Top 10 gold price predictions for 2013

My personal opinion? Gold likely bottomed at $1,200 recently, but don’t expect spectacular gains through the end of the year. Precious metals need a big catalyst to move higher aggressively.

-Posted by Alejandro Guillú Mendoza

Introduction
Many people around the world want to know the answer to the question, where are gold prices going?

I invested many hours browsing the internet searching for answers to this question to save you time and money because time is money.

Have another question? Drop me a line. I only answer questions regarding money. Please don’t ask me where your lost dog is or why your boss fired you.

Here are my findings when I searched for the Top 10 gold price predictions for 2013:

1) $1,487 Morgan Stanley

The 15th-leading investment services company in the world downgraded its forecast 16% to $1,487, according to the Wall Street Journal.

Peter Richardson said speculation of selling by European Central Banks and nervousness over the possibility that the United States of America Federal Reserve will end its QE earlier than December 2013 are also top contributing factors.

2) $1,530 David Morgan

David Morgan is the publisher of The Morgan Report and creator of silver-investor.com which has been featured on CNBC and Fox Business.

Bernice Napach of the Daily Ticker has written more about this. You can watch the seven-minute video here.

3) $1,550 Goldman Sachs

The second-leading investment services company in the world downgraded its six months forecast to $1,600 from $1,805 and its twelve months forecast to $1,550 from $1,800, according to the Wall Street Journal.

The recent sell-off was “likely excessive,” and it has “exposed a quickly waning conviction in holding gold positions, especially ETFs.”

4) $1,637 Deutsche Bank

The bank lowered its forecast last month 11.8% to $1,637, according to Fox.

“Given our forex strategist’s expectations for continued strength in the U.S. dollar and our U.S. economist’s forecasts for an acceleration in gross domestic product growth going forward, we expect that gold will struggle to appreciate meaningfully against the U.S. dollar.” – Daniel Brebner

5) $1,700 HSBC

The bank lowered its forecast 3.5% from $1,760 to $1,700, according to Reuters.

“Later in 2013, we expect monetary easing, escalating currency wars, and geopolitical tensions to support gold prices up to $1,800 an ounce.”

“Increased inflationary expectations should buoy gold.”

“Any price drop below $1,600 per ounce may stimulate jewelry, coin and small bar retail demand in price-sensitive economies.”

“Further ETF or Comex liquidations could put additional pressure on gold prices.”

6) $1,880 Aubie Baltin

Check out this article: 5 reasons Gold Will Set an All-time Record in 2013. I’m not sure I agree, but the title’s pretty bombastic…

7) $2,200-$3,000 Jason Hamlin

Jason Hamlin is the President and Founder of GoldStockBull and more importantly, one of the Opinion Leaders in the Gold & Precious Metals category at Seeking Alpha.

Pent-Up Potential For Precious Metals in 2013 is an interview by The Gold Report where he discussed his prediction.

8) $10,000 Societe Generale

“With some rare exceptions … analysts don’t like to stand out from the crowd. It is dangerous and career-challenging. In that vein, we repeat our key forecasts of the S&P Composite to bottom around 450, accompanied by sub-1% US 10-year yields and gold above $10,000.” – Albert Edwards

Read more in Doomsday? SocGen Predicts S&P to 450, Gold at $10,000 by Sam Mamudi.

9) Franklin Templeton

The tenth-leading investment services company in the United States of America does not offer a specific numeric forecast. However, they believe the price of gold will go up. You can read their recent financial analysis here.
Keep in mind only eight investment services companies in the world make more money than them.

10) Hebba Investments

Hebba Investments is one of the Opinion Leaders in the Gold & Precious Metals category at Seeking Alpha and although he does not offer a specific numeric forecast, he believes the price of gold will go up. You can read his recent financial analysis here.

My personal opinion? Gold likely bottomed at $1,200 recently, but don’t expect spectacular gains through the end of the year. Precious metals need a big catalyst to move higher aggressively.

Why silver investors should stay away from silver coins

There is nothing wrong with collecting coins if you ARE ALREADY A MILLIONAIRE. If you are not then you need to sell your coin collection right now to the highest bidders.

