argentina to boost up gold reserves!!!

Gold to a 17-Year High on Demand for Haven, Inflation Hedge

Sept. 15 -- Gold prices in New York rose above $459 an ounce to a 17-year high on investor demand for a haven and a hedge against rising consumer prices.

Signs of inflation and the prospect of an economic slowdown in the U.S. in the aftermath of Hurricane Katrina combined to boost the precious metal, analysts said. U.S. consumer prices this year are rising at a 3.9 percent annual rate compared with a 3.5 percent increase a year earlier, data from the Labor department showed today.

``Gold has always been a safe-haven play,'' said Zach Liggett, a fund manager at Traverse City, Michigan-based Financial & Investment Management Group, which manages $450 million. ``And gold seemed to fit the bill where we can add more inflation protection in our portfolios.''

Gold futures for December delivery rose $5.20, or 1.2 percent, to $458.90 an ounce at 9:51 a.m. an ounce on the Comex division of the New York Mercantile Exchange after reaching $459.20, the highest since June 1988. The metal has gained 5.4 percent since Aug. 30, climbing in 10 of the past 11 sessions.

A futures contract is an obligation to sell or buy a commodity at a set price by a specific date.

Liggett said his gold holdings have doubled since the beginning of the year. He declined to comment on how much gold he currently has.

High oil prices are the main factor driving up gold, said Frederic Panizzutti, senior vice president at MKS Finance, a Geneva-based precious-metals trading and refining company.

Gold also climbed on investor demand for an alternative to currencies.

``It shows a growing lack of respect for all currencies,'' said Dennis Gartman, an economist and editor of the Gartman Letter. ``You can't have a bull market in gold until it starts going up in all currencies, and that's what it's doing now.''

Gold priced in yen have climbed 12 percent this year and 4.2 percent since Aug. 31.

Argentina's Reserves

Argentina's central bank may increase gold reserves as a hedge against inflation and protection against a financial crisis, Juan Ignacio Basco, bank head of market operations, said yesterday in London. Increased reserves helped South America's second-biggest economy stabilize its currency and revive investor confidence after a $95 billion debt default triggered a plunge in the peso in 2002.

Gold may rise to $480 an ounce by the end of this year and $500 next year, GFMS Ltd., an independent London-based precious metals research group, said in a report yesterday.

That ``confirmed the case for the upside,'' said David Gornall, the head of foreign exchange and bullion at Natexis Commodity Markets Ltd. in London. ``The sentiment is with the market.''

Higher oil prices may weaken the dollar and boost gold's appeal as an alternative investment, GFMS said.

source gold-eagle.com