As winter continues to rage across most of Canada, here is some news to warm our hearts. The gold price is at a six-year high. This morning it hit about US$385/oz, and it's going even higher, according to most analysts.
Common wisdom is that political tensions the push for war in Iraq, the Korean nuclear threat are supplying the upward pressure. But these situations are probably not the whole story behind the strong price improvement. The historic fundamentals central bank reserves, government spending, and the paper money supply are responsible for the underlying strength.
James Turk, the man behind the Freemarket Gold & Money Report, claims astonishing accuracy in his monthly gold price predictions. For example, early last January he said gold would hit US$370 by the end of the month. It did. Now he has told interviewer Thom Calandra that he expects to see $US434 by the end of this month (see http://cbs.marketwatch.com/news). An extensive interview with Turk appeared in Barron's magazine last September, and it is on-line at www.goldmoney.com/en/article-in-media/barrons.html.
That's one optimistic forecast, and there are many more. A quick search for "gold price" on the Internet returned over three million sites to investigate. (One of the better ones is www.kitco.com.) The methods of forecasting vary from neural networks to software programs. The forecasters' sophistication ranges from gut feeling to complicated algorithms factoring in multiple variables.
We are happy to feel bullish on gold. It is such a pretty metal. Better prices translate into more activity in the gold mining and exploration sector. I wish I owned a bunch of gold stocks (I don't own any), but I do feel I am part of the Canadian gold mining family, at least as a long-time observer. When gold miners do well, I smile proudly.
I plan to do a lot of smiling in the near future.