Today’s Daily Angle comes from Wikinvest Wire member Tim Iacono of TimIacono.com. You can read the full article on Tim’s blog.

Despite all the hoopla about a new all-time high in U.S. dollar terms, the 2009-2010 version of the recurring gold bubble is still quite modest by historical measure, a point that should be clear to see in the graphic below that was in dire need of updating.

Surely, the current move up would be much more impressive than the last two if the metal were priced in euros. It now seems to be only a matter of time before the important €1,000 an ounce milestone is reached – with spot gold now trading at €977 an ounce, it looks to be just a matter of just days, if not hours.

Today’s Daily Angle comes from Wikinvest Wire members MarketFolly. You can read the full article on the Market Folly blog.

Flash Player 9 or higher is required to view the chart Click here to download Flash Player now

View the full FUTURE:GC00 chart at Wikinvest

Societe Generale is out with some well thought out research on everyone’s favorite precious metal: gold. The global strategy research piece is called “Popular Delusions: When to sell gold.” In it, the argument is made that gold is not really an investment, but rather a speculative tool.

The most intriguing thing about this precious metal is perhaps the vast array of reasons that investors are purchasing it. Some use it to hedge, some are making a speculative wager, while others use it to bet against fiat currency or protection from inflation. In SocGen’s research, they examine gold primarily as an insurance policy. And they interestingly point out that, “Indeed, during the ‘6000 year gold bubble’ no one has defaulted on gold. It is the one insurance policy which will pay out when you really need it to.”

The author is using gold as an insurance policy against developed market governments failing. They note that the crises we’ve seen in Dubai and now Greece are just the first few drops in the bucket. In the end, they conclude that it will be time to sell gold when “political winds change direction and become blustering gales forcing us onto the course of fiscal sustainability.” So, there you have their argument for gold as an insurance policy.

In another corner, you have hedge fund rockstar John Paulson who is using his new gold fund to bet against fiat currency, and in particular, the US dollar. We also just recently examined the dynamic between gold, the dollar & gold equities.

Global macro hedge fund Woodbine Capital, on the other hand, sees gold as the anti-goldilocks. They’ve owned gold as well as out of the money puts on the metal. They’re not using it as a hedge for inflation or deflation. Instead, they’re wagering on it as part of their theme of increased emerging market demand.

Additionally, we’ve also see John Burbank’s Passport Capital’s rationale for owning physical gold. They own it because of its supply/demand dynamic as well as central bank action, among other reasons. David Einhorn’s hedge fund Greenlight Capital was one of the first to store physical gold. We’ve also seen others use it as a diversification tool in their portfolio. Lastly, we saw Dan Loeb’s Third Point at one time use gold as a fat tail risk and doomsday trade. Obviously, the reasons to own gold vary. The research below now presents gold as an insurance policy.

Click here to continue reading this article on the Market Folly blog…

A week removed from the blockbuster announcement that the Reserve Bank of India had purchased 200 tonnes ofgold from the IMF, precious metals continued their ascent, gold making fresh all-time highs last week at just over $1,120 before ending the week with a gain of about $20 at $1,118 an ounce. Silver posted a modest gain, up from $17.39 an ounce to $17.42 an ounce.

The view that central banks will continue to be net buyers of gold rather than net sellers (as has been the case for about the last twenty years) has many calling the Indian purchase at $1,045 an ounce the “new floor” for the gold price.

That would certainly seem to make sense at least for the near-term as market analysts speculate on which central bank might be next to buy IMF gold while hearing the U.S. Federal Reserve and international G20 representatives stress that it is far too early to begin removing the massive liquidity and stimulus that have seemingly rescued the world from another Great Depression.

The recent rise in the gold price has obviously been aided by a weakening U.S. dollar but, with unemployment set to go even higher over the next six months, there is little reason to think that the Fed will do anything to bolster the currency during that time.

Rumors swirled last week that the Reserve Bank of India may have sold U.S. Treasuries to fund its recent gold purchase and there is growing unease amongst countries that maintain dollar “pegs” for their currencies as they have to print more of their own currency to buy dollars and maintain that peg.

As for silver, it is interesting to note that inventory at the iShares Silver Trust ETF (NYSEArca:SLV) continues to rise, surging in recent days to a new all-time high with the addition of 200+ tonnes as shown below.

Creation and Redemption of SLV shares compared to the price of Silver.

Meanwhile, inventory at the world’s most popular gold ETF, SPDR Gold Shares ETF (NYSEArca:GLD), remains below levels seen at mid-year.

It should be an interesting period ahead for both gold and silver since, going back to very early in the decade, there has been a repeating two-year pattern for the metals that can been seen in the gold chart below. Since 2002, prices have peaked at new highs early in the even numbered years - in 2004 at $425, in 2006 at $725, and, most recently, in 2008 at $1,035.

