Apr 13 2006
The spot price of gold surged to its highest since December 1980 on Tuesday, April 11, to trade at US$604.00 a troy ounce. Analysts said the latest surge came on the heels of increased fund investment into gold and other commodities, primarily as a hedge against inflation.
James DiGeorgia, editor of Gold and Energy Advisor newsletter, which provides expertise in precious metals and energy markets, says that $600 gold is just the beginning.
"While we first recommended gold in our newsletter in November 2004, when gold was at $447 an ounce, I wrote my best-selling book, 'The New Bull Market in Gold: $1000 Gold and the Many Ways to Profit from It,' back in 2003 when gold was at $335," said DiGeorgia. "And the same forces that have pushed gold up to its current levels will continue to keep gold moving upward. While there may be corrections along the way, I think we'll be seeing $1000 gold fairly shortly."
Those forces, according to DiGeorgia, include the fact that the supply of gold is falling while global demand is accelerating; the weakness of the U.S. dollar; the perception of an overvalued stock exchange; the slowing of the real estate bubble; and, last but certainly not least, the most recent story about instability in the Middle East -- the U.S.'s targeting of Iran. The U.S. is weighing air strikes to destroy Iran's nuclear facilities and bring down President Ahmadinejad's government, according to an article in this week's New Yorker magazine. The Washington Post reported April 9 that the U.S. is studying military options against Iran as part of a strategy to pressure Iran to back off its nuclear development program. "In the face of uncertainty -- and that includes not only stock market insecurity but also geopolitical instability, such as U.S. threatening Iran, Chavez's reign of terror in Venezuela and others -- people will flee to safety, to gold," explained DiGeorgia. "Those people include not only individual investors, but central banks as well. Foreign countries are no longer buying dollars as they have in recent years, but are reinvesting and diversifying their wealth in gold."
Russia, Argentina, and South Africa have all announced their intention to purchase considerably greater amounts of gold, while many Middle East countries seem to have already started their own gold-buying programs.
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