Top Gold Market Analysis

Now that Greece is taking a break, Portugal took a big blow as Moody’s downgraded its debt rating to junk. The country will likely need further aid. Who is next? Ireland? The nature of downgrade is more of a technical nature that has to do with level of rates and spreads but is good enough to send investors to safe haven.

The rise in gold prices are highly bullish as China raised interest rates by 0.25 percentage point for the third time this year. China’s top priority remains fighting inflation than a faster growing economy.

Eric Sprott, founder of Sprott Asset Management and investor, forecasts gold and silver prices fly high considering the amount of money printing. “If we ever have QE3 announced, I think gold and silver will just go absolutely bonkers here. And so I just think you have got to step in there and own it; we’ve had these fears all the way along. You know, $400, and $500 and $700 and $800 dollar gold, everyone was afraid it was a one-time thing. I don’t think it is a one-time thing, I think it is a secular thing.”

Analysts at RBC Capital Markets forecast a rally in gold and silver prices for the second half of 2011. Gold and silver stocks will highly benefit from this rise in prices, especially the ones with strong fundamentals, “relatively low risk profiles, and liquidity,”

What are these stocks? Agnico-Eagle, Goldcorp, and Silver Wheaton are among their top picks for this rally, “We are maintaining our weighting for Precious Metals at Overweight as we believe margin expansion, dividend increases and strong seasonal performance could provide catalysts for a H2/11 rally in gold equities,” says RBC analyst.

Gold prices broke out below $1,500 an ounce after Greece found a way to push back its problems. The metal headed toward lower and bounced off 1480, the major support, as we expected. The recent bargain hunting after the 4^th of July U.S. holiday are very bullish for gold as greenback is also up among a basket of major currencies.

Shares of Gold Resources are trading over 12% lower this morning in response to an article published on Barron’s claiming that the company’s gold deposit estimates and extraction costs are not correct and that the President sold $700,000 of stock the day after Barron's contacted him with questions. The article suggests that the investors shorting the stock "are probably wise" for not taking management words. The company tried to address the concerns (download the response at the end of the article) but the sharp decline in share prices are speaking for themselves.

Are gold futures driving the gold equities or is it the other way around? If gold stocks are the driver behind gold prices now that they are creating a support while spot prices came down, the positive diversion can be good new to gold bullion and equity holders.

Jordan Roy-Byrne of Wall Street Cheat Sheet argues that “a significant bottom is likely in and the risk in the shares is much smaller than only a few months ago.”

Today, London revealed its first gold vending machine that sells physical gold conveniently similar to an ATM machine. It started in Abu Dhabi and then spread to Munich, Madrid, and Vegas, to mention a few.

Is this a bubble sign or a bullish sign for increasing gold investment demand? We tend to agree with the latter.

The Telegraph reports the Gold to Go machine: