The 79 Times: Fortune, Greed, Divinity and Light

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The price of gold has fallen over the past few days, leading some to question its value as a safe and ultimately profitable investment. In his essay Trivial Pursuit?, John Hathaway counters the idea that gold’s price behaviour ‘reflects the trivial obsessions of a discredited fraction of investment opinion.’ He argues that far from being irrelevant in a world where financial markets are stable, the yellow metal’s strength is a sign of distrust in the ability of present day financial instruments, including paper currencies, to preserve capital over time. ‘The global bid for physical gold,’ he argues, ‘is potentially immense.’

The price of gold in Sydney was $US641.15 per fine ounce yesterday, down $US18.20 on Friday’s close. Gold stocks fell, with Newcrest (ASX: NCM) dropping AUD$1.47 to AUD$20.61, and Lihir Gold (ASX: LHG) shedding 21c to AUD$3.06.

Commodity exports from Australia may rise to a record for a fourth straight year as Chinese demand pushes up prices and volumes, and farm exports recover from a drought, according to an Australian Bureau of Agricultural and Resource Economics (ABARE) report quoted on Bloomberg. Sales are expected to reach AUD$148 billion in the year ending June 30, 2008, and earnings will be AUD$138 billion this fiscal year, the Canberra-based forecaster said. Driven by this investment demand, gold prices may rise 11% to average USD$670 an ounce in calendar 2007.

The Amex Gold Miners Index (GDM), an index that is comprised of the common stocks or ADRs of publicly traded companies involved primarily in the mining of gold and silver, rose 1.08% in February and gained 0.23% for the two months ending February 28, 2007.

The parliament of small South American nation Suriname has approved its budget for the fiscal year 2007, according to Carribean Net News. President Ronald Venetiaan has stated that the approval of the budget paves the way for his government to finance policies designed to improve the situation for the entire nation, which will include negotiations later this year with gold mining multinational Newmont and Suralco/Alcoa to construct a gold mine in the country.

US-listed precious metals royalty company Royal Gold (Nasdaq: RGLD) is set to acquire Battle Mountain Gold Exploration Corp. (OTC Bulletin Board: BMGX), after Battle Mountain accepted Royal Gold’s proposal to acquire 100% of its fully diluted shares for approximately 1.57 million shares of Royal Gold common stock in a merger transaction. Battle Mountain is a precious metals royalty company with a portfolio consisting of 12 properties located mainly in the Americas.

Gold coins, jewellery, gold-plated furniture, book covers, porcelain, glass ornamented with gold and many other gold-embellished articles are on display at the National Museum of Warsaw in an exhibition entitled “The magic of gold. The art and the symbol,” reports the The Warsaw Business Journal.

According to Ryszard Bobrow, the exhibition’s curator, “Gold has always played an important role. Owing to its physical and chemical properties, as well as its rarity, gold was thought to be the most precious substance. Over the course of hundreds of years, it gained rich symbolism. It was a symbol of possession, fortune, greed, but also of divinity, light, heaven.”

The 79 Times

The Daily Reckoning
The Daily Reckoning offers an independent and critical perspective on the Australian and global investment markets. Slightly offbeat and far from institutional, The Daily Reckoning delivers you straight-forward, humorous, and useful investment insights from a world wide network of analysts, contrarians, and successful investors. Founded in 1999, The Daily Reckoning is published in 7 countries with a worldwide readership of almost 1 million people.
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