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Gold regaining its place as the ultimate money

Section: Daily Dispatches

Gold Rises to Record as Investors Seek Alternative to Currency

By Pham-Duy Nguyen
Bloomberg News
Wednesday, May 12, 2010

Gold futures rose to a record for the second straight day as financial turmoil in Europe spurred demand for an alternative to currencies.

Gold priced in euros, British pounds, and Swiss francs also rallied to all-time highs on concern that a plan to rescue Europe's indebted nations will slow the region's economic recovery and devalue the 16-nation common currency.

"Gold is expensive, but people in the euro zone are moving out of their currencies and forcing themselves into gold," said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. "There's a lot of fear on the part of the Europeans that moves to mitigate their debt crisis will only lead to more problems. People want to be in the currency of last resort."


Prophecy Resource Corp. Appoints Rob McEwen to Advisory Board

Prophecy Resource Corp. (TSX.V: PCY, OTC: PCYRF) is pleased to announce the appointment of Rob McEwen to the company's Advisory Board. McEwen is a leading Canadian mining industry entrepreneur. He is the chairman and CEO of U.S. Gold Corp. and Minera Andes Inc. McEwen was the founder and former chairman and CEO of Goldcorp Inc., whose Red Lake Mine in northwestern Ontario, Canada, is considered to be the richest gold mine in the world. During his tenure at Goldcorp, McEwen transformed the company from a collection of small companies into a mining powerhouse, growing its market capitalization from $50 million to approximately $8 billion.

For Prophecy Resource Corp.'s complete statement:

On the Comex in New York, gold futures for June delivery rose $22.80, or 1.9 percent, to $1,243.10 an ounce. Earlier, the price reached $1,247.70, the highest ever.

The euro has dropped 12 percent against the dollar this year on concern that budget deficits in Greece, Spain and Portugal will escalate. Over the weekend, the European Union and the International Monetary Fund announced a rescue package of almost $1 trillion.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, have advanced 5.2 percent this year to a record.

"The whole bailout is quantitative easing across all of Europe," said Michael Guido, the director of hedge-fund sales at Macquarie Bank Ltd. in New York, who expects gold to rise to $1,500 by the end of the year. "You're seeing this big rush into gold ETFs, physical bars, and coins out of Europe that's supporting the thesis that gold is the default currency."

Gold has gained 13 percent this year following nine straight annual gains. The metal has outperformed stocks, bonds and other commodities in 2010. The MSCI World Index of shares has dropped, and returns on the benchmark 10-year U.S. Treasury are up 3.9 percent.

"All we can do is to put our money into real assets, because paper money everywhere is being debased," Jim Rogers, the chairman of Rogers Holdings in Singapore, said in an interview on Bloomberg Television.

Gold will rise to $1,300 in a month, up from a previous forecast of $1,200, and silver will climb to $18.50 an ounce, up from $16, UBS AG analyst Edel Tully said in a report. She increased her three-month forecasts for gold to $1,200 and silver to $17.25.

Gold may reach $1,500 by the end of the year as concern spreads that other nations will struggle with debt, said James Dailey, who manages $145 million at TEAM Financial Asset Management LLC in Harrisburg, Pennsylvania.

"Every major government in the world has been reckless stewards of their currencies," said Dailey, who recommends owning mining stocks over physical gold because of the potential for higher returns. "There's a shift in investor psychology that gold is not a barbaric relic. It's back to being a monetary asset."

Before today, the Philadelphia Stock Exchange Gold & Silver Index, which includes mining companies, rose 9.5 percent this year. The gauge gained 36 percent last year and fell 29 percent in 2008.

Some investors may sell gold after this month’s rally, analysts said. Before yesterday, the all-time high was set on Dec. 3.

The metal's 14-day relative-strength index climbed to 75 today. A level above 70 is a signal to some analysts that prices are poised to decline.

Cheaper silver, up 17 percent this year, may outperform gold. Peter Sorrentino, who helps manage $13.8 billion at Huntington Asset Advisors in Cincinnati, last week moved 6 percent of his gold holdings into silver in the Huntington Real Strategies Fund.

Silver futures for July delivery rose 36.9 cents, or 1.9 percent, to $19.663 an ounce on the Comex. Earlier, the price reached $19.735, the highest level since March 2008.

Platinum futures for July delivery gained $46.50, or 2.7 percent, to $1,747.30 an ounce on the New York Mercantile Exchange. Palladium futures for June delivery advanced $15.25, or 2.9 percent, to $547.45.

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Coming Friday-Sunday, June 11-13, at the Dallas-Fort Worth Airport Marriot:
The Anglo Far-East Bullion Co.'s Gold and Silver Conference

The conference will explore the dangers and opportunities in today's bullion markets and the need for investors to diversify bullion holdings outside of bullion banking and commodities markets. Speakers will include David Morgan of, Gold Anti-Trust Action Committee Chairman Bill Murphy, and Duncan Cameron and Philip Judge of Anglo Far-East Bullion Co. The earliest conference attendees on Saturday will be able to schedule one-on-one interviews for personal consultation with Anglo-Far East's experts on Sunday.

To learn more about and register for the Anglo Far-East Bullion conference, please visit: