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The USAGOLD Market Update

Archive of Notable Stories and Gold News

News Worth Lingering (continued...)

USAGOLD VideoBrief [video] -- June 10, 2009
Is the DJIA a viable economic indicator?
-- featuring Pete Grant & Jonathan Kosares

USAGOLD VideoBrief [video] -- May 19, 2009
Save dollars or save gold?
-- featuring Pete Grant & Jonathan Kosares

Rocket School of Economics -- An Often Overlooked Issue!
(May 22) -- The great credit contraction is now well and truly underway. In simple terms it is like the tide going out prior to the tsunami coming in. The dollar is a liability and as such being in cash is also a liability. Government securities are also liabilities, but the issue of liabilities versus real assets is more widespread than that. The precious metals are not a liability, and ownership of them is a very wise move given the uncertainty surrounding everything else that is happening.

USAGOLD RoundTable [video] -- Apr. 23rd, 2009
Recovery, what recovery?
-- featuring Pete Grant, Jonathan Kosares & George Cooper

Gilded Opinion -- In uncertain times, all that glisters is a gold standard
The logistics of embracing a new gold standard would be mind-boggling. UBS, for example, calculates that the US reserves of gold are so small, relative to its monetary base, that a price above $6,000 an ounce would be needed to reintroduce a gold standard. To implement that standard in Japan, China and the US, the price would be more than $9,000.

USAGOLD VideoBrief [video] -- Apr. 2nd, 2009
A global currency backed by gold?
-- featuring Pete Grant & Jonathan Kosares

USAGOLD RoundTable [video] -- Mar. 12th, 2009
Not getting your TARP? Buy gold (while you can!)
-- featuring Pete Grant, Jonathan Kosares & George Cooper

Rocket School of Economics -- Problematic Banking Systems!
(Mar 28) -- The real issue here is the fiat monetary system itself. The purpose of a gold standard is to effect settlement and the closing of the gold window in 1971 placed the very necessary activity of settlement into the deferred stage. Since that time no transactions have been officially settled. These unsettled transactions remain on other Central Banks balance sheets as reserves, which they are not. They are liabilities of the United States.

An ABCs of Gold Investing Update -- March 8th, 2009
Gold coin shortage likely to become chronic

by Michael J. Kosares

USAGOLD VideoBrief [video] -- Feb. 4th, 2009
Answering viewers' questions.
-- featuring Pete Grant & Jonathan Kosares

Gold coin shortage as demand soars (FT 2/25)
"The demand is extraordinary. All the coins we got on Monday are gone today [Tuesday] and we will not be able to take any order until the following week," Mr Kramer said. "It is the same with other mints." Although the surge in coin demand is a bullish signal for gold prices, the fact that mints cannot match demand means that the potential extra consumption does not push spot prices higher, but just drives premiums above normal levels. The Rand Refinery in Johannesburg, which mints the world's most popular gold coin, South Africa's Krugerrand, said demand was above its maximum capacity, even after doubling last month to 20,000 ounces from 10,000 ounces a week. Johan Botha, head of precious metals sales at the Rand Refinery, said there was demand for more from international investors, pointing to strong sales to Switzerland, the UK and Germany. "If we were able to produce 30,000 ounces,the market would absorb it," he said. Mr Kramer said MTB had Krugerrand orders equal to three months of refinery supplies to the company.

USAGOLD VideoBrief [video] -- Jan. 26th, 2009
Currency manipulation? Geithner's comments, China and consequences.
-- featuring Pete Grant & Jonathan Kosares

Gilded Opinion -- Unintended Consequences
The arrogance and self importance of politicians is an insult to the intelligence of all Americans. They put their unproven theories into practice by committing trillions of taxpayer funds. They are only concerned about the next election cycle and not about the long-term consequences of their ignorance and ignorance of crucial facts. The accumulation of blunders over the decades by government has led to unintended consequences that could bring down our country. Recent developments will have disturbing consequences for all Americans.

Ex-central banker warns of massive dollar collapse (Telegraph 1/5)
Americans must prepare themselves for a massive collapse in the dollar as investors around the world dump their US assets, a former Bank of England policymaker has warned. The long-held assumption that US assets - particularly government bonds - are a safe haven will soon be overturned as investors lose their patience with the world's biggest economy, according to Willem Buiter. "There will, before long (my best guess is between two and five years from now) be a global dumping of US dollar assets, including US government assets. Old habits die hard. The US dollar and US Treasury bills and bonds are still viewed as a safe haven by many. But learning takes place." He said investors would, rightly, suspect that the US would have to generate major inflation to whittle away its debt and this dollar collapse means that the US has less leeway for major spending plans than politicians realise.

USAGOLD VideoBrief [video] -- Dec. 3rd, 2008
$2000 gold? Citigroup's recent price projection is analyzed.
-- featuring Pete Grant & Jonathan Kosares

Gilded Opinion -- Alf Field's LAST Elliot Wave Gold Update
There are three things you need to know about Alf Field. First, his forecasting on the gold market utilizing Elliot Wave Theory has been consistently accurate since his first essay in 2003. Second, he comes to a much different conclusion about gold's future than Robert Prechter, EWT's most famous practitioner. Third, this will be his final essay and for a remarkable and admirable reason which you can discover by reading on.

Gilded Opinion -- How to invest in commodities... Our lives depend on commodities yet most are too afraid to invest in them. History is dotted with massive bull-markets in commodities, which occurred regularly. In fact, over the past 200 years, we had five major booms in natural resources. The shortest boom I could find lasted 15 years, and the longest one continued for 40 years!

USAGOLD RoundTable [video] -- Nov. 14th, 2008
TARP: Too early to call it a failure?
-- featuring Pete Grant, Jonathan Kosares & George Cooper

J.P. Morgan urges investors to buy gold for the holidays (Mineweb 12/1)
J.P. Morgan's analysis suggests that "gold has shown two faces to the market: gold equities have underperformed the S&P 500 since the beginning of this financial crisis, but
gold bullion has outperformed the general markets handily. We continue to feel this results from the operational challenges the gold miners face as a group but points to upside potential for gold prices as mine supply continues to fall and now central bank sales diminish." ..."We believe the price of gold was artificially low starting in the mid-1990s as physical oversupply from the mines, central banks and forward selling pressed down on prices." ... The analysts also suggest that "the gold coin and small bar market has seized." J.P. Morgan's research revealed that gold lease rates "have picked up recently in an echo of the tightness in the coin market. ...We also understand investors are switching holdings from unallocated gold (a general liability of bullion banks) to allocated gold (a more secure custodial holding).

