Jeffrey Nichols, Senior Economic Advisor to Rosland Capital had the following comments on the current gold market situation and outlook:

Gold continues to disappoint as recent attempts to rally have been frustrated again and again. And, once again, it has been institutional speculators – traders with no long-term allegiance to the yellow metal but an uncanny ability to trade both sides of the market – who are responsible for gold’s failure to move higher.

What the gold market needs to move higher is a good dose of Zoloft or perhaps, even more extreme, a high-voltage jolt of electroshock therapy to jog the metal’s price out of its current state of depression.

Perhaps this will come from across the Atlantic – where recessions are worsening, social discord is on the rise, and the euro appears vulnerable to further capital flight.

Maybe, unpredictably, it will come from some geopolitical upset – on the Korean Peninsula or in the Middle East.

Or, possibly, it will come from Washington’s inability to deal with its mountain of debt, lack of fiscal restraint, or the insidious and still barely apparent effects of sequestration on economic activity and employment.

More likely, the jolt needed to set gold firmly on its long-term upward trajectory may come from a renewed recognition by the Fed and the financial markets that still more monetary accommodation is needed to prevent the economy from stalling. That’s what fueled the September 2011 run to record high gold prices . . . and this may be what does it again.

For now, gold’s short-term prospects remain uncertain. We could very easily see a further retreat, possibly to $1520 or even lower . . . but much of the recent selling is also price-sensitive — coming from gold ETFs and “paper gold” products in futures and other derivative markets — and will diminish quickly if prices dip much lower and traders begin to bet on the long side of the market.

Meanwhile, physical demand from China and other Asian markets remains strong and can be expected to strengthen further if prices continue their retreat. As in the past, price-elastic physical demand will provide some downside insurance.

Gold’s short-term direction may depend largely upon the flow of outside news rather than the internal fundamentals of the gold market. Indeed, there is no telling whether the next move will be up or down.

What I can say, however, is that the long-term bull market remains intact . . . and there will be sizable rewards for those with patience who stay the course.

I can also tell you that central bank reserve managers are not worried their gold assets will depreciate. Indeed, they continue to buy more. But many are, most definitely, worried about the prospective depreciation in the value of their U.S. dollar holdings – and maybe you should be too.

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information or contact Rosland Capital.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital (www.roslandcapital.com), had the following comments on the current gold market situation and outlook:

Gold continues to suffer under a cloud of bearish expectations. Its price has been trending lower for some 20 months now – and, at recent lows, is off some 30 percent from its September 2011 all-time high of $1924. Some investors, analysts, and journalists are already writing obituaries for the decade-long bull market and foresee only a grim future for the yellow metal.

These naysayers, most prominently economist Nouriel Roubini who gained some renown for predicting the financial-market debacle of 2008, point to a number factors to support their bearish predictions. They say inflation will remain subdued, the U.S. dollar will continue to appreciate, interest rates will rise, Europe will pull through without sovereign defaults, and the central banks of some deeply indebted countries with substantial gold reserves (like Italy or Spain) may sell some of their official gold reserves. Moreover, they say gold has been over-hyped and don’t see why investors would want to own an asset that earns no income.

It seems to me that the bears have a fairly provincial view and a limited understanding of gold’s increasingly bullish long-term fundamentals. By “provincial” I mean they are ignoring more than half the world – the half that loves gold and will accumulate more. They seem to think not much is important to the future of gold outside the United States and Europe.

They also are overly optimistic about U.S. economic prospects and the implications for U.S. monetary policy. In recent months, expectations of Federal Reserve policy have been a powerful short-term influence, affecting much of the day-to-day movement in gold prices.

What happened to China, India, the Middle East, Turkey and other gold-friendly countries? If anything is certain, it is this: Households, institutional investors, and central banks in these countries will in the next few years continue to acquire increasing quantities of gold – and much of these acquisitions are for the long term. In other words, much of this gold won’t come back to the world market even at much higher prices levels, contributing (as I’ve frequently said in the past) to a future shortage of physical gold and steep price increases for the yellow metal in years ahead.

