Gold keeps shining
If you liked gold in 2006, chances are you'll want to stick with it in 2007.

(Fortune Magazine) -- Gold got off to a fast start in 2006, hitting a high of $725 an ounce in May. Though it has lost about $80 since then, it remains well above the $500 an ounce it was fetching when we suggested in last year's Investor's Guide that it still had room to run. Many of the factors we cited in making our call are still influencing the market, including strong demand from China and India, a weak dollar, and global worries about terrorism and political tensions. We'd add to that list the threat of renewed inflation in a world so awash in liquidity that private-equity mega-deals are now weekly events. So if you liked gold in 2006, chances are you'll want to stick with it in 2007.

Another trend fueling the gold rush has been the popularity of exchange-traded funds (ETFs), which make it much easier for retail investors to gild their portfolios with direct exposure to the metal. Two popular choices include streetTracks Gold Shares (GLD), which holds about 14.2 million ounces, or $9.2 billion, of gold bullion in trust. iShares COMEX Gold Trust (IAU) has 1.4 million ounces of gold in trust, or $880 million. Both are up about 30% so far this year. For investors who prefer traditional mutual funds, Franklin and Fidelity offer top-performing choices that give investors exposure to a basket of gold-mining stocks.

Markets in flux, but the strength lies with gold

CHINA'S gold rush reached fever-pitch during the recent Chinese New Year period, the Xinhua news agency reported.
In the little over two weeks since February 10, retail sales of gold in Guangzhou alone reached 7.82 tonnes - that's 275,842 ounces, or the annual production of several mid-sized Australian mines put together.

In cash terms, those with money to spend on gold parted with $US224 million ($285 million). And in the Chinese capital, one department store - Beijing Caishikou - marketed "lucky balls"' containing just one gram of gold which could be worn around the neck or wrist.

The gold content was worth about $US24. Thousands upon thousands have been sold in the past few weeks.

What it calls demand from the "historically frustrated Chinese buyers" is one factor that makes Citigroup bullish about gold in its latest report on the yellow metal.

It sticks by its view that the gold price will stay strong because of Chinese demand, the buying by "petro-dollar fueled Middle Eastern consumers" and the absence in the market of aggressive shorts.

Citigroup is expecting the metal to test $US700/oz in the coming months and its preferred exposure is through Newcrest Mining (NCM).

Gold rose 23 per cent in 2006, starting the year at $US517/ounce and ending it at $US637/oz.

But, during this period of sustained gold price strength, the underlying gold equities had generally underperformed and disappointed.

"In the space of 12 months, numerous gold producers and developers have suffered due to higher costs within the industry, toxic hedge books and underperforming assets," it added.

Meanwhile, Australia's ample supply of world class deposits had been plundered by offshore companies over the past five years, with most being sold off just before the start of the strongest gold bull market is almost three decades.

The result: more than 65 per cent of Australian gold production of 8.2 million ounces a year was now controlled by large foreign companies.

But Citigold tells its clients they should stick with the remaining locally listed majors - Newcrest and Lihir Gold (LHG).

Outside of those two, the Australian gold sector was highly speculative in nature with limited investment-quality companies. Of the two, Newcrest was favoured because of its large reserve base, low cash costs and a pedigree in exploration that differentiated it from other gold stocks.

But the juniors to watch according to Citigold are Avoca Resources (AVO), Dominion Mining (DOM), Perseverance Group (PSV) and St Barbara (SBM). Companies with interesting offshore exposure included Allied Gold (ALD) with Simberi in Papua New Guinea; Equigold (EQI) at Bonikro in Mali; Oceana Group (OGD) and the Dinkidi project in the Philippines and Troy Resources (TRY) which had Melidine in Canada.

Six Key Financial Indicators Alert Investors to Buy Gold and Gold Coins

Lear Financial, Inc. points to six reasons gold and gold coins will again become the center of the global financial system

Santa Monica, CA (PRWeb) March 1, 2007 -- The global economic and financial market looks increasingly precarious and global trade imbalances are at unprecedented levels. Rising U.S. interest rates and high oil prices now threaten to push the system to a breaking point.

In this highly volatile international financial climate, gold's value, relative to most national currencies, will soar
"In this highly volatile international financial climate, gold's value, relative to most national currencies, will soar," said Kevin DeMeritt, a top gold investment advisor of Lear Financial, Inc., the parent company of Gold Central, one of the top gold coin companies in the U.S.

"There are six key reasons why investors should own gold coins," adds DeMeritt.

Inflation - Today, a number of factors are creating the perfect inflationary storm: major tax cuts, a spike in oil prices, a mammoth trade deficit, and America's status as the world's biggest debtor nation makes owning gold coins a viable hedge against inflation.

Declining dollar - Gold is bought and sold in U.S. dollars, so any decline in the value of the dollar causes the price of gold to rise. However, now that it has been stripped of its gold backing, the dollar is nothing more than a fancy piece of paper.

Gold as a safe haven - Gold has often been called the "crisis commodity" because it tends to outperform other investments during periods of world tensions. When international crisis is eminent, the public begins to distrust paper assets and turns to buying gold coins for a safe haven.

Supply and Demand - Gold production is declining and global demand is outpacing supply. Both India and China are in the process of liberalizing laws relating to the import and sale of gold in ways that will facilitate gold purchases on a mammoth scale.

Store of Value - Gold price may fluctuate but over the long run gold has consistently proved to be an effective preserver of wealth. It has also proved to be a safe choice in times of economic and social instability.

Portfolio Diversifier- Gold is an important part of a diversified investment portfolio because its price increases in response to events that erode the value of traditional paper investments like stocks and bonds.