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Archive of 2006's Notable Stories and Gold News

2006

Emirates narrowing dollars reserves (12/28)
The sale itself is a small one, worth about $2 billion. But the implications of a cash-rich friend of Washington selling off its dollars is a sign that central banks elsewhere may be looking to cut losses from a dollar widely expected to slip further in 2007. "It's a prudent move and it's indicative of broader thinking," said Simon Williams, HSBC's chief Middle East economist. "It's another factor that will exert downward pressure on the dollar."

Gold to end UP for sixth year running (12/28)
GFMS has returned with an update to its latest survey, saying that gold would trump these [May '06; $730] levels again. First it said this would happen by the end of this year, but has since prolonged the occurrence to the first quarter of 2007. According to research earlier this year, GFMS points out that investors have been buying gold for its impressive performance compared to stocks and bonds. Standard Bank of London says that while gold is hovering around $620/oz at the moment, its uptrend is expected to continue from early next year.

Kosares: As Paulson and Bernanke fail in China, we have crossed a modern economic Rubicon (12/22) -- It will be business as usual on the economic front and the Paulson-Bernanke China mission will serve as just another marker -- albeit an important one -- on a long road that started in 1971 with the first official devaluation of the dollar and its severance from gold. Perhaps the die was cast back then, but be assured we have now crossed an important economic Rubicon from which there can be no turning back. Under the circumstances, there will be no slowing down the international scramble for anything tangible -- most notably... gold.

A Beginners Guide to Investing in Gold (MoneyWeek 12/22)
Successful investing is about the diversification and management of risk. In layman's terms this means not having all your eggs in one basket. We know from history that markets can and do crash and if you are not diversified your entire nest egg can be wiped out. Experienced and knowledgeable investors have long known that gold and gold related investments can be solid investment choices. Gold is stable in times of global geopolitical instability and when there is economic uncertainty, recessions and depressions. It is important that investors look at their portfolios holistically. Used correctly, gold and gold related investments can be highly effective components of a properly diversified investment portfolio. A good rule of thumb would be a minimum allocation of around 10% to gold and related gold-investments.

Gilded Opinion: Triple Decade Effect by John Richardson
(12/20) ...the future looks likely to be a time of great opportunity where some deft investing could potentially have the best of both Worlds... A continuing boom in stocks for some or much of the coming year, that could very well be accompanied by an inexorable rise in Gold and Silver prices, but what investors should be deftly aware of and watch for, are the signs of what looks to us, what will become an inevitable impending inflexion point, where stocks will peak out, and Gold and Silver prices will keep going higher. What we should be reading from this is that the coming boom in Gold and Silver could be monumentally greater, than perhaps anyone can imagine...

Gold is Cheap, several banks say (Bloomberg 12/11)
The swooning U.S. dollar is making gold Wall Street's darling again for 2007. "Gold is the purest play against the dollar" said Louise Yamada, managing director of Yamada Technical Research Advisors LLC in New York, who sees gold surpassing $730 next year on its way to $3,000 within a decade. Yamada, the former head of technical research at Citigroup Inc., now has lots of company among the world's biggest financial institutions. Deutsche Bank AG's chief metals economist, Peter Richardson, made gold his favorite pick for 2007. JPMorgan Chase & Co. analysts John Normand and Jon Bergtheil on Dec. 7 said only corn could rival gold as the best bet while Merrill Lynch & Co. analyst Michael Jalonen elevated gold's value through 2010. "If you can only make one commodity investment," gold is the "choice for 2007," said Richardson from his office in Melbourne. "Gold is probably the most straightforward investment to go with in this environment because of its consistent inverse relationship to the dollar," said Yamada, voted Wall Street's best technical analyst from 2001 to 2004 in surveys by Institutional Investor magazine. "Other countries are trying to diversify their dollar holdings. They're buying gold and anything they can to get out of the dollar." Gold remains cheap relative to other assets. The record high of $850 an ounce, reached 26 years ago, is equal to $2,100 in today's dollars after adjusting for inflation. The cost of an ounce today is equal to about 10.3 barrels of oil, compared with 23 barrels in 1980. "Prices can only go higher from here," reaching $800 next year and $1,000 by the time U.S. President George W. Bush leaves office in January 2009, said Frank Holmes...

Magnificent at the museum, but gold is no museum piece (Powell 12/6) -- From a speech at the American Museum of Natural History: Your gold exhibition is magnificent, but its inevitable implication is that gold is an antique, a museum piece, a relic -- like the dinosaurs just down the hall. To the contrary -- gold is central to the world financial system even today, even as the shroud of antiquity is so painstakingly woven around it to deceive. Indeed, gold is not just central but the very center of the world financial system.

Paulson Believe a Financial Crisis is Overdue (Comstock 11/30)
While a complacent Wall Street, oblivious to all risks, continues to drive the market higher, it seems that Treasury Secretary Henry Paulson believes that a financial crisis is overdue -- a serious crisis that would be a body blow to the U.S. economy. This fear is shared to some extent by Bush and Bolten, who wanted a major Wall Street player at Treasury in case an economic emergency occurs. Since taking the reins in July, the Wall Street veteran has reinvigorated the President's Working Group on Financial Markets, which had languished. Mr. Paulson is chairman of the Working Group, which coordinates government policy on financial markets and includes the heads of the Federal Reserve, Securities and Exchange Commission, and Commodity Futures Trading Commission.  Mr. Paulson has insisted that they meet about every six weeks. Before his arrival, the group met every few months and sometimes as infrequently as once a quarter. Mr. Paulson is having the Working Group look at the systemic risk posed by hedge funds and derivatives, and the government's ability to respond to a financial crisis, officials said. He has ordered his chief of staff, Jim Wilkinson, to oversee the creation of a Treasury command center to track markets world-wide and serve as an operations base in a crisis. ... All in all, it does not seem that Secretary Paulson shares the sanguine Wall Street view of the market and the economy. Indeed, now that he is no longer in the securities business, Paulson is acting very much like a man who is looking ahead and does not like what he sees.

The age-old message: ingot we trust (Telegraph 11/30)
How high will gold go in the currency Götterdämmerung? With a smile of approval, Mr Hambro notes the $4,000 to $5,000 forecast by the Swiss guru Dr Martin Murenbeeld. Formally, he is sticking to a cautious $750 in 2007, then we'll see.

India's Tarapore for increasing CB gold (FinEx 11/29)
Underscoring the benefits of diversifying foreign exchange reserves and the uniqueness of gold component as part of the forex basket , SS Tarapore, former deputy governor, Reserve Bank of India and economist, has strongly advocated for increasing the proportion of gold in the country's forex reserve. "Gold is unique, in the sense it is both a commodity and a store of value. More importantly, gold invariably moves inversely with the US dollar and also rises in value when international inflation gathers momentum. Thus, there are strong reasons for holding a reasonable proportion of Indian foreign reserve exchange reserves in gold," Tarapore added.

Why commodities still make sense (Kiplinger, Dec.)
[Since Spring,] prices have dropped, but demand for raw materials is still on the rise in developing countries. Smart investors will take note. The downturn appears to be merely a necessary correction in an extended cycle that could run into the next decade. China and other populous developing nations have a voracious, and growing, appetite for energy as well as industrial and precious metals. "People of the emerging world want to live a more luxurious life," says Fred Sturm, manager of Ivy Global Natural Resources. Industrialization, urbanization, rapid growth in vehicles in use, and infrastructure construction -- all key trends in the developing world -- stoke that ravenous appetite.

