fat profits say gold us1100 for 2008

We Are Targeting A Gold Price Of US$1100 In 2008

It appears to us as if some speculative traders might be getting a little ahead of themselves.

We're not interested in what the speculators think and do to the price of gold. For all we know, its price may get driven as high as US$1500 an ounce.

We're much more interested in the long-term fundamentals for gold, and as we've been saying for a long time now, they are still very strong.

Gold is a currency, not a commodity.

Because of gold's unique qualities, for thousands of years it has been used as a store of wealth and a medium of exchange. Because of its inability to be freely created (unlike government controlled money) gold has always been the anchor of financial systems, providing stability and trust.

With stability and trust in the world's monetary system evaporating rapidly throughout 2007, little wonder gold performed so well - 2007 delivered the best calendar year return for gold since 1979.

Given that there is a 50/50 chance of the US falling into recession, we think more financial instability is in store for 2008.

Therefore gold's biggest moves may still be in the years ahead.

Still, when adjusted for inflation, gold remains well below its all-time high. An ounce of gold at US$875 in 1980 would be worth around US$2,200 today.

Given that background, it's no hard to see why we've lifted our target price for gold for 2008 to US$1100 an ounce.