Gold and Silver: The Rally Isn't Over Yet
Source: Peter Degraaf, Seeking Alpha (11/29/07)
...The fact that the HUI rose strongly, while gold was down in price today, is a very bullish signal for both gold and the HUI index.
The sub-prime mortgage debacle is nowhere near solved, and we can count on the central banks to do what they do with every problem they run into: print more money.
...The price of gold, adjusted for inflation (using the official CPI rate which is deliberately held down), would have to be over $2,200.00/oz, just to match the $850.00 price reached in 1980. The world has since added several billion new consumers. Gold is still cheap!
The central banks on balance, have less gold on hand than they claim to have. They will soon be reluctant to sell the gold that is still in their vaults, for fear that the price they can obtain, will be less than what they can get in the future, and they surely will want to avoid the mistake made by British PM Gordon Brown who with much fanfare, sold gold at $260.00/oz in 2001. Or how about the Canadian central bank, which over a period of time, sold more than 90% of its gold, and put the money into U.S. Treasury notes - worth almost $38 billion...
The fact that the HUI rose strongly, while gold was down in price today, is a very bullish signal for both gold and the HUI index.