Gold prices 'will soar to new high'

Gulf Daily News ^ | December 16, 2005 | BDN staff

[DebtAndDelusion]

LONDON: Heavy demand for gold from Russia, China, India, the Middle East and possibly the United States is likely to push the price up to a record high of $650 an ounce by the end of 2006.

In the United States, where demand for gold is about half that of Europe, concern about the impact of the changeover at the millennium boosted gold demand in 1999, and fear could at some time be a factor again, Frank Holmes, chief executive of US Global Investors, said this week.

"If fear takes hold the price of gold could jump faster than people are expecting," he said.

Historically the highest price for spot gold was seen in 1980 at $850 an ounce and recently Japanese demand has pushed prices up over $540 an ounce, a rise of nearly 24 percent so far this year.

Most of the demand has come from fund managers looking to diversify their portfolios into precious metals which have little or no correlation to stocks and bonds and central banks swapping dollar reserves for gold. Emerging market consumers are also buying more gold jewellery.

"Emerging markets are driving up the price of gold," Holmes said.

Holmes's fund invests in gold miners. It has around $1 billion under management and in the 12 months to September it returned nearly 20pc.

"The supply coming out of gold mines has been falling for the past couple of years and will continue to fall to the end of the decade. The birthing process to bring new supply on stream can take 10 to 15 years."

The prospect of some central banks raising the proportion of gold they hold in their reserves is also on the agenda and adding to the atmosphere of gold fever in the market.

Last month Russian President Vladimir Putin called on the central bank to gradually raise gold reserves. Russia currently holds around 386 tonnes or 12.4 million troy ounces of gold.

"That triggered a rise above $500 an ounce," Holmes said.

"Prior to that there was China, which we know is aiming to turn 2.4pc of its foreign currency reserves into gold."

UK-based consultancy GFMS expects total world demand for gold to rise 7pc this year to 3,383 tonnes.

It sees the fastest pace of demand growth in India - 26pc to 881 tonnes in 2005 from 702 tonnes in 2004.

"The Middle East is also recycling some of its trillions of petrodollars into gold."

GFMS expects a six percent rise in gold demand to 679 tonnes compared with 641 tonnes in 2004 in the Middle East.

But Holmes thinks that a trigger for another lurch higher, towards $650 an ounce could be a sharp rise in demand from consumers in the United States.

"Americans become gold buyers out of fear. In 1999 everyone was worried that at the turn of the millennium everything would fall out of the sky. Americans bought 2 million ounces of gold eagle (coins) that year," he said. US demand for gold is likely to rise just 1pc this year to 251 tonnes and European demand to fall 6pc to 533 tonnes, according to GFMS.

[DebtAndDelusion]

Thank goodness those darn Asians and Islamics have stopped buying all the gold for a few weeks. I don't doubt gold will keep going up as long as the federal government keeps spending money they don't have and the Federal Reserve keeps inflating the money supply. The recent spike has woke a few folks up but most are still slumbering as they sleep off the house buying binge.

All these technical analysts with their charts and graphs want to talk about resistance and support -- doesn't mean a darn thing. Hopefully the price drops below 500 so gold can be cheap after the holidays when everybody in America is still hung over from the holiday shopping spree. But if it doesn't drop below 500 before the next move up then we are going to see that 650 next year for sure.

I'm not sure I'd want to be buying those American gold eagles though. They say 50 dollars on the front of them. Another thieving dog like Roosevelt might get elected and say Americans have to turn them in for 50 dollars of paper money. Krugerrands and Austrians might be better.

Gold is going to the moon.

HG

[RockinRight]

OK, all true, but I still wish I would have bought some gold about 5 years ago.

[lilylangtree]

Wonder what's going on behind the scenes. Remember Bunker (or was it Nelson) Hunt in the 70s tried to corner the market on silver. Gold went to $1000 or thereabout because of the manipulation behind the scenes. Suspect the same is going on.

