"Gold may shine again in 2009"

[Atash Hagmahani]

http://www.telegraph.co.uk/finance/breakingviewscom/4076105/Gold-may-shine-again-in-2009.html

Actually, it's doing fine at the moment. It's in a rally.

The problem that I perceive is that the "spot price of gold" is really the contract price at the commodity exchanges. There is far more "paper gold" trading than REAL gold. So, every time we have another "liquidity crisis"--and I think one is coming again this year--then precious metals get crushed.

BUT, it is becoming increasingly difficult to take delivery. It is possible that at some point, it won't be possible at all. Already at this point, spreads between contract price and retail price are growing.

Although I do have money invested in gold MINERS, I am of a mind to get out at some point in this rally, because stocks are "paper", mining costs are increasing, and the "paper price" of gold impacts gold miners' profits more than the street price.

[offdalip]

and I think one is coming again this year--then precious metals get crushed.

Take delivery, when prices come down a little.

I did late last year, not enough, but I'll keep building my position on any downturns.

That said... After May, I think TSWHTF economicwise when the huge stimulus package finally gets monetized......

[Watcher]

A rumour is being reported in England that the Chinese are looking to use some of their stockpile of USD to buy up small gold mining companies.

As the Chinese have too many USD and the price of small gold mining companies is strangely low it does make a certain amount of sense.  It is just speculation, but it does fit with the pattern of China investing in natural resources companies and the timing is good.

I think keeping an eye on Chinese state overseas investments is going to be a good idea.  How they dispose of their USD will have huge implications for the rest of the economy, as well as which particular sectors they do decide to concentrate on.