-Posted by Alejandro Guillú Mendoza

Introduction

This article tries to explain in a simple way to readers without a college degree in economics or finance some macro economic factors that are currently changing the global supply and demand of silver.

Ground rules

Silver coins ARE NOT INVESTMENTS. Silver coins are still minted by countries to satisfy the unlimited demand for numismatists around the world. When you acquire a silver coin you are not only paying for the precious metal itself but also for the graphic design and for the minting.

Countries make billions of dollars each year buying silver by the ton and reselling it as coins.

There is nothing wrong with collecting coins if you ARE ALREADY A MILLIONAIRE. If you are not then you need to sell your coin collection right now to the highest bidders.

The problem with silver coins is that you need to pay for insurance each year and that cost eats some of your profits.

If you want to invest in silver then you need to buy either a silver mine or the ETF SLV. There are other financial instruments for more sophisticated investors that I am not going to cover in this article. If you want me to write about them then drop me a line.

Does Apple buys a lot of silver?

Silver is the best conductor for electricity, and in some cases the cost is not as important and it is used instead of copper which is cheaper (i.e. for small, complex electronics). One easy way to predict if we will buy more technologically advanced things made with silver is to closely watch the global GDP. If the world is expanding then it is likely that we will build more expensive things made with silver.

You can read the World Economic Outlook published by the IMF.

If you want to invest in silver, then you need to keep an eye on the price of copper because this metal is used only because silver is too expensive. If the price of copper starts to rise too much, then some companies may just decide to switch to silver.

Obviously, this is just a theoretical point. In reality, Chile, Peru, Argentina, Brazil and Mexico won’t let that happen, and they will just lend billions of dollars to publicly-traded copper mining companies to keep the price of copper low.

Digital cameras for everybody

Silver nitrate has always been used for photographs, and over half of all the silver mined was used for this before the digital camera was invented. This number is getting smaller and smaller every year, and one day we won’t use silver nitrate anymore. That would increase the number of silver available for other industrial uses bringing down the price of silver in the future.

If you are a politician in a country with a very limited supply of silver, then you need to reduce the demand for silver nitrate in your country as much as you can with the expansion of access to digital cameras to the general population.

Let companies like Nikon, Olympus and Canon import digital cameras without paying any taxes.

Allow these companies to issue Visa, MasterCard, American Express, Discover, UnionPay and JCB credit cards to buy their digital cameras insured by the government.

More than 90% of the world’s silver is produced in Mexico, Peru, China, Australia, Russia, Chile, Bolivia, Poland, the United States and Canada. If these countries reduce their own consumption in silver nitrate, then they will have more silver for export.

As you can see, the price of silver is not really about finding more silver mines but about finding smarter ways to use LESS SILVER.

What is the Protect our Silverware Act?

Most people with silver jewelry, silverware or silver coins are wealthy, and they don’t lose any money every time a burglar enters their house because they’re reimbursed by insurance. The rest of us are hurt by the insurance companies because every time they write a check to pay for these crimes, they increase the bill for all of us.

If less silver is stolen then the prices we pay to protect our homes will be reduced over time.

It is a known fact that burglars only steal from you when you are not home. A very popular trick among thieves is to call everybody until you get an answering machine. I strongly suggest you to get rid of your answering machine and just reroute your old telephone to a cell phone answered by one of your employees in China, India, Indonesia, Brazil, Pakistan, Nigeria, Bangladesh, Russia or Mexico.

You can hire one on Elance for just a few cents per hour.

I propose a new law that will force any silver seller to register every silver buyer into a national database and each silver holder will be forced to hire a silver sitter when they are not home.

Let’s say that you are going to leave town for a few days on business. You call the Silver Police and they will send you an employee that will stay in your home for a few days until you return. Each silver holder will pay a “Silver Police Tax” each time he buys something made of silver to pay for this new Police Department.

This will reduce crime among families holding silver and will also reduce unemployment.

Conclusion

I believe these 10 countries will enact new smarter laws to keep the domestic supply of silver very tight and will also increase silver exports to other least developed countries with more loans to small businesses exporting jewelry and mirrors and other clever measures like a silver stamp that you can use to ship any item made of silver to an eBay or Amazon buyer in another country.

