Money and Metals

Reuters reports on the strong bull market for gold. "Gold's 37 percent rise in six months to 25-year highs, far from a price-bubble ready to pop, will continue upwards on renewed fund enthusiasm, analysts said. The bull market may attract even more new money in the coming years, with potential for bigger price spikes, they said."

"'Like a gorilla with a gun, gold can go anywhere it wants,' said Peter Hillyard, head of metals sales, ANZ Investment Bank."

"Analysts say gold has room to go much higher. It is still well off January 1980's all-time high of $850, a level which would now stand at $2,100 after adjusting for inflation."

"'I do not see any bubble on the gold market. Prices have been firmly supported by fundamentals. Most notably, changes in global liquidity have put upward pressure on prices,' said Michael Widmer, analyst at Macquarie Bank Ltd."

"The safe-haven metal is expected to continue attracting buying due to political unrest, notably the Middle East, on worries about inflation and economic growth, instability in currency markets and hopes of buying by central banks. Iran's nuclear ambitions and the victory of Hamas, the Islamic militant group, in Palestine elections are the latest hot topics, prompting many investors to take refuge in gold."

"Sharp rises in gold holdings at ETFs has helped improve sentiment toward bullion, with some arguing the inflows reflect long-term investment and were not likely to be reversed in a period of weaker prices. Gold funds have accumulated more than 440 tonnes now, which would equate to the 12th largest holding by central bank."