Indeed, looking out beyond the next year or two, demand for gold in these countries will be enough to move gold prices higher even if economic and investment conditions in the United States and Europe are not propitious for gold.

In the meanwhile, however, a faltering U.S. economy – particularly employment-market conditions and the declining pace of consumer price inflation – could trigger a surprisingly robust recovery in the price of gold.

The Fed is targeting a decline in the unemployment rate to 6.5 percent and a rise in the inflation rate to at least two percent. As long as these targets both remain illusive, the Fed is likely to continue its program of Treasury and mortgage debt purchases, known as quantitative easing, at $85 billion per month – and if the economy falters, as I think it might, financial markets may be surprised to see an even more stimulative monetary policy, surely a recipe for higher gold prices.

Financial markets are anticipating an early reduction in the pace of quantitative easing, a “tapering” or scaling back in the pace of monthly bond purchases. As a rosy economic scenario becomes more doubtful, possibly with a spate of disappointing economic news, gold could rally sufficiently to reverse the gold market’s price momentum and reestablish the long-term bullish uptrend.

Employment market conditions are even worse than the headline unemployment rate suggests with stagnant wages, a shrinking workweek, a torrent of part-timer workers who would like full-time employment, and a rising number of discouraged workers dropping out of the work force. Don’t expect any reduction in central bank monetary stimulus until the labor market shows meaningful signs of improvement.

What about inflation and the dollar? Investors and observers of the gold scene have been misled by the very low reported rate of consumer price inflation and by the apparent strength of the U.S. dollar in world currency markets. I don’t know anyone who really believes that inflation is near zero. It may be low, but not that low . . . and, eventually, all that new money the Fed is creating month after month will come home to roost.

Gold prices have been restrained by the “appearance” of a strong U.S. dollar. In reality, the currencies of all of the old industrial-world countries are devaluing together as each country attempts to increase international competitiveness and boost exports. These currencies – including the euro, the pound, the Swiss franc, the yen, the Australian dollar and others – are all losing value in terms of their true purchasing power – only the dollar’s decline is a bit slower than most others. This “beggar-thy-neighbor” competition is reminiscent of the Great Depression . . . and must surely be supportive of gold.

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver coins, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital, has the following comments on the current gold market situation and outlook:

Equity, debt and precious metals markets all reacted sharply to last week’s warning from Federal Reserve Chairman Ben Bernanke that the central bank could begin tapering off the central bank’s monthly bond purchases later this year if economic conditions continue to improve.

But that’s a big “if.”

Chairman Bernanke said the Fed intends to scale back its monthly purchases of Treasury and mortgage-backed bonds later this year and to end them altogether when the unemployment rate falls to 7 percent, which the Fed predicts by mid-2014.

But Fed expectations are often unrealized. To be blunt, its track record at forecasting the economy has been dismal – and its predictions of economic growth made early this year have already proven overly optimistic.

My feeling is that the economy remains vulnerable and economic conditions will disappoint the rosy scenarists at the Fed (and elsewhere) in the months ahead.

This is even truer as a result of the Fed’s latest policy statement given the rise in medium- and long-term interest rates, the fall in equity markets, and the resurgent dollar exchange rate vis-à-vis America’s trading partners – all of which will restrain rather than promote economic growth.

Employment markets remain especially vulnerable, where the Fed’s target for the headline unemployment rate is still far away and other measures (such as hours worked, average wages, the number of part-timers wanting full-time employment, and the number of discouraged job seekers dropping out of the workforce) paint an even worse picture.

The housing sector – one of the economy’s current hot spots where hiring has been on the up and up, is extremely interest-rate sensitive and could soon succumb to higher mortgage interest rates.

A reassessment of economic prospects in the months ahead should be supportive of precious-metals prices in this year’s second half.

In the meantime, gold remains vulnerable to further setbacks given the technical and psychological damage inflicted by this latest sharp decline in the yellow metal’s price.

