This Month in Gold – June 2011

Factbox: Gold Milestones on the Way to the Summit
Reuters – On Monday, May 2nd, gold attained an all-time record high of $1,575.79/oz. In commemoration of this historic milestone, a Reuters Factbox captures some important dates in gold’s trading history since the early 1970s: August 1971, Nixon takes dollar off gold standard; January 1980, gold peaks at record $850/oz on inflation concerns; August 1999, gold bottoms at $251.70/oz as central banks dump holdings; November 2005, gold cracks $500/oz, highest level since December 1980; March 2008, gold breaks through $1,000/oz barrier only months before Lehman bankruptcy. It has been a sprint to $1,500 an ounce and beyond ever since.
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Mexican Central Bank Quietly Buys Almost 100 Tons of Gold
MarketWatch – Discreetly, Mexico’s central bank added a whopping 93.3 tons of gold bullion to its reserve holdings in February and March. The move, reported by IMF statistics, is in tune with recent net central bank buying of gold following two decades of sales, according to the World Gold Council. The majority of the Bank of Mexico’s reserves are in US dollar-denominated assets – from which it is ostensibly seeking to diversify. Russia likewise expanded its gold holdings by 18.8 tons and Thailand by 9.3 tons over the same timeframe.
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Forbes Predicts US Gold Standard Within 5 Years
Human Events – In an exclusive interview with Human Events, celebrity businessman and owner of the Forbes media group Steve Forbes predicts the US will return to a gold standard within the next five years. “What seems astonishing today could become conventional wisdom in a short period of time,” Forbes said. Forbes believes a gold standard would help America resolve a host of economic, fiscal, and monetary problems. Mandating a commodity backing could help stabilize the value of the US dollar, restore global investors’ confidence in US debt, and reign in reckless federal spending. Forbes underscores that politicians need to “get over” the conviction that the Fed can single-handedly manage the economy via monetary policy. And, he warned, “you cannot trash your money without repercussions.”
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Demand for Gold Coins Suggests Bull Market Still Charging
Financial Post– Demand for gold coins remains muscular despite a transient pullback in commodities over the past month. This month, sales of American Eagle gold coins by the US Mint are on track to set a new decade high. The first week of May sales totaled 57 percent of April sales. Since high levels of coin sales have in the past augured well for the future price of gold, this groundswell in the secondary market suggests the gold rally still has a ways to go Analysts reckon fears over sovereign debt loads and inflation continue to fuel demand for secure physical holdings, while the American Eagle coin maintains its stellar reputation worldwide.
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For Paulson, Gold Still Glitters
DealBook (NYT) – Hedge fund magnate John Paulson – who rose to wealth and fame betting against the US subprime mortgage market – continues to be faithful to gold, which netted him $5 billion in personal gains in 2010. His loyalty endures even as prices dipped over the past month and other marquee players, such as George Soros, curbed their positions in the precious metal. At a recent conference, Paulson counseled that volatility was for the meantime inevitable and should not discourage taking a stake. Paulson believes the US dollar stands to lose even more value in the coming years, and as such, gold is not in a bubble but will instead protect against inflation and appreciate.
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