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[Lavanay]

Gold declined sharply in a choppy trade on Friday as weakness in crude oil prices and volatility in dollar pressured the prices. The gold futures fell sharply early on Friday as crude oil prices tumbled and after a robust U.S. jobs report lowered the chance of a large cut in key interest rates by the Federal Reserve next week. But weakness in dollar after weak consumer confidence data then supported it to recoup some of the earlier losses. Gold futures for February delivery at COMEX shed $6.90 to end at $800.20 an ounce. The contract saw the lows of $796.80 an ounce early in the session.

                       

The dollar traded mixed on the last trading day of the week. After the jobs data, the U.S. dollar was mixed, rising against the yen, and trading flat against the euro. The dollar index declined 0.1% at 76.295.  The U.S. economy added 94,000 nonfarm payroll jobs in November, according to the Labor Department. The market was expecting growth of 85,000 jobs. Strong jobs data faded the chances of 50 basis point interest rate hike by Fed.

 

India's gold imports declined for the second consecutive month from a year earlier as high gold prices dented jewelry demand during the traditional peak consumption season. Purchases in November fell to 12 metric tons from 59 tons a year earlier, according to the Bombay Bullion Association. Imports slumped to 14 tons in October from 68 tons a year earlier.

[dudette]

FIRST: Investor confidence can turn on a dime BUT consumer confidence in the banking system, well, that’s a different animal.  Confidence in bankers, in the Federal Reserve, in the dollar, in politicians, has been eroding for several years.
 
And this is a global trend.  And gold is the cure consumers and investors turn to in such times.
 
SECOND: This is a broad-based bull run.  Right now in Asia Edge we are raking in huge profits in commodities as far-ranging as fertilizers and iron ore, chickens and coal, copper and bulk shipping.
 
 
THIRD:  The REASON commodities are in a bull market is the simplest reason of all: demand is crushing supply.  Economic engines are firing on all cylinders in India, China, Singapore, Russia, South Korea, Indonesia, Australia, even Vietnam.  Those engines require oil, coal, bauxite, pork, palm oil, silver, wheat, you name it.
 
 
FOURTH: The economic wealth being created by these engines is creating PERSONAL wealth for more people than has ever been seen in the history of the world.  China has almost as many millionaires today as Japan.  Last year, China had 15 billionaires.
 
Today it sports 106.  India’s millionaire club is growing 20% a year.
 
No wonder India’s consumption of gold tops every other nation’s—and demand is growing at an astonishing 70% a year clip!
 
AND FIFTH:  You can buy gold, you can buy a commodities-based ETF, you can buy PetroChina, which just became the world’s most highly-valued company, you can buy a Brazilian mine like Vale de Rio Doce…you can do any of these things and do well.
 
BUT you will not have participated in the broadest sense in this stunning bull market and you will be taking considerable risk on board.  This is volatile stuff, and you need to be super alert at all times.

- Rajiv Handa

[Lavanay]

The correction from the April 2007 high in gold gave us an extraordinary opportunity last summer to accumulate mining shares while they were truly undervalued. Simplicity, our premier gold timing model, was the key. Nevertheless, gold and silver investments still remain all but undiscovered by the mainstream investment community.

The most underbelieved asset class today is precious metals, but they are beginning to gain serious investor attention again as gold moves to all-time highs over $850. The next major move is just beginning. Once the current rally takes a brief rest, gold will advance to at least $1,000 during 2008 on its way to eventually hitting $1,600.

Gold will soon become popular cocktail conversation as the mainstream begins to catch on.
This August, we received a rare buy signal from our gold timing model, “Simplicity.” The previous time Simplicity gave a buy signal was in May 2005 when gold was $440. The average annualized gain after Simplicity buy signals is 89.6% … and they say no one rings a bell!

The time is ripe again for precious metals.

Fundamentally, gold and silver couldn’t be more bullish. The U.S. dollar is weak; and as the dollar falls, gold will rise. That is cast in stone.

China (as I mentioned) is on a buying spree with billions of dollars in excess cash. To come up to speed with the rest of the central banking world, it is estimated they will need to purchase 2,000 to 3,000 tonnes of gold.

Although the mainstream has not warmed up to the metals yet, we are experiencing the third great gold bull market of the last 100 years. The first was from 1929 to 1932 where we saw the price of the average mining stock increase 650%. In the second, from 1969 to 1980, the typical mining stock appreciated by 1,000%.

The third secular bull market in gold is under way (it's far from over), yet the Philadelphia Gold and Silver Index (XAU) has but barely begun to perform. You will likely see the XAU double this year and appreciate 300% from current levels by the decade’s end.