USAGOLD Client Letter - November 2006 Update
November Edition (by Michael Kosares)

Market Update: The U.S. Election and Gold (M.Kosares 11/21) -- The Bush administration, with the tacit cooperation of the Federal Reserve, has been trying to drive the dollar lower for years. The problem is not the lack of will in this regard. The problem is the lack of success. Every attempt by American policy makers to drive the dollar lower is met with equally aggressive policies on the part of our trading partners to make their currency even cheaper. With the Democratic Party adding its policy initiatives to the mix, it might be enough to convince investors worldwide that dollar devaluation will become a reality. No one really knows the full ramifications if the American political establishment were to get its way and successfully inaugurate a downward dollar spiral. As described in the articles within, there is a new dynamic in Washington which we should take into consideration. All things considered, 2007 should prove to be an interesting year for gold and the dollar. With gold already being driven by record worldwide physical demand, a dollar crisis on top of it could push gold past its all time high of $875 sometime next year.

ECB's Trichet: CB gold sales only 395 t (Reuters 11/20)
Central bank gold agreement sales in the year to Sept. 26, 2006 were 395.75 tonnes versus a limit of 500 tonnes, the head of the Group of 10 top central bankers, Jean-Claude Trichet, said on Monday in Sydney after a meeting on the global economy.

Reviewing the systemic case for gold investment (AME 11/19)
The twin US deficits threaten to undermine the US dollar within the next two-and-a-half years. Not the argument of a deranged gold bug but the former Federal Reserve Chairman Paul Volcker last week. Another Washington big name Robert Rubin also called for higher taxes to rebalance the budget to save the US dollar. However, the point that should not be lost on potential gold investors is that the systemic problems of the US dollar show no signs of going away, and that this structural weakness is already reflected in a rising gold price, and will probably end in a spectacular gold price blow-off in a dollar crisis. ...forecast of $1,650 an ounce gold could prove too conservative!

Dollar Breakdown to Ignite Gold Market (JH 11/17)
The dollar is moving toward a crossroads. The timing of this crisis should coincide nicely with wave III of the current bull market and may very well be the fuel to ignite gold's next big run. The U.S. Dollar Index, which tracks the buck against a handful of the world's major currencies, has been consolidating along an uptrend line that began in December 2004, but also along a downtrend that started in November 2005. Given that the trendlines are on path to intersect, the dollar will be breaking out soon. Technically speaking, it looks very likely that the direction will be to the downside. With China and other countries freely talking of plans to diversify their foreign exchange reserves, which have been predominantly comprised of U.S. dollars, the FX hordes now have a fundamental excuse to push for a breakdown. The Street.Com reports that "gold is still glittering" and the shine is about to get much brighter... [I]f China invested just 5% of its reserves in gold, it could buy the world's entire annual mine production. If China decides to take this route, those wild predictions about $2,000 gold could come to fruition in a hurry. Are you still sitting on the sidelines thinking gold is a barbaric relic?

China will corner the gold market! Here's why... (Edelson 11/16)
China has the largest foreign reserves of any country in the history of the planet. Compare that to Washington, which owes nearly $9 trillion, not counting contingent liabilities. Whose paper currency do you think should have more purchasing power? Naturally, the yuan. Yet that's not the case -- the dollar remains stronger. But not for long. Over the next few years China is essentially going to corner the world's gold market. Beijing will not set out to consciously "corner" the gold market. But, in effect, that will be the end result. I've met with central bankers, banking regulators, and gold traders in China. I know their views on the yuan and gold. I've been told that China will be buying up huge amounts of gold. A few months ago, China announced that it will plow at least 2.5% of its trade surplus into gold. That's a staggering $2.5 billion of brand new demand for gold every year. Beijing knows that the rest of the world perceives China's economy as loaded down with hidden debts and plagued by corruption. So as China progresses toward superpower economic status, authorities in Beijing want the country's currency to be a world-class, stable medium of exchange. They envision the yuan as a major international currency some day, with as much (or more) status than the U.S. dollar. That's why they're going to back the yuan with gold... loads of it. So is gold undervalued? You bet it is! Just to catch up with inflation, it should soar above $2,000 an ounce. China's buying would just be the icing on the cake. This is why I suggest getting more aggressive in gold right now. By the time Beijing officially declares that it's buying gold, it will be too late...more

Dehedging Gold -- Why Barrick's in Trouble (BC 11/14)
Despite some weird trading action, gold prices are likely to rise by $200 over the next four years. That's the forecast of firms like UBS, Credit Suisse, BMO and others, and it also just happens to be what the forward market is priced at. In their Weekly Comment (Nov 13) on Gold, Credit Suisse states: U.S. economic fundamentals ­- the US$ underpins the gold price. There continues to be a raft of reasons and arguments from economists against the long-term health of the US$. These include: the massive and rising debt and current account deficit; looming crisis in Social Security; the rising budget deficit; and excessive household debt. Global supply and demand factors ­- mine supply will likely continue to decline significantly over the next 10 years. Global gold producers are depleting reserves faster than they can discover them. Supply and demand factors will begin to make their presence felt to such an extent that they alone (or in combination) could trigger a quantum upward change in the gold price, enough to sustain a new gold price US$ equilibrium. [S]everal major producers ... are rapidly trying to de-hedge, which means that as and when the gold price pulls back, they are going into the market and buying back some forward production they previously sold. That will drain future cash flow and profitability, so traders have to watch this situation as well. Credit Suisse is reporting that goldminer producers have de-hedged 318 tonnes YTD, and that already is twice greater than the 131 tonnes de-hedged for the whole of 2005. That statement tells anybody who can read that gold mining companies expect the price to ramp up from here...

Gold gains as dollar drops on China report (Blmbrg 11/9)
Gold in New York gained the most since June on speculation that China will boost purchases of the precious metal to diversify its foreign-exchange reserves. "All central banks are trying to diversify," People's Bank of China Governor Zhou Xiaochuan said at a conference in Frankfurt. "We have had a very clear diversification plan for several years."

Playing with Fire: The Dollar Illusion (Spiegel 10/25)
The two things investors crave most are high yields and high security. Since you can never have both at the same time, the moods of investors are like an emotional roller coaster. They shift constantly from fear to greed and back -- although major investors, like corporations and states, clearly prefer security over fancy returns. The dollar is still the world's reserve currency, even though it hasn't deserved this status for a long time. The devaluation of the dollar can't be stopped -- it can only be deferred. The dependence of foreign central banks on the dollar will defer its crash, but it won't prevent it. Much of what people today think is immortal will be buried by the global currency crisis. So who will be the first to destroy the dollar illusion? Why should the central banks of Japan or Beijing throw their dollars onto the market? The underlying motive is the same as the one that once prompted investors to buy dollars -- fear. This time it is fear that someone else may be faster, fear that the dollar's strength won't last, fear that every day spent waiting may be one day too long. It's fear that the herd instinct of global financial markets will set in and overtake those who can't keep up. ... Lester Thurow, a member of Clinton's commission, draws the sober conclusion that no one will believe the US balance of trade could produce a crisis "until it happens."...full article

USAGOLD Client Letter - October 2006 Update
October Edition (by Michael Kosares)

A Swap Story: Borrowed from the Bank of England (Kirby 10/18)
U.S. gold exports [25.1 tonnes] rose 55.0% in August from the previous month, and was up 83.0% from the previous year, the Commerce Department reported Thursday. [Jan-Aug export totals 144.6 tonnes]

The Last Days of the Dollar (Y!Finance 10/17) -- One of the reasons the U.S. dollar only buys approximately 110 yen today instead of 360 yen of yesteryear is because the Japanese allowed us to continually devalue the dollar -- that is, to pay our debts with cheaper dollars. The problem today is that China isn't willing to play the game the way the Japanese did. If we drop the purchasing power of the dollar, the Chinese, by pegging their currency to the dollar, also drop the value of their currency. The irony is that we accuse China of playing games with their money. It's more honest to say that China just isn't willing to play the game we want to play. But an even bigger problem is looming: It seems like the rest of the world is less willing to play our money game. That's why the European Union introduced the Euro. If the oil-producing nations stop accepting the dollar and switch to gold or the Euro, things will definitely get sticky.

