gold set to overtake status of us $, analyst

From the Mining Daily Newsletter...

THE COMBINATION of another
record price and news that the
Reserve Bank of India purchased
200 tonnes from the IMF for
around $6.7 billion is evidence
that gold is overtaking the US
dollar as a reliable official reserve,
a senior resource analyst told
MINING DAILY.
“Many national economies no
longer trust the US dollar,” H3
Global Advisors’ Mat Kaleel said.
“This purchase is a clear sign
from India, which is going to
become the world’s third largest
economy at some point, that
it does not trust the US dollar
anymore.
“This is not a cyclical thing, but
rather a significant change in the
structural nature of the US dollar,
which is losing its reserve status.”
Overnight updates saw the
price of gold reach a record high
of US$1084 per ounce, jumping
thirty cents in price from the
beginning of November.
The spot price of gold also rose,
reaching US$1087 per ounce, up
2.6% from US$1059 per ounce
quoted late Monday.
According to Kaleel, while the
price of gold may be volatile in
the short term future, the high
prices are likely to remain for the
long term, and this will continue
to push the confidence in gold
above the US dollar.
“We believe this is the start of
a very long term trend,” he said.
“The long term floor for gold
is probably around US$900 to
US$1000, at which point the
Chinese, the Indians and probably
10 or 15 central banks would
happily dispose of US dollars.
“The smartest people in the
world are buying gold. It is an
inflation hedge, a deflation hedge
and a hedge against government
fiscal irresponsibility.”