Gold Price Increases Leading to Consolidation

By Dave Brown – Exclusive to Gold Investing News

Gold prices have been surging lately, and with plenty of reason. A second quarter which has seen headline news on the financial precipices of debt contagion in Europe, potential U.S. credit rating downgrades, Middle East tension and an earthquake in Japan have combined in a tailwind for gold price appreciation. With such a volatile dynamic context capital markets appear to be trading on sentiment and any global recovery appears to be in its infancy stage at best. In such times of uncertainty, many gold investors and industry stakeholders have seen that “crisis is danger plus opportunity.”

Consulting, audit and tax firm PwC recently released a report summarizing the merger and acquisition activity and corporate reorganization during the second quarter. Over the last three months, the Canadian equity market has demonstrated a strong appetite for deals including 836 merger and acquisition announcements worth approximately $57 billion. This investment restructuring is equivalent to the strongest deal quarter since prior to the credit crisis of 2008.

Dominating this arena, as most investors could appreciate, are the resource and energy industries accounting for as much as 45 percent of the activity; however, they actually under-represent the sector constituents which have increased organically due to inflated commodity prices to account for 51 percent of the market. “Mega deals” during the quarter included the world’s biggest gold miner Barrick Gold Corp. (TSE:ABX), which made a $7.8-billion acquisition bid for copper miner Equinox Minerals.

In the report, mega deals worth $1 billion each contributed to most of the total value of all deals; however, with 71 announced middle market deals worth a combined $23 billion the diverse mix included a healthy cross section. There were also a considerable number of smaller deals worth less than $100 million, primarily within Canada’s junior mining and energy marketplace.

Prices climb on continued fear

On Wednesday, gold increased to $1,672.80 per troy ounce, up $21.80 from the previous trading session and nearly double the $880 per troy ounce spot market trading price from early 2009. Among other precious metals, silver tested three month highs, trading 0.2 percent higher on the trading session at $40.88 per troy ounce, while platinum and palladium fell. According to Bloomberg a report by JP Morgan (NYSE:JPM) suggested that gold might eclipse a record $1,800 per troy ounce by the end of the year, while copper revisits $10,000 per tonne.

Platinum has been the topic of some bullish reports by some analysts. The precious metal mitigates risk against fiat currency dilution currently engineered by the world’s central banks and provides exposure to global industrial growth exposure. GFMS, a metals consultancy firm, forecast in its annual Platinum and Palladium Survey that by the end of the year platinum will be “comfortably north” of $1,900 per troy ounce trading significantly above its present range of $1,780.

Outlook

With a rational tone of careful confidence the PwC report offers, “by nearly all measures 2011 has proven to be a perfect storm for Canadian M&A, as predicted in our annual outlook. What do we expect going forward? Our view is that M&A typically lags the broader capital markets. Many of the deals announced in Q2 can be traced to market sentiment in late 2010/early 2011. Given recent macro instability we expect cautious optimism to pervade for the remainder of 2011 and through 2012.”

According to alternative assets industry data provider Preqin, the capital available for institutional investors is over $195 billion. The considerable value of this wealth accumulation, combined with an aging global demographic profile offers the potential for strong pension fund demand for assets that can provide inflation protected long term returns or the storage of value. This broad secular investment thesis might also be favoured by foreign sovereign wealth funds given the current context of a low interest rate environment and a protracted period of US quantitative easing.

The report states, “Examples of deal sectors that will likely continue to be busy include real estate, infrastructure, timber, agriculture, gold and resource sector verticals.” Canadian dominance on the buy and sell side, “in many of these sectors will likely mean that Canadian deal makers will fare better than other developed nations like the US and the UK.”

Americans & Money: 27 Facts

Americans & Money: 27 Facts
by Drew Gannon


With companies like Apple, IBM, and Harley-Davidson recently posting big earnings, it may be easy to start feeling more optimistic about the economy. But Americans have found that even when the markets are growing, our pocketbooks might not be.
So what exactly is the financial situation for Americans today? The most recent government surveys, polls, research, and census data -- gathered by New Strategist Publications in The American Marketplace -- give us 27 financial facts about what we own, what we owe, and much more.

