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Jun 10, 2009

Stockhouse Gold and Silver Supplement

Stockhouse Gold and Silver Supplement
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Gold Seems Ready To Surprise The World Of International Finance

Posted: 10 Jun 2009 11:10 AM PDT


The recent development of the gold price warrants more attention than usual. Quite a few of the gold watchers had turned negative with their predictions, using the old familiar reasons like that gold has lost its historical function as a money standard, that there is no shortage of gold in sight in the next few years and that there would be no reasons to expect an increase in the demand for gold. In the meantime, gold has just gone its own way and edged up to above the US$950 per ounce level.

In the last few weeks, I have seen some interesting developments here. First of all, the official acknowledgement that the Chinese government has begun to accumulate gold, a very significant step. If only they would put a small percentage of their foreign currency (read: US dollars) reserves into the yellow metal with which they have ages of history…….. Then, the obvious elasticity of the international demand for gold which shows that the declining demand from the Middle East and India is easily replaced by the demand from other sources. And not to forget the growing awareness of gold by the public as a better way to have money than money itself. I heard that several very well-paid creative celebrities now want part of their rewards being paid in gold…. And how about the announcement that in Germany, ATM's will be installed where the people can buy their wafers of gold directly from the wall….? At least you could call that a remarkable initiative……! I have said it before and I am saying it now again: gold seems ready to surprise the world of international finance………

I wrote the above words a few weeks ago in the May issue of "MINING IN AFRICA" when gold was at US$ 956.50. At the time I write this, gold has been edging up towards the still magical level of US$ 1,000 per ounce. As before, it came very close to breaking it but it again retreated due to all kind of "reasons". As you can read further in this issue, there are no real reasons. What we are dealing with are only short-term reactions from those who think of gold only as a replacement for other type of investments in times of crises. It is just crazy that gold is down just because the dollar has a day of a hick-up. Reading the daily comments on the gold price makes me often think of one of the best lessons I took when I was a young analyst. I heard the big boss of one of my country's largest pension funds say when he was asked what he thought about the interest rates: "I only talk about interest rates when I am very drunk, there is nothing sensible to say about it when you are sober….". Really, it is amazing what people who have some of the best possible and most prestigious jobs in the world's financial communities, sometimes say about gold, they are so prejudiced that they seem to forget that they got their brains to be able to think. I would like to add one of my one-liners: "Those who have no doubts, have nothing to think about".

No matter how you look at it, gold is in a highly interesting phase. It certainly is not in a phase of not being noticed. Ignoring it can prove to be a very costly affair. Understanding it is not easy, not understanding it is common. But gold is back on the map and likely to be here for a long time. For many, gold may not be an investment but they should look at it as an insurance. Those investors should not question to buy shares or gold, they should buy shares ànd gold. And when the investment demand for gold will rise, there will be that real shortage of the yellow metal. The shortage, or rather the lack of it, that the negative minds on gold always use to joke about the positive minds on gold. Isn't there a saying "who laughs last, laughs best"? Anyway, gold is back and I am glad GOLDVIEW is back too!

FT.Com:"Ten US banks to repay Tarp funds"

Ten financial groups including JPMorgan Chase and Goldman Sachs were allowed to repay a combined $68bn to the US Treasury in a move that marks a turning point in the economic crisis but formalises the divide between healthy and fragile banks

Gata Dispatches: "SMART MONEY magazine notes falsification of U.S. economic data "

Smart Money magazine notes falsification of U.S. economic data
Submitted by cpowell on 08:39PM ET Tuesday, June 9, 2009. Section: Daily Dispatches 11:35p ET Tuesday, June 9, 2009Dear Friend of GATA and Gold:Smart Money magazine has published a profile of John Williams, proprietor of the Shadow Government Statistics Internet site, who long has documented how the U.S. government has been falsifying economic statistics. The profile is headlined "True or False: U.S. Government Statistics Lie," and you can find it at the Smart Money site here: POWELL, Secretary/TreasurerGold Anti-Trust Action Committee Inc.
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