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Gold Boosted by Unprecedented Global Money Printing

Commodities / Gold & Silver 2009 Feb 06, 2009 - 06:05 AM GMT

By: Mark_OByrne

Commodities Best Financial Markets Analysis ArticleGold remains firm as there is increasing nervousness about the global economy and indeed nervousness about the global monetary system and this is leading to continuing strong investment demand. Gold remains at or near record highs in nearly all major currencies ($914.00 £622.11 €713.06) and looks set to regain its nominal record high of $1,030/oz in the coming weeks. UBS joined Goldman Sachs and Merrill Lynch in drastically increasing their gold price forecasts yesterday. UBS has increased its 2009 average gold price forecast to $1,000 an ounce from $700 as investors seek a safe haven from the financial turmoil.


There is a gradual realization that slashing interest rates to zero and close to zero is not the magic wand, quick fix to our global economic ills. Especially as one of the continuing major challenges is the availability of credit and money rather than the price of credit and money.

Banks remain very hesitant to lend and it does not make a huge difference to businesses and employers who need credit whether interest rates are at 0% or at 3%. And now frugal and prudent savers are being punished as they see their savings debased in an unprecedented monetary experiment of massive money printing, quantitative easing and monetization of debt (printing money to buy government bonds).

The Bank of England cut rates to a new record low of 1.5% but experts warned that the cut 'will not help Britain climb out of recession' and some saw the cut as "pointless" with the potential to create inflationary problems and even possibly a sterling crisis.

Understandably, gold’s store of value qualities are in demand internationally. Gold’s detractors always point out that it does not offer a yield – they are slower at pointing out that very few paper assets today do.

Gold has been proven to preserve wealth throughout history – in all manner of recessions and depressions including stagflation, virulent inflation, hyperinflation and deflation. While the man in the street and the consensus is concerned about deflation, the real medium to long term threat is inflation and investors should be cognoscente of this real risk.

While investment demand remains very strong there are growing fears about the declining supply of gold - the world’s mine gold supply has been falling in recent years and it fell to 2,385 tonnes last year, down 3.6 per cent from 2007 (despite the rise in prices in recent years).

The first law of economics is the law of supply and demand. There is a finite amount of gold in the world and thus supply is finite. Fiat money creation is anything but finite and never has so much money been created in the history of the world as has been seen in recent months.

Thus, over the medium to long term the value of paper currencies will inevitably fall versus the finite, universal currency that is gold.

By Mark O'Byrne, Executive Director

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
Fax  +353 1 6619664
Email info@gold.ie
Web www.gold.ie
Gold and Silver Investments Limited
No. 1 Cornhill
London,
EC3V 3ND
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@www.goldassets.co.uk
Web www.goldassets.co.uk

Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

Mission Statement
Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Mark O'Byrne Archive

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