What We Make
Even with unemployment numbers on the rise, the average American is still employed and insured. Fifty-eight percent of Americans have a job, with an average salary of $735 a week, and 56 percent of Americans still receive employer-provided health insurance. The majority of Americans still recognize the importance of the daily grind, with 70 percent claiming hard work is the way to get ahead in the job market.

What We Own
The American dream still includes a home of our own: Sixty-seven percent of Americans are homeowners. The average American lives in a 1,800-square-foot house built before 1975. Along with a home, the average American household also owns two vehicles and the majority (62 percent) owns at least one pet.

What We Do With Our Money
While the average American household has a net worth of $96,000, that figure includes the equity in our homes. When it comes to more liquid financial assets, 54 percent of Americans have less than $100,000 in savings and only 19 percent of households directly own stock. But Americans are still spending money. The average American spends $69 a day, even though we only have an average of $34 in our wallets.

How We Spend on Technology
It's a technological world we live in now, so it makes sense that a large chunk of our money goes into these products. The majority of Americans own a desktop (59 percent) and/or a laptop (52 percent) computer, and 76 percent of Americans use the Internet on a typical day. Today, a whopping 87 percent of Americans have a cell phone (35 percent own a smartphone), whereas only 70 percent of Americans still use a landline.
What We Worry About
The economy might be showing signs of an uptick, but 58 percent of Americans are still worried about being able to maintain their standard of living. It's no wonder we're worried: Including mortgage obligations, the average American household carries $75,600 in debt. We're working hard to stay on top of it, though: 54 percent pay credit card bills in full each month.
Still, keeping and creating jobs in the U.S. remains the most important political priority for 51 percent of Americans. Even more Americans (60 percent) believe the economy, specifically jobs, will be the top issue in the 2012 election. And Americans want government to spend more money on health care (60 percent) -- a necessity that now costs the average American $3,126 a year out-of-pocket. They also want to see more spending on the environment (60 percent), and education (74 percent).

Investing In Silver

Is investing in silver a profitable endeavor? Metals have been the attraction since ancient of times to this day. Investing in gold, silver, copper, zinc and oil is considered as good investment now.

There are also indexes that reports and records or silver and gold price movements. Investing in silver is a bright idea, as the silver index looks promising. In the month of May, 2007 silver has hit a high of .17 per ounce and since it is under it is still at the reach of an ordinary investor.
You can try your luck on silver through Hecla Mining (NYSE: HL), Pan American Silver (NASDAQ: PAAS), Silver Standard Resources (NASDAQ: SSRI) and iShares Silver Trust (AMEX: SLV). The demand of silver is increasing in countries around and that is the major reason why investing in silver remains a gaining ground.

Gold and silver almost move in the same way on an index. Therefore, when gold prices do well in the stock exchange it heavily affects silver prices and silver rise up too.

The Silver boom is likely to occur, and contributing to this factor is demand of silver articles in USA, China, India, Russia and other parts of Europe. Silver jewelry is highly in demands it looks chic, is affordable and has a resale value. Silver consumption is increasing day by day. Industries silver demand is increasing every year.

Silver is a good conductor of electricity and that makes it popular as well. It is also thought that silver stock is low this year and when the demand supply ratio stretches silver rates will automatically soar.

Investing in silver is coming up as a powerful business with lots of money to play around with. It wouldn’t be inaccurate to say that investing in silver will bring you the gold mine. One can invest in Silver coins or silver bullions but take into account the high premium associated with it. Your broker can be the guide to your investing in silver.

The bottom line is this: in order to really profit from investing in silver, you need to focus all your efforts on this endeavor. Don’t become a jack of all trades but master of none. Follow these important tips and you’ll make a good profit with your silver investing exploits.
For more tips for investing in the stock market, visit http://www.stock-investing-tips.com, a popular site that teaches how to make a fortune in the market.