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$1,800 Gold by the End of the Year?

By Roman Baudzus, June 6, 2011

According to many market observers, Asia’s economic growth rate will decline significantly in the coming months – with China and India in particular affected. In order to curtail rising prices, the People’s Bank of China (PBC) has tightened its monetary policy several times since October last year, and has announced further restrictive measures. But despite increasingly hawkish policies from some of the continent’s central banks, world-wide demand for commodities is not expected to decline over the next few years, with base and precious metal prices expected to rise.

Many analysts think that the PBC’s anti-inflation measures have been too weak to make a difference, though many fear that Asia‘s economic growth could slow significantly in the foreseeable future – fears that have hurt the prices of base metals such as copper, zinc and aluminum. Others differ, however, and see Chinese demand picking up in the second half of this year. Many industrial end consumers are reducing their inventories drastically as a result of high commodity prices, and will have to return to the market soon to replenish their inventories.

As Firoz G. Merchant, chairman and founder of Pure Gold Jewellers, told Khaleej Times in an interview, other factors are expected to support precious metal prices, including the geopolitical situation in the Middle East and North Africa, which is likely to support high oil prices. Financial instability across Europe and the United States is also boosting demand for gold and silver, while accelerating inflation in several Asian economies is also causing many Asians to buy gold and silver as hedges against depreciating currencies. Merchant, founder of one of the fastest growing jewellery houses in the Middle East, added that he expects growth rates in large parts of Asia to remain high enough to support the demand for a wide range of commodities.

Merchant said that oil prices will likely remain in an upward trend in the coming years, and that we could see oil prices climbing to $200 a barrel, which in his view could become the new “normal”. However, due to the volatility in the crude oil sector, a growing number of investors at the international capital markets would favour investments in gold over oil. The yellow metal’s appeal among investors was on the rise due to better investment returns in the last couple of years. The growing demand for physical gold in China and India will result in a continuance of the yellow metal’s upward trend.

Merchant forecasts that the gold price will trade in a range between $1,700 and $1,800 per ounce later this year. In his view, the gold price has the potential to reach $3,000 per ounce in three to five years, with investors fleeing to gold owing to currency debasement and debt problems.

This article is written by Roman Baudzus of GoldMoney.com and with their kind permission, O B Research has been privileged to publish their work on our website. To find out more about GoldMoney, please visit:

Record Sterling Gold Price as UK Economy Weakens

June 6, 2011

Last Friday’s weak US employment data pushed gold prices up, with the most actively traded Comex gold contract – for August delivery – settling up $9.70 (0.6%), at $1,542.40 per troy ounce. Though platinum and palladium futures also settled up for the day, silver was hurt by the weakening economic sentiment, with the silver Comex contract for July delivery closing down 1.1 cents at $36.191 per ounce.

Meanwhile, gold priced in British pounds reached a new record price last Friday of £945 per ounce, as investors grow increasingly wary of the fragile state of the UK economy and rising inflation there. Britain’s coalition government is coming under increasing pressure to soften its approach to cutting the country’s budget deficit, though given the modest nature of the cuts so far attempted (UK government borrowing hit a new monthly record of £10 billion in April) it’s not clear that an even looser, more relaxed approach to deficit reduction from the government will necessarily result in GDP growth – especially if economic conditions in the rest of Europe, America and East Asia continue to deteriorate.

The old cliche “if America sneezes, the world catches a cold” remains apt, and the US economy is in a depression rather than a recession. The fall in US house prices over the last four years has beaten the slide in valuations that occurred during the 1930s Great Depression, and the unemployment situation there remains dire – despite government statistical adjustments that might tempt some to think otherwise.

In the words of economist John Williams of shadowstats.com: “actual (US) business activity continues to suffer severely, and much-more-extreme reporting ‘catch up’ looms in the month and months ahead. There simply is and has been no underlying fundamental circumstance at hand that could sustain positive growth in the broad US economy… with consumer income not growing faster than inflation and with debt-expansion potential still severely restricted, broad economic activity has no basis for entering a period of sustained growth. At best, various short-lived stimulus gimmicks may have short-lived impact.”

With US consumer demand important to so many countries (not least the UK), this can’t help but have an effect on economies all over the world. America is losing its dominant position in the world – economically as well as geopolitically. But as the sub-prime mortgage crisis of 2008 showed, bad events in America still have a nasty habit of wrecking havoc elsewhere.

This article is written by the GoldMoney Newsdesk and with their kind permission, O B Research has been privileged to publish their work on our website. To find out more about GoldMoney, please visit:

NEWS: Dacha Sells 30,000 Kilograms of Yttrium Oxide

June 7, 2011

Dacha Strategic Metals Inc. announced today that it has sold 30,000 kilograms (“kgs”) of Yttrium Oxide from its domestic supply in Shanghai at an average price of 230 Rmb per kg (including VAT) for gross proceeds of 6,900,000 Rmb(approximately US$1.1 million). Based on the original purchase price of 58 Rmb per kg and a total gross purchase price of 1,740,000 Rmb, the Company realized a pre-tax gain of 5,160,000 million Rmb (approximately US$0.8 million).


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Orvana Minerals announced the commissioning of the EVBC
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We are increasing out target price from $5.00 to $6.00 and maintain our BUY recommendation.

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