Perth Mint suspends orders amid rush to buy bullion (Australian 11/22)
Perth Mint sales and marketing director Ron Currie said the unprecedented demand had forced the Mint to cease orders until January, with staff working seven days a week, 24-hour days, over three shifts to meet orders. He said Europe was leading the demand, with Russia, Ukraine, Middle East and US all buying -- making up 80 per cent of its sales. One European client purchased 30,000 ounces for $33 million. "We have never seen this before and are working right at capacity. And we are seeing it from clients in the shop buying one ounce, right up to 30,000 ounces from overseas clients," Mr Currie said.

China allows individuals access to spot trade in real gold (ChinaDaily 11/21)
Individual investors were allowed to buy and sell Au99.95-category gold as of Friday at the Shanghai Gold Exchange (SGE), the Shanghai Securities News reported. A Shanghai-based analyst, considered the SGE's decision as a breakthrough since it was the first time the exchange allowed individual investors to participate in the spot transaction of real gold. SGE, the country's first such exchange which was set up in October of 2001, began free trade in gold one year later but it served only institutional investors.

China PBOC mulls raising gold reserves by 4,000 tons (DowJones 11/19)
China's central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country's huge foreign exchange reserves, the Guangzhou Daily reported... [but] didn't elaborate on the plan.

Gold's safe appeal attracts record interest (FinancialTimes 11/19)
Sales of gold coins and bars reached their highest levels for more than a decade in the third quarter while gold exchange traded funds saw record inflows as investors sought a safe haven from the crisis in financial markets. The WGC's report provides confirmation of previously anecdotal evidence of record investor interest. The third quarter saw media reports that mints around the world had run out of gold coins as Lehman's collapse sparked concerns among investors about the health of the world's financial system.

The deflation hoax (Saxena 11/14)
Central banks and governments are printing TRILLIONS of paper currencies around the world, the US has now become a socialist society and all this money-creation should result in a huge inflationary tsunami in the future. In my opinion, those who are forecasting deflation, don't understand our monetary system. What we have seen in the recent past is not deflation but a contraction in asset prices due to liquidation...

Rocket School of Economics -- What is an Asset?
(Nov 14) -- Gold stocks today are not the gold stocks of the 1930's. They too have become a target of the writers of derivative contracts, as is any public entity that trades on an exchange. Any index can be shorted and any commodity can be sold off via the futures markets. The actual supply and demand situation for any item is not reflected in the price and this is because of derivatives and the leverage generated by them. Nowhere is this more evident than in the gold market at present with a severe worldwide shortage of physical metal not being reflected in the price... yet.

FED: The promise and peril of the new financial architecture (Fed 11/6)
The depth and duration of this period of weak economic activity remain highly uncertain. The financial turmoil revealed that the old financial architecture is broken. But its successor is not yet established.2 In my view, the prospects for robust economic growth over the intermediate term are likely to be determined, not principally by the trajectory of housing prices, but by the speed with which a new financial architecture emerges and the form that it takes. This challenge of creating a new financial architecture is hardly unique to the United States. ... We are witnessing a fundamental reassessment of the value of virtually every asset everywhere in the world. ... The difficult choices made by policymakers and market participants around the globe will have real implications for future growth prospects.

Venezuela's bid to boost gold reserves bad news for Crystallex (Globe&Mail 11/5)
Venezuelan President Hugo Chavez's government says it is taking over one of the world's largest gold deposits, operated by Toronto's Crystallex International Ltd. The nationalization of the Las Cristinas project, which Crystallex has said could contain more than 16 million ounces of gold worth about $11.8-billion at today's prices, could prove the death knell for the junior miner's decade-long struggle to build the mine. "This mine will be recovered and will be operated under the state's administration," Venezuela's Mining and Basic Industries Ministry said in a statement. Crystallex's beleaguered shares lost more than a quarter of their value. Mr. Chavez has threatened to take over mining operations in the past, but has never done so, until now. He has already nationalized Venezuela's oil industry as well as electricity, steel, cement and telecom companies. "As a result of the financial crisis that has spread to a global scale, it is necessary to try to reclaim our gold to increase our international reserves," the government statement said.

U.S. has plundered world wealth with dollar (Reuters 10/24)
The front-page commentary in the overseas edition of the People's Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies. "The grim reality has led people, amidst the panic, to realize that the United States has used the U.S. dollar's hegemony to plunder the world's wealth. ... The U.S. dollar is losing people's confidence. The world, acting democratically and lawfully through a global financial organization, urgently needs to change the international monetary system... How can Europe and Asia grasp each other's hands and together confront the once-in-a-century global financial crisis sparked by the U.S.; how can they construct a new equitable and safe international financial order?" A two-day Asia-Europe Meeting (ASEM) of 27 EU member states and 16 Asian countries was set to open on Friday.

Now is the best time to invest in yellow metal (FT Editor 10/20)
Merrill Lynch's commodity expert Francisco Blanch reckons there is a real chance the US dollar will lose its reserve currency status ­ or at least see this severely damaged. The simple fact is that the US has taken on too much debt and the global consequences of that can only be good for gold. Longer term, Blanch actually sees a fresh boom in energy prices ­ a view that stems from the fact that the current moves to bailout the financial system in New York and London will eventually prove to be inflationary.

USAGOLD VideoBrief [video] -- Oct. 18th, 2008
Physical Gold vs. Paper Gold
-- featuring Pete Grant & Jonathan Kosares

Anna Schwartz: Bernanke is fighting the last war (WSJ 10/18)
Even though the Fed has flooded the credit markets with cash, spreads haven't budged because banks don't know who is still solvent and who is not. This uncertainty, says Ms. Schwartz, is "the basic problem in the credit market. Lending freezes up when lenders are uncertain that would-be borrowers have the resources to repay them. So to assume that the whole problem is inadequate liquidity bypasses the real issue." ... Today, the banks have a problem on the asset side of their ledgers -- "all these exotic securities that the market does not know how to value." "Why are they 'toxic'?" Ms. Schwartz asks. "They're toxic because you cannot sell them, you don't know what they're worth, your balance sheet is not credible and the whole market freezes up. We don't know whom to lend to because we don't know who is sound. So if you could get rid of them, that would be an improvement." The only way to "get rid of them" is to sell them, which is why Ms. Schwartz thought that Treasury Secretary Hank Paulson's original proposal to buy these assets from the banks was "a step in the right direction." The problem with that idea was, and is, how to price "toxic" assets that nobody wants. And lurking beneath that problem is another, stickier problem: If they are priced at current market levels, selling them would be a recipe for instant insolvency at many institutions. The fears that are locking up the credit markets would be realized, and a number of banks would probably fail. Ms. Schwartz won't say so, but this is the dirty little secret that led Secretary Paulson to shift from buying bank assets to recapitalizing them directly, as the Treasury did this week.