In the days ahead, much depends on the price-responsiveness of physical demand, particularly in the large Asian markets. Earlier this year, demand for jewelry, coins, and investment bars surged as private-sector buyers as well as central bankers dramatically stepped up their purchases at prices under $1400 an ounce – and, even more so, whenever prices dipped below the mid-$1300 range.

The question now is will these price-sensitive buyers rush in as they have in the past or will they wait a bit for prices to stabilize, possibly at lower levels, before stepping up their gold purchases.

Many gold investors, including clients of Rosland Capital, know I’ve been bullish on gold-price prospects for many years – and I remain so at least for the long term. I remain confident that we will see gold trading at new all-time highs sometime in the next five years. For investors with a very long-term perspective – as well as for those buying gold as a portfolio diversifier and financial insurance policy – current prices will prove to be a bargain.

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver coins, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital, had the following comments on the current gold market situation and outlook:

Gold hit a fresh three-year low of $1,180 per ounce in late June and has since struggled back to the $1,240 to $1,260 range. Although the latest decline began back in April, the sell-off accelerated in June following Fed Chairman Ben Bernanke’s statement that the U.S. central bank might soon taper off its program of quantitative easing.

Although the price of gold remains vulnerable and overly sensitive to any bearish news, the metal’s price is, in my view, already in the process of bottoming.

At recent price levels, the probability of a sizable and sustained decline (of, say 15-20%) seems considerably less than the probability of a similar long-lasting percentage advance. Moreover, should we see another round of price weakness, even below the June low point, it is very likely to be short-lived . . . while a meaningful advance would signal the resumption of gold’s long-term bull market.

In fact, many gold investors and suppliers of bullion coins, small bars, and investment-grade jewelry are already sensing that gold has found a bottom after the steep decline of the past few weeks. In response, physical demand and dealer restocking across Asia have already picked up, a sign that a rally in the price of gold may already be underway.

Similarly, we suspect a few central banks – most notably the People’s Bank of China and the Central Bank of Russia – may have recently resumed or accelerated their long-term gold acquisition programs.

Physical gold markets, which in the past couple of years have been losing the tug of war with paper markets, may now be on the ascendency, regaining their influence in setting the metal’s price. While Western gold traders and institutional speculators have been selling, Eastern investors and central banks have continued to accumulate physical bullion.

Importantly, these are long-term buyers many of whom are unlikely to part with their recently acquired gold at any price – and this is now creating a shortage of actual metal to satisfy new physical demand – what I’ve called “free float” in past reports.

This shortage accounts for the significant price premiums now prevailing over the benchmark London and New York gold-market prices. Indeed, buyers in China are now paying as much as $40 an ounce an ounce above the London benchmark.

Another often-overlooked indicator of physical market supply and demand is the wholesale gold lending (or leasing) rate. This is the interest rate bullion dealers, banks, central banks, and large institutional gold-market participants charge one another to borrow physical gold. In the past few days, the one-month gold lending rate has risen from little more that one-tenth of a percent to more than three-tenths of a percent.

We have long argued that this scarcity of physical gold may result in a surprisingly high-powered advance in the price of gold when institutional selling has run its course and Western market psychology sheds its extreme negativity.

To arrange an interview with Jeffrey Nichols or Rosland Capital’s CEO Marin Aleksov, please contact Carrie Simons at Triple 7 Public Relations (310.571.8217 | carrie@triple7pr.com).

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver coins, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital, had the following comments on the current gold market situation and outlook:

It was only a matter of time before gold prices broke through overhead resistance at the technically and psychologically important $1,300 an ounce level. After all, the market had become increasingly “tight” in recent months with a growing shortage of readily available physical metal. This could be seen in the hefty price premium investors have willingly paid to take delivery of gold bars (as much as $40 an ounce in Shanghai, for example), the rise in gold loan rates, the modest backwardation in gold futures markets, and reports of refinery backlogs.

In addition to the market’s internal supply/demand situation, gold prices have been extremely sensitive to U.S. monetary policy prospects – with every statement by Fed Chairman Ben Bernanke and other central bank officials parsed every which way by gold traders and speculators. In the past few months, expectations that the central bank might soon begin “tapering” its monthly asset purchases (akin to easing up on the monetary gas pedal) weighed heavily on the gold market.

