Why Has the Gold Price Risen 300%?

Source: Guardian, Kenneth Rogoff (10/3/10)

"There are sound reasons for it. . ."

There are sound reasons for it. . .

Rational conversation about gold's value has never been easy. With prices up >300% over 10 years, it's even harder. Last December, economists Martin Feldstein and Nouriel Roubini penned op-eds bravely questioning bullish market sentiment, sensibly pointing out gold's risks.

Since their articles appeared, the price has moved up further

In December 2009, gold bugs argued the price was going to $2,000. Now, emboldened by continuing appreciation, some suggest it could be headed higher.

One successful gold investor explained that stock prices languished for >10 years before the Dow crossed 1,000 in the early 1980s. Since then, it's climbed above 10,000.

At $1,300, today's price is likely more than double very long-term, inflation-adjusted, average gold prices. What could justify another huge increase in gold prices from here?

Medieval alchemists engaged in what we now consider an absurd search for ways to transform base metals into gold. Wouldn't it be paradoxical, then, if financial alchemy made a gold ingot worth dramatically more?

The most powerful argument to justify today's high gold price is the dramatic emergence of Asia, Latin America and the Middle East into the global economy. As legions of new consumers gain purchasing power, demand inevitably rises. At the same time, emerging market central banks (CB) must accumulate gold reserves. With the euro looking less appetizing as a diversification play away from the USD, gold's appeal naturally grew.

There are solid fundamentals that arguably support today's higher gold price; though it is far more debatable whether and to what extent they will continue to support such prices going forward.

If you are a high net-worth investor, a sovereign wealth fund or CB, it makes perfect sense to hold a modest proportion of your portfolio in gold as a hedge against extreme events.

Announcing Streetwise Live! Events
Source: Streetwise Reports (07/13/2020)

Streetwise Reports is offering 100 investors—at no charge—the opportunity to meet via Zoom with executives of precious metals companies as they discuss recent developments at their companies and upcoming catalysts.

"China's export quota could be opportunity for Canadian miners"

Latin America: Six Gold Juniors Amass 100M+ Ounces
Source: Marc Davis, BNW News (05/25/2010)

Latin America, the world's last great mineral frontier for prolific gold discoveries, is proving a godsend for some lucky investors.

Mexico: Gold's Next Powerhouse Player
Source: Marc Davis, BNW News (11/03/2009)

As the world's key gold producing nations struggle mostly in vain to replenish dwindling below-ground supplies, Mexico is bucking the trend in a big way.

Where Have All the Gold Mines Gone?
Source: Brent Cook, Exploration Insights (04/14/2009)

Given the declining global gold production, mining companies’ demand for reserve replacement and the acute dearth of new gold discoveries, there is no doubt that real economic discoveries will be exceptionally valuable. . .the opportunity for stellar profits is the best it has probably ever been. Identifying the few successes, however, will require vigilant and constant technical assessment of geology and drill results, always with an eye to mine economics.

Congo Completes Mining Review, Says Majors Quit Talks
Source: Reuters (12/20/2008)

"Review process is extended an additional 45 days to allow six companies to return to the negotiating table for direct talks with government ministers."

I haven’t spoken to my old mining stock friend, noted and universally respected gold stock guru, Bob Bishop, about Rare Element in a year, but I hear he is still a supporter and very large shareholder. I don’t believe he will hold it against me to remind you that this was one of his favorite holdings when he left the newsletter writing business. . .

It's Only the Beginning for Uranium
Source: www.financialinsights.com (06/03/2005)

Dr. Richard S. Appel, author of Financial Insights, first became bullish on uranium in mid-2003, when it appeared obvious that its supply versus demand equation was fated to seriously drive higher its price. Since then, a series of events in the uranium industry has led Appel to believe that uranium prices will reach never before seen levels.

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