Interview with SecTreas Robert Rubin (CitiGroup 10/10)
Robert Rubin ominously mentions Paul Volcker (75% chance of a financial crisis within 5 years,) Sandy Weill (nobody will ring a warning bell for you,) and Rubin himself directly reminds us, "we live in a globalized environment and in a country which has enormous fiscal and external deficits. So you have to figure out some way [...] to protect yourself if we should have a real currency problem here." These comments certainly present a case which justifies gold's place in every portfolio.

Bundesbank boosts sentiment for gold market (FT 10/5)
Germany's Bundesbank said on Thursday that it does not plan to sell any gold from its reserves for a third year, giving a significant boost to sentiment in the gold market after recent sharp falls in prices. The Bundesbank's announcement comes at the start of the third year in the second five-year pact governing European Central Bank gold sales.

GFMS: Stats confound rumor of heavy CB gold sales (10/4)
At 14:00 GMT 4th October 2006, the European Central Bank (ECB) released the final weekly financial statement of the Eurosystem, of the current Central Bank Gold Agreement (CBGA) year. According to the document, Eurosystem members sold two tonnes over the week ending Friday 29th September 2006. Sales by the signatories to the Agreement ended up far short of their annual 500 tonne quota at just 393 tonnes. This confounds market speculation during much of September that there had been a last minute rush to sell gold before the end of the second Agreement year (on 26th Sept) and that this was responsible for the period's price weakness. Looking ahead, GFMS also see little reason to alter their belief that sales under the remainder of the Agreement are unlikely to reach quota either on an annual basis or for the full five year Agreement period. We are perhaps on the threshold of an era of more moderate net official sector selling...

Special: China's Changing Reserves; What it means for gold
(Kosares) -- Gold is now definitely on the policy agenda for China. This revelation of Chinese establishment thinking, I believe, marks a watershed for the gold market, and something that will have to be factored into decision-making in London and New York's gold trading rooms from now going forward.

The trillion dollar question: China is grappling with how to deploy its foreign exchange riches (FT 9/25) -- At the top of the semi-public shopping list funded out of existing reserves are raw materials, something confirmed by both Mr Wen and Mr Zeng. The reserves could, for example, pay for importing the oil to fill a long-planned strategic reserve, the tanks for which are near completion. The government is also considering whether to buy gold, considered a hedge against the potential of a falling US dollar.

Central Bank Gold Agreement: Sales drop to end year (J Phillips 9/26) -- In the week ended the 22nd September, sales of gold by two signatories of the Central Bank Gold Agreement amounted to 12 tonnes... But of far greater importance is the fact that only +/- 600 to 700 tonnes remains of the announced sales for sale over the next three years. The Bank of Russia intends to "increase the volume of gold metals in Russia's gold and foreign currency reserves", the Bank's First Deputy Chairman Alexei Ulyukayev told the State Duma budget committee on Thursday of this week. The share of gold in the country's gold and foreign currency reserves is presently only 3%. Russia has long since spoken of increasing the content of Russia's gold in foreign exchange reserves to 10% of reserves. If the Russians are to act effectively on this intention they must enter the 'open' market to buy more gold.  The 890 tonnes of gold required to take Russian gold reserves to 10% at present would more than outweigh the remaining balance of gold sales from the Central Bank Gold Agreement signatories for the next three years.

Gold's dynamics arise again (Moneyweb 9/20)
Financial markets were taken aback this week by news that Brian Hunter, a hedge fund manager (age 32), lost $5bn in a week on bad natural gas trades.Hunter used various derivatives, the favourite instruments of hedge fund managers. Derivatives are contracts derived from real, tangible underlying contracts. Derivatives are financial instruments that allow investors to speculate on the future price of, for example, commodities or shares - without buying the underlying investment. Warren Buffett, the world's second richest man, has described highly complex financial instruments such as derivatives as nothing less than "time bombs" and "financial weapons of mass destruction" that could harm not only their buyers and sellers, but the whole economic system. Buffett once stated that "we've long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie [Munger, Buffett's partner] and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children." For investors who disavow the fantasies of hedge fund managers, along with fiat money, gold bullion remains one of the most attractive alternative investments. This week, analysts at ING Financial Markets said gold prices were likely to rebound going into next year...

Special: Serving the lie: Why the gold conspiracy isn't all it's cracked up to be (Kosares) -- In my view the Washington Agreement was signed to abort runaway gold loan volume. Previous to the agreement, gold loans were compounding in what might be described as a fractional reserve lending system. Red lights began to flash in certain quarters, and Rothschild led the way in calling for more "transparency" in the gold market and a new system to deal with the burgeoning gold lending market...

Gilded Opinion -- Robert Mundell: 'Ahead of his Time' (IMF)
Mundell argues that the system broke down in the early 1970s because the U.S. rejected the idea of increasing the price of gold -- and thus made gold's relationship with the dollar untenable... In fact, had the U.S. revalued gold, the system could have sailed along for another two or three decades.

Special Contributor -- Gold, Bankers, the Trade Deficit and Unsettled Transactions (vonBraun 9/6) -- ...the notes used as payment are debt instruments and are themselves not officially redeemable, which suggests that any accumulation of them is a risky business. They are not a neutral item, on the contrary they are anything but neutral, being dependant on the rest of the world's inflationary banking system to agree to hold IOU's...

USAGOLD Client Letter - August 2006 Update
August Edition (by Michael Kosares)

FIRST STRIKE! -- Have you been misled? (US Mint 8/23)
The United States Mint has received inquiries from consumers regarding use of the term "first strike." The term has appeared in connection with the advertising and grading of 2005 and 2006 silver, gold, and platinum proof and bullion American Eagle Coins, and the new 2006 24-karat proof and bullion American Buffalo Gold Coins. Currently, there is no widely-accepted and standardized numismatic industry definition of "first strike." Coin dealers and grading services may use this term in varying ways. Some base its use on dates appearing on United States Mint product packaging or packing slips, or on the dates of product releases or ceremonial coin strike events. Consumers should carefully review the following information along with each dealer's or grading service's definition of "first strike" when considering a purchase of coins with this designation...more

What does the US rate freeze mean for gold? (MoneyWeek 8/18)
...it is clear that inflation is a growing problem. So now that the Fed has stopped raising rates, it seems clear that they are focusing on something other than inflation. The object of their redirected attention is clear. The Fed has become focused on the economy. With the slump in housing becoming obvious, ... the economy is slumping. So the Fed has changed its priorities. Instead of fighting inflation, the Fed instead is now trying to avoid a recession. The implications for the US dollar are ominous ... of a Fed focused on avoiding a recession instead of preserving the purchasing power of the dollar. It won't take long to recognize that the dollar's exchange rate will head lower and inflation will worsen. ...more gains for gold and silver are likely.