But last week, Chairman Bernanke’s latest comments led many Fed watchers to now expect no change in the central bank’s program of quantitative easing until sometime next year – and this shift in expectations was quickly reflected in a firmer gold market.

However, somewhat ironically, it was Japan’s Sunday election results (granting Prime Minister Abe’s ruling coalition in majority in both houses of parliament) that triggered the early Monday morning wave of buying in Asian markets and kicked gold prices smartly through the $1,300 an ounce level. The election results were interpreted as a popular mandate to continue Japan’s aggressive reflationary policies.

Gold still remains vulnerable – but, day by day, the chances of a significant decline below $1,300 are diminishing and the probability that we are in the initial phase of a major up-leg in the metal’s price is growing. It may be that gold prices are still in a “bottoming phase” and have more work to do around recent levels before moving substantially higher.

Although we can enumerate a number of proximate factors contributing to gold’s recent advance back over the $1,300 an ounce level, it is just possible that something more fundamental but less visible is at work. That something is a whiff of “stagflation.”

Stagflation, a period of low or negative economic growth coupled with high or accelerating price inflation may already be what ails us. Certainly, you’d think so judging from recently reported economic indicators.

The 1970s was a decade of stagflation here in the United States and just about everywhere else. It was the result of financing the Vietnam War and the Great Society via the printing press beginning a few years earlier and then compounded by the 1973 Arab oil embargo and the subsequent sharp increase in global energy prices. Not surprisingly, it was also a decade of skyrocketing gold prices, with the yellow metal rising from $35 an ounce in 1970 to $850 an ounce in January 1980.

Sounds awfully familiar: Wars in Iraq and Afghanistan, along with high Federal spending on entitlements, all financed by the Fed’s aggressive program of quantitative easing. And, with instability across much of the Middle East (Egypt’s military coup, Syria’s civil war spilling over into Lebanon, Israel gearing up for a possible attack on Iran’s nuclear facilities, Iraq and Afghanistan deteriorating into lawless states, Arab springs threatening to erupt in one or another of the Gulf states) a disruption of oil supplies to the world market is a real possibility.

Even without a Middle East oil crisis of one sort or another, recent U.S. consumer and producer price data may be earlier indicators of inflationary pressures in the economy. After all, the degree of monetary stimulus has been unprecedented.

The June Consumer Price Index was up by 0.5 percent, thanks to higher gasoline prices and higher costs for clothing, food, housing, and medical care. The Fed’s preferred inflation indicator, the “core” CPI, which excludes food and energy as if these items don’t count in every family’s budget, was up only 0.2 percent. So the Fed remains unworried though many households are feeling the pain of higher prices.

Meanwhile, the Producer Price Index surged for the second straight month, rising by 0.8 percent. This is the fastest rate of increase since last September – and suggests more price pressures are in the consumer’s pipeline.

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver coins, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital, had the following comments on the current gold market situation and outlook:

With many traders on both sides of the Atlantic on holiday, gold has fallen victim to the dog days of summer, falling through the technically and psychologically important $1,300 price level, driven lower by merely a ripple of spec selling magnified by thin volume in Western markets.

This week’s gold-price action has been a stern reminder of gold’s continuing vulnerability. Just as the price seemed poised to move higher, a hard and fast correction brought the price swiftly back down through $1,300 an ounce before fresh support appeared just under the $1,285 level.

Gold may be vulnerable but, on a more positive note, it is also over-sold and sentiment is overly negative. 



It appears as if gold prices are still in a lengthy “bottoming phase” and may have more work – technically speaking – in the $1,180 to $1,350 range before breaking through overhead resistance and moving substantially higher.

The short-term technical picture may seem bleak . . . but the long-term fundamentals remain bullish. Once again, the big sellers have been a small number of major bullion dealers and institutional traders driven by computer models and momentum indicators.

Making it difficult for the price to achieve “escape velocity,” many of the physical buyers who have been accumulating gold over the past few years (private investors and central bank reserve managers alike) have tapered their rates of gold accumulation or simply postponed purchases, waiting for signs that the gold price has hit bottom before stepping up to the plate to resume their “normal” buying patterns.

