World Gold Council Country Reports

Consumer demand trends in individual countries:
Asia/ India
• Overall consumer demand in India in the first quarter of 2006 declined by 27% to 145 tonnes. This was largely driven by the sensitivity of the Indian market toward price volatility.

• Jewellery demand reacted sharply to price volatility, falling 38% on the previous year which was an exceptionally strong performing quarter.

• Sentiment within India, in part aided by media commentary, became increasingly attuned to the belief that gold prices would continue to rise, thereby providing some support to consumer demand in the jewellery market. Demand during the key festival of Akshaya Thrithiya, on April 30, appears to have been higher than in 2005.

• Despite an overall decline in demand, net retail investment boomed, rising 32% on the same period in 2005, itself 90% higher than that of 2004. Two factors propelled this higher: increased promotion by banks following the success of earlier WGC-assisted campaigns; and the general belief that prices will continue to rise, whereby individuals are actively purchasing gold coins and small bars with the view of turning them into jewellery at a future date.

Saudi Arabia

• Saudi Arabia witnessed a stock market crash in February 2006, affecting both consumer sentimentand the purchasing power of high-income individuals for the first quarter. Against this background, the rising price of gold proved a heavy deterrent to jewellery purchases which dropped 30% on the previous year.

UAE and the Gulf

• Consumer demand in the UAE suffered heavily in the first quarter of 2006 as the country mourned the death of the Ruler of Dubai. The Dubai Shopping Festival, a key period for gold sales in the region, took place over this period and as a result was scaled down.

• The first quarter in Kuwait followed a broadly similar scenario whereby a mourning period for the death of the Emir in January, negatively impacted consumer demand for gold.

Turkey

• Turkish jewellery demand was 43% lower year-on-year, although again the comparison is with an exceptionally high quarter in 2005. The rise in gold price was the major cause; however its impact was exacerbated to a small extent by an 11% fall in tourist numbers.

• The rising price encouraged gold investment during the quarter, producing the second highest
quarter ever recorded for gold investment in Turkey.

Europe and United States

Europe

• In Italy, spending on luxury products, including jewellery, continues to be constrained by weak
employment growth and falling real wages.

• In the UK, purchases of all forms of jewellery remained subdued. Both in the UK and Italy it was clear that demand for higher quality, more fashionable and stylish pieces continued, while plainer mainstream items suffered.
www.gold.org

• There has been little change in the trend of European retail investment, with new buying offset by dishoarding and profit taking. Dishoarding from France, essentially younger people selling inherited gold, still dominates the overall picture.
U.S.A.

• While the US economy started the year in robust form, signs of emerging weakness resulted in
tighter consumer spending on luxury goods. Combined with the rising price of gold, this resulted in a 5% decrease in jewellery demand in tonnage terms on the same period in 2005. Nevertheless, this equates to a 23% increase in underlying gold value.

• In contrast to jewellery, buying of coins and small bars has been strong in the US, rising 41% above year-earlier levels.

Marino G. Pieterse Reports

Kitco Bullion Dealers commentator Marino G. Pieterse, made the following points, with respect to gold's current pricing and demand on May 29th:

"The World Gold Council (http://www.gold.org/) reported in its recently published update on supply and demand statistics with data for the first quarter of 2006 that sustained interest from different groups of institutional investors drove the gold price to new highs However, according to figures completed by GFMS (http://www.gfms.co.uk)/, the world's premier research institute on gold, total demand for gold at 835 tonnes was 16% lower than in the first quarter of 2005, primarily as a result a significant fall in jewellery demand particularly in Asia and the Middle East, This is according to my prediction in Goldletter's April-issue, when I pointed at the price sensitivity on demand as a result of increasing gold prices.