Central banks all but stop lending bullion (FT 10/7)
The one-month gold lease rate rocketed to 2.649 per cent, its highest level since May 2001 and significantly above its five-year average of 0.12 per cent, according to data from the LBMA. Traders said the jump reflects the fact that central banks ­ mostly European ­ have almost completely stopped lending gold in the last few days and are not rolling forward old leases after maturity. This is because of fears that some borrowers might not repay their bullion loans if they are engulfed by the financial crisis. "There is very little appetite for unsecured lending at the moment," said John Reade, a commodities strategist at UBS. Central banks usually do not ask borrowers to post any guarantee ­ or collateral ­ to secure bullion loans. "The key word now is safety," an official from a Europe-based central bank said.

Gold eagleUS Mint halts some American Eagle coin production (Reuters 10/7)
"The U.S. Mint has worked diligently to attempt to meet demand, however, blank supplies are very limited and it is necessary for the U.S. Mint to focus remaining bullion production primarily on American Eagle Gold One Ounce and Silver One Ounce Coins," the Mint said. The Mint said it would continue to supply one-ounce American Eagle gold coins and one-ounce American Eagle silver coins on an allocation basis to coin dealers. For half-ounce and quarter-ounce American Eagles, the Mint said that inventory was depleted last week and no more coins would be produced for 2008.

A USAGOLD Market Update
The Big Bailout of 2008

The chickens come home to roost... [Addendum]

USAGOLD VideoBrief [video] -- Oct. 3rd, 2008
The Financial Bailout & Gold Shortages
-- featuring Pete Grant & Jonathan Kosares

Central banks favor gold as crisis unfolds (Reuters 10/2)
in the fourth year of the latest Central Bank Gold Agreement, which ended on Friday, sales fell well short of this [500t] ceiling, to just over 357 tonnes. With banks worried by the outlook for the financial sector, sales could be even lower in the final year of the pact. "Given the damage done to a lot of other paper assets that were formerly considered secure, there will be greater risk aversion among central banks," said Philip Klapwijk, executive chairman of metals consultancy GFMS. "This will only boost gold's status within central bank reserves." A key reason why central banks want to hold onto gold is the instability of their most common reserve asset, the dollar. The U.S. currency slipped to record lows against the euro earlier this year, and although it has since taken on a firmer tone, doubts remain over its outlook. "Gold assets have moved up in value in euro terms whereas dollar assets have fallen considerably," Klapwijk said. "There has been a reassessment of gold given developments in last few years. ... There are more and more questions being placed against the U.S. dollar and its role at center of existing international financial system."

Gold, manipulation and domination (Asia Times 10/2)
All over the world, trade in gold had been the favored device for evading national foreign exchange controls from the end of World War II to 1971. In 1946, the Bretton Woods regime adopted in 1944 became operational, thereby forbidding the importation of gold for private speculative purposes...

Wealthy investor hoard bullion (FT 9/30)
Investors in gold are demanding "unprecedented" amounts of bullion bars and coins and moving them into their own vaults as fears about the health of the global financial system deepen. Industry executives and bankers at the London Bullion Market Association annual meeting said the extent of the move into physical gold was unseen and driven by the very rich. Industry executives said gold refineries and government mints were working at full throttle to keep up with investor demand, but acknowledged they were suffering from shortages, particularly on coins.

Gold and silver dealer reports an 'unprecedented' shortage of metals (Post 9/28)
...the supply of gold and silver available for small retail investors suffered a dramatic deterioration within hours on Friday, as wholesalers reported that government mints and refiners, the primary suppliers of the metals, had stopped offering new supplies. ''It's absolutely unprecedented," said O'Byrne, who said the shortages were likely to drive up the costs of gold and silver in the secondary market.

European central banks cut sales of gold (FT 9/28)
Institutions bound by the Central Bank Gold Agreement -- the banks of the eurozone plus Sweden and Switzerland -- sold about 343 tonnes of gold in the year that expired on Friday, the lowest amount since the first CBGA was signed in 1999. This compares with 475.8 tonnes in the year to the end of September 2007. Under the agreement, the banks are allowed to sell up to 500 tonnes of gold each year.

US Mint suspends Buffalo gold coins after depletion (Reuters 9/25)
gold buffalo"Demand has exceeded supply for American Buffalo 24-karat gold one-ounce bullion coins, and our inventories have been depleted. We are, therefore, temporarily suspending sales of these coins," the Mint said in a memorandum to authorized American Buffalo dealers. In mid-August, a shortage of American Eagle one-ounce gold coins due to "unprecedented" demand had also forced the U.S. Mint to temporarily suspend sales of the popular coins. The Mint said Thursday it would continue to supply the American Eagle 22-karat gold one-ounce and American Eagle silver bullion coins on an allocation basis to coin dealers.

USAGOLD VideoBrief [video] -- Sept. 16th, 2008
The Financial Crisis & Gold
featuring -- P. Grant, J. Kosares & G. Cooper

A USAGOLD Market Update
Six Situations to Monitor for the Rest of 2008

A focus on what matters most to investors and gold owners

USAGOLD VideoBrief [video] -- Sept. 5th, 2008
Is $100 oil relatively cheap or expensive?
Int'l capital flows -- toward yield or safety?
featuring -- Pete Grant, Jonathan Kosares

Gold bull market set to resume on strong fundamentals (MktOracle 8/29)
As the precious metals summer doldrums come to a close, we need to assess the damage from another season of gold hatred and disdain. Like déjà vu for veteran gold investors, the mainstream financial media took advantage of gold's seasonal weakness to proclaim the death of the Ancient Metal of Kings. Gold's $190 plunge from mid-July to mid-August saw it knife through a number of key support levels. This caused blood to flow in the streets even for the gold faithful. Doldrums is an understatement for the rotten sentiment witnessed in the latter half of this summer...

Swiss clean out S Africa Krugerrand coin maker (Evening Standard 8/29)
The sole maker of South African Krugerrands today ran out of the iconic bullion coin after an 'unusually large' order from a buyer in Switzerland. An unnamed Swiss buyer ordered a massive 5000 ounces, cleaning out the Rand Refinery's gold stocks. Precious metal bullion is attracting investors as a haven against a sliding dollar and global conflict and has led to shortages. The US Mint has suspended sales of one-ounce American eagle gold coins, and Johnson Matthey has stopped taking orders for 100-ounce silver bars at its Salt Lake City refinery. Heraeus holding has a delivery waiting list of as long as two weeks for orders of gold bars in Europe.

A DAILY ARCHIVE:
Pete Grant reports from CHINA - August 2008

Rocket School of Economics -- Through the Looking Glass?
(Aug 23) -- The financial markets appear to be imploding and we hear that rescue plans and bail outs are the order of the day. But do we know exactly what is the problem? Now the housing debacle needs to be recognized for what it is, a banking debacle having its origins from within the fiat monetary system itself...