Importantly, as we have pointed out repeatedly in recent commentaries, the risks of a major lasting downward correction are significantly less than the possibility of a quick bolt into higher territory and the re-establishment of the long-term bullish trend. To my mind, the question is not “if” but “when.”

We sense that the U.S. economy is weaker than generally believed – and certainly not strong enough to bring real improvement to the jobs market and real relief to the unemployed, under-employed, and under paid. As this view gains credence, expectations of early tapering should diminish, putting gold on a firmer footing.

Those who see significant improvement in labor market conditions are looking at the economy through rose-colored glasses. As July’s employment data point out, despite the decline in the headline unemployment rate, the overall labor market remains bleak.

This, along with other recent indicators — including the recently reported inflation data well below Fed targets — suggest that gold and other financial markets will experience a shift in expectations, with a growing number of participants anticipating a later start-date for the Fed to begin cutting back its program of quantitative easing.

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver coins, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital, had the following comments on the current gold-market situation and outlook:

Gold continues its rollercoaster ride, lurching one way then the other, leaving many investors with an uncomfortable feeling of uncertainty. What’s behind this recent wave of gold-price volatility . . . and where is it likely to lead?

Simply put, the market is reacting to shifting expectations and uncertainties that are pushing and pulling gold in different directions – expectations about prospective U.S, military involvement in Syria . . . and expectations about prospective U.S. monetary policy.

To Taper . . . or Not

Many Fed watchers, financial-market traders, and investors expect the Fed will begin scaling back its monetary stimulus in the next month or, at least, announce a start date following its mid-September FOMC policy-setting meeting.

In April, when Chairman Bernanke hinted that a reduction in monetary stimulus could begin later this year, surprised gold-traders panicked and the metal’s price fell precipitously. Now, however, the possibility of tapering – a gradual dialing back of its super-stimulative monetary policy – is, for the most part, already reflected in the current price of gold and the prices of other financial assets.

If, indeed, the Fed initiates – or simply announces – a start-up date for the implementation of a decreasingly stimulative monetary policy, the yellow metal’s price would likely suffer, at most, a short-lived setback. Alternatively, if following its September 17^th-18^th policy-setting meeting, the Fed continues to postpone the start of tapering gold prices could rally smartly.

But tapering is not tightening – and monetary policy will, in any case, remain in a stimulative pro-gold mode for months, if not years, to come as the economy continues to struggle to regain its footings. And, in any event, as important as it is, there’s more to gold-price prospects than U.S. monetary policy.

When the Missiles Fly

Rising economic and geopolitical uncertainty associated with possible U.S. military action against the Syrian regime – and fear of possible unintended and unpredictable consequences possibly involving Russia, Iran, Hezbollah, Saudi Arabia, Turkey, and Israel – contributed much to the late August gold-price rally by increasing both safe-haven and speculative demand. And, the subsequent easing of war-related fears contributed much to the early-September gold-price decline.

When it seemed President Obama was on the verge of ordering a military strike, safe-haven demand propelled gold right through overhead resistance around $1,400 an ounce and sent the metal briefly above $1,420. But then, the British Parliament’s resounding rejection of that country’s participation in any U.S.-led military action against Syria – and Obama’s lack of popular support here at home – together made a U.S. military action seem somewhat questionable and, in any case, not so imminent. Thus, began the downward correction that brought gold prices back to the $1,360 to $1,370 range of support late this week.

However, as of this writing, it now looks like the President will eventually receive bipartisan Congressional support for some limited military strike – and, if so, I’d expect the gold price to rebound, at least briefly, depending on concurrent monetary policy developments from the Fed. Indeed, the drag on U.S. and global economic activity arising from higher oil prices and the uncertainty-related postponement of business and household spending decisions could discourage the Fed from early tapering.

