GOLD PRICE NEWS - The gold price broke through the $1,100 barrier as waning confidence in fiat currencies drove investors to increase their gold exposure. While the U.S. dollar gold price remains well off its record highs, gold priced in terms of the euro or the British pound is trading very close to its all-time high. The rally in the U.S. dollar versus the currencies of America’s trading partners has led to a large liquidation of COMEX long gold futures positions. Roughly 94,000 contracts have been liquidated, a drop of over 30% off the highs made late last year.
Unlike their U.S. counterparts, in recent weeks, investors in countries with currencies that have been under pressure have seen steady appreciation in their gold holdings. While, in the U.S., the short-term reaction of traders has been to sell U.S. dollar denominated gold, the longer-term fundamentals for gold have strengthened due to the emergence of sovereign debt issues across the globe.
Gold mining stocks will not trade in Canada or the U.S. today due to holidays. Although, given today’s rally in the gold price as well as a positive note on the world’s largest gold producer in this weekend’s Barron’s, gold stocks look set to open stronger when trading resumes Tuesday. Reporter Jacqueline Doherty discussed the bullish outlook for Barrick Gold (ABX) held by Ed Shill, chief investment officer at QCI Asset Management. Shill compared the price performance of Freeport-McMoRan Copper and Gold (FCX) to Barrick and illustrated how the shares of FCX have rallied 172% rally since last February while the stock priced of ABX “has not budged.”
The copper price has outperformed the over the past year, but Shill believes this could change going forward. Based on past correlations, Shill is betting on a reversion to the mean and has purchased shares of Barrick Gold.
