Gold eases on more profit taking   2005
2005 December 21 (from Reuters) -- New York gold ended lower in choppy trade on Wednesday, as the market digested heavy profit taking but retained the bullish investment outlook which took futures to 25-year highs last week. "You have very aggressive fund selling. Clearly that's been the case for the last couple of days," said Bruce Dunn, a trader at bullion trading firm Auramet. "This time of year it's the wild, wild West. This is a bit more than I've seen in the past, only because of the positions and players. It's a much deeper market." COMEX February gold ended down $1.70 at $495.30. Dealers said the recent tone has been set on the Tokyo Commodity Exchange, where selling [contract liquidation] by small investors knocked yen-priced gold futures down more than 2 percent overnight. But in the long term the Japanese public seems to be enamored of gold amid worries about inflation and the yen. "We saw a couple of days of TOCOM opening limit-down. We have seen definite liquidation from 'Joe Public' as we like to call them," said Graham Leighton, precious metals vice president at Societe Generale. The markets were thin as traders avoided unnecessary risk before back-to-back long weekends and the close of books for the year. Low liquidity makes it tricky to get big deals done without moving the price adversely....

Gold price exploited during thin pre-holiday trade
December 20 (from MarketWatch) -- Gold futures closed below $500 an ounce Tuesday as traders gauged physical and investment demand for the metal in the last few trading days of the year. "There is that tug-of-war between would-be buyers and the traders who really are squaring the trading logs before we head into the weekend," said Jon Nadler, investment-products manager at bullion dealers Kitco. "Vulnerability is still present." And as trading winds down for holiday book-squaring and volumes ebb, "we might witness a few unsettled trading sessions," he said. COMEX February futures finished the session at $497, down $9.10, its lowest closing level since Nov. 23. Even so, "gold's 15% annualized gain is almost three times that of the S&P 500 -- a performance that has speculators and long-term investors alike not only taking a serious look at the precious metal but actively accumulating it each time its price retreats," said Nadler. Overall, the year 2005 was "only a precursor to a broad-based increase in investor participation in the precious-metals markets," he said, adding that "significant price action in gold will be apparent during 2006 and 2007."...

December 20 (from DowJones) -- "Gold seriously started to suffer from the year-end lack of liquidity today," said analysts at MKS Finance. "The New York hours were extremely thin." Another New York-based analyst said the thin market was exploited Tuesday. "Trading conditions tend to be choppy this time of year."

December 20 (from Reuters) -- New York gold futures reversed gains to end near last week's low in thin trade on Tuesday, with traders wary of volatility in the final sessions of 2005 but clinging to a bullish view for next year. "There's no reason for long-term investors to get out," said a desker at a bullion trading firm. "The major players are going to try to bully this thing around, but you would imagine volumes are thin." With trading books being closed for the year ... price swings can be dramatic.

Gold ends higher; $600 eyed for 2006
December 19 (from MarketWatch) -- Gold futures closed modestly higher Monday, backing off the session's best levels, with analysts expecting the contract to attempt to consolidate above $500 and then move higher. "Gold is likely to build a base above $500 during thin market conditions over the next two weeks, and enter 2006 aiming for a minimum target of $600," said Peter Grandich, editor of the Grandich Letter. "A resumption of the U.S. dollar decline is the likely new catalyst for higher prices." Gold for February delivery closed at $506.10, up 20 cents.

Dig into gold and silver for a safer future (EconTimes 12/19)
In a fundamental way we must see gold prices as a function of the crude oil prices. Traditionally, since 1970 until the '90s, the price of every troy ounce of gold was equal to 16 barrels of oil. However, after '01 when oil prices began to move up sharply, gold failed to keep pace. At present with oil prices close to $60 per barrel and gold trading at $500 per troy ounce, the ratio is roughly 8.5 bbl of oil per troy ounce of gold. This is way below the historical average and, therefore, it is expected that gold prices will continue to rise in the near term as hedge funds will sell oil and buy into gold. If we assume that the traditional ratio will be restored in the long term, then the price of gold should touch $1,000 per ounce...

Could gold blaze back to its all-time high? (Times 12/18)
The gold price has gained nearly 16% so far this year and touched a high of $540 on Monday, before plunging to $508 by the end of the week because of heavy selling in Japan. However, many analysts think the pullback will prove temporary and the gold price will rally further next year, possibly even regaining the nominal peak of $850 that it achieved in January 1980, when markets were in the grip of a global inflation scare. However, $850 then was worth about $2,500 in today's terms.

Discovering Gold Again (Forbes 12/15)
Gold surpassed the $500 per ounce plateau and is currently outperforming every currency in the world. The short but obvious answer to what is driving up the price is demand. China and India -- both of these nations have been growing in economic spades, and with their economic growth has come paper wealth and an almost instinctive need to convert this paper into assets with intrinsic value. Greater paper wealth in both countries translates into greater demand for conversion into gold. Since 1975, American citizens have had the ability to purchase gold freely for private ownership without any licensing or restrictions of any kind. Chinese citizens were just granted this right in 2002, and not until recently have they been able to freely walk into a bank and purchase gold. What does this mean? Newly granted freedom of ownership. Recently published statistics peg American ownership in gold totaling 1.4 grams per person; compare that to less than one-tenth of a gram per Chinese citizen. You really don't have to do the math to figure that there's a relatively huge void of ownership that should surely be filled. Couple this with the notion that the Chinese have a more traditional perception and appreciation for the intrinsic value of gold, and you have the possible makings for per capita Chinese gold ownership to soar beyond American levels.

Russian Central Bank will Reevaluate Gold (Kommersant 12/14)
Yesterday, Bank of Russia announced that starting from January 1, 2006 it will re-evaluate the gold in the country reserve according to market prices. This decision was explain by the "necessity of aligning the published data with current market realities." However, it looks like in reality the Central Bank (CB) is getting ready to buy massive amounts of gold, and the market prices will allow the bank to avoid accounting mistakes.

Gold Breakout on Yearly Chart,