Seasonal and Other Factors

Looking ahead to the official start of autumn, seasonal factors, especially the approaching festival season and associated rise in gold demand in India, the restocking by jewelry manufacturers after the summer holidays, continuing strong demand from China, and a pick-up in central-bank acquisitions, should also contribute to gold’s recovery.

There may be other positive wildcards for gold over the horizon:

For one thing, fiscal gridlock and the approaching Federal debt ceiling could raise financial-market anxieties, weaken the greenback, and worse, trigger a downgrading of U.S. Treasury debt by the credit-rating agencies.

Not much discussed, the long-term decline in world gold-mine output already underway – and the strike by South African gold miners – is likely to further encourage some of the gold bulls, even if it has little significant affect on the metal’s overall supply/demand situation.

And, in the background, playing a supporting role, has been record physical demand from the gold-friendly Asian markets and cash-rich central banks as well as retail investors buying coins and small bars in Western markets.

Taken together, these bullish gold-market trends and developments should be enough – irrespective of prospective Federal Reserve monetary policies – to assure gold prices move higher in the months ahead.

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver coins, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital, had the following comments on the current gold-market situation and outlook:

Gold’s recent failure to sustain brief rallies and generate any lasting upward momentum has many gold bulls asking “If not now, when?”

Indeed, the early-autumn economic and financial news should have fueled a significant advance in the metal’s price – or so conventional thinking would suggest, what with the Fed’s postponement of tapering, the fiscal impasse and partial government shut-down in Washington, and the approaching debt-ceiling and possibly perilous U.S. Treasury default in world financial markets.

Instead, for the past couple of years, a small number of institutional investors and large-scale speculators trading in “paper” markets have continued to weigh gold down despite the strength of demand in “physical” markets. Stated differently, Western selling has so far trumped Asian buying.

But this market imbalance is not sustainable, if only because the buyers have very deep pockets and very strong hands. Hundreds of tons of bullion bars have traveled from depositories in New York, London, and other Western vaults to Hong Kong, Shanghai, and millions of Eastern households. When sentiment shifts and Westerners look more favorably on gold, Asian holders will not likely sell, except at extraordinary price levels.

The correction that saw gold tumble from its September 2011 all-time high over $1,920 an ounce – and the advance that immediately preceded it – owed much to at most a few hundred large-scale institutional investors who were late to buy gold after the yellow metal already had a sizable run . . . and were just as quick to sell once gold stalled and failed to continue the quarter-to-quarter gains that these investors required to look good to their shareholders.

Equally important to gold’s detriment in the past couple of years, a small number of institutional speculators – mostly the trading desks of the big financial firms trading gold from the short side in futures and over-the-counter markets – drove gold lower and profited greatly by selling strategically at price points that were sure to trigger still more selling and the opportunity to buy back at still-lower price levels.

Gold remains vulnerable and possibly quite volatile in the short term . . . but it is becoming increasingly attractive to long-term buyers with a significant rise in the price all the more likely over the next three-to-five years.

Talk of tapering and uncertain developments on the U.S. fiscal and debt fronts could drive gold one way or the other in the weeks ahead.

For sure, the partial Federal government shutdown – depending on how long it continues – will negatively impact consumer spending, unemployment, and economic activity. And the longer it lasts, the less likely is any imminent change in U.S. monetary policy. The Federal Reserve will not risk adoption of policies that might trigger a full-blown recession.

But tapering or not, monetary policy will, in any case, remain in a stimulative pro-gold mode for months, if not years, to come as the economy continues to struggle to regain its footings. And, in any event, as important as it is, there’s more to gold-price prospects than U.S. monetary policy.

So far, there seems to be little “default premium” in the gold price and little “default discount” in the dollar’s exchange rate against key foreign currencies – but this could change dramatically in gold’s favor if Congress remains intransigent as D-Day approaches.

Looking ahead, Indian festival and wedding-related demand, restocking by jewelry manufacturers worldwide in anticipation of Christmas and New Year retail buying, continuing strong demand from China, and a pick-up in central-bank acquisitions, should underpin the gold price and could contribute to a resumption of the long-term uptrend in the metal’s price.

