6 May 2006

Driven by uncertainty, gold makes its move

AFX News Ltd. London : Financial News Products: "Sometimes known as an alternative currency, the precious metal has traditionally offered a means through which investors can offset financial losses or potential losses or hedge against inflation.

With the dollar recently trading at a one-year low against the euro and a seven-month low against Japan's yen and experts betting on further weakness in the greenback, gold has climbed more than $150 an ounce year to date.

'The only one who doesn't know the U.S. dollar is dead is the U.S. dollar,' said Peter Grandich, editor of the Grandich Letter.

And 'as the decline in purchasing power of fiat currencies is magnified, gold will start attracting even more interest from individuals that are seeking an alternate 'currency',' said Emanuel Balarie, a senior market strategist at Wisdom Financial.

Federal Reserve Chairman Ben Bernanke said last week that the U.S. central bank may pause its interest rate-increase cycle, adding to the misery of the dollar, and global concerns over Iran's nuclear research has sparked interest alternative investments.

Now there are 'trillions of dollars floating around and as people flee paper money (dollars), gold and silver money become attractive competitors,' said Peter Spina, a chief investment strategist at GoldSeek.com.

One could say, 'gold IS money,' he said.

Indeed, 'while paper money is a liability with no intrinsic value, gold has -- in all situations,' said Julian Phillips, an analyst at GoldForecaster.com.

'To have a stockpile of gold means to have a measure of financial security no matter where one is on this earth, and this will hold true no matter what price oil goes to or how high global uncertainty rises and confidence"

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