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Gold Surges on Safe Haven Stock Market Panic Buying

Commodities / Gold & Silver Oct 10, 2008 - 05:02 AM GMT

By: Mark_OByrne

Commodities While gold has again surged on safe haven buying overnight (and is up since 20% since the financial and economic crisis deepened), there is increasing surprise that gold has not surged to its recent record highs especially as there are deepening shortages of retail bullion internationally and the gold holdings of gold ETFs continue to surge.


The election is just 4 weeks away and we are likely to see gold surge soon after. The fundamentals, particularly of supply and demand, are looking extremely good and prices are set to surge in the coming months.

There are likely to be huge daily and weekly up moves in the gold market and a price surge akin to that seen in the late 1970s. In the four years after the election of Jimmy Carter, gold surged by more than 700% (from near $100/oz to over $850/oz)and given the confluence of even more bullish factors in this election year, we are likely to see a similar price surge in the coming months.

Gold may not have surged as much as some had expected in recent weeks due to massive liquidation in other all markets due to leveraged losses and a flight to cash. This is particularly the case with hedge funds and other traders and speculators with short term horizons.

But gold increasingly resembles a submerged beach ball - a submerged beach ball can only be pushed only so far under water prior to leaping out of the water and this is what will happen to gold prices in the coming weeks when the extremely bullish supply demand fundamentals eventually kick in.

Premiums continue to surge on a daily basis on bullion coins and bars making the COMEX price less relevant all the time. There is the unprecedented situation whereby some large bullion dealers in the UK, Europe and the U.S. have been cleared out of absolutely all of their bullion stocks small coins and bars and larger bars. Some wholesalers have also been cleared out and one of the largest wholesalers, who have limited supplies, are being forced to ration supply of coins and bars to their favoured customers.

We have had a manic week with staff drafted in from other divisions and working late into the evenings to clear the backlog of orders. We had the same volume of sales in the last week that we did in all of September which was a record month. Luckily we have been able to source some of our bullion requirements in mainland Europe but things are becoming increasingly tight there as well.  

By Mark O'Byrne, Executive Director

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
Fax  +353 1 6619664
Email info@gold.ie
Web www.gold.ie
Gold and Silver Investments Limited
No. 1 Cornhill
London,
EC3V 3ND
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@www.goldassets.co.uk
Web www.goldassets.co.uk

Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

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Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

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