Five reasons to invest in the 360Buy.com IPO

We don’t have a 360Buy.com IPO date yet, but when we do, the offering will probably generate a lot of media. Here are five reasons to consider investing in the 360Buy.com IPO.

-Posted by Alejandro Guillú Mendoza

We don’t have a 360Buy.com IPO date yet, but when we do, the offering will probably generate a lot of media. Here are five reasons to consider investing in the 360Buy.com IPO:

1) Mr. Liu Qiandong.

Liu Qiandong is currently No. 93 in the list of the Top 400 Richest Chinese with a net worth of over a billion dollars at just 37. He started his own business in 1998 with just $12,000 CNY and six years later he started jd.com. After only 6 years, the company grew to 10 billion yuan in sales. He’s No. 25 on the list of Asia’s Hottest People in Business compiled by Fortune. If somebody from ICBC and the China Construction Bank is reading this, then please LEND THIS MAN TEN BILLION DOLLARS. It is unlikely that you will lose your money with him.

2) Alibaba sells over $170 billion.

I don’t need to explain this one.

3) They want to compete with DHL.

Most people see Jingdong as the next Amazon, but I prefer to see them as the next DHL.

Only 4 companies in the whole world remain in the Air Courier industry: Deutsche Post (Frankfurt: DPW), Federal Express (FDX), United Parcel Service (UPS) and Expeditors International (EXPD).

Together they turn a massive profit of at least $5.1 billion each year. The United States of America dominates this industry with 75% of the companies. At the end of the day, China must pay these companies to move their products from the factories to the stores.

They are very busy building half a dozen distribution centers in China. It is only a matter of time before they expand to the 14 countries that share borders with China.

4) Digital Sky Technologies believes in them.

This Russian company invests only in the Internet, and they had the vision to invest $100 million in Facebook (FB) when the company was valued at just $10 billion in 2009. That same year they also invested in Zynga (ZNGA).

In 2010 they invested $135 million in Groupon (GRPN), when the company was valued at just $1.35 billion. In 2011, they invested in Airbnb, which is now valued at $2 billion.

As you can see, they have a very strong track record of picking the right companies at the right time. If they are investing $1.5 billion in this company, then that means they believe this company will have a market value of $15 billion in 2016.

5) Rakuten is the fourth leading Internet & Catalog Retail Company in the world.

Rakuten of Japan is only behind eBay (EBAY), Liberty Interactive (LINTA, LINTB) and Amazon (AMZN) according to Forbes. This company currently has a market value of over $13 billion and annual sales of $5.6 billion. This company was founded in 1997 and it is now one of the largest companies in the world. They have grown to 10,000 employees. I think they already proven to the world their business model works and 360Buy is doing the same thing in China.

Conclusion

I don’t think this company will file for an IPO anytime soon. If they run out of cash, they can always give a call to Al Waleed Bin Talal and very nicely ask him for another couple of billions.

Has the gold market bottomed in 2013?

Several little-know macroeconomic factors are changing the global supply and demand of gold. Read on to find out what they are.

-Posted by Alejandro Guillú Mendoza

Introduction

This article tries to explain in a simple way to readers without a college degree in economics or finance some macroeconomic factors that are currently changing the global supply and demand of gold. They’re not often talked about, but they are very important to understanding the precious metals market!

Ground rules

Gold coins ARE NOT INVESTMENTS. Gold coins are still minted by countries to satisfy the unlimited demand for numismatists around the world. When you acquire a gold coin you are not only paying for the precious metal itself but also for the graphic design and for the minting.

Countries make billions of dollars each year buying gold by the ton and reselling it as coins.

There is nothing wrong with collecting coins if you ARE ALREADY A MILLIONAIRE. If you are not, then you need to sell your coin collection right now to the highest bidders.

The problem with gold coins is that you need to pay for insurance each year, and that cost eats some of your profits.

If you want to invest in gold then you need to buy either a gold mine or the ETFs IAU or GLD.

There are other financial instruments for more sophisticated investors that I am not going to cover in this article. If you want me to write about them then drop me a line.