USAGOLD RoundTable Discussion [video] -- Aug. 12th, 2008
Gold's price decline; The dollar's rally; What's next?
featuring -- P. Grant, J. Kosares & G. Cooper

Hundreds of U.S. banks will fail, warns leading economist (Reuters 8/5)
The United States is in the second inning of a recession that will last for at least 18 months and help kill off hundreds of banks, influential economist and New York University Professor Nouriel Roubini told Barron's this week. Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well, Mr. Roubini said -- at least US$1-trillion and more likely US$2-trillion. As for the banks that will go bankrupt, they will include community banks that finance homes, stores, downtown areas, commercial real estate and other mainstays of U.S. towns and cities.

Gold and the IMF (Business Line 8/5)
There is already a school of thought that the Reserve Bank of India should deploy a significant part of its reserves in gold as against relying purely on paper securities such as US treasury bonds. In the event of the IMF selling part of its gold holdings in the near future, India should grab such a rare opportunity to offer to buy part of the gold held by it on behalf of the IMF.

Rocket School of Economics -- Compounding to the Downside!
(Aug 2) -- We are currently witnessing the unraveling of the fiat monetary system, the one that began with the formation of the Federal Reserve in 1913 and was enhanced with President Roosevelt's confiscation of the capital of the American people in 1933, when gold ownership was made illegal. President Nixon's closing of the gold window in 1971 further unleashed the fiat system from any remaining constraints...

Sovereign funds cut exposure to weak dollar (FT 7/16)
Some of the world's largest sovereign wealth funds are seeking to scale back their exposure to the US dollar in a sign of global concern about the currency. One big sovereign fund in the Gulf has cut its dollar-denominated holdings from more than 80 per cent a year ago to less than 60 per cent, while China's State Administration of Foreign Exchange (SAFE) has been looking to strike deals with private equity firms in Europe as a part of a strategy to reduce its dollar holdings. Behind the scenes, fund officials are questioning the credibility of the Federal Reserve and US Treasury in defending the dollar and maintaining financial stability.

Citigroup says long-term gold price could double or even triple (mineweb 6/30)
Citigroup forecasts that "gold is likely to regain $1,000/oz by end-08 and to work higher through 2009-2010." In their recent Gold Commodity Update, Citigroup metals analysts John H. Hill and Graham Wark also predicted that "longer term, we believe that gold is capable of doubling or tripling from current levels." The analysts said "secular and seasonal factors favor gold" during the second half of this year. "We remain positive on gold, based on macro and supply/demand factors. The forces that have propelled gold for 5 years are firmly in place." Citigroup's analysis also revealed that "gold shares have stalled as investors have flocked to physical bullion [...] The move in gold has been perhaps too sharp for the equities," the analysts said. "During a financial crisis, safe haven demand favors the simplicity of bullion."

The shrinking influence of the US Federal Reserve (Spiegel 6/26)
Officials with the International Monetary Fund (IMF) have informed Bernanke about a plan that would have been unheard-of in the past: a general examination of the US financial system. Under its bylaws, the IMF is charged with the supervision of the international monetary system. Roughly two-thirds of IMF members -- but never the United States -- have already endured this painful procedure. For seven years, US President George W. Bush refused to allow the IMF to conduct its assessment. Even now, he has only given the IMF board his consent under one important condition. The review can begin in Bush's last year in office, but it may not be completed until he has left the White House. [T]he final report on the risks of the US financial system is released in 2010 -- and it is likely to cause a stir internationally...

Vietnam suspends gold imports (FT 6/23)
Vietnam's communist authorities have temporarily suspended all gold imports in a bid to tackle the country's spiralling trade deficit and help support the depreciating local currency, the dong. With Vietnamese investors rushing into gold as a hedge against skyrocketing inflation, Hanoi ­ which sets an annual quota for gold imports ­ has withdrawn licences for further imports, traders said on Monday. The decision comes as record imports of gold bars have made Vietnam the world's biggest market for gold bullion, surpassing India and China.

Gold may rise to $5,000 on inflation (Blmbrg 6/19)
"You could easily see for the next several years that prices rise not to $1,000 an ounce, but prices rise to
$5,000 an ounce or beyond as inflation psychology becomes more and more embedded and people become desperate to have a source of value," said Christopher Wyke, London-based emerging market debt and commodities product manager at Schroder, which oversees about $10 billion of commodity assets. Investors are turning to gold for protection as two-thirds of the world's population cope with inflation rates that are climbing to more than 10 percent...

RBS issues global stock and credit crash alert (Telegraph 6/18)
The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks. "A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist. A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets. Such a slide on world bourses would amount to one of the worst bear markets over the last century.

Inflation creation... and the gold standard (Barrons 6/16)
The world knows there are a lot more dollars sloshing around these days. Cheap credit, by which the Fed induces banks to create money, did it. The Fed put the price of money at 2% per year and handed out all that anyone needed to fund houses, vacations, boats, stocks, restaurant meals and, above all, goods and services from abroad. World inflation ebbs and flows with U.S. monetary policy. We emit dollars to pay for the things we import. Foreign producers turn them in to their central banks for local currency. ...The fundamental problem, however, is not paper money. It's not the long absence of a gold standard. Here and everywhere, the inflation problem is an absence of moral commitment to maintaining the value of money. The American dollar or any other currency -- even the malignant Zimbabwean dollar, which is losing half its value every day -- can be as good as gold if the monetary authorities make that choice, or as valueless as waste paper if they decide to steal from the people. ...Fortunately, we cannot really leave the gold standard. From minute to minute, we know exactly how many dollars, pounds, yen, rubles or dong the most active traders will exchange for an ounce of gold, or for specific quantities of oil, corn, wheat, rice and a couple of dozen other actively traded commodities. We do not need a formal gold standard to discover that the monetary authorities have erred on the side of inflation; the markets do that constantly.

Senator to unveil plan to limit funds' commodities purchases (MktWtch 6/13)
Sen. Joe Lieberman, a Connecticut independent, plans to unveil a legislative proposal Wednesday that would prohibit institutional investors from making further investments in commodities once they exceed a certain limit. The bill will be one of three proposals aimed to curb financial speculation in commodities markets. The other two include limiting the size of the stake any one investor can have in the market.

China 'Not Smart' to Invest in U.S. Bonds (Blmbrg 6/13)
China's government, which invests up to a third of its $1.68 trillion in currency reserves in Treasuries, is "not smart" to invest in U.S. debt and should seek higher returns, a former legislator said. "I don't think it's a smart move to invest in U.S. bonds," said Cheng Siwei, former vice chairman of the National People's Congress, China's legislature, at a Beijing conference.