Gold jewellery demand, accounting for 52% of total demand, fell 22% (175 tonnes) to 531.4 tonnes from 706.8 tonnes in the first quarter of 2005, compared to 109 tonnes flowed into Exchange Traded Funds (ETF's). Although this was the largest quarterly increase in investment since the World Gold Council backed street TRACKS Gold Shares listed on the New York Stock Exchange at the end of 2004, also according to my expectations this demand was not strong enough to compensate fully for the decline in jewellery demand."

Summer Gold

The recently released figures compiled by GFMS Ltd. for the World Gold Council have revealed some interesting facts for gold's future outlook. The report released this week tied jewelry demand in Asia and the Middle East in particular, to the fall.

As far as ETFs are concerned, it said that "easy access ETFs provide investors to the asset. But the most prominent aspect of the report revealed that the "most significant finding in the report is the fact that investment demand is surging ahead and that gold is reassuring its monetary value and is reganing respect among Western investors and institutions alike," says Jon Nadler, investment products analysts for Kitco.com.

Nadler says gold is making a come back at the moment. But the question remains, after the recent sell off and correction, will that price reach the 800 mark as predicted, by the end of this year? Investors wait and watch as the summer unfolds and the upcoming months set the track for the final length.

Who Is Buying Gold?

Kitco analyst Roger Wiegand, discusses global gold markets, reflecting that, "China, India, Japan and in greater amounts the Middle Eastern oil barons, are all prolific gold buyers. Several We heard of a report last week which was not verifiable, that only about 1% of the general markets buying public is invested in gold or gold stocks. We know the number is low but cannot be certain it is that low at this time. Nevertheless, investment reports and market-chart behavior indicate most retail street investors are thinking buy and hold forever while watching their mutual funds go into the dumpster."

Wiegand furthers that, "Central banks were dumping gold with both hands at $250-$450 and now are closet buyers. Those with the opportunity to sell more under the international gold selling agreements are holding back not selling their quotas or prearranged amounts."

Profile: Mining in South America

According to an MBendi, South America Mining Report, "South America still attracts the most exploration dollars in the world – 27% of global gold exploration and 38% of base metals. Argentina has seen a constant reduction in exploration expenditure since 1997, with expenditure in 2000 totalling $110 million ($130 million in 1998).The floating of the Brazilian currency on world markets resulted in a collapse against the US dollar of up to 40%."

The president of Bolivian owned energy company Petrobas, is reported to have scheduled talks with Brazil- as bilateral agreements were discussed with Brazilian Energy Minister Silas Rondeau.

The heat is turning up in South America, as countries, but US commercial agreements with Latin American countries on an individual level, could be serving to undermine a goal of political and economic integration. Chile, Peru, Colombia and Central America are all tops on the list of countries with whom the US has signed free trade deals, while Uruguay and Paraguay could be next.

Is real integration for South America merely a pipe dream or is this idea worthy of merit?

Mining in Bolivia Faces Uncertain Times Ahead

Bolivia's mining sector could be in for a shake up as the government is reported to be placing control over mining, forestry as well as other areas in the countries economy. President Evo Morales is said to be nationalizing natural gas.

Morales is reported to have said that this movement around natural gas, "was just the beginning, because tomorrow it will be the mines, the forest resources and the land." Higher taxes and royalty payments are on the agenda for existing properties, in an attempt to spread the wealth in Bolivia's mining sector.

Bolivia, a country with a rich history of struggle over control of precious metals, has faced competing interests since the Spaniards discovered silver in 1544. According to a Country Report, "From 1557 to 1985, the mining industry dominated the Bolivian economy. By 1985, however, the production of every significant mineral in the country had failed to exceed the output registered in 1975."