[G.Mason]

"I'm not sure I'd want to be buying those American gold eagles though. They say 50 dollars on the front of them. Another thieving dog like Roosevelt might get elected and say Americans have to turn them in for 50 dollars of paper money. Krugerrands and Austrians might be better."

Since when is the melting point of gold an insurmountable temperature to reach?

Now who's going to the moon?

[Baby Driver]

This is nothing other than a thinly veiled attempt
to gain significant influence over large chunks
of the Gold Market. *That* is the goal. It is not
merely private investors wishing large trinkets.
This is about control of gold bar reserves.

[The_Republican]

NXG
BGO

Good Luck!

[coconutt2000]

No doubt in a couple of years, gold will soar. I am highly doubtful that gold will hit $650 at any time this year. I think it is far more likely to slide backward to about $430-$450 next summer.

[fzx12345]

Wasn't it George Soros who was responsible for much of the 1993 gold boom and bust?

[Baby Driver]

This is being done by governments.

[willyd]

When you see all the commercials on TV about how to buy gold, you should be wary. Those people would be buying gold if it was really going to $650 instead of spending millions in infomercials in an attempt to unload it all at today's prices. Those commercials weren't around a few years ago because those same people were busy buying gold for a few hundred dollars cheaper. One contrarian theory any way.

[BeHoldAPaleHorse]

I get spam from Swiss American talking about how gold will go to $2,500/oz any day now, and how I can profit from this by buying gold at $550/oz from Swiss American.

If it's really headed to $2,500/oz in the immediate future, and I owned a bunch of gold, I sure as hell wouldn't sell it at $550/oz.

So the odds are that this has been a pump, and what comes next is the dump.

[wideawake]

recently Japanese demand has pushed prices up over $540 an ounce

Spot price is now $502.

[jjm2111]

Gold alert!

[willyd]

They are probably just trying to free up some cash so they can make even more money by investing in the Iraqi Dinari...lol or llamas...

[wideawake]

Gold is going to the moon.

Sure it is. That's the infomercial sales pitch of the month.

[headsonpikes]

... I still wish I would have bought some gold about 5 years ago.

Bullion is unforgiving. ;^)

OTOH, among gold stocks, the junior developers have lagged the producers and also the large developers.

See if you can spot the bargains from this spreadsheet:

I hate to think how this will post. The last number in the stream of figures and info contained in each company's listing is the US$ Market Cap/oz of gold in the ground. The sector average is $36.79. Since the comparative value of gold in situ for producing miners is from $100-200, one can see the potential in these puppies. Sorry about the formatting - I sorted it out a little at the beginning and highlited the US$ MarketCap/oz of gold for the first few - anyone interested can figure it out.

GOLD IN SITU SPREADSHEET Figure 23: Gold In situ valuation spreadsheet

Sh o/s Price C$ Mkt. Cap Sum oz/co Mkt Cap/oz Mkt Cap/oz Company Sym M Dec 8/05 $M Project Name Country Au M Oz M/oz C$ M/oz US$

American Bonanza BZA 74.33 0.58 43.11 Copperstone US 3.035 14.21 11.72 Fenelon Canada Gold Bar US Northway Canada Taurus Canada

Anatolia Minerals ANO 41.00 1.80 73.80 Cukurdere(Copler) Turkey 5.504 13.41 11.06 Tunceli Turkey

Arizona Star Resources AZS 40.41 6.50 262.67 Cerro Casale Chile 5.693 46.14 38.07