China gold fund manager sees potential for rally (Reuters 6/13)
After doubling his money in the gold market in just six months, Wang Weilie, one of China's leading gold fund managers, believes another surge in gold prices is likely in the next few years as global inflation escalates and the dollar sags. He also stressed the need for a strategic approach to gold investing. "We Chinese should be 'gold dragons', not 'gold bugs' who were bullish on gold but suffered losses in past decades," he said. "We have reason to believe that gold will hit $2,000 in coming years after it broke the $1,000 level," he said.

Inflation fears may push gold back to $1,000 (Reuters 6/13)
"There's a good chance that it may go back above $1,000 in the short- to medium-term," said Richard Davis, a London-based fund manager at BlackRock. John Hathaway, senior managing director of Tocqueville Asset Management, said gold serves as an alternative financial asset particularly when markets worry about banking issues or currencies. "I think we will see gold going above those record high levels again and that will probably be this year."

Nobel laureate Mundell predicts dollar crisis (Reuters 6/4)
A major dollar crisis could come within five years and China is discussing reforms to the global monetary system ... similar to the one which operated under the Bretton Woods agreement from the end of Second World War until the 1970s, says Nobel Prize-winning economist Robert Mundell.

Gold -- Some bullish thoughts (Murenbeeld 6/4)
My point here is that we are in a major uptrend in the gold price. But within major uptrend prices often go sideways and also go down. I'm going to show you a chart later that has to do with geopolitical impacts on the gold price, and you'll see that oftentimes you get bumps in a downtrend or bumps in an uptrend. And my point really is that we had a bump in the gold price that is directly related to the credit market crisis. ... From a longer-term perspective, we're quite bullish.

Dollar a victim of globalization -- gold bars and a strong lock might be the best answer (MW 6/2)
CNBC's Larry Kudlow refers to the U.S. currency lately as the American peso. With the way the U.S. Federal Reserve failed to defend the dollar, calling it the American peso may just be an insult to the peso...The further you get from actually possessing the metal itself, the further you get from the true value of gold. As gold regains its footing and contemplates the next run above $1000, I believe to $1400 within six to nine months, if not far sooner, you can always get a bigger safe deposit box and have peace of mind to boot.

Gold price to rise long term says China CB official (Reuters 5/30)
china gold demandInternational gold prices are likely to rise further in the long term due to dollar depreciation, rising demand and global political and economic uncertainty, a researcher at China's cental bank said. Rising prices would actually be likely to encourage buying in developing countries, where the metal is considered an important store of value.

Gold seen as safest investment option (FT 5/29)
As with any market, prices will go up and down, but the price of gold has consistently increased over the longer period, so is still considered by most to be a sound investment. The survey results reflect the growing global appetite for gold and other precious metals.

Rocket School of Economics -- Back to Basics Again!
(May 26) -- People today are not taught to be productive, nor do they understand and appreciate a quality product. Instead, people are taught to consume, to obtain "things" that are not supportive of productivity, but instead support and maintain the habit of consumption. At the core of the issue of over consumption is the banking system...

The case for $1,300 gold (goldmau 5/23)
There are those who predict a rebound of the dollar index and a protracted USD 800/oz gold price or even lower. They just don't get the message. Gold is an international market. Physical gold demand is mostly from Asia and as long as Asian currencies keep strengthening, the USD-denominated gold price will keep going up, regardless of what happens to the US dollar index.

Gilded Opinion -- Financial speculation in commodity Markets
Senate testimony by Dr. Benn Steil. Also, Is the Dollar Doomed?
Many have recognized this, and have therefore asserted that we are experiencing a "commodities bubble". This conclusion, however, presumes that the US dollar, which the world uses to price and trade commodities, is a fixed unit of measurement, like an inch or an ounce. Yet it is not, and, worryingly, it has become less so in recent years. Whereas the prices of oil and wheat measured in dollars have soared over the course of this decade, they have been remarkably stable when measured in terms of gold. It is therefore reasonable to conclude not that we are a experiencing a commodities bubble, but rather the end of what might usefully be termed a "currency bubble".

Time to buy gold (SeekingAlpha 5/19)
It's amazing how many people out there still do not understand the basic bullish fundamentals of the gold market. Even a large number of analysts are providing their clients with erroneous advice, by telling them to 'wait for a bottom.' Many of these clients could well be facing the problem of looking back ruefully at the bottom, long after it is in place.

JPMorgan to start physical oil trade, eyes $200 oil (Reuters 5/15)
JPMorgan Chase & Co will begin trading physical oil by year-end, increasing its exposure in a market that could rise to $200 a barrel, the bank's global head of commodities said on Wednesday. JPMorgan will join a growing list of investment banks from Goldman Sachs to Barclays Capital seeking to boost profits on their big derivatives trading desks by gaining a foothold in physical markets. "Urbanizing populations in markets like India and China are driving the appreciation in commodity prices." In addition to oil, Masters expected prices of metals and grains to remain high... "I think high commodity prices are staying for some time but you could also see corrections and you will certainly see high volatility. The current inflated prices are a reflection of fundamental factors, not just speculation."

Life after the oil crash (LATOC Misc.)
Almost daily, new evidence is emerging that progress can no longer be taken for granted, that a new Dark Age is lying in wait for ourselves and our children . . . growth may be coming to an end. Since our entire financial order from interest rates, pension funds, insurance, to  stock markets  is predicated on growth, the social and economic consequences may be cataclysmic. It is becoming evident that the financial and investment community begins to accept the reality of Peak Oil, which ends the first half of the age of oil. They accept that banks created capital during this epoch by lending more than they had on deposit, being confident that tomorrow's expansion, fuelled by cheap oil-based energy, was adequate collateral for today's debt. The decline of oil, the principal driver of economic growth, undermines the validity of that collateral which in turn erodes the valuation of most entities quoted on Stock Exchanges.

Why do investors swap gold futures for metal (CommodityOnline 5/12)
Unallocated gold is the Gold Market's major concession to financial trickery (a.k.a. "innovation"). Merely a book-entry on a credit ledger, it works much the same as a bank account ­ only without deposit insurance ­ representing a loan from the buyer to the brokerage. That leaves the investor very much "on risk" with regards to the brokerage's financial survival. And it's been estimated to us here at BullionVault that well over 95% of the world's daily Gold Dealing is still done on an "unallocated" basis.

Persisting with gold (LiveMint 5/12)
Expansionary monetary policy pursued at every hint of crisis without allowing forces of creative destruction to work has brought the ghost of inflation back to live among us permanently. Equally important is America's systematic abuse of trust and confidence placed in the US dollar as a global reserve currency by other nations. Yet, many countries -- for reasons not fully clear -- continue to finance America's profligacy and borrowing exclusively through public funds. However, it would be extremely dangerous to assume that this would continue or end without massive disruption to the global financial order.

