Anyone who understands gold’s historic role will grasp the importance of the argument behind extra bank leverage. Direct ownership of bullion by a bank is superior to holding the fiat money issued by a central bank.
Spot gold has consolidated gains above the 200 day moving average at $1,640/oz. Gold has climbed 1.5% to a one month high, due to concerns about the euro-zone sovereign debt crisis. Risk appetite has returned lifting markets across the board.
With just a few trading days left in 2011, we can take stock of gold's performance vis-`a-vis other assets. Gold is 13.7% higher in USD, 12% higher in GBP and 14.4% higher in EUR. Gains were seen in all fiat currencies.
Combine the central bank purchases of gold with the fact that we are now entering the strongest months of the year for gold. November has historically been the strongest month of the year for gold equities, with mining stocks increasing 8.1%.
People are always throwing around the fact that gold is "rare". While that's absolutely true, most people don't have a clue as to what that really means. Even more important to understand is that the gold supply is growing at less than 2% per year.
Gold prices opened with double-digit gains on Thursday and touched $1,817.90 per ounce ahead of the New York session's start even as the US dollar reclaimed the 74.00 level on the trade-weighted index.
Gold is higher in euros but mixed in other currencies this morning as the euro continues to weaken on sovereign debt and contagion risk. The euro has fallen against all currencies in recent days but especially against gold.
In making the case for continued investment in gold, the managing director of American Precious Metals Advisors is succinct: gold reaching $2,000/oz. in the next year and $3,000-5,000/oz. "before the cycle begins to reverse."