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Author:
Brian Noer

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.

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About the author:

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. Brian is the Writer, Editor and Research Associate for the InvestorIdeas.com portal team.

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A Quick Note From The Publisher... If you like the article above, you may be interested in the following article which is also related to Gold/Silver... Congress Approves .9999 Fine Gold Coins New .9999 fine (24 karat) 1-oz legal tender $50 gold coins will be added to the U.S. Mint's line of gold bullion coins in 2006 when President Bush signs into law a bill that Congress passed in December. The legislation calls for the Mint to have the coins ready to distribute by June 2006, but the coins may be ready before then. The legislation authorizing the new .9999 fine gold coins was quite specific, mandating the design and even the method of packaging. For the first year of issuance, the coins "shall bear the original designs by James Earle Fraser, 'which appear on the 5-cent coin commonly referred to as the 'Buffalo nickel' or the '1913 Type 1'." This wording, without specifically saying it, calls for the obverse (front) of the coins to carry the famed Indian Head design by Fraser. The reverse will carry the equally-famed buffalo design. Each Indian Head-Buffalo coin is to be encased in a protective capsule, possibly such as the capsules used by Australia's Perth Mint to protect its .9999 fine gold bullion coins, including the popular limited edition Lunar Series Gold Bullion Coins. The protective cases "shall be readily distinguishable" from the packaging for proof coins, which are also authorized by the bill. For years, proof coins have been individually encapsulated in protective cases. Individually encapsulating bullion coins will be new to the U.S. Mint. The Mint's 22-karat (.9167 fine) American Gold Eagles, which are the world's best-selling gold bullion coins, are packaged twenty to a tube and are not individually encapsulated. Production of the Indian Head-Buffalo coins will be unlimited, and they will be marketed toward gold investors who prefer .9999 fine (24-karat) gold coins. The U.S. Mint already has the ...