What if we'd been on the Gold Standard (SeekingAlpha 5/9)
Gold-standard advocates think in terms of an institution whose continued operation, once adopted, would never again be doubted. But the problem is, if you can go on a gold standard, then you can go off a gold standard. And uncertainty about if and when the latter will occur can make the system itself a very destabilizing force.

Gold's downturn to be limited - says BlackRock (ThomsonFin 5/2)
Gold's march higher may have stalled in recent weeks but still-strong demand, limited supply and the possibility of further jitters in the economy mean the longer term upward trend is far from over, BlackRock's head of resources Graham Birch said. "What drove gold above $1,000 was an extreme amount of fear that the financial world was in great peril and it was hours away from a cataclysmic collapse," said Birch. U.S. central bank intervention and moves by major banks to repair some of the damage inflicted by the credit crunch have eased those fears, but investor interest in commodities as alternative assets remains strong.

Crisis in food prices threatens worldwide starvation (GlobalRsrch 4/24)
Rising worldwide food prices are resulting in shortages, riots and protests, promises by governments to expand food aid, expressions of concern by international bodies like the World Bank, and stress on household budgets even in developed countries like the U.S.

All that glitters in tough times is probably gold (stuff.nz 4/22)
Conditions still favour gold. Gold prices rose in recent weeks as record oil prices and continued weakness in the dollar encouraged investors to buy into bullion. With crude prices touching a record, gold's role as a hedge against rising inflation has seen the precious metal move higher.

Chinese increasingly buy gold as wages rise (AFP 4/21)
"The stock market is not as good as before and people do not feel safe parking all their savings in banks." says Lin Yuhui, analyst at China International Futures. "So they tend to buy gold as a means to hedge inflationary risks."

Citibank to reduce market-making ops in gold (MktWtch 4/21)
"We continue to make aggressive markets in precious metals for our customers, and when it suits us we will also make markets for our competitors. We are no longer going to be part of the obligatory market-making scheme for our competitors," said a Citibank spokesman. Citibank said it stopped making the obligatory spot, forwards and options markets for other banks since late autumn. Citibank services the precious metals markets 24 hours a day from its London and Singapore offices. [Market makers are price makers and are obliged to display bid and offer prices. Most traders are so-called price takers - they get to pick and choose when to get in and get out of the market.]

India may soon fix gold prices for global market (IANS 4/21)
India, one of the leading gold consumers in the world, may soon manage to move from being a mere "price taker" to a "price maker" in the world of royal metal. Tired of the wild fluctuations of gold price in the London Bullion Market and its impact on Indian market, Bombay Bullion Association (BBA), in collaboration with Bombay Stock Exchange (BSE), National Multi-Commodity Exchange (NMCE), IT People (India) Ltd and Reliance Money Ltd, has decided to set up its own trading platform for gold. "We want to launch it in a month's time."

US subprime bottom ... and gold as new money (goldmau 4/18)
Factor in hundreds of other mortgage brokers and banks that have been erased from the market outright, you can reason the general equity market has held up remarkably very well with just a 10% drop in S&P500. Why is it that US equities are seemingly un-affected by subprime? (I certainly would not be bearish of the equity market as it is measured in dollars.) The cost of dollars is next to free at 2%. Everything is relative, when something is measured in terms of 'nothing', it takes a lot of that 'nothing' to make up something. When S&P 500 is measured in gold, you can see S&P 500 is barely half of what it was a year ago. Now that we are near the bottom of interest rates, I expect all the hoarded money to spill out looking for a new home as it simply does not pay to park money earning 2% with real inflation running at double digit. Fundamentally gold is under priced today to just about all asset classes. Studies suggest a gold price between $1,500 to $2,000/oz based on today's oil and copper price...

The appeal of gold (Fortune 4/17)
The hard-core survivalists, however, share some overlap with the moderates in that the value of the dollar is a perpetual concern. The moderates would point out that while the dollar is unlikely to fall into total worthlessness, it's getting a bit more worthless day by day -- a slow but inevitable crumbling of social infrastructure and economic systems.

S.Africa gold output falls 28% (Reuters 4/10)
South African gold output fell 28.2 percent year-on-year in February in volume terms, while total minerals production fell by 7.3 percent, official data showed.

Lehman bailed out money market & cash funds (Blmbrg 4/10)
Managers of money market funds have spent more than $4 billion to prop up money funds that were supposed to have investments that were the safest outside of bank deposits and government debt.

IMF to shed staff and sell gold (FT 4/8)
IMFThe board voted yesterday to cut 15% of its staff and sell about $11bn in gold reserves in one of the biggest shake-ups of its funding since it was founded. The IMF plan to cut 380 jobs and sell 403.3 tonnes of gold, about an eighth of its reserves, still must be approved by the US Congress, which is unlikely to happen until after the presidential elections this year. The drying up of loans [to nations in financial crisis, which was its main source of income,] had set the organisation up for a $400m funding shortfall by 2010.
[According to a related article by Reuters: An IMF official said, "We would either sell to the market or, if we can, sell it to a central bank" at market prices.]

Markets still 'impaired', Fed urges action (Blmbrg 4/3)
New York Federal Reserve Bank President Timothy Geithner said capital markets are still "substantially impaired" and policy makers and financial industry leaders must "act forcefully" to stem the crisis. "What we were observing in U.S. and global financial markets was similar to the classic pattern in financial crises." The current financial crisis is the worst since the Great Depression, billionaire George Soros said in an interview yesterday. "This will probably not prove to be the final bottom" in financial markets, he said.

Bernanke defends Bear Stearns rescue (AP 4/3)
financial crisisIn his testimony Wednesday, Bernanke said the Fed and other government agencies were informed on March 13 that without help Bear Stearns would have to file for bankruptcy the next day. He said that "the damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain." ... "We did what we did because we felt it was necessary to preserve the integrity and viability of the American financial system, which in turn is critical for the health of the economy," Bernanke said.

China's great leap into bullion investment (WSJ 4/2)
...new ways to invest in gold are rapidly popping up in developing countries. It's transforming the market for one of mankind's most venerable ways to sock away wealth. The door is opening to a new class of investors who previously wouldn't have had access to gold futures and other tools. Their rush to invest has helped fuel soaring prices. Only in 2002 did investors in China get the ability to trade physical gold on the Shanghai Gold Exchange, though individuals couldn't invest in actual bullion until 2005.

Analysts See Gold Decline As Profit-Taking Correction (DJ 4/1)
"You've got to bear in mind the spectacular nature of the rally" prior to the pullback the last two weeks...