Mexico is now a bullion superpower with a little help from Carlos Slim Helú

Only ten countries in the world produce more gold than Mexico. However, the annual gold production has grown at double-digit rates in 2005, 2006, 2008, 2010 and 2011.

Unlike other countries, in Mexico you don’t own the gold in your own land. If you find gold in your backyard then the government takes it. There is no such thing as a Mexican prospector.

There is no point in using modern technology to search for gold mines in Mexico and buy the land to make literally a ton of cash. As you can imagine, there is little demand for a geologist in Mexico because you cannot monetize the natural resources.

After over 300 years of gold mining, the United States of America, Peru and Canada remain the third, sixth and seventh largest gold producers in the world. Mexico is very similar to those countries from a geological point of view but nobody has mined that gold yet. In other words, there are mountains of gold in Mexico.

The supply of gold in the continent of America is too vast and unlimited if you consider the current global demand. We have enough gold to pay the entire debt of every country in the continent of America to the rest of the world.

Each year we find faster and cheaper ways to extract gold. Innovation also applies to the extraction of gold. One very important factor that you need to consider is that gold is usually found in very remote locations very far from civilization. Gold mines invest a lot of money in diesel to transport the precious metal to the nearest DHL, UPS or Federal Express location.

Electric cars will only increase the profits of gold mines in the coming years.

After the 1994 economic crisis in Mexico, experts were hired to avoid another economic crisis in the future, and one of the suggestions was to allow billionaires and foreign, publicly-traded mining companies to extract the gold and save it for a rainy day.

Fresnillo (London: FRES) is now a FTSE 100 company and the 30th-largest diversified metals and mining company in the world, according to Forbes. Annual profits are over $700 million. It is not a bad idea to set up a limit order to buy this company at $1,000 in case the price drops from current levels due to a panic sell-off.

Mexico currently holds over 125 tonnes of gold, and they will keep buying gold from Fresnillo and other mining companies currently operating in Mexico until the gold reserves are over 365 tonnes, which is what Venezuela currently holds.

Mexico is one of the richest countries in the world, and with over $170 billion in foreign exchange reserves, they certainly can afford to buy more gold. This “I will buy any amount of gold that you can extract” will attract a lot more gold mining companies. They don’t even have to invest any capital. Mexico will lend them any cash they may need to install the mine, and they can pay for the loan in gold.

You cannot even pay for your MasterCard at Bank of America with a gold coin, let alone a billion-dollar syndicated loan if you are a mining company. Unless Russia, South Africa, Peru, Canada, Indonesia, Uzbekistan and Ghana start a Golden Arches Bank where foreign publicly-traded mining companies like BHP Billiton (BHP) and Freeport-McMoRan (FCX) can apply for a billion-dollar loan to build new gold mines, everybody will just move to Mexico.

What is a Gold Mart?

India likes gold jewelry a lot. In fact, they buy more gold jewelry that anybody else with the exception of China.

One smart way for China, Australia, the United States of America, Russia, South Africa, Peru, Canada, Indonesia, Uzbekistan, Ghana and Mexico to increase exports of gold jewelry is to simply lend money to young entrepreneurs in Pakistan, Nepal, Buthan, Burma, Bangladesh, Sri Lanka and the Maldives to open a Gold Mart franchise.

The fictional Gold Mart franchises will be strategically located in cities near the border with India to encourage small business owners to buy gold jewelry and sell it to consumers in India.

Each Gold Mart will include a large selection of jewelry from small companies that just don’t have the infrastructure to export small quantities of gold jewelry to India. Each country will handle the logistics to ship their products near the largest market for gold jewelry. This will create a lot of jobs in the gold jewelry industry and a lot of tax revenue.

Obviously, I am not a consultant for any of the countries previously mentioned, but I am sure they hired people way smarter than me to help them keep the demand for gold high and they will come up with a lot more clever solutions to export more gold jewelry to India.

I am just a regular guy. Countries have entire armies of consultants just thinking how to solve their problems all day long.

Conclusion

India cannot force their people to stop wearing gold jewelry, but they can systematically sell their gold reserves every time the price of gold goes up more than usual until their reserves are depleted.

