Thursday 17th November 2005 AD
" TODAY & TOMORROW'S GOLD PRICING STORY"

Yesterday I spoke to a group of investors. "What is inflation, and why is the price of gold rising?" were the questions I was addressing. I made the point that for more than 5000 years gold has always acted as a hedge and protection against geo-political and financial uncertainty and crisis. 

A recent good example is in the 1970's, when, re-acting to worsening cold war tensions, US deficits, high inflation, the oil crisis, Vietnam and the Cuban missile crisis, gold climbed from $35 oz to $850 oz (at its peak), a healthy increase of 2500%.

In many respects the geo-political and financial environment of the early 2000's is shaping up to be quite reminiscent of that period 3 decades ago.

My good friend Benjamin works in risk management in a large natural recourses company.  This morning he emailed, "Philip, demand for gold has been going up.  Oil Investors from the Middle East, are re-investing back into gold because of inflation. The World Gold Council for 3rd QTR reports an increase in gold demand of more than 50%! With $500oz just around the corner and inflation barreling just behind, 2006 could be a great year for the Generationally Wealthy investor." 

I explained to my group, we are not so concerned with the day to day price movements in gold. I concluded, "there are some important key points to remember; gold is more undervalued than at any time in recent history.  There is less gold above the ground per head of population alive today than at any other time in history."

What does all this mean to you and I? How has gold been re-acting to other currencies? What part will the energy story (oil and gas) play in the future gold price? Who is the 'Generationally Wealthy Investor' that Benjamin refers to?  Questions we will be digging into in coming days.

Best Regards  - Philip Judge pjudge@anglofareast.com