Gold-MiningStocks.com Reports - 18 Year High Causes Gold Market
Rally
Gold-MiningStocks.com Reports - 18 Year High Causes Gold Market
Rally
Benchmark gold futures hit 18 year high at market open -
Investment funds led the buying.
Brian Noer - Gold-MiningStocks.com November 2005
Gold-MiningStocks.com (GMS) reports that upon market opening on
Thursday the price of gold hit $483.20 per ounce, near the
highest point in almost 18 years as investment funds and
speculators searched for alternatives to currencies, stocks and
bonds. Gold futures were up 13% from the beginning of 2005. The
buying was done mainly by funds, with investors jumping aboard
upon the release of the World Gold Council's report on third
quarter Gold demand which stated that Asian consumer demand in
particular is strong.
Precious mineral buying increased on Wednesday upon speculations
that gold would hit $500 per ounce (last seen in 1987) due to
investor concerns about the US economy and geopolitical
instability. Dorothy Atkinson, Broker with Bolder Investment
Partners, sees the $500 projection as a safe bet, "The trend is
your friend - the trend which has been in place for many years
is not a particularly steep one, and I fully anticipate we will
get to $500 per ounce in the near future."
"Portions of the world's population are starting to remember
that currencies have risk and that gold is one of the world's
best stores of value/proxy for money," said Michael Meyers,
President of Running Fox Resources (TSXV: RUN) a company that
features an advanced high grade gold project and a highly
prospective Alberta natural gas project, both located in Canada.
"The US is quietly favoring a lower valued dollar in order to
pay back foreign debt with those same depreciated dollars. At
the same time energy prices are very strong and appear to be
going higher over the next 3 months, and there has traditionally
been a strong correlation between gold and oil."
NYSE Gold Stocks rallied at close of business on Wednesday.
Bolder's Atkinson explained that, "There is currently a move
towards hard assets; investors are buying gold stocks because
they are interested in owning gold, and the stocks provide
leverage to the gold price."
One of the public gold companies that is benefiting from the
rally is Agnico-Eagle Mines Ltd. (NYSE: AEM) whose stock jumped
from below $14 on Tuesday, to above $15 today (Thursday). David
Smith, Director of Investor Relations for Agnico-Eagle explained
that rising demand as well as a weak US Dollar is behind the
current rally.
"The World Gold Council just came out with a report of positive
demand statistics, and bullish data. Demand is rising - there is
talk of some central banks adding gold to their reserves - and
most market watchers in general will say that mine supply will
be flat at best or even declining going forwards. This
projection may explain the rise in our stock since we recently
announced our goal to double gold reserves and to triple gold
production by 2009."
The precious metals market made gains as a whole with silver
reaching 11 month highs and platinum hit a 26 year high. Gold
has been seen to decouple itself somewhat from its inverse
relationship with currencies, as the US dollar also rose upon
projections of continuing Federal Reserve interest rate
increases.
Agnico-Eagle's Smith said however that this decoupling is just
normal market volatility. "Gold is in a strong position due to
the fact that the US Dollar is fundamentally weak with its twin
deficits. Recently it may seem that the gold/dollar relationship
has broken down to a small degree but over a longer period of
time that relationship should remain intact."
Brian Noer
Brian Noer has a degree in Business and Economics from the
University of Western, Ontario. His career in the financial
markets spans sixteen years and several continents, including:
Manager with The Bank of Montreal in Canada, Associate Analyst
with the structured finance group at Moody's Investor Services
in the UK, and Editor for several financial trade magazines in
the UK for both Thomson Financial Publishing and Euromoney PLC
(titles include Thomson's trade magazines "The International
Securitisation Report", and "Capital Market Strategies", and
Euromoney's "Asset Finance International"). Brian is the Writer,
Editor and Research Associate for the InvestorIdeas.com portal
team.
Disclaimer: www.InvestorIdeas.com/About/Disclaimer.asp