about to break higher, page-25

Matty

Since you are now showing an interest in the gold market I thought I would provide you with some sources of material on this subject.

1. A good starting point is understanding why gold has value. In a recent report Erste Bank of Austria put out a report "In Gold We trust" which was written by its gold analyst Ronald Stoeferle. He was interviewed on Financialsense. See link below which also provides a link to the report

http://www.financialsense.com/financial-sense-newshour/guest-expert/2011/08/10/ronald-stoeferle/in-gold-we-trust

Make what you will of that report, but one thing to take away is the importance of negative real interest rates that make holding gold an attractive asset. Negative real interest rate means that the inflation rate exceeds the interest rate on bank deposits or shorter term government securities (which are deemed to be riskless - ie you will get your money back).

The last gold bull market was killed off when the former Chairman of the US Federal Reserve raised interest rates to around 18% (from memory), which was above the then prevailing inflation rate. The current easy monetary conditions around the world (except Australia) has resulted in inflation being higher than interest rates in China, India, USA and Europe. These are the main buyers of gold, and if they ever raise interest rates enough then the gold price could plummet as people will find a better alternative investment.

2. Standard Chartered Bank put out a report analysing the supply and demand of gold, and this can be accessed from here

http://www.acting-man.com/blog/media/2011/07/57833659-In-Gold-We-Trust-061411.pdf

3. There are a heap of useful websites that contain information on the gold market. Here are a few

http://www.321gold.com/

http://www.zealllc.com/

http://www.24hgold.com/english/home.aspx

http://www.marketoracle.co.uk/

http://www.financialsense.com/

If you decide on buying gold companies rather than gold bullion then you will need to understand this market (which can be more closely related to other equities instead of the metal) and the underlying economics underpining the viabilities of the companies.

And a possible GFC2 event could have an unpredictable impact on the gold price and on gold equities.

I hope this helps and good luck. It aint easy.

loki