Gold : What’s driving it higher ?

Gold / Silver Forecaster - Global Watch - As we approach the end of 2007 and a time when gold looks poised to move through its record high, and a time when global financial volatility and uncertainty have never been higher, it is time to look at what's driving the gold market now and what lies ahead in 2008. There is no doubt that during 2007 the gold market has evolved from one suffering persistent undermining attack by global monetary authorities over the last 25 years [through sales and accelerated supply] began to fade noticeably, as the credibility of its replacement, the U.S. $ began to decay visibly, to one that garnered a new respect, if only amongst both private and fund investors. And by funds, we are not referring to the short-term speculators but to long-term holders, primarily of gold Exchange Traded Fund shares. It is primarily Investor demand that will drive the demand for gold in 2008 because of the enviable position it holds, which we describe below. Add to the above the meteoric rise of the oil price and we saw gold beginning to act as a counter for dropping confidence in the monetary system attracting more investment demand. Such decay was amply described by and ex-Treasury Official in an essay, in which he pre-ambled as follows. More than a confidence crisis! "Many $ holders, including central banks and sovereign wealth funds as well as private investors, clearly want to diversify into other currencies. Since foreign $ holdings total at least $20,0...

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