Wednesday, December 28, 2005


Central Bank Rumors, Housing Drive Gold Higher

Bloomberg reports on what is driving gold higher. "Gold rose to a two-week high on speculation that central banks, the biggest holders of the precious metal, may buy more bullion to bolster their reserve assets. China should increase its gold holdings to 2,500 tons from 600 tons, said China Galaxy Securities economist Teng Tai. Russia, South Africa, and Argentina also have said this year they would hold more gold. Central banks, mainly in the U.S. and Europe, hold almost a fifth of the world's gold."

"Gold futures for February delivery rose $6.20, or 1.2 percent, to $516.30 an ounce on the Comex division of the New York Mercantile Exchange. Prices earlier reached $520.20, the highest since Dec. 14. Gold has jumped 18 percent this year, heading for a fifth straight annual gain."

"Increasing its holdings to 2,500 tons would make China the world's fifth-biggest holder of gold, behind the U.S., Germany, the International Monetary Fund and France. It is currently the 10th largest holder, according to the producer-funded World Gold Council."

"Gold has rallied from a 20-year low of $253.20 an ounce in 1999 partly because 15 central banks in Europe agreed to limit annual bullion sales. Central banks sold 478 metric tons last year, or 23 percent less than in 2003."

"Gold also gained on speculation a cooling housing market may slow the U.S. economy and send the dollar lower. 'The housing market will have an impact if it comes off hard,' said Domenick Nardo, a trader in New York. 'A weak forecast for the economy would be supportive of gold.'"

What would be the best way to participate in the Gold Bull market? I am considering Gold money ( Looks like a very easy way to participate and liquidate. Apart from that Perth mint in Australia issues certificates. Have you looked into this Ben?

The easiest way is probably via the two gold ETFs. Otherwise, there's the Everbank CDs or (for leveraged plays) mining stocks, indexes & ETFs.

If you lean libertarian (as I do), physical possession is a must, too.
Thanks for the tip. I completely agree about physically holding at least some of your gold.

If one can't earn interest on the account, I don't know what the advantage is. Do you?

All the central banks are printing paper currency left and right to mop up the excess dollar circulating around the world. Soon people will loose faith in Fiat currency (Paper currency backed by nothing). During uncertain economic times gold value will rise. That is what we are seeing in the past 5 years or so. So, the appreciation of gold is the real return here. Of course there is no interest. There are few talk shows that shed light on the Gold.

Plese visit,, or Financial Sense news hour by Jim Puplava(Saturdays), or Peter Schiffs talk show at on Wednesdays 5:00 p.m.
Ben, I love your housing bubble blogs.I have been long both the physical metal and gold mining shares the past several years. If I could point your readers to a very educational site it is Jim Sinclair's Jim is known as Mr. Gold and is Chairman of Tan Range Exploration. As a shareholder the past 3 years all I can tell you is that we all love the work Mr Sinclair does. You can get a priceless education just from reading his posts everyday.If anyone is interested in the physicalmetal, I believe that coins are a real easy way to go. Check out
Thanks Phil, I'll check it out.
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