Vietnam halves gold import tax (Xinhua 8/16)
Vietnam has reduced its import tax on gold bullion to 0.5 percent from one percent. The tax decrease recently decided by the Vietnamese Finance Ministry is a move to develop the domestic gold market. Vietnam imported some 40 tons of gold in the first seven months of 2005, 65 tons in 2004, and 59 tons in 2003. The country has around 8,000 gold trading firms.

U.S. Trade Deficit in June to $64.8B (AP 8/10)
America's trade deficit showed a slight improvement as strong global growth pushed U.S. exports to a record level. That helped offset a surge in Chinese imports and record crude oil prices. The deficit declined 0.3 percent in June, compared with May, dropping to $64.8 billion, still the fifth largest imbalance on record, the Commerce Department reported Thursday. The deficit is running at an annual rate of $768 billion through the first six months of this year, putting the country on track to see a fifth straight record imbalance. Last year's deficit was $716.7 billion. Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., have told Treasury Secretary Henry Paulson that they will push for a vote by the end of September on their legislation to impose 27.5 percent penalty tariffs on Chinese imports unless China moves to allow a greater appreciation of its currency against the dollar.

Newcrest chief sees gold at $1,000 (SMH 8/9/06)
Gold is currently trading around $US639 and new boss of Newcrest Mining Ltd, Ian Smith, said it was within the realms of possibility that it could make a catastrophic jump to $US1,000 an ounce somewhere down the line. Between 75 per cent and 80 per cent of annual gold production is hedged .. by the middle of next year Mr Smith said gold hedging would be reduced to around 50 per cent. Once those key issues are bedded down, Newcrest will also become more vulnerable to takeover bids having been speculated as a target for some time. "You always have plans in place because its one of those points on the radar screens and risk profile of every mining company," he said.

Bank of Italy slashes dollar holdings (Telegraph 8/3/06)
Italy's central bank has switched a quarter of its foreign currency reserves into sterling, dumping billions in US Treasury bonds, in the most dramatic move to date by a G7 country to slash exposure to the dollar. Dollar flight has been gathering pace at smaller central banks. However, for China and Japan, the two giants, with combined reserves of some $1,800bn, it is much harder to diversify smoothly out of the dollar. Any sign that they are liquidating their holdings of US bonds could trigger a global stampede, causing a dollar crash and a broader financial crisis. The two countries would be left with sharply devalued holdings. The Banca d'Italia is viewed as one of the world's most market-savvy central banks, holding onto every ounce of its gold reserves when others, including the Bank of England, under Treasury orders, sold much of their bullion at the bottom of the market.

Interview: Summer Doldrums Offer Best Chance To Buy Gold
TOKYO (DowJones) -- ...according to Michael Kosares, president and CEO of Denver-based precious metals firm Centennial Precious Metals. "Summertime has proven to be the best time to buy gold." see full article

Oil will hit well over $100 and stay high (Reuters 7/11)
Oil prices will soar to well over $100 a barrel and stay high as part of a sustained commodities bull run that has another 15 years to run, says billionaire U.S. investor Jim Rogers. ...As an indication of how much room the commodities market has to grow, Rogers said there were around 70,000 mutual funds for investing in stocks and bonds and less than 10 to invest in commodities. "People have started to invest in commodities. It's a bull market and bull markets pick people up as they go higher and higher," he said.

Syria moves reserves to euros, will drop dollar peg (Blmbrg 7/11)
Syria plans to end its currency peg to the dollar by December to reflect closer trade ties with Europe, central bank Governor Adib Mayaleh said. The Central Bank of Syria has already converted half its foreign-exchange reserves to euros, Mayaleh said in a telephone interview from Damascus, without being more specific. Syria's reserves, including gold, totaled $4.1 billion at the end of 2005...

UAE Central Bank set to enter gold market (AMEinfo 7/3)
The Governor of the UAE Central Bank, Sultan bin Nasser Al Suwaidi told reporters this week that the bank was preparing to convert up to 10 per cent of its currency reserves into gold. ... July and August look the quietest months for the gold market, and it could be that the UAE makes its historic diversification while other market participants are on the beach in the South of France. Ten per cent of the UAE's $23 billion foreign currency reserves would be a substantial injection in to the narrow gold market.

Would a gold standard work today? (Mineweb 6/29)
...there is a possibility of the United States devaluing the dollar as a way of reducing its external liabilities. The United States is the world's largest debtor and Professor Ferguson argues that history shows how there is a temptation to debase a currency when large amounts of that currency are held by foreigners. In 1959, there was $518 in circulation for every ounce of gold held by the United States. Today, that figure is $37,831 (73 times as much, an annual increase of 9.8%). Alternatively; in gold terms, the dollar is now worth 6% of what it was 40 years ago. From 1966 gold has outperformed the returns on the Standard & Poor's 500 index and the US Consumer Price Index.

Beaten up dollar unsettles investors in USA and abroad (USAToday 6/22)
As gold has soared, the value of the dollar has sunk on international markets, making imports and trips abroad more expensive. And in recent months, the rise in gold and fall of the dollar have begun to unsettle investors here and abroad, with potentially severe consequences. In the long run, the sliding dollar could dry up the world's appetite for the USA's oceans of debt. Were that to happen, some warn, we could see surging interest rates, a sinking economy and, perhaps, an end to the dollar's reign as the world's premier currency. ... Michael Kosares of USAGold in Denver says his upper-middle-class clients are buying gold in lots of $100,000 or more. "Our clientele is looking at the price of commodities going up around the world and seeing inflation coming down the pike," he says. Foreign investors are buying gold, too. And that signals dwindling confidence in the dollar. Many foreign central banks are diversifying their holdings, which have traditionally been in dollars...

Special Contributor -- When is a Reserve Not a Reserve? (vonBraun 6/19) -- We have yet to hear a clear description of what the monetary 'problem' actually is and who exactly is the holder of said unidentified problem. Now this is not surprising since the creators of whatever the problem actually is are not going to tell you that their creation is the problem. Nor are the willing holders of the problem going to admit to their mistake either, not yet anyway...

Why Arabian Investors Should Buy and Hold Gold (AMEinfo 6/14)
A concerted intervention by central banks has temporarily depressed the gold market providing an excellent buying opportunity for those who missed the recent gold rally. But this savage price fluctuation has highlighted the volatility of gold and its dangers for traders who decide to do more than buy and hold... ...investors who want to preserve their wealth in this environment should buy gold -- not equities or bonds whose future is much more open to doubt. Indeed, the weakness seen on global capital markets in the past month may be just a sign of days to come, perhaps this autumn, with a full scale financial crisis. Gold will definitely be the place to have some money in such an environment, and precious metals will likely outperform all other financial assets.

Interview: Summer Doldrums Offer Best Chance To Buy Gold June 14 TOKYO (DowJones) -- Along with surfboard wax and sunscreen, you just might want to add a few Krugerrands to your early summer shopping list as June and July will present the best opportunity to buy gold for the rest of this year, according to one industry insider. "We usually get a price decline or at least a stabilization in the gold price beginning with a 'June swoon' that allows the investor to purchase below the average for that particular year," said Michael Kosares, president and CEO of Denver-based precious metals firm Centennial Precious Metals. "Summertime has proven to be the best time to buy gold." (MORE... see full article here)

The Bullish Case for Gold (Murenbeeld 6/5)
This discussion will outline seven factors that underlie our bullish gold price outlook for 2006 and 2007...

