Remonetization of Gold: Start Hoarding

        In a 55-page Special Report on Gold, Paul Mylchreest, analyst with Credit Agricole Cheuvreux, London, U.K., says Gold and Gold Mining Stocks are poised for an unprecedented rise in prices and profile. Here are the highlights of that Special Report. Download the full report in a pdf format.

• We are raising our mid-cycle gold price estimate to US$900/oz from US$750/oz and see the possibility of a spike to US$2,000, or higher. Covert selling (via central bank lending) has artificially depressed the price for a decade.
• Central banks have 10-15k tonnes of gold less than their officially reported revenues of 31k. This gold has been lent to bullion banks and their counterparties and has already been sold for jewellery, etc. Non-gold producers account for most and may be unable to cover shorts without causing a spike in the gold price.
• There is a supply deficit in the gold market of around 1,300 tonnes p.a. before any central bank selling and perhaps 700 tonnes p.a. after "official" sales, but before covert selling. This compares with world gold mine output of only 2,500 tonnes p.a. Some central banks, notably Russia, are starting to buy gold.
• Gold acts as an early warning of potential crisis such as rising inflationary/deflationary pressures and general confidence in paper currency, especially the USD. A strongly rising gold price could have severe consequences for US monetary policy and the USD. History suggests that gold always wins against an inflating paper currency (i.e. one subject to excessive supply growth).
• Gold and gold mining stock are poised for an unprecedented rise in prices and profile. Investors in UK/European equities need to assess the implications for their portfolios. Global/hedge funds may be better placed to respond. Anglo American is the only large cap gold/precious metals play domiciled in Europe.