According to the same report, In order to capture gold as a reserve for the Central Bank, in 1988 the government offered a 5 percent bonus over the international price of gold on local sales to the Central Bank. Gold was mined almost exclusively by over 300 cooperatives throughout the country, along with about 10,000 prospectors. "

Mining cooperatives ended up requesting additional land from the government, in order to explore prospects. It was said that, "Government policy favored augmenting gold reserves as a means of leveraging more external finance for development projects. "

However, at the moment, government policy tows a different party line as it sets a course for redistributing the wealth of a nation. This trend in post-colonial societies who have the political means of staving off outside influence, is see other places in the world such as Zimbabwe, where the government has set out to reallocate control over its land, making a point of shirking off a history of British rule. What this often means however, is that countries in the midst of implementing this kind of change, face a high price as trading partners begin to diminish and the country is left with little in the bank, in terms of foreign currency.

What's next for Bolivia? How will Spain and Brazil react to the news of the country's reforms? Only time will tell.

Gold: A Running Commentary

The situation in Iran continues to aid in speculation over what will happen in the commodities market. Gold is safe and in a time when Bloomberg reports, "Yesterday, Iran asked the United Nations to take urgent action against the U.S. for what it describes as a threat to attack its nuclear facilities. "

Since January, uncertainty has been rising along with the price of the metal, valued around the wrold for various purposes. Overall, however, gold is the old standby during moments of political unreset.

According to GlobalSecurity.org, "From the end of World War II through 1983, domestic mine production of gold did not exceed 2 million ounces annually. Since 1985, annual production has risen by 1 million to 1.5 million ounces every year. By the end of 1989, the cumulative output from deposits in the United States since 1792 reached 363 million ounces. "

The IMF has stated that their current gold holdings, "are valued on its balance sheet at SDR 5.9 billion (about $9 billion) on the basis of historical cost. As of March 31, 2006, the IMF's holdings amounted to $60 billion (at then current market prices). "

Gold: The Fashion Statement

The World Gold Council has listed its list reasons for why its wise to invest in gold. Perhaps stating the obvious, that, "Gold has proved itself to be an effective way to manage wealth. For at least 200 years the price of gold has kept pace with inflation. In 1999, Alan Greenspan, then Chairman of the Federal Reserve Board of the United States of America, said: 'Gold still represents the ultimate form of payment in the world."

Enough said? Well maybe not. Given all of gold's recent attention in the media, it seems as though the commodity has become somewhat of a fashion trend. Despite the fact that it remains to be one of the world's oldest signs of status, it seems as though it's getting a bit of a makeover today, as younger generations are requiring more incentive.

Can we say that gold has become bullish on the fashion front this year? Some might argue yes. James Jefferson, a designer for the Jefferson Sukhoo label has commented that, "Gold evokes a feeling of wealth. It's symbolic of fashion's return to luxury."

Pam Danziger, Presdient of US Marketing firm Unity, has publicly stated that, "After years of catering to the Boomers' luxury appetites, luxury goods marketers need to tap the tremendous spending potential of Generation X-ers."

Oil on the Rise

Iran again in the news, reported that they will not halt their nuclear program. The country's decisions are having a marked influence on oil and commodity prices.

The reports are in- according to COMEX, "gold for June delivery rose $10 to $610.10 an ounce, near a fresh 25-year high. The rise in oil and gold prices was negative for overall investor sentiment. But it was good for the underlying stocks in those sectors."

According to the Economist online, "MAHMOUD Ahmadinejad, Iran's president, has advice for those who oppose Iran's nuclear programme: Be angry. The war of words between the Islamic Republic and a group of western countries worried that Iran is trying to make nuclear weapons has intensified sharply. The week began with a disputed report of American plans to use nuclear bunker-busters against Iran, and continued with Iran's announcement that it had enriched uranium..."

Such stark projections for Iran's nucelar policy future, could have wider implications for the market on the whole. In any case, the future for gold in terms of what might take place this summer, has been projected as we continue to face uncertainty within this region.

Gold Stoops Down Once More

Gold, as we all know, is not a free standing agent. Today as the price dipped down when oil took another tumble, due to increasing speculation on shortages in Iran and Nigeria, the precious metal did not take long to follow suit.