In many ways, recent events are shaping up to be a repeat of this pattern which, based on the previous peak-to-peak gains would imply a gold price somewhere north of $1,300 early next year.

Gold prices per ounce with even-year peaks highlighted.

Of course, any sharp rebound in the dollar (which some are still loudly predicting) would reverse this trend very quickly.

There were some truly odd goings on in Vietnam over the last week or so that, for those who pay attention to this sort of thing, really adds to the case for a much higher gold price, perhaps sooner rather than later. After seeing a surge in buying in gold bullion in recent years, particularly after inflation soared to nearly 20 percent in early-2008 and investors looked to preserve their wealth, the government banned imports of the metal.

Gold continues to be traded in the country, however, due to the limited supply, it has developed its own local market that, last week, saw bullion trading at about $60 higher than in global markets. After markets went “crazy” (see thisaccount in Vietnam.net), the government announced that it would resume imports of the metal and premiums are now reverting quickly to more normal levels.

Today’s Daily Angle comes from Wikinvest Wire member Hard Assets Investor. You can read the full article on the Hard Assets Investor Blog.

Flash Player 9 or higher is required to view the chart Click here to download Flash Player now

View the full FUTURE:GC00 chart at Wikinvest

You’d think last month’s earnings releases would have given a boost to gold stocks, since four of the five components of the NYSE Arca Gold Miners Index (GDM) reporting posted positive results. Yet, going into the last week of October, miners’ stock prices slumped, only to emerge at the end even lower.

Of course, you could have said virtually the same thing about gold itself, but stock losses were tenfold the slippage in bullion. The exchange-traded fund tracking the miners’ index—the Market Vectors Gold Miners ETF (NYSE:GDX)—gave up 9.3 percent last week, while the value of the metal-holding SPDR Gold Shares Trust (NYSE:GLD) eased only 0.9 percent.

So why should good news produce such bad results?

Well, to a certain extent, there’s truth behind the old adage “buy on the rumor, sell on the fact.” There were whispers on the Street—some good, some not—about the miners’ numbers.

Agnico-Eagle Mines Ltd. (NYSE:AEM), for example, was expected to put up per-share earnings of 20 cents for its third quarter; before its earnings report, the company’s stock traded above $68. Analysts then started talking up a 19-cent figure. When the company posted an 11-cent loss, however, traders marked down Agnico’s shares by more than $15.

Disappointment with poor financial results is understandable, but even the miners’ good news went unrewarded.Newmont Mining Corp. (NYSE:NEM) blew the doors off analysts’ earnings guesses, taking in 79 cents a share after the sell side forecasted earnings of only 57 cents. Newmont’s price reaction? Shares slumped nearly $2.00 before settling halfway up the $43 handle.

A similar scene played out when Barrick Gold Corp. (NYSE:ABX) announced a 54-cent-per-share operating profit. The Street had been eyeing a 47-cent profit before hedging charges, and rewarded company shareholders with a 3 percent haircut.

Likewise, Gold Fields Ltd. (NYSE:GFI) and Eldorado Gold Corp. (NYSE:EGO) both turned in results that met or exceeded Street expectations, only to find sellers anxious to work their share prices lower.

But rumors don’t tell the whole story.

Gold Stocks: The Hybrid Investment

The important thing to remember about gold stocks is that they represent hybrid investments. Like any equity, a portion of their returns will reflect traders’ sentiments about the issuers’ financial prospects, as well as its management team, the general equity market conditions and other idiosyncratic factors. The rest can be attributed to the market’s disposition toward gold. Therefore, gold miners in essence serve two masters: the gold market and the stock market. In the aggregate, 54 percent of the returns chalked up by gold stocks is “passive”; that is, directly ascribable to gold. Of course, the influence of gold upon individual issues varies, but that variance is vitally important in shaping investor expectations.

Gold Miners Index Component Three-Year Relative Share Price Performance

When selecting stocks, investors often look at an issue’s MPT (modern portfolio theory) statistics, such as beta andalpha. Beta measures the variance in a stock’s price history relative to a market benchmark; simply put, beta tells an investor how volatile that stock’s price trajectory is likely to be. Alpha, on the other hand, represents the stock’s return in excess of the market and of the risk-free yield on Treasury securities; alpha informs the investor how much excess return—positive or negative—has resulted from that stock’s volatility differential in the past.

Investors can often find MPT statistics for individual stocks published by market newsletters or on Web-based financial platforms. Investors should know, however, that they’re not getting the whole story about gold miners’ risk from these figures.

Click here to continue reading this article on Hard Assets Investor.