Gilded Opinion - Rocket School of Economics
The Broken Watch - Part 1

This is a country in debt up to its neck. Its citizens have no savings and the means for maintaining the debt game have been exhausted. The idea of using ones home equity -- which was the result of inflating house prices -- as a form of savings is over. Those who have aided and abetted this insidious scheme are now finding this out for themselves. The banking system has no fallback position.
Also... The Broken Watch - Part 2

Central Banks Case Study: Switzerland's gold sales (Mineweb 3/26)
The SNB has stressed that gold remains an important comment of the balance sheet and the implication is that this current programme is likely to be the last for the time being.

BlackRock says gold record high may be challenged (Reuters 3/26)
Investment manager BlackRock expects tight gold supply and a gradual rising trend in the price which could lift the metal to new highs.

Next Stop: $2000 gold (SeekingAlpha 3/24)
...the Fed is exercising its right to print money with renewed abandon, comforted by the short term validation of its strategy afforded by the Dow's responsive surge. ... The general feeling on Wall Street is one of suppressed awe for the utter absence of hesitation the Fed chairman has demonstrated in the face of the crisis. His creativity and resourcefulness during this time is admirable. The next 10 to 12 weeks are going to be no less chaotic then we've those we've been enjoying in 2008. This is what Ben Bernanke is facing next, and the only real weapon left in the arsenal is more cash, which is okay for the short term, but the dollar is becoming more and more worthless with every billion dollar bailout.

CHINA: Investors keen despite gold price dip (CCTV 3/24)
Big swings in global prices for gold and a sluggish stock market have triggered a rush to invest in the yellow metal.

Faltering market conditions could push gold to $1,800/oz within year (TF 3/17)
In the shadow of Sunday's "bailout" of Bear Stearns "conditions in the major financial markets have deteriorated further, which we believe increases the probability of a sharp upward spiral in the gold price," analyst Paradigm Capital Analyst Don MacLean said. He now believes there is a 40% to 50% chance that gold will reach $1,800/oz within a year, up from a previous estimate of a 25% chance back in January.

Gold hits $1,000 on weak dollar (AP 3/13)
Gold briefly pushed past the psychologically important $1,000 mark Thursday, as investors poured money into the metal to hedge against a tumbling dollar, soaring crude prices and a shaky U.S. economy.

Bundesbank likely to hold on to gold reserves (Reuters 3/11)
Germany's Bundesbank will probably hold on to the vast bulk of its gold reserves in the next year of the central bank gold agreement, beginning in September, central bank president Axel Weber said on Tuesday. The Bundesbank, which is the second-largest holder of gold behind the U.S. Federal Reserve, announced in October it would sell a maximum of 8 tonnes of gold to the German finance ministry to mint coins in the fourth year of the deal.

Demand high even as gold nears $1,000 (Reuters 3/7)
Gold's near vertical climb to historic highs approaching the key $1,000 mark shows no sign of abating as bullish forces such as a sinking dollar and record high oil are not seen fading anytime soon. "And, with the right confluence of economic and geopolitical developments, we could see gold spike to $1,500 or even $2,000 in the next few years."

When gold breaks $1,000, then what? (Reuters 3/6)
"...fundamentals drive the market more than price targets." Should the the price of gold burst through the $1,000-per-ounce barrier, which it nearly did on Wednesday, experts predict it could reach higher records and even double this year, "...$1,500-$2,000 gold in the next 12 months is definitely possible. ...The Euro is too expensive and the dollar is not attractive, so gold is looking like the place to go for investors."

Gold will plough through $1,000 (FT 3/4)
John Reade, precious metals analyst at UBS, expects gold to reach $1,025 an ounce in one month's time and $1,075 in three months ... believes that investors and asset managers are turning to the metal as a safe haven against financial market stress and fears of stagflation -- evident from the very large volumes of physical investment buying, together with some large-scale transactions.

Gold beats financial assets (Bloomberg 3/3)
Gold, silver, platinum and palladium may be the best-performing financial assets this year as inflation and slowing growth erode the value of the world's major currencies, bonds and stocks. Precious metals have risen at least twice as fast as the euro and yen in 2008 and returned six to 20 times as much as U.S. Treasuries. The Standard & Poor's 500 Index and all other major gauges of equities are down.

Gilded Opinion
Value of gold and dollar in the eye of the beholder

The markets can easily handle $3,000 - $5,000 oz. gold in the near term horizon with minimal disturbance. It is when gold rises too much over $5,000 too fast that we might start to worry about global inflation panic. My take is that over the next few years gold will establish a new equilibrium to fiat currencies, albeit at much higher level than today's $950/oz.

Gold's Glittering: investors making the metal precious (redOrbit 2/29)
"Wall Street has to start changing its opinion with the way gold prices are going up," said Michael Kosares, author of The ABCs of Gold Investing. "I think it is the ultimate insurance policy or defensive mechanism against currency depreciation," Kosares said. "I see gold as a long-term portfolio item that protects you from local currency depreciation. ... Put some gold away, and take it out as if it was money you were taking out of your savings account. As long as we're in a fiat money system, I feel gold needs to be a permanent aspect of the portfolio."

Quantum's Jim Rogers expects $3,500 gold (TimesOnline 2/28)
Rogers told 750 global fund managers that America is "completely out of control", there will be a 20-year bull market in commodities, prices will be in turmoil, and that the price of gold, which hit an all-time high of $964 an ounce yesterday, will continue its surge to as much as $3,500 an ounce. The dollar may have declined recently, he added, "but you ain't seen nothing yet".

IMF goldIMF gold sales -- a perspective (Mineweb 2/27)
It looks as though any sales by the IMF will be restricted to 400 tonnes used in a previous sale and repurchase agreement ­ and in any case would be made within the existing CBGA sales Agreement. "...we have emphasized that the sale should be undertaken in a very careful way in terms of their periodicity amounts and manner of sale such as not to disturb the market."

Why Bernanke's recession will last 'til 2011 (MrktWatch 2/25)
Forget paper money and IOUs. Commodities are the world's new "currency:" Hard stuff like oil, grains, metals, gold.

The ultimate sell signal for stocks (MrktWatch 2/25)
The resignation of America's unheeded and under-funded chief accountant and watchdog, along with the billion-dollar bullhorn he's been given, are the ultimate sell signals for America's stock investors. This is an once-in-a-lifetime opportunity, both for the foundation to work toward solutions and for you to invest accordingly as they progress. That means sell domestic stocks short as the crisis expands, invest in commodities and foreign-stock ETFs that take advantage of a weakened U.S. dollar and economy, and build your retirement reserves with open-minded investing. This is the time to review your entire portfolio and invest decisively.

America's economy risks mother of all meltdowns (M.Wolf 2/25)
Nouriel Roubini of New York University's Stern School of Business states that there is "a rising probability of a 'catastrophic' financial and economic outcome". The risks are high and the ability of the authorities to deal with them more limited than most people hope.