Atna Resources Ltd. ATN 40.30 1.91 76.97 Pinson USA 1.227 62.73 51.76 Aurizon Mines ARZ 102.44 1.40 143.42 Casa Beradi (West Mine) Canada 2.586 55.46 45.75 Axmin Inc. AXM 121.30 0.57 69.14 Bambari/Passendro CAR 3.271 21.14 17.44 Main CAR Kofi Mali Canarc Resources CCM 57.30 0.41 23.21 New Polaris Canada 1.3088 17.73 14.63 Bellavista Costa Rica Benzdorp Suriname Sara Kreek Suriname Comaplex Minerals Corp. CMF 38.50 2.83 108.96 Meliadine West Canada 1.218 89.46 73.80 Meliadine East Canada Committee Bay Resources CBR 28.70 0.51 14.64 Three Bluffs Canada 0.188 78.03 64.38 Cumberland Resources CLG 54.80 1.91 104.67 Meadowbank Canada 4.870 21.49 17.73 Meliadine West Canada Meliadine East Canada Desert Sun Mining Corp. DSM 73.28 2.47 181.00 Jacobina/Bahia Brazil 3.804 47.58 39.25 Etruscan Resources Inc. EET 67.69 1.43 96.80 Samira Hill Niger 2.468 39.23 32.36 Youga Burk Faso Agbaou Cote d'Ivoire European Goldfields EGU 111.75 2.44 272.67 Certej Romania 14.577 18.71 15.43 Olympias Greece Skouries Greece Stratoni Greece Gabriel Resources GBU 146.40 2.55 373.32 Rosia Montana Romania 23.075 16.18 13.35 Bucium Romania Gammon Lake Resources GAM 72.40 11.30 818.12 Ocampo Mexico 7.296 112.14 92.51 Ocampo UG Mexico Glencairn Gold Corp. GGG 154.40 0.38 58.67 Bellavista Costa Rica 1.697 34.57 28.52 El Limon Nicaragua La India Nicaragua Golden Queen Mining GQM 60.95 0.41 24.99 Soledad Mtn California 1.838 13.60 11.22 Gold Reserve Inc. GRZ 35.80 3.43 122.79 Brisas Venezuela 12.067 10.18 8.40 Great Basin Gold GBG 86.29 1.60 138.06 Ivanhoe Nevada 12.659 10.91 9.00 Burnstone S. Africa Greystar Resources Ltd. GSL 32.70 7.70 251.79 Angostura Colombia 10.713 23.50 19.39 IMA Exploration Inc. IMR 43.56 3.36 146.36 Navidad Argentina 4.750 30.81 25.42 Intrepid Minerals Corp. IAU 46.01 0.58 26.69 Casposo Argentina 0.941 28.36 23.39 San Cristobal El Salvador Jaguar Mining Inc. JAG 31.06 3.55 110.26 Sabara Brazil 3.188 34.58 28.53 Santa Barbara Brazil Paciencia/ Rio de Plata Brazil Turmalina Brazil Kirkland Lake Gold KGI 40.86 4.27 174.47 Macassa Properties Canada 1.974 88.40 72.93 Metallica Resources MR 82.69 2.36 195.15 Cerro San Pedro Mexico 8.167 23.90 19.71 El Morro Chile Metallic Ventures MVG 51.25 1.64 84.05 Esmeralda US 7.056 11.91 9.83JUNIOR MINING Weekly 20 Figure 24: Gold In situ valuation spreadsheet Sh o/s Price C$ Mkt. Cap Sum oz/co Mkt Cap/oz Mkt Cap/oz Company Sym M Dec 8/05 $M Project Name Country Au M Oz M/oz C$ M/oz US$ Minefinders Corp. Ltd. MFL 36.52 5.70 208.14 Dolores Mexico 5.839 35.65 29.41 La Bolsa Mexico Minera Andes Inc. MAI 71.10 0.39 27.73 Huevos Verdes Argentina 0.371 74.72 61.64 Saavedra W. Argentina Miramar Mining MAE 159.70 2.33 372.10 Hope Bay Project Canada 6.317 58.90 48.59 Mundoro Mining Inc. MUN 25.94 1.68 43.58 Maoling China 5.703 7.64 6.30 Nevsun Resources NSU 76.46 2.17 165.92 Bisha Eritrea 4.865 34.11 28.14 Tabakoto Mali Segala Mali Novagold Resources Inc. NG 72.00 10.68 768.96 Donlin Ck US 19.297 39.85 32.87 Nome Gold US Rock Creek US Shotgun US Galore Creek Canada Copper Canyon Canada Orezone Resources Inc. OZN 108.00 2.14 231.12 Essakan Burkina Faso 2.491 92.79 76.55 Sega Burkina Faso Kerboule Burkina Faso Bombore Burkina Faso Golden Hill Burkina Faso Bondi Burkina Faso Pacific Rim Mining PMU 79.30 1.03 81.68 El Dorado-Minita El Salvador 0.869 93.94 77.50 Coyotera El Salvador Nueva Esperanza El Salvador Palmarejo Gold Corp. PJO 63.90 4.10 261.99 Palmarejo-Trogan Mexico 2.864 91.49 75.48 Seabridge Gold Inc. SEA 27.65 8.25 228.11 Courageous Lake Canada 16.356 13.95 11.51 Kerr Canada Sulphurets Canada Red Mountain Canada Grassy Mountain US Quartz Mountain US Hog Ranch US Castle/Black Rock US Semafo Inc. SMF 90.18 1.87 168.64 Samira Hill Niger 3.418 49.33 40.70 Mana (Wona and Nyafe) Burkino Faso Kiniero Guinea St Andrew Goldfields SAS 254.70 0.13 31.84 Stock Complex Canada 0.999 31.88 26.30 Nixon Fork US Southwestern Res. Corp. SWG 43.00 10.75 462.25 Boka China 4.438 104.16 85.93 Tyhee Dev. Corp TDC 41.90 0.13 5.45 Discovery - Ormsby Canada 1.545 3.53 2.91 Nicholas Lake Canada Viceroy Exploration Ltd. VYE 41.70 4.69 195.57 Gualcamayo-QDD Argentina 2.014 97.12 80.12 Amelia Ines Argentina Vista Gold Corp. VGZ 13.67 5.98 81.75 Amayapampa Bolivia 12.309 6.64 5.48 G. de Los Reyes Mexico Hasbrouck US Hycroft US Long Valley US Maverick Springs US Mountain View US Paredones Amarillos Mexico Wildcat US Yellow Pine US Western Silver Corp. WTC 47.97 12.02 576.60 Penasquito Mexico 14.073 40.97 33.80 San Nicolas Mexico Carmacks Copper Canada Wolfden Resources WLF 50.00 3.65 182.50 Monument Bay Canada 1.079 169.07 139.48 High Lake Canada East Bay Canada Ulu Canada Average of 44 companies 45.68 37.69 Source: Company reports, Canaccord Capital Converse US Goldfield US Source: Company reports, Canaccord Capital

