This Month in Gold – October 2011

China Buys Gold to Challenge US Dollar
Al Jazeera – America’s diplomats know the world will one day pull the plug on the US dollar’s life support system. A recently published, unredacted Wikileaks cable from the US Embassy in Beijing shows that the concern has, in fact, been at the front of their minds. The cable quotes an editorial in a Chinese government-sponsored newspaper claiming Beijing is increasingly buying gold to encourage the rise of monetary alternatives; in effect, as the cable quips, to “kill two birds with one stone” by simultaneously undermining the US dollar’s and euro’s status as reserve currencies.
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Hedge Fund Heavyweight Sees Gold at $2,200
Bloomberg – Tony Hall, the moonlight boxer and hedge-fund heavyweight who returned a whopping 33 percent for his clients last year, prefers to fight from the gold corner. Golden-glove Hall believes that the yellow metal could work its way up to $2,200 an ounce by the end of 2011. Hall notes that in today’s turbulent economic environment, gold is attractive due both to its safe-haven and inflation-hedge qualities. For Hall, the latest correction in gold to the $1,700 level is a good opportunity to jump back into the ring.
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Gold-Backed Dollar Puts ‘Fair Value’ at $10,000 an Ounce
Bloomberg – If every US dollar in circulation were actually backed by the full faith and credit of incorruptible gold and not by politicians’ hollow promises, you would need approximately 10,000 greenbacks to buy one ounce of the yellow metal, a recent report maintains. Dylan Grice, a London-based global strategist at French bank Société Générale, crunched the numbers and says that the $10,000 figure is the actual “fair value” of gold. Significantly, the calculation suggests that in playing catch-up, gold has the potential to quintuple its current spot price.
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Industry Eyes Gold at $2,000+
The Globe and Mail – According to the average prediction of participants at the London Bullion Market Association’s conference, the gold industry’s biggest annual gathering, gold is primed to crack the $2,000 an ounce threshold over the coming year. Participants expressed über-bullish sentiments based on their direct experience with buyers and sellers. For instance, Steven Nathan, marketing director at the Rand Refinery in South Africa, had this to say about the popular Krugerrand coin: “Demand is insatiable. It’s the strongest period ever right now.” Incidentally, in years past, the conferences’ average predictions have often turned out to be excessively cautious.
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