valenzuelaclan

 WOW I didnt know gold was such a bad bet.  If only I got in at $250 and ounce.  Still a good buy, Buy this time next year maybe $1000.  People only buy gold before or after an economic crisis.  Expect an attack on Iran.  Or the Iranian oil burse is making a dent on the dollar and investers are looking for something real and safe...
 
 Gold Reaches $600 an Ounce for First Time Since 1981 as Commodities Rally

Oil Rises to Two-Month High, Gasoline Jumps on Concern Over Fuel Supplies

U.S. Stocks' Three-Day Rally Ends as Gold, Oil Gains May Signal Inflation  
 
Gold Tops $600 as Investors Bet Metals Will Beat Stocks, Bonds
April 6 (Bloomberg) -- Gold in New York climbed above $600 an ounce for the first time in 25 years as investors bet metals will fetch better returns than stocks and bonds.

Gold has gained more than $100, or about 20 percent, since the end of November, beating the Standard & Poor's 5 percent return. U.S. corporate bonds earned less than 1 percent. Investments in index-linked commodity funds will rise 38 percent this year to $140 billion, according to Barclays Capital.

``Commodities are the flavor of the month,'' David Gornall, head of foreign exchange and bullion at Natexis Commodity Markets Ltd. in London, said in an interview today. ``Gold, silver, zinc or copper, it doesn't really matter what it is, as long as it's a commodity.''

Gold for June delivery rose $7.10 or 1.2 percent to $599.60 an ounce at 1:24 p.m. on the Comex division of the New York Mercantile Exchange. Prices earlier reached $601.90, the highest since January 1981.

Funds are betting commodities will keep outperforming other assets such as stocks and bonds. The soaring gold price has mirrored gains this year in other metals such as copper, zinc and silver, and agricultural commodities including sugar. Copper has climbed 30 percent this year. Zinc has jumped almost 48 percent. Sugar has advanced 21 percent.

`A Valid Asset Class'

``You're bringing in a new segment into the market that was never there,'' said Michael Guido, director of hedge fund marketing and commodity strategy for Societe Generale SA in New York. ``A lot of investor money is pouring into gold and commodities. It's become a valid asset class.''

Gold may attract investors as worldwide interest rates remain too low to contain inflation, analysts said. Oil prices hit a two-month high today.

Uncertainty over future interest rate hikes in the U.S., Japan and Europe has depleted confidence in currencies and enticed investors to accumulate gold, analysts said.

The European Central Banks left its main rate at 2.5 percent today. The U.S. benchmark rate is at 4.75 percent after 15 straight increases. Japan's rate remains close to zero. Gold gained in all currencies last year, paced by a 36 percent surge in gold sold in euros and yen. The metal priced in yen has climbed 15 percent this year. Gold sold in euros has gained 12 percent.

``Gold is benefiting on the backs of the dollar, the euro and the yen,'' said William Fleckenstein, president of Fleckenstein Capital Inc. in Seattle, who began buying gold when it was $300 and last purchased futures when the metal traded around $550. ``Even if you like one, it's just the lesser of evils. The move in gold has been against all currencies.''

Central Banks

Some central banks are buying gold to diversify their foreign currency reserves. Chinese Premier Wen Jiabao hinted yesterday that China might change the makeup of its foreign exchange reserves, the South China Morning Post reported. China's currency reserves climbed to $853.7 billion in February. The country has now surpassed Japan as the world's largest holder of foreign currencies.

About 75 percent of China's reserves are held in U.S. dollars while about 1.3 percent are held in gold.

``It could be bullish for gold if they decide to move wholesale out of the dollar into gold,'' Fleckenstein said. ``I have no interest in selling any of my gold.

Higher oil prices are also boosting gold prices as investors seek a hedge against accelerating inflation. Gold typically rises as price increases quicken. The precious metal surged to $873 an ounce in 1980, when U.S. consumer prices jumped more than 12 percent.

Crude gained for a second day in New York as declining gasoline stockpiles before the peak U.S. summer-driving season added to concern about reduced exports from Nigeria and Iran.

`Everything is Bullish'

``Everything is bullish for gold,'' Christoph Eibl, head of commodities trading at Zug, Switzerland-based Tiberius Asset Management AG, said in an interview today. ``Look at oil prices, look at the euro and base metals. People are just crazy for commodities.''

Investment funds have been the biggest buyers of gold this year, outpacing purchases by jewelers, who accounted for 73 percent of demand last year, the London-based World Gold Council said in a March 29 newsletter.

Speculative long positions in gold futures, or bets prices will rise, outnumbered short positions by 120,586 contracts as of March 28 on the Comex, the Washington-based Commodity Futures Trading Commission said March 31. Net-long positions rose by 16,322 contracts, or 16 percent, the biggest weekly increase since November 2005.

``We're entering bubble territory,'' said Eibl at Tiberius, which has holdings in energy, metals and agricultural commodities. ``Prices have moved away from reality, and are no longer linked to fundamentals.''
 

To contact the reporters on this story:
Danielle Rossingh in London  drossingh@bloomberg.net;
Pham-Duy Nguyen in Seattle at  pnguyen@bloomberg.net.
Last Updated: April 6, 2006 14:07 EDT