UBS: Sees serious demand for gold (Telegraph 6/5)
The world's big money brigade is snapping up gold bullion at eight times the rate originally thought, according to a report by UBS, the world's biggest gold trader. The Swiss bank said information from its trading floor suggested that funds and investors were allocating 20 percent of their commodity portfolios to precious metals. The Zurich bank is the world's leading gold trader and manages the biggest known stash of private client wealth, surpassing $1,000 billion. "The sort of money that is chasing this market higher is not hot money," Ross Norman, director of the BullionDesk. "It is slow, steady investment by pension funds and long-term buyers. Anybody who thinks this market is about to head sharply lower is reading it badly," he said. President Vladimir Putin, a frequent critic of dollar hegemony, has ordered the Russian central bank to raise the gold share of foreign reserves from 5 percent to 10 percent. In China, monetary committee member Yu Yongding last week issued the most explicit call to date for Beijing to diversify its $875 billion reserves into gold to protect against a tumbling dollar.

Price Fluctuation Limits Eliminated for COMEX Contracts (NYMEX 6/2)
PRESS RELEASE: The New York Mercantile Exchange, Inc. today announced that the COMEX Division has eliminated price fluctuation limits for all COMEX contracts beginning with the NYMEX ACCESS session on Sunday, June 4 for trade date June 5. This change was made in order to better facilitate the core functions of price discovery and hedging provided by COMEX products.

Dismissing fears of retreat in gold (BusRep 6/2)
Goldman Sachs International UK managing director Jeffrey Currie, who is well-known for his bullish views on the gold price, said yesterday that strong demand for most metals meant that the long-term high price cycle was likely to continue...

A contrarian analysis of gold's recent plunge (DowJones 6/2)
To understand the significance of gold's recent plunge, contrarians argue that we need first to understand the psychology of bull markets. Their goal is to rise while attracting as few adherents as possible along the way. If the bullish bandwagon gets too crowded, the market must first scare as many as possible of those adherents away from the bullish camp before resuming its upward path...

China should buy gold, Central Bank advisor says (Blmbrg 6/1)
"China has more than enough foreign-exchange reserves," said Yu Yongding, who advises on policy as a committee member of the People's Bank of China. "While they cannot be reduced sharply all at once, China has decided to take measures to curb their growth rate and diversify investment of its reserves." The central bank would likely use new reserves to diversify away from the dollar and into other assets, rather than shifting current holdings. "We don't want to cause dramatic fluctuations in the foreign-exchange and securities markets," said Yu. "We need to use some of the reserves to buy other assets such as gold and strategic resources such as oil."

Special Contributor -- The significance of August 15, 1971 (vonBraun 5/31)
At what point do holders of US $'s finally get the idea that they do need to swap out of paper into commodities? ... Perhaps the relevant question is, how much physical metal is there remaining to meet rising demand as a result of profits from rising oil prices and an increasing reluctance to hold US dollars?

Gold Fields CEO says bullion could hit $1,000 (Reuters 5/31)
"I see the price continuing from these levels and moving higher, and in fact could move significantly higher over the next couple of years. I would not be surprised to see it going up into four figures in dollar terms, that's a very real possibility," he said in an interview. "Gold, despite having a fairly healthy run since 2001, is still incredibly cheap on the gold-oil ratio and I think there's still lots of upside potential just taking that into account. ... The recent run-up in the dollar price was very rapid, a little bit quicker than I had anticipated, so I wasn't surprised to see this pull back."

Might a Russian Ruble attack lead to Exchange Controls in the US? (GoldForecaster 5/16)
Putin called for the establishment of a Rouble-denominated oil and natural gas stock exchange in Russia "to trade in oil, gas, and other goods to be paid for in Roubles," he said. This is the second most significant step in removing the U.S.$ from the throne of sole global reserve and trading currency. ...This move by Russia tolls the bell on oil being exclusively priced in the U.S.$. So far, as the oil price rose, the demand for the U.S.$ grew heavily, in line with the rising price, giving it the stability it has maintained over the last few years, despite the series of record Trade Deficits. But the rest of the globe doing trade with the U.S. is under no illusions that the sheer volume of dollars being printed to pay the bill for this Trade deficit has forced them to accept a suspect currency. This will precipitate, in time, upward pressure on interest rates. We would expect this to start in the markets through sales at the long end of the Treasury Bonds, then as these are sold off, move down to the short end of the market until foreign investments are concentrated at the short-end [T-Bill] and at worst, held in 'call' money. The liquidation of these assets and subsequent purchases of foreign currencies will pull the $ down and cause a heavy outflow of foreign capital. Before this happened, we would expect the Fed to heavily intervene in the foreign exchanges to defend the exchange rate of the $. The Fed has already made preparations for such a defence. Should this prove insufficient and we have no doubt they will, we expect the Fed to try to stem the capital outflow from the country with Exchange Controls from initially gentle to eventually harsh levels.

Mining shareholders wary of Latin American Nationalization (DJ 5/10)
Moves by Venezuela and Bolivia to nationalize their countries' natural resources could soon spill into the mining sector, likely boosting prices for metals that are already at multi-year or record highs, while pressuring shares of companies with interests in Latin America. "A great leftwing, socialist rising is occurring in Latin America, which will push higher all mineral prices," said Ned Schmidt, editor of the Value View Gold Report. "Venezuela and Bolivia are only the beginning." Analysts argue over whether the threat to metals production is extensive, but tend to agree that mining companies will suffer the greatest blow.

China urged to quadruple gold reserves (Reuters 5/9)
Chinese economists are urging Beijing to quadruple its gold reserves to 2,500 tonnes from the current 600 tonnes because the country foreign exchange reserves had become the world's largest, an official industry newspaper reported. "More gold reserves will help the government prevent risks and handle emergencies in case of future possible turbulence in the international political and economic situation," the paper said, citing Tan Yaling, a researcher with the Bank of China. A weak dollar had also made more gold holdings necessary... China has been trying to gradually diversify its reserve holdings away from the dollar.

Gold makes its move (AFX 5/5)
The misery of the dollar, and global concerns over Iran's nuclear research has sparked interest alternative investments. Now there are "trillions of dollars floating around and as people flee paper money (dollars), gold and silver money become attractive competitors," said Peter Spina, a chief investment strategist at GoldSeek. Julian Phillips, an analyst at GoldForecaster, said, "To have a stockpile of gold means to have a measure of financial security no matter where one is on this earth, and this will hold true no matter what price oil goes to or how high global uncertainty rises and confidence wanes." John Person, president of National Futures Advisory Service said, "As more and more investors start allocating more resources in gold, we could see $800 and as high as $1,000 by year's end."

$2,500 per Ounce Gold Coming Soon (NY Sun 4/28)
Investment adviser, Stephen Leeb, whose recommendations are generally laced with discipline and common sense, recently fired off a shocker to subscribers of his New York-based monthly newsletter, the Complete Investor, predicting a possible explosion in the gold price to between $1,500 and $2,500 an ounce. No, not in the next 10 to 20 years but, would you believe, in just 12 to 24 months?

