Catching A Ride on the Gold Express

Source: The Sydney Morning Heraldáá(10/6/07)

Gold's strength heralds further gains for physical gold and for shares of mining companies, many analysts and fund managers predict.


The precious metal thrives in times of uncertainty, but there's no certainty about when that is. Conrad De Aenlle explains.

Gold is supposed to be a destination for scared money but as the credit crunch intensified last month this presumed haven lost value along with many other assets. Only after the worst of the crisis had passed did traders return to gold, sending its price sharply higher.

The metal has gained about $US80 ($90) an ounce, or 12 per cent, since mid-August, about the time the sharemarket reached a trough.

This strength heralds further gains for physical gold and for shares of mining companies, many analysts and fund managers predict. They offer a variety of reasons, ranging from a desire to hedge against a falling dollar, a weaker economy or geopolitical instability, to a conventional, Econ 101 imbalance of supply and demand.

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