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China makes it hard to believe commodity boom is over

Section: Daily Dispatches

9:45p ET Thursday, August 28, 2008

Dear Friend of GATA and Gold:

Peter Grant, senior metals analyst for Centennial Precious Metals in Denver, has written a week's worth of what might be called economic travelogue from a trip through China. Among his observations:

"Double-digit growth along with expansionary monetary policy also puts upward pressure on wages. Each day more and more Chinese are lifted out of poverty. It is estimated that by 2025 China's middle-class will be the largest in the world, more than 600 million strong. At that point the Chinese middle class will be nearly twice the size of the entire population of the United States (based on U.S. Census Bureau estimates).

"That's a mind-boggling figure. Just imagine the consumption and the demand for food and energy. Sure, we've seen a pretty steep correction in these commodities of late, but does anyone really believe that this retreat in prices is sustainable?

"Consider also that the other members of the so-called BRIC nations have rapidly growing middle classes as well. Between now and 2025, for example, India's middle class will grow tenfold.

"Given that there is a cultural affinity toward gold ownership in China and India in particular, I think its safe to assume that with more wealth will come more demand for the yellow metal from these countries. Factor in the price risks associated with a middle class that will comprise more than 50 percent of the global population in less than 20 years, and gold just over $800 an ounce is a real bargain. Check that; gold is a steal at these levels."

You can find Grant's commentary at Centennial's Internet site, USAGold, here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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