Price Gap Portends Gold Price Boom

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"Despite the powerful attempts of governments to eradicate gold's role in monetary affairs, the free market price has risen continuously."

Most consider the New York market 'spot' price for an accurate indication of the true price. However, investors now buying buy physical or 'fabricated' gold, are paying a premium of between $20 and $30 per ounce. When these gaps existed in the past, major increases in the price of gold were imminent.

For much of the 20th century, gold continuously defied global government efforts to restrain its price. The premium currently in place may be evidence of the latest round of such policies.

More recently, market dealers have become increasingly aware of a covert official 'blessing' for large naked short positions opened by major 'bullion' banks. These bets are designed to force down the free market price of gold.

In the mainstream investment community, gold has been consistently scorned as an investment. Many respected analysts have even suggested that gold's allure is wholly based on perception and that the metal lacks intrinsic value. And yet, in terms of U.S. dollars, gold returned about 5.8% in 2008, following a 31.4% return in 2007. Thus far in the 21st century, gold has delivered an average annual return of some 16.3%.

Despite the powerful attempts of governments to eradicate gold's role in monetary affairs, the free market price has risen continuously. Today, though the possibility of global depression acts as a head wind, the existence of an "above market" premium for fabricated gold may foretell a major threat to the credibility of paper currencies, a major U.S. dollar devaluation and a consequent strong rise in the price of gold in the months ahead.

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