needed. And if the stock market keeps rallying, Bernanke may have less reason to sound concerned about the economy.

The Dow Jones industrials were up 247 points, or 2.3%, to 11,101 at about noon Tuesday, with an hour of trading to go.

-- Tom Petruno

RELATED:

Gold ETF's market value surpasses S&P 500 ETF

Soaring gold prices trigger crime wave

After two years of economic growth, recession risks rise

Photo: Australian gold coins at the Perth Mint. Credit: Ron D'Raine / Bloomberg News

Gold price surge leads to wave of crime [Video]

Goldsecurityphoto 

The surging price of gold has made the precious metal attractive not only to investors but also to thieves. In Los Angeles, police have reported an increase of smash-and-grab robberies at jewelry stores and street muggings in which thieves have snatched gold chains from victims and run away.

The Times reported Friday that police have warned the public not to wear gold jewelry in public to avoid becoming a victim.

Last month, police released a video, below, which captured a robbery at 21st Century Jewelry on South Broadway.

In an interview, the victim of that robbery said he was worried about the valuable, uninsured jewelry that thieves were stealing that day. But mostly he was thinking about his wife and 6-year-old daughter.

“Always I think about them,” he said, requesting that he not be identified out of fear for his safety. “I’m always thinking about my daughter. ... That moment was really scary.”

RELATED:

Soaring gold prices trigger jewelry robberies

3 robbers steal jewels in Koreatown, beat security guard

Surveillance video shows attack on blind woman in Little Tokyo

--Stuart Pfeifer

Photo: Security guards outside jewelry stores on South Broadway in L.A. Credit: Jay L. Clendenin/Los Angeles Times

Gold jewelry, foreign currency: Your weekly ScamWatch

Here is a roundup of alleged cons, frauds and schemes to watch out for.

Investment fraud -- A Florida man has pleaded guilty to mail fraud in connection with a $30-million investment fraud scheme, the Justice Department announced. David R. Lewalski, 47, had been accused of defrauding investors in his company Botfly by claiming he could provide monthly returns of up to 10% trading foreign currency but instead using new investors' money to pay returns to earlier investors. Lewalski also spent millions of investor funds on himself, including jet travel, jewelry and high-end real estate, federal prosecutors said.

Selling your gold -- With the price of gold above $1,700 an ounce, some cash-strapped Americans are deciding to sell some of their gold jewelry. The Better Business Bureau says consumers should take precautions to make sure they get a fair price. It recommends that no matter where they're selling, consumers take their jewelry to several appraisers before selling to a gold buyer. The BBB also said consumers should ask buyers how much they’ll be paid per ounce and get several quotes. The group cautioned consumers not to let jewelry of different karats be weighed together: Some buyers weigh all gold together and pay only the price for the lowest-quality gold.

Investing in volatile times -- Investment scams often increase during volatile economic times, the Better Business Bureau said in a recent news release. When making investments, consumers should look out for warning signs of potential fraud, the group said. Reputable investment advisors will not promise high returns with little risk, will not use high-pressure sales tactics such as claiming there’s a deadline to get in on the investment and very rarely will contact investors unsolicited, the BBB said.

RELATED:

Grandparent scam, inventions, disputes

EBay fraud, wedding scams

Used cars, immigration lotteries

-- Stuart Pfeifer

Connect

Recommended on Facebook


Advertisement

In Case You Missed It...

Video




Categories


Archives