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information or contact us.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

NEW YORK (October 24, 2013) – Jeffrey Nichols, Senior Economic Advisor to Rosland Capital (www.roslandcapital.com), had the following comments on the current gold-market situation and outlook:

With Washington’s latest budget and debt-ceiling crisis behind us, gold traders and investors are refocusing their attention on U.S. monetary prospect – with expectations of tapering later this year rising and falling with the flow of economic data and the apparent strength of economic recovery.

But, before long, America’s dysfunctional politics will again share the limelight as a key gold-price driver.

Gold prices rallied smartly, jumping some $40 an ounce (or more than three percent) soon after last week’s last-minute agreement in Washington to postpone negotiations on government spending and the debt ceiling until early next year.

Gold’s very positive reaction to the postponement reflected revised expectations of prospective Fed policy with a growing number of market participants anticipating no imminent change in Fed policy – that is to say, no tapering or scaling back of the Fed’s super-loose monetary policy – through the end of this year and possibly into next year’s first quarter.

We have long argued that a still-fragile and feeble economy would weigh against early tapering — and believe the Fed will postpone cutting back in its monthly bond purchases until next spring or beyond.

As a result, we expect the metal’s price will continue to be data driven . . . and we expect data to be pro-gold, showing a weaker-than-hoped for economy. Fed officials will remain especially concerned about the high rate of unemployment, the growing number of under-employed, and the numbers of ex-workers who have simply given up looking for employment – and gold investors would do well to monitor these economic indicators as well for clues to where gold prices may be headed next.

Indeed, in our view, the economy is weaker than most imagine . . . and this will force the Fed to maintain its program of quantitative easing with purchases of Treasury and mortgage-backed securities continuing at a rate of $85 billion per month though the early months of next year and possibly longer. This is one of the key reasons we remain more bullish on the outlook than many other gold analysts and market pundits.

Moreover, with Federal Reserve Board Chairman Ben Bernanke’s tenure at the Fed ending on January 31^st and Janet Yellen assuming the top spot, and other changes in the voting membership of the FOMC, the Fed might postpone any shift in monetary policy until this coming March or April. What we do know is the Fed wants to see a durable recover – and any change in policy is dependent on the economy showing signs of renewed vigor.

Importantly for gold and world financial markets, the U.S. Congress has merely kicked the can down the road. After shutting down much of the Federal government for 16 days and coming dangerously close to a default of some sort on U.S. Treasury debt, Washington granted the U.S. economy a temporary reprieve – agreeing to resume the business of government at current spending levels through January 15^th and averting default by extending the nation’s borrowing capacity though February 7^th.

Before long, Congress will once again be engaged in a continuing, and likely acrimonious, drama over spending and debt limitations. With this “politics as usual” on Capitol Hill it seems highly improbable the Federal Reserve will alter its current monetary stance at its upcoming October, December or January FOMC policy-setting meetings.

With the right-wing Tea Party Republicans digging in for a fight and unwilling to compromise, there’s little reason to believe things will be much different in the next round of budgetary and debt negotiations. We expect renewed uncertainty over the eventual outcome – and the continuing possibility of a U.S. Treasury default.

We imagine the American public and our foreign creditors will start worrying again about renewed Federal budget and debt discord come around Thanksgiving or soon there after – with negative consequences for the U.S. economy as personal consumption, business spending, employment, and Wall Street all take a hit. Importantly, these fears and uncertainties will weigh increasingly heavy on the U.S. dollar in world currency markets to gold’s advantage.

Tapering or not, monetary policy will, in any case, remain in a stimulative pro-gold mode for months, if not years, to come as the economy continues to struggle to regain its footings. And, in any event, as important as it is, there’s more to gold-price prospects than U.S. monetary policy and fiscal disarray.

Looking to the days and weeks ahead, Indian festival and wedding-related demand, restocking by jewelry manufacturers worldwide in anticipation of Christmas and New Year retail buying, continuing strong demand from China, and a pick-up in central-bank acquisitions, should underpin the gold price and could soon contribute to a resumption of the long-term uptrend in the metal’s price.

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, numismatic gold coins, silver, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.