[A Balrog of Morgoth]

Are you a tout for a gold broker, or is the price of gold your sole interest?

(check out the posting history, folks)

[headsonpikes]

Eek! Sorry, folks. ;^)

Still, among these 43 stocks are a dozen or more that will be huge gainers - 10+ baggers - should gold continue a generally upward-drifting bull trend.

The trick is to pick them. ;^)

[SolidSupplySide]

Heavy demand for gold from Russia, China, India, the Middle East and possibly the United States is likely to push the price up to a record high of $650 an ounce by the end of 2006. In the United States, where demand for gold is about half that of Europe

The author of this needs a crash course in classical economics. The demand for gold is insignificant compared to the supply. We could meet global demand for gold for decades and decades without mining another ounce of the precious metal.

Other gold purchases, such as those of China and elsewhere, are for monetary purposes. They are not demand. The basic problem is that the Federal Reserve is issuing far too many FRNs than the economy needs. When monetary investors see the increasing ratio of FRNs to ounces of gold, the price of gold goes us. And that has nothing to do with demand.

I have been chastized for using economic terms with too much precision in the past on FR. But it is an economic fact that demand for gold is insignificant compared to its supply (including inventories). An increase in the demand for gold would have an imperceptible effect on the price of gold.

[jjm2111]

I don't know about you man, but I'm convinced. I'm going to sell my entire portfolio and buy gold. The Collapse is coming any day now. All you nay-sayers will be sorry!!!
[/s]