The instability that a country such as Nigeria has faced in the meantime, would take a long time to level as the government faces International speculation as to where N30bn Oil Proceeds have gotten to?

Additionally, an audit report out of the Nigeria Extractive Industry Transparency Initiative (NEITI) has uncovered sums from "N7.04 billion ($55million) to a whopping N30.720 billion ($240 million) as discrepancies in payment schedules of oil companies operating in the country to the Central Bank of Nigeria (CBN)." With these kinds of blemishes existing on the country's report card, the country ranks 152nd from 1st place on Transparency International's Corruption Perceptions Index, sharing a spot with Cote D'Invoire and Equatorial Guinea. Much in this regard, investors could be wise to show concern.

Gold Hedges on Concern Over Increase In Oil Prices

April 7th - For the first time since 1981, gold is seen to be taking a leap today up to $600 against concerns over oil prices. Sources at Bloomberg report that, "Gold for June delivery rose as much as $9.40, or 1.6 percent, to $601.90 an ounce on the Comex division of the New York Mercantile Exchange, surpassing $600 for the first time since Jan. 6, 1981. It was at $597.80 at 9:13 a.m. local time."

Christoph Eibl, head of commodities trading at Zug, Switzerland-based Tiberius Asset Management AG has said, "We're entering bubble territory... Prices have moved away from reality, and are no longer linked to fundamentals.''

RBC Capital Markets Offer 2006-2009 Outlook Perspectives

From the mouths of one of the world's biggest gold companies, Bobby Godsell, chief executive of AngloGold Ashanti, was recently reported to have, "predicted that worldwide gold production would stagnate, then fall in the coming years as large deposits of the precious metal become scarce," in an aritcle in the Financial Times.

After hitting a 25 year high last week, speculation around gold is a hot topic. Mr. Godsell also was reported to have said that, "“All of the gold majors are finding it difficult to replace their reserves. New mine production will be flat-to-declining.”

Even more telling, "RBC Capital Markets in London estimated that total gold production would rise slightly in 2006 and 2007, be flat in 2008 and start to fall in 2009. 'There hasn’t been a big gold discovery for years,' said an analyst."

Gold for June Delivery Takes a Minor Tumble

Sources at MarketWatch report that,"June gold fell $3.30 to $588.50 an ounce," as of March 31st, 2006. The reason one might ask? Quite simply it can be linked to the fact that, "Strength in the U.S. dollar eased some investment demand for the precious metal after gold touched a fresh 25-year high of $594.60 overnight."

On the other hand, May silver was reported to have gone down 8 cents at $11.58 an ounce, following on the heels of a 22-year high. As many were predicting, once the ETF had been approved, the price of silver may just be levelling for the near term period.

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Will Gordon Do It?

And the question still remains, will Gordon Brown take the plunge and sell off the majority of Britain's gold reserves? As the price of the commodity continues to near the $600 mark, the heat under Brown's collar could be just enough to lift the golden latch.

According to Gabriel Rozenburg, reporter for the Times, "The Chancellor sold 395 tonnes of Britain’s gold reserves between 1999 and 2002, generating $3.5 billion. At yesterday’s London closing price of $554.10 he would have generated more than $7 billion (£4 billion)."

With all the speculation factored in, that gold will peak at around $800 by the end of the year, keeping an eye on Mr. Gordon's temperament, could prove useful.

Bill Jamieson, reporter for the Scotsman newspaper exclaims of gold's upsurge: "This is all deeply embarrassing for our Chancellor, Gordon Brown." Brown has been known for his poor timing in the past, selling off the country's gold reserves at inopportune moments. Will he step in and lay a correction for his past actions? Stay tuned.

ETF Ruling Is Here

The long awaited news that silver will become and Exchange Traded Fund is in. Reuters is reporting that: "U.S. benchmark silver futures shot to a 22-year high on speculative buying on Tuesday after the U.S. Securities and Exchange Commission approved rule changes for a silver exchange-traded fund." Silver for May delivery also is reported to have received a shot in the arm.

