1   Gold should “catch up” to other commodities.  
Through early December 2009, silver was up 70%and Platinum had risen 60% compared to just 35% for gold.  Oil Prices were up over 100% since February Supported by a Bank of America securities report, gold should catch up soon.

       2 A falling dollar usually pushes gold prices up.
Gold is universally quoted in dollar terms, so when the dollar falls gold usually rises. There tends to be a mirror image (negative correlation) between gold and the dollar.

        3    Inflation is now beginning to rise.
Late 2008, the Fed doubled the U.S. money supply within three months- which is unprecedented in U.S. history.  As Milton Friedman said, “Inflation is always and everywhere a monetary phenomenon.” This new money will fuel inflation over time, even though we’ve so far only seen inflation in commodity prices and other assets.

        4    China is buying gold.
For its central-bank reserves. China is reducing its proportion of dollar purchases. Government-run Chinese TV encourages 1.3 billion new Chinese “gold bugs” to invest in gold, which they can now do at local banks, fueling domestic demand.

        5    The national debit is soaring.  
The White House recently predicted that another $9 trillion will be added to the deficit over the next 10 years, DOUBLING the national debt by 2019. In 2009, the U.S. budget deficit added $1.6 trillion, more than three times the previous year and 1o times that of the 2007 deficit.   Uncle Sam’s total debt now equals more than 80% of GDP.   

   6   New Gold ETF’s
(Exchange Traded  Funds) Will promote more gold buying. ETF’s must buy physical gold to back their shares. This alone boosts gold’s demand volume. The SPDR Gold Shares exchange-traded funds (ETF) now hold more gold than many major governments, about $35 billion in gold. In addition to the existing ETF’s a new gold ETF Was recently launched, “Physical Swiss Gold Shares.”

   7    Major insurance companies and hedge fund managers are buying gold. Northwestern Life, America’s third largest insurance firm, recently bought gold for the first time in its 152 year history. In addition, 20 of 22 (91%) leading hedge fund managers recently surveyed were buying gold personally for protection from a weak dollar and inflation.  Individual and IRA demand was up so much in the last year that for the first time in 23 years, the U.S. Mint had to suspend selling many different gold bullion coins.

    8 Gold hedging by producers has stopped.
Leading gold mining companies like Barrick Gold have stopped hedging their future gold production.

     9  Jewelry demand is the missing link.
Gold has risen strongly without help from India and other global jewelry markets. Jewelry demand is down 25% in 2009. Once those markets recover and after the global recession ends, this major demand source could push higher, faster.

  10  Another 9/11 (or similar crisis)
This could send gold soaring. The attack on America in 2001 was the beginning of the current long term bull market in gold.

   11  Central banks are now net buyers  of gold.
For the first time since 1998 – when the current program of central bank gold sales began.

   12   Gold production growth is down
Down 8% per year since 2001 falling about 1% each year. The South African mines are old and depleted. It takes years to bring a new find into production. New gold supplies barely match population growth, so that any demand growth can push gold higher.

  13    Mainstream publications are turning stock market investors into gold bugs. Nearly every day, the Wall Street Journal and Financial Times have gold stories, plus Barron’s “Commodities Corner” and major money magazines, Forbes, Fortune, Money and Smart Money all feature gold on their covers.

  14    Failed banks are draining FDIC reserves.
In 2009 well over 140 banks failed and over 550 are predicted to fail as well. The FDIC reserve fund is down for .22% of insured deposits. The FDIC estimates that bank failures by 2013 will cost the FDIC $70 billion – vs. $10 Billion available now.

  15    The “Dubai World” debt default took the world by surprise.
Helping to send gold above $1200 in December 2009. In America, a new health care bill on top of other massive spending programs could send the federal deficit souring further. The dollar cold then decline much faster, sending gold up farther.