Gold returned 24.75% in 2006, rising from $497 to $620 per ounce. It completed its 5th year of gains and is up by more than 140% in the last 5 years.
It has thus outperformed all other asset classes in that period as can be seen in the performance table and chart.
Gold Investments Ireland remain bullish on both gold and particularly silver and are confident that, as we have continually pointed out, they are now both in multi year bull markets. Commodities, like all asset classes follow long term economic cycles. Commodities increased in value in the late 1960’s and 1970’s; broadly declined in value in the 1980’s and 1990’s to record lows and have been rising again since 2001.
We are not as confident on the outlook on some commodities such as base metals and some soft commodities which are more cyclical in nature and would likely be affected by a slowdown in the global economy. Gold on the other hand is not solely a commodity but more importantly a universal currency held by every Central Bank of note in the world.
It is the only currency academically proven to have an inverse correlation to conventional assets such as bonds, equities and property. We believe gold will surpass its non inflation adjusted high of $850 per ounce in 2007 and its inflation adjusted high of some $2,400 per ounce in the next 10 years.
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| Mark O'Byrne (right), Managing Director of Gold and Silver Investments Ireland, was the Moneymate/Investor Magazine Financial Analyst of the Year 2006. Pictured with Stephen Flood, Director, Gold and Silver Investments Ireland |
Bloomberg has reported how a highly respected analyst, Louise Yamada sees gold surpassing $730 next year on its way to $3,000 within a decade.``Gold is the purest play against the dollar,'' said Louise Yamada, managing director of Yamada Technical Research Advisors LLC in New York, former head of technical research at Citigroup. Yamada is highly respected and was was voted Wall Street’s best technical analyst from 2001 to 2004.
The Bloomberg article, 'Gold Is Cheap, Yamada, Banks Assert as Sales Pared', which quoted Yamada said that gold is becoming Wall Street's darling again in 2007. Bloomberg's Pham-Duy Nguyen said that this is due to "The swooning U.S. dollar, which has become a proxy for the slowing American economy and the nation's humiliating lack of success arranging regime change in Iraq, banning weapons of mass destruction in North Korea and Iran and reducing its trade and budget deficits."
Among the world's biggest financial institutions. Deutsche Bank AG's chief metals economist, Peter Richardson, made gold his favorite pick for 2007. JPMorgan Chase & Co. analysts John Normand and Jon Bergtheil on Dec. 7 said only corn might rival gold as the best bet while Merrill Lynch & Co. analyst Michael Jalonen elevated gold's value through 2010.
``If you can only make one commodity investment,'' gold is the ``choice for 2007,'' said Deutsche Bank AG's Richardson from his office in Melbourne.
The fundamental reasons for owning gold and silver in the last 5 years have not changed indeed most of them have become stronger:
• Demand Factors
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Record & Unprecedented US Trade, Budget & Current Account Deficits.
- Rising Oil & Energy prices and Peak Oil.
- Overvalued and Plateauing Property Markets.
- Rising Interest Rates in the US and globally.
- Record Consumer, Mortgage and National Debt Levels in the US & much of the western world.
- Increasing Pensions Difficulties with underfunded pensions and the 'Demographic Time bomb'.
- Growing realisation of the long term impacts that global warming will have on all societies and economies as clearly outlined in the Stern Report
- Geopolitical Instability and 'The War on Terror'.
- A depreciating and declining US dollar - the global reserve currency;
Increasing global investor demand for safe haven assets & Central Bank demand for gold in order to maintain full faith and provide stability to unstable currencies and monetary reserves.
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