One the other side of the equation, critics are toting that silver has been overvalued in its own right, irregarldess of the outcome of the ETF ruling. The proof will be in the pudding, whether or not this will be the case over the upcoming months, once the fever has finished breaking.

Gold at Highest Rate Since December 8th, 2005

As of Friday, March 10th, gold took a rise not seen since late last year. What did analysts attribute to this recent increase? Oil and the Euro seem to be what lies behind the scenes, as we see gold make a slight adjustment. More from The News International, in Pakistan.
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"GOLD: Gold climbed to its highest level this year, amid a plunging US dollar and surging oil prices.

An ounce of gold climbed to $446.76 Thursday spot price and $443.70 Friday for the fixed price — its highest level since December 8. "A stronger euro and new highs of crude lifted the yellow metal back above 440 dollars," said UBS analyst John Reade.

The dollar plunged to a two-month low point against the euro this week on structural concerns over the US twin deficits, making gold — priced in dollars — cheaper to buyers using other currencies. Record oil prices boost gold as it is deemed a less risky investment."

A Recipe for Portfolio Success?

This check list, prepared by Chairman of Weiss Ratings, Mark Weiss, was recently posted on "Precious Metals Warrants." Weiss' advice to include gold in one's portfolio to balance things out, could need further examining. Taking a look at how the mining industry is shaping up after last year's trend in mergers and acquisitions amongst some of the world's leading gold mining companies (ie.Barrick/Placer Dome), Robin Bennett of Hunter Dickinson Inc. says, "once the waves of post merger integration have smoothed, we will see a further increase in appetite amongst majors, to earn into junior mining assets that have projects close to production."

Keeping an eye out for this trend, could help aid in understanding how these markets will turn.


Warning! Fiscal Hurricane Approaching! Is Your Portfolio Secure? Part 1

Martin Weiss, Chairman of Weiss Ratings, Inc. and author of ‘The Ultimate Safe Money Guide,’ has said:

1. “Get out of the stock market."
2. Put up to 60% into short term treasury bills.
3. Put up to 20% in 3-5 year treasury notes.
4. Put 10% to 20% into gold bullion and/or gold mining shares (Editor’s Note: and other precious metals and energy stocks and/or the warrants of those that expire in more than 3 years) depending on how bullish you are on this sector.
5. Put 10% to 25% in one of a variety of hedge funds depending on how aggressive you want to play the market.
6. Be patient and wait for the bottom of the stock market and then buy with both hands but beware of false bottoms. Include gold, etc in such a portfolio because gold is negatively correlated with other asset classes. It is a great way to balance your portfolio.
7. Pay off all your debts including the mortgage on your home.
8. If you are mortgaged to the hilt then sell NOW and rent for a few years and then buy back in, if you wish, once prices have dropped (and they will!) or once the danger of the decline has blown over."

USD and JPY Currency Pair Could Show Signs of a Larger Turn, March 2

"Lien recommended as technically strategy that USD/JPY has broken below a 2 month trend line as well as its shorter term 20-day SMA and longer term 100-day SMA. The breakdown signals a possible shift in trend, but we would need to a close below 115.00 to get the real confirmation that USD/JPY uptrend has no run its course and is essentially over. However, if the currency pair manages to close back above 117.50, then the downtrend is negated and the uptrend in USD/JPY remains intact. "

Gold Futures Are Up In This Morning's Trading, March 2

SAN FRANCISCO (AFX) -- Gold futures edged higher Thursday on the heels of a two-session climb, with the April contract up $1.10 at $566.90 an ounce. The contract touched a three-week high of $569 on Wednesday. "There's little reason to be overly concerned about any major retracement, but there's also little evidence that the market will break out to new highs anytime soon either," said Dale Doelling, chief market technician at Trends In Commodities. "Traders' patience will likely be tested over the next several weeks and one side will finally cry 'uncle'," he said