Gold Outlook -Gold is still driving the market

Those of you who have been watching these videos in the past will not be surprised to hear me say that weve got more of the same coming.

All the way through weve talked about the gold price being quite strong and really leading the resource sector. And thats reflecting all the inbalances in the world in respect of debt levels in a lot of the OECD countries. Now were seeing that strong gold price, were seeing gold over 1150 over night, and I think were going to see move up to the 12,13, 14 hundred dollars an ounce, reasonable soon, certainly thats what it looks like.

The demand for gold is still very robust and were seeing the major gold stocks starting to really perform and look as if theyre going to make a major upside breakout.

Now the gold price is moving because of a whole range of reasons. Mine production has been declining for the last 10 years, and that has a minor impact, weve seen India buy that 200tonnes of gold from the IMF and Im sure that other central banks around the world of smaller nations are looking to buy more gold as well. The American dollar is weakening, it has been quite weak over the past few months, and that certainly is helping things. The decision by the US fed to keep interest rates low for another year or so basically means that the US dollar will be much weaker against other currencies, and the so called carry-trade where people borrow low interest rates costs (US$) and buy assets will continue.

The weight of money in the United States banking system also certainly thinks, suggests, that well see flows of funds out of bank cash management into equities, weve seen the American equity market being very strong, itll flow into commodities, but particularly commodity sector stocks

One of the things weve been talking about over the last couple of weeks is a very long term share price chart for the S&P gold index, which has been put together going back to 1921, and this is from Eric de Groot and published on the jsmineset webpage. Now thats an outstanding chart that basically shows for the last 28 years the gold index in the United States , the Philadelphia gold index, has been going side ways, sideways for 28 years.and now its about to make a break, and in doing so were going to see very robust performances in the major gold stocks, and quite fantastic performances in some of the smaller gold stocks.

So gold is really driving this market.

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• Martin Place Securities
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