Trend of gold as store of wealth 'may start to snowball'--ScotiaMocatta

Deep-rooted global financial problems will escalate the demand for gold as a safe haven.

Author: Dorothy Kosich Wednesday , 10 Dec 2008

In its December Metals Matters report, ScotiaMocatta suggests that global financial problems "seem so deep rooted that demand for gold as a safe haven is expected to escalate."

Gold demand has in fact exploded, and not just here and there. Everywhere. Around the world, customers have been queuing up to strip coin shops' shelves bare. Mints have been running 24/7 and still have been forced to ration coin shipments to their dealers. ETF vaults are bulging.

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Fear triggers gold shortage, drives US treasury yields below zero

By Ambrose Evans-Pritchard Last Updated: 9:26AM GMT 11 Dec 2008

The investor search for a safe places to store wealth as the financial crisis shakes faith in the system has caused extraordinary moves in global markets over recent days, driving the yield on 3-month US Treasuries below zero and causing a rush for physical holdings of gold.

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Swiss gold refineries pushed to the limit by demand

By Gerhard Lob SwissInfo, Bern, Switzerland Sunday, December 14, 2008

Gold refineries in Switzerland are working at their limit to cope with demand for the precious metal from investors seeking ways to shield their wealth.

"I've never experienced anything like this in my whole career," Erhard Oberle, chief executive of the firm for the past 20 years, told SwissInfo. He said the demand was so heavy that it could hardly be satisfied.The reason for the gold -- and silver -- rush is that at a time of financial crisis many investors want real assets.

The general rule of the market is that gold is always attractive when everything else is unattractive….

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The list goes on and on but gold's appeal reaches further than the average retail investor, it seems that gold is regaining its monetary shine as well:

Saudi Arabia buys 3.5 billion dolalrs worth of gold

There has been an unprecedented surge in Saudi gold purchases in the past two weeks with over $3.5 billion being spent on the yellow metal, reported Gulf News citing local industry sources.

Gold market expert Sami Al Mohna told the leading regional newspaper that this buying had substantially increased the gold reserves of the country: ‘Many Saudi investors see this as the right time for making investments in gold as the price is the most reasonable one at present’.

He said gold was seen as a traditional safe haven at a time of global financial turmoil. Gulf regional stock markets have fallen very sharply since early October, leading to an exodus of cash which needs to find a safe haven.

Gold is currently trading at prices similar to a year ago, and 30 per cent off its March peak. Saudi investors clearly think this is the right time to buy and are piling into gold.

News about the Saudi gold rush is bound to fuel speculation about the alleged large physical gold transactions that have been taking place at prices will above the spot price set in the futures market. It is very unlikely that such a large hoard of physical gold could have been bought for the depressed current price.

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China PBOC Mulls Raising Gold Reserve By 4,000 Tons - Report

China PBOC Mulls Raising Gold Reserve By 4,000 Tons - Report BEIJING (Dow Jones)--China's central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country's huge foreign exchange reserves, the Guangzhou Daily reported, citing unnamed industry people in Hong Kong. The Guangzhou-based newspaper didn't elaborate on the plan. China's forex reserves, at US$1.9056 trillion at the end of September, is the world's largest. U.S. dollar-denominated assets, including U.S. treasury bonds and mortgage agency bonds, account for a big proportion of the forex reserves

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Please take a peek at some snapshots below and judge yourself whether or not these price movements have the look of free markets at work or just blatant market intervention. Needless to say I prefer the latter.

Please remember that more than 90% of all COMEX sessions end up down, no statistician on earth will tell you that free markets could operate that way. The build up of 9 hours Asian/Europe trading being 'neutralized' in just a few seconds at COMEX is not a blueprint of free and fair markets at work but of blatant intervention.

The above are clipped from a long article by E Homellburg posted in the cafe.