Gold to Hit Record High Next Year (Reuters 4/28)
ZURICH -- "The trend is up. I have a 50 per cent probability that we will get to $800 next year and a 25-30 per cent probability to take that up to $850," Martin Murenbeeld told Reuters on the sidelines of the European Gold Forum. "We are at the early stages of gold and commodities becoming an asset class in a portfolio. So how much money could potentially go to the commodities side? I say the sky is the limit."

Why gold will keep going higher (Moneyweek 4/27)
I expect gold to reach $1,000 per ounce in the foreseeable future. Neither central banks nor wealthy individuals with to increase their holdings of suspect currencies, and the US dollar has become a suspect currency because of the scale of the US budget and trade deficits.

Russia questions dollar's reserve role (Reuters 4/21)
Russian Finance Minister Alexei Kudrin on Friday questioned the dollar's pre-eminence as the world's "absolute" reserve currency, given its recent volatility and the size of the U.S. trade deficit. The remarks helped send the dollar lower against major currencies and caused Wall Street analysts to wonder whether central banks will increasingly diversify their holdings out of dollars. Kudrin, in Washington for the semiannual meetings of the International Monetary Fund and World Bank, told reporters at a news briefing the dollar's value had not been very stable in the past several years, particularly against the euro. "This causes significant changes in the international situation and that is why we do not understand the U.S. dollar at the moment as the universal or absolute reserve currency," he said. "The international community can hardly be satisfied with this instability. Whether it is the U.S. dollar exchange rate or the U.S. trade balance, it definitely causes concerns with regard to the dollar's status as a reserve currency," Kudrin added. Russia's foreign currency and gold reserves of $212 billion are the largest of any country outside of Asia. Currency traders were especially sensitive to any remarks regarding the dollar's reserve status after the Swedish central bank earlier Friday said it had decreased its holdings of dollars to 20 percent from 37 percent of total holdings.

Gold may surpass $850
April 12 (from MarketWatch) -- Independent precious metals research group GFMS said developments across the Middle East are one factor that may help gold post further strong gains in the next two years -- and even surpass the 1980 high of $850 an ounce. In its Gold Survey 2006, released Wednesday, GFMS said it expects the metal to find support in a slowing U.S. economy, weaker dollar and inflationary pressures. But after its gains of the past year, the metal has also become an attractive investment target for institutional investors, making it an asset class in its own right as well as an inflation hedge. GFMS believes this phenomenon is still at its early stages but would not be surprised to see longer-term investors like pension funds enter the commodities market, propelling gold prices even higher. "You're playing with fire if you ignore the weight of money argument, looking ahead into 2006," said Klapwijk. "We'd only need to see a tiny slice of mainstream assets diverted into gold, which comparatively is a pretty small market, and the price could really take off." There is little doubt that the $850 level will be reached "within the next few years as trillions of dollars float around looking for refuge," said Peter Spina, an analyst at GoldSeek.

Special Contributor -- Keep Your Eye on the Ball! (vonBraun 4/8)
The 'ball' that one should be keeping ones eye on is the price of both the precious and the base metals and their relationship to paper assets.

USAGOLD Client Letter - April 2006 Update
April Edition (by Michael Kosares)

Investment shift sets up $1,000 price by 2010 (MW 3/30)
"Gold at $600 an ounce might be a surprise to many, but these are the same people that were surprised when gold hit $300, when it broke $400 and when it moved to over $500," said Emanuel Balarie, a senior market strategist. "Most likely, they will still be surprised when gold hits $1,000 an ounce," which could come in the next three to four years, if not sooner, he said. "The typical investor has yet to discover the attractiveness of this asset -- the gold price is just starting to reflect this move as investment dollars flow in," said analyst Peter Spina. Spina sees $650 to $700 then "onwards to over $800 ($825-$875)" within two years. Another analyst said, "This is just the beginning of a gold move to $4,000-plus by 2042 -- when Social Security is 'scheduled' to go bankrupt."

Time for Gulf economies to boost gold reserves (Woertz 3/30)
An increasing number of central banks like Russia, China and Argentina are actually buyers of gold in order to diversify their currency reserves and Western central banks appear to be increasingly reluctant to enact further sales (e.g. Germany) or have sold or leased out most of their gold (e.g. England and Portugal). Thus, apart from the inflation fears and the dollar weakness, the supply gap and the derivative short position is the third main driver of the gold price rally of recent years. These underpinning fundamentals are so strong that one can safely assume that we are still at the beginning of a secular price rise rather than at its end. In fact, the accompanying boom in commodity and oil prices and unstable political developments remind one of the gold price rally of the 1970s, when gold price rose more than 20-fold from $35 to $850. Individuals in the Gulf countries seem to be well prepared for these developments as they are the second-most important buyers of gold in the world after India. ...gold constitutes a superb hedge against inflation and dollar weakness and could thus mitigate the danger of being short changed by selling precious oil for rapidly devaluing paper dollar receipts. A minimum rate of gold reserves like the European Central Bank (ECB) stipulates for its members (15 percent) and an increase of gold reserves like Russia recently announced (from five to 10 percent) certainly would be an advisable policy for the Gulf countries...more

China should tap FX reserves to buy gold (Reuters 3/27)
China should use part of its fast-growing foreign exchange reserves to buy gold as it seeks to adjust the asset mix to hedge against risk, a Bank of China official was quoted on Monday as saying. "We can use part of the foreign exchange reserves to buy gold, which would help make the reserves more diversified and help guarantee and increase their value," said Wang Yuanlong, former economist at Bank of China, the country's largest foreign exchange bank. Central bank chief Zhou Xiaochuan said earlier this month that China would adjust the mix of its reserves in light of global market conditions. In doing so, China's criteria would be safety, liquidity and profitability, in that order.

Dollar loses clout in bullion market (Reuters 3/24)
"People have realized that the dollar is important for gold, but it's not the only factor, and you cannot slavishly trade gold just simply because of what's happening to the dollar," said John Reade, analyst at UBS Investment Bank. As the dollar rose by about 4.5 percent against the euro in the five months to early February, gold gained 30 percent to hit a 25-year high of $575 an ounce, the highest since January 1981.

Investing: Go for gold... not green (YahooFinance 3/21)
The reason I have more and more dollars is simply because I don't hold on to them. Instead, I do my best to keep my dollars moving into assets that are going up in value, not down. In the late 1990s, when people were pouring money into the tech and dot-com stocks, my dollars moved into oil, gold, silver, and real estate, when prices were low. Today, because the dollar continues to drop in value, I keep moving my money into those same asset classes, although much more cautiously. My concern is that very soon, citizens of the world will tire of America's gross fiscal mismanagement and hesitate to take U.S. dollars. The secret to surviving the next few years is keeping your wealth in real money, not in the U.S. dollar. Buy things that hold their value and are exchangeable all over the world. Commodities such as gold and silver have a world market that transcends national borders, politics, religions, and race. A person may not like someone else's religion, but he'll accept his gold. One of the reasons why I'm bullish on gold and silver is because the American public is still sound asleep to this asset class. Most Americans have no idea how or where to buy physical gold and silver. The outlets that sell gold and silver I have visited are already low on inventory. If and when the American public wakes up to the reality that their dollars are not money, but a currency, the panic and stampede will begin. Should that happen, today's prices for gold and silver will look like bargains.