Junk-grade Fed? (NTSun 2/21)
The new Term Auction Facility's purpose is to lend to banks under stress in the sub-prime credit crisis. The banks front collateral against which the Fed advances money. "The rub," Grant's writes, "is the quality of the collateral." It quotes a Financial Times interview with one financial strategist, Christopher Wood, as saying that banks "are increasingly giving the Fed the garbage collateral nobody else wants." ...if the salvation of the Fed is all the gold it has in its basement, what does that tell us about the monetary system on which the rest of the world is relying?

Markets assess costs of monoline meltdown (FT 2/21)
An analyst at Barclays Capital likens current events to nothing less than the "demise of the shadow banking system" that has sprung up in recent years around the structured world. Policymakers pray that this chain reaction of financial implosions can still be contained without sending the economy into a tailspin... however, there are now rising fears that problems that have already unfolded in relation to mortgages could be replayed in the corporate debt world, with potentially painful implications for growth.

Citigroup forecasts gold at $1000 (Platts 2/13)
The latest Citigroup North America Mining & Precious Metals report: "We remain positive on gold, based on a mix of macro and supply-demand drivers; the forces that have propelled gold for the past five years are
in place, and intensifying," said the report. "Corrections are expected along the way, and buying on weakness is recommended, which seems to be the central lesson of the past five years. ... Coordinated Fed and central bank action to thaw credit markets and boost liquidity should be positive for hard assets and gold." Gold has been attracting new groups of powerful investors, institutional asset allocations to commodities, and Citi expects this trend to continue.

Depression risk might force U.S. to buy assets (Reuters 2/12)
Fear that a hobbled banking sector may set off another Great Depression could force the U.S. government and Federal Reserve to take the unprecedented step of buying a broad range of assets. That would be reminiscent of some steps the U.S. government took in the 1930s when the economy was mired in deflation and high unemployment. One turning point came when agricultural prices were restored to their pre-slump levels. Such measures were among the New Deal programs that President Franklin D. Roosevelt launched to bolster the economy.

IMFG7 approves IMF gold sales (Reuters 2/9)
The Group of Seven rich nations on Saturday approved the sale of gold by the International Monetary Fund from April as part of a broad reform of its budget... that resources should be raised by selling gold. "The IMF is rich, if it wants to be."

G7 can't stop freight train of unwinding risk (Reuters 2/7)
"Risk is being reassessed globally." Investors have become skittish about having risk in their portfolios as a credit crisis and fears of a U.S. recession have lopped off $5.3 trillion, or 10 percent, of value from global stock markets.

Rocket School of Economics --
The Financial Equivalent of Faulty Towers

by Professor von Braun, February 6th

Investors rush to gold... (Wall Street Journal 1/31)
...in places like India, where banks aren't always trusted and currencies can be unstable. Today, a different class entirely is powering gold's rise: mainstream investors and money managers who once shunned it. They hope adding gold to their portfolios will help soften the blows of inflation, possible recession, the sagging dollar and gyrating stock prices. What we have seen in the last few years is a fundamental shift in attitudes toward the gold markets by Western investors.

When governments print money, buy gold (The Business 1/18)
The price of gold tells us a lot about ourselves. It holds up a mirror to the way we are governed, our economy and its prospects. In that sense, the gold price's journey towards $1,000 is a resounding vote of no confidence in authority. It's the market flashing a red light. Currencies come and go, but gold has been a store of value for more than 5,000 years. Gold is rare, but, thanks to Gutenberg, paper money is not. Presented with an opportunity to churn out extra cash at little expense, it takes a special kind of government to resist. Few seem able to do so.

FINANCIAL TIMES

Gold price surges above $900
as investors seek refuges from dollar

"Prices could explode to multiples of these levels in the event of a full-blown U.S. recession."

Gold is the new global currency
In today's uncertain world, gold is back in fashion

Video interview of Javier Blas
Bullish on bullion

"Still the latest surge looks much less impressive if adjusted for inflation. In real terms bullion would need to be well above $2000 to match the price achieved in 1980."

Gold at $1,250 possible in 2008 (The Independent 1/13)
In 2007, a gold investor would have enjoyed a 32 per cent gain on top of the 20 per cent-plus increases seen for most of the previous five years. So what does this year have in store? The gold chart up to mid-2007 was "constructive" before going exponential. The-BullionDesk forecasts an average price of $976 in 2008 with a possible high of $1,250.

Turkish appetite for gold unfazed by record prices (Reuters 1/14)
People want a guarantee for their savings because of the problems in the world economy and they have found this guarantee in gold now. ... Given the problems in the world economy I believe gold's appeal will continue, and since the habit of always investing in the dollar has been broken, and consumers have started to think of it [gold] as an indispensable part of their portfolio, it is not that price-sensitive anymore.

Gold's Next Hurdle Of $1,000 Puts Inflation Risks In Sharp Focus (DJ 1/14)
Global inflation, stock volatility, the upcoming Chinese New Year holiday - you name it, there's a reason out there for gold's rapid rise and the likelihood it will hit a new eyeball-popping level of $1,000 an ounce.

BlackRock says gold a better 2008 bet than oil (Reuters 1/14)
Gold is likely to prove a better bet than oil in 2008 given the prospect of falling U.S. interest rates and further U.S. dollar weakness, the head of asset allocation at BlackRock Inc said.

Bully for bullion (FT 1/11)
Fundamental changes in the gold market have taken hold that suggest higher prices might last a lot longer. The dynamics have begun to change "inexorably towards a diminishing supply of gold and increasing investment demand, which will ultimately impact on the gold price". Among the factors that experts cite are rising global inflation, concerns about the health of the financial system - and the weakness of the dollar, which could be aggravated by further Federal Reserve interest rate cuts to cushion the American economy against the impact of the credit squeeze.

China launches gold futures (CSC 1/10)
The official debut of China's gold futures ignited the new frenzy of speculation that may stir up international gold price. By 9 o'clock on January 9th, gold futures contracts for June were finally offered in the Shanghai Futures Exchange (SFE). Minutes after their official debut, 7 contracts purchased climbed to the daily 10 percent limit before dropping back down a bit. Taking the dollar-yuan exchange rate of 8th of January at 7.2791, the benchmark price of Chinese gold futures would be $897.28 per ounce, with an upper limit of $987.02. This benchmark price was the highest price in the international market. By contrast, on the same day, the price of gold in London reached $876.8 and COMEX gold futures reached $892.

Gold breaks 28-year record high, oil hits $100 (AFP 1/2)
Unrest in Pakistan, a faltering dollar and surging oil futures sent the price of gold soaring to a record high on Wednesday, beating its previous highest level set 28 years ago. The precious metal rose to $859.20 an ounce, smashing its peak of $850 reached on January 21, 1980. ...The price of crude hit 100 dollars per barrel in New York for the first time in history...

Older (2007) Gold News, Archives . . .

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