Expect Gold To Shine In 2008 By Patrick A. Heller
December 26, 2007
Metals Market Update with Patrick A. Heller
In 2007, the U.S. dollar suffered, falling
more than 25 percent against gold.
The rise in gold occurred despite massive
government and central bank intervention. On Dec. 18,
for instance, the European Central Bank made 14-day
loans of more than $500 billion to commercial banks
around the world, trying to stabilize markets past Dec.
31, a major financial valuation and reporting date.
What can we expect in 2008? I foresee
higher gold and a declining dollar. Here are three factors
that should have a major impact:
" Liberalization of Chinese government regulations
for private citizens to own gold. Demand will come from
profits diverted from the soaring Chinese stock market,
possibly exceeding annual worldwide gold production!
Even if the increase is much lower, gold prices could
" The dollar will retreat from its 60+ year status as
the world's reserve currency. Governments will reduce their
dollar reserves, switching to baskets of currencies or additional
gold. Fewer international transactions will be priced in dollars.
" The banking industry's liquidity problems, not cured
by nearly a trillion dollars of direct and indirect central
bank monetary inflation in 2007, will wreak worldwide dislocations
in 2008. As investors realize that paper assets are riskier,
demand for tangible assets like gold will rise.