Special: Confronting Confiscation
(Kosares) -- In the face of far-reaching government confiscatory power over property and financial contracts, the investor need not throw in the towel in pursuing his best interest, specifically in regard to gold ownership.

Belarus central bank to increase gold reserves (IFAX 3/17)
The National Bank of Belarus plans to set up a gold reserve of at least 32 tonnes of gold equivalent by 2011, a source in the main precious metals and stones department at the National Bank of Belarus told Interfax. The National Bank expects that in 2010 gold and forex reserves will amount to $3 billion. The National Bank's gold reserve amounts to 25.02 tonnes of gold equivalent, compared with 4.41 tonnes in 2001.

Arab Central Banks move assets out of Dollar (Ind 3/14)
Middle Eastern anger over the decision by the US to block a Dubai company from buying five of its ports hit the dollar yesterday as a number of central banks said they were considering switching reserves into euros. The United Arab Emirates, which includes Dubai, said it was looking to move one-tenth of its dollar reserves into euros, while the governor of the Saudi Arabian central bank condemned the US move as "discrimination". Separately, Syria responded to US sanctions against two of its banks by confirming plans to use euros instead of dollars for its external transactions. Analysts warned other central banks might follow suit. ..."Investors are going to take this into consideration [and] will look at investment opportunities through new binoculars." ..."Is it okay for US companies to buy everywhere but it is not okay for other companies to buy the US?" ..."The issue is whether we will see similar attitudes taken by other Middle Eastern banks. It is a question of momentum." [see also related article]

Gold seen as undervalued, expected to regain glitter (BTimes 3/6)
Paper money, while being an excellent medium of exchange in normal commercial dealings, is a very poor store of wealth as it is too easy to print and will disappear in a fire. We are all familiar with monetary inflation. It is the relentless increase in prices over time. The gold inflation rate can be computed by expressing the annual gold production as a percentage of the historic gold production. The present rate is in the range 1.6-1.9 percent. ...On comparison the oil/gold, real estate/gold and Dow Jones/gold ratios all suggest that gold may be currently undervalued. It does appear that funds are currently flowing into the gold markets which are viewed as relatively undervalued entities. This may eventually lead to a significant revaluation of gold and a restoration to its former purchasing powers.

Falling dollar inspires central bank cooperation (DowJones 3/3)
The world's central banks are likely to start working more closely together as they try to manage the impact of an expected long-term decline in the value of the U.S. dollar. "Just as the U.S. role as world superpower won't last forever, neither will the dollar's role as the world reserve currency," said John Nugee, a former central banker. There are widespread concerns the U.S.' growing overseas indebtedness, reflected in a current account deficit of more than 6% of gross domestic product, is creating the risk of a sharp correction in the nearer term. If foreign investors become less enthusiastic about continuing to add to their dollar holdings, that lack of demand could quickly depress the currency. The dilemma that central banks face is that any move to reduce their exposure to a declining dollar would only accelerate that decline, further pushing down the value of their existing holdings. Nugee said some form of coordination is clearly in the interest of the central banks who hold dollars, and wouldn't be unheard of.

China intends to double its gold reserves this year (Minesite 3/1)
The National Development and Reform Commission has stated that China intends to more than  double its gold reserves to 1,270 tonnes this year. For official gold holdings, this will put it on a par with Switzerland (but still well short of the U.S., said to have 8,133 tonnes in Fort Knox). In 2005 China increased its gold reserves by 20 per cent to 620 tonnes and now it is going to add a further 650 tonnes. China is stuffed to the gills with US dollars and needs to diversify its holdings and the attraction of gold becomes ever more clear. Any forays by Bush into the Middle East or , indeed, South America where some of his neighbours are getting a bit naughty, will only add to the attractions of gold as a store of value.

China to make gold trading easier (MarketWatch 3/1)
The Bank of China will slash the trading spread on gold trading by up to 20% for 13 weeks beginning next Monday and running until May 27, according to reports carried in the Shanghai Daily Wednesday. The move is part of two reforms designed to make the buying and selling of gold easier and less expensive. Starting later this year, the Bank of China will run a trial program allowing holders of U.S. dollar accounts to trade gold. China already allows investors to buy and sell gold through Chinese currency accounts, denominated in yuan, though the sales are based on the dollar value of the metal on international markets.

Iran's Really Big Weapon
(Courtesy Belgian, from UPI) -- The prospect of a mushroom cloud rising from Iran's Desert of Stones may be less destabilizing than a simple free market economic measure that Iran is said to be planning for March of this year. Tehran is preparing to open a bourse where traders can buy and sell oil and gas, along the lines of the IPE in London and the NYTMEX in New York. The differences are first, that this one would price its energy in euros, not dollars, and second, that it would not use West Texas Intermediate or Brent Crude (from the North Sea) as its standard oil for pricing. It would use a Persian Gulf-produced oil instead. This could be a far more profoundly punishing blow to American interests than Iran's ability to manufacture a crude atom bomb. ... As the world found with the first great OPEC price rise of 1973, when the price per barrel tripled, the crucial OPEC decision was as a direct result of President Richard Nixon's Aug. 15 decision to end the dollar's link to the gold standard. The dollar declined in value, which meant the OPEC producers received less value for their oil. So at their Beirut meeting on Sept. 22, OPEC adopted resolution XXV:140, which resolved to take "any necessary action ... to offset any adverse effects on the per barrel real income of member countries resulting from the international monetary developments as of Aug. 15." Most of the financial world is currently awaiting another, similar devaluation of the dollar, in response to the monstrous scale of current deficit on the U.S. current account.

The Gold Price Riddle (BIA 2/27)
The metal looks a likely $600 bet for mid-year, and some highly-placed names bandy $1000 around, even $3000 in under ten years from now. For the especially observant, most signposts would appear to point eastwards as the cause of gold's relentless upwards trend. "Any move to buy more gold is going to place greater pressure on supply -- even a hint of Asian central banks buying at present would set the gold market on fire." Since the gold market is miniscule compared with financial assets, all it takes is a relatively small diversion from stocks of bonds into gold to make the metal's price shoot up. "Investors are diversifying portfolios. There is a feeling that currencies and equities are not necessarily reliable and they're adding to commodities because they see greater returns there."

China needs to cut US dollar weighting in forex holdings (Forbes 2/27)
China should cut the weighting of the US dollar in its foreign exchange holdings to reduce its exposure to exchange rate risk because of volatility in the US dollar, according to a top Chinese government advisor. 'The US dollar rate is not stable,' he said.

It's still a gold rush (ExpressMoney 2/26)
In a world ravaged by terror attacks and wars, gold prices have been on the rise since September 2001. In 2005, in international markets, the price per ounce increased from $424 to $517 -- a gain of 22 per cent. On Friday, it closed at $559. That's still far short of the all-time high of $850 hit during the Iran-Iraq war in 1980, but experts are talking about that level in this shifting political and economic order. Analysts feel another [price] surge is likely and the long-term trend is up. Till such time as the threat of terrorism and higher inflation is real, and the dollar continues to be perceived as weak, central banks and hedge funds will stay overweight on gold. Just as countries need a store of value, so do individual portfolios.

Gold for Investment Portfolios? (2/16)
Gold gained in London as investors sought to diversify their portfolios and get higher returns. Investors are buying gold because it's outperforming stocks and bonds. Gold rose 90 percent in the five years to the end of 2005, while the Standard & Poor's 500 Index returned 2.7 percent with dividends reinvested. Gold is an anti-cyclical commodity, and the funds want to own it to diversify their portfolios. Fund investments in commodities will soar almost 50 percent to $120 billion this year, Standard Bank in London said in a report.