Gold stored in vaults does not produce any cash (unless of course, you lend the gold)

You can also lend shares in gold mines. Perhaps it is time for India to invest in the Ghana Stock Exchange, the Uzbekistan Stock Exchange and the Indonesia Stock Exchange. Just a thought.

As always, be prepared for volatility in the gold market, no matter what you do, and never allocate more than 30% of your portfolio to precious metals. Remember, gold is a hedge against a currency collapse, and no one can guarantee there will actually be a currency collapse. Preserving your capital should always trump the desire to make large profits!

Photo by TheRivo

Top 10 silver price predictions for 2013

Where have all the silver bulls gone? Price predictions for the white metal are all over the board in 2013.

Posted by Alejandro Guillú Mendoza.

Many people around the world want to know the answer to the question, “Where is silver going?”

I invested several hours browsing the Internet searching for answers to save you time and money (because time is money, after all). Have another financial question? Drop me a line. Please don’t ask me where your lost kitten is or why she left you. Ask me about topics that can make you money, like silver!

Here are my findings on the latest silver price predictions for 2013, 2014 and beyond. The prices are sorted from low to high:

1) $26 Barclays according to CommodityOnline

Barclays believes strong production growth in mining will knock silver prices down and keep them low in 2013. “We expect it to grow to 25.2kt in 2013, with the slowdown in output from Australia and Europe being offset by strong growth across South America and Asia. We expect modest growth from the major producers, with Mexico retaining its pole position.”

2) $30-$32 Neil Meader (Head of Precious Metals Research and Forecast) according to Forbes

“For the moment, we would expect to see a continuation of the price volatility that we’ve seen of late.

“The unknown for the longer term is inflation.”

“It would be wrong to assume that a year-on-year price fall automatically presages an end to the multi-year rally; that occurred in 2009 and yet prices (based on the annual average) then more than doubled in just two years.”

3) $31 Deutsche Bank

The bank lowered its forecast last month 16.5% to $31 according to Fox because the demand for stocks over commodities is rising and the growth in the United States of America is improving. The 2014 forecast was also significantly reduced.

Excluding major banks currently in the red. Deutsche Bank is the fifth least profitable major bank in the world with barely $400 million in profits. It appears they are no longer qualified to give financial advice to anybody. Perhaps they should hire me. I can easily turn a profit of $40 million. I am just a regular guy. They have 100,000 employees.

4) $33 HSBC

The bank increased its target for silver from $32 based on four factors driving prices higher: industrial demand, investor appetite, strong coin and bar purchases and a bottoming out of jewelry demand according to the Wall Street Journal.

“Greater industrial silver consumption is one of the most compelling arguments in favor of higher prices.”

5) $34.10 BNP Paribas

The bank reduced its silver 2013 forecast a few months ago to $34.10 from $39.05 according to Reuters.

6) $35 Morgan Stanley

Morgan Stanley is very bullish on silver and selected the precious metal as one of the Top Picks for 2013 according to BusinessWeek.

“Gold, silver and corn will outperform other raw materials next year as a weaker dollar and rising investor demand bolster precious metals while supply curbs aid grains.”

7) $38 Commerzbank according to the Wall Street Journal

Silver is “establishing itself as a precious metal with an industrial character, setting itself significantly apart from gold.”

8) $40.25 Michel O’Brien

Silver To Gain 29% in 2013 – Analysts, Traders and Investors.

“The silver market remains a very small market and this continuing global investment and store of value demand should lead to silver reaching a real record high, inflation adjusted, of over $140/oz in the coming years.”

9) $50-$60 Ge Christenson according to SilverSeek

“This is not a prediction based on wishful thinking and hope, but a best estimate based on rational analysis of data stretching back to 1975.”

“Silver (and gold) will continue to rise, doubling every 3 – 4 years, until our government manages to tame the deficits, the borrowing, and the inevitable inflation.”

10) $91 Equity Management Academy

Silver Doctors started recently in 2011 and they are visited by over 750,000 each month. The video analysis by Steve Roy is only 9 minutes long.

This was the highest forecast I could find at the time of this writing – a time when, admittedly, silver prices are extremely low. It’ll be interesting to see which of the predictions above come the closest to the truth by the end of the year.