Monday, January 26, 2009

Commodities in focus – Gold prices rise above $900/oz

The spot price of Gold rose above $900/oz on Monday for the first time since October 10, 2008.

Gold ETF's also benefited. New York's SPDR Gold Trust GLD, the world's largest gold EFT allows investors to invest in physical gold like they do normal stocks. This is accomplished through issuing securities backed by physical gold stocks. SPDR said its security backed gold holdings rose 1.6% percent to an all-time high of 823.57 tonnes during Friday trading.

The ETF isn't doing all that bad either. Year-to-date it is up 4.92%. Take a look at the ETF's performance over the year year. The chart truly does justice to the age old concept of investing in gold as a safe heaven. With interest rates so low, investing in Gold, even at yields of 4.92% will become even more enticing as banking woes persist in developed world.

The Royal Bank of Scotland's head of commodity strategy, Nick Moore told Reuters factors including falling interest rates, the re-inflation of Western economies and the prospect of lower supply both from mines and via central bank sales were supporting gold.

“In times of economic crisis, falling equity markets and mounting aversion to risk, physical gold is preferred as the safest form of investment,” Commerzbank analyst Eugene Weignberg said.

Below I have included two links. The first link directs you to a informative analysis and perspective on the gold market by Lawrence Williams who, along with his “expert panel” are forecasting gold prices to reach a high of $1074/ oz.

The second is a article about how gold miner Red Back has managed to successfully raise capital on the Toronto Stock Exchange, further indication of the support for gold.

Forecasting the gold price – expert panel predicts $1074 high, Mineweb readers $1305 – Mineweb

Gold miners still able to raise capital from the markets – Mineweb