Chinese perspective on bouyant gold (People'sDaily 2/14)
The international gold price has soared 37 percent over the past six months and hit the peak for the past 25 years doubling that of five years ago. This has aroused much attention of the world financial circle. What are the reasons for the considerable rise following its plunge? Gold is expected to continue to be strong, mainly boosted by consumers, the change of central banks' attitude toward gold, the change of gold enterprises, and demand from fund investment.

Gold bugs eye $600, $850, and far beyond (TheStreet 2/6)
Lundin's conservative estimate for this year is that the $650 will easily be reached. But he doesn't bar the idea that speculative fever may push it to test its historic highs around $850, which were last touched in January 1980. Adjusted for inflation, this would equate to more than $2,000 in current dollar terms. "Should the nominal high of $850 be touched, then the next target would be $2,200." That's also the call of French bank Credit Agricole Cheuvreux, which sees the possibility of a spike to $2,000, without providing a time frame...

Gold not a bubble, could go on up (Reuters 2/2)
Gold's 37 percent rise in six months to 25-year highs, far from a price-bubble ready to pop, will continue upwards on renewed fund enthusiasm, analysts said. Gold has room to go much higher. It is still well off January 1980's all-time high of $850, a level which would now stand at $2,100 after adjusting for inflation. "I do not see any bubble on the gold market. Prices have been firmly supported by fundamentals. Most notably, changes in global liquidity have put upward pressure on prices," said Michael Widmer, analyst at Macquarie Bank Ltd.

Japanese yen weakens, savers pile into gold (FT 2/2)
Amid further signs that the Bank of Japan is not yet ready to abandon its ultra-loose monetary policy, in which additional liquidity is pumped into the nation's banking system, Japanese retail investors continuing to pile into gold, selling yen in the process.

Why you must buy gold (Rediff India 2/1)
Gold prices have risen by over 17.80% in 2005 and more than doubled since September 2000. And if the 'experts' are to be believed, there is a lot more steam left in gold prices. In times of inflation, the smart money tends to move to gold, thereby driving up its price. The preference for gold stems from the fact that it is readily available in a standardised form. Moreover, storage is not that big an issue as compared to, say, crude oil. At present the interest in gold as an investment destination is palpable. In our view, gold is a must in every portfolio. However, the extent to which you should be invested in it should depend on your overall asset allocation.

Meet the New Fed Chairman...
January 31 (USAGOLD) -- In 2002, then-Fed Governor Benjamin Bernanke burst into our monetary consciousness with his printing press speech. His fine work earned him the honorary title "helicopter commander." While largely a background figure since then, today's Senate confirmation to succeed Alan Greenspan as Fed chair makes this an ideal time to review Dr. Bernanke's views on monetary policy, and to speculate about what his chairmanship will bring.

"Buy gold now..." (GulfNews 1/26)
Buy gold and jewellery now - this is not a campaign punchline but advice to investors and consumers by industry experts. The economic situation in the Middle East high oil prices and the weakness of some currencies and economies is pushing the international and regional investment funds to increase the share of gold in their portfolios. The global price is expected to touch $650 in the first half of the year. The Dubai Gold and Commodities Exchange, the city's new gold derivative exchange, will soon extend trading to all seven days of the week from five now, its chairman said yesterday.

JP Morgan sees gold near $600 by year-end (Reuters 1/23)
J.P. Morgan Securities said in a report on Monday prices might even jump to $800 from $556 now, if Iran's nuclear issue heated up and oil hit $100 a barrel. The report said gold was likely to gain from a favourable currency environment, with the dollar seen range-bound in the first half of the current year, while weakening later. "The recent pullback in gold from its record highs should not be interpreted as a peak, rather we see it as a stage in a longer rally."

What does gold's rise mean to the average investor?
by Michael Kosares (1/19) -- There's one thing we have to keep in mind as gold breaks through the glass ceiling: It has been artficially held down through one machination or another for a good many years. Those numbed by gold's rise and unable to act should keep that historical fact in mind. As I have mentioned here before, the cyclical retracement for which some might be hoping may not come until we once again attain the old highs near the $900 mark. The real mission for most investors is to protect one's hard-earned (won) wealth through the ownership of the most direct representation of wealth itself -- gold. Those waiting for that long, deep correction may be waiting a long time simply because rising gold could very well be part of a much bigger cycle than most market observers have factored-in. Gold is now reacting to a confluence of factors...more

AUDIO: 'Zapata George' on Oil and Gold
(FSN 1/14)
Jim Puplava and Ike Iossif interview George S. Blake on his forecasts and views for oil and gold markets. (1hr)

Special Contributor -- The Gathering Storm and Gold (Kosares 1/7)
"The implied threat imposes itself directly on the private investor who has no resources but his or her own were such a panic to unfold. If you haven't diversified into gold, now is the time. If you have diversified but still need to add more gold to your holdings, it is better to get the job done now than wait for a price correction. As the past week exemplified, the downturns are shallow with a quick bounce back to the upside. Don't play games with your future as this dangerous situation gathers momentum."

China eyes switch in reserves away from dollar (FT 1/6)
Move could have significant impact on currency, commodity markets
China indicated on Thursday it could begin to diversify its rapidly growing foreign exchange reserves away from the US dollar and government bonds ­ a potential shift with significant implications for global financial and commodity markets, putting heavy downward pressure on the greenback. The statement comes at a time of growing debate in China on how the reserves are invested. It is a subtle but clear signal that they are interested in moving away from the US dollar.
Prior Related News: Chinese economists urge expansion of gold reserve (12/28) -- Some economists have been appealing to the State Administration of Foreign Exchange to expand China's gold reserve after the Renminbi appreciation in a bid to reduce the country's reliance on the greenback, Xinhua new agency reported. China should increase its gold reserve from 600 tons to about 2,500 tons in a short term and to 3,000 tons in a long term to cope with the versatile exchange rate risks, said Teng Tai, an economist of China Galaxy Securities Company. Too little gold reserve would pose threat not only to China, but also to the global monetary system.

Gold may extend gains for 6th yr on diversification (Blmbrg 1/4)
"It's all about fund diversification. That's the bottom- line," said the head of commodities sales in London at ANZ Banking Group. Investors have been "heavily dependent on equities, bonds and currencies." Investors are buying gold because it's outperforming stocks and bonds. Gold rose 90 percent in the five years to the end of 2005, while the S& P 500 Index returned 2.7 percent with dividends reinvested. An index of Treasuries maturing in two years or more returned about 30 percent including interest reinvested, Merrill Lynch & Co. indexes show. Gold may rise as high as $850 an ounce within 18 months as a weakening dollar boosts the metal's appeal as an alternative investment to U.S. assets.

Gold Price Overview AVERAGE annual prices: For 2006 gold at the London price fix touched an intra-year high of $725.75, whereas its average price throughout the year was $604.00 -- up nearly 36 percent from 2005's average price of $444.50. The 2004 average was $409.25, while 2003 had an average of $363.50 per ounce. The average price for 2002 was $310.00, and the average 2001 price was $271.00 per ounce. In percentage terms, year-by-year gains in average annual price for the price of gold over the past five years have been an impressive succession of 35.9 percent, 8.6 percent, 14.4 percent, 17.3 percent, and 12.6 percent.

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