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The Enormous Undervaluation of Gold

(PRWEB) December 14, 2005

Gold has already blasted off to new 22-year highs. It has just blown past $ 526 per ounce — and is likely heading MUCH higher.

As we have mentioned previously, the reasons are clear:

— Central Banks Printing Money

— Depressed Oil Prices That Are Now Surging

— The Rise of India and China

Gold surged to $ 530 recently before easing back to $ 526, but it’s still so enormously undervalued it’s a joke.

Let’s say you owned an ounce of gold in 1980. And let’s say you cashed it in at gold’s peak of $ 850.

You’d walk out of the gold dealer’s with $ 850 in your pocket. Today, it would take a gold price of $ 2,176 to equal the inflation-adjusted value of that ounce of gold in 1980.

So put another way, today’s gold price of $ 526 is less than one-quarter of what its true inflation-adjusted price was 25 years ago. Just half of that level would be $ 1,088, more than double today’s gold price.

One of the huge fundamental forces driving Gold inexorably higher today is the World’s Central Banks also underestimated the meteoric rise of India and China as consumers and players on the world market.

The formula is simple:

In China and India over 2 Billion people want a better lifestyle and more quality products – and they want them now. Their demand for raw materials including gold is massive – add these modern desires and consumer tastes to limited supplies and you get surging inflation and booming gold markets.

China and India are pressuring gold prices both directly and indirectly. Remember that the world Gold market has only recently been opened to 1.2 billion people for the first time since the Red Army marched into Beijing in 1949. Gold is also an important aspect of the culture of both these countries perhaps more so than any other nation. In India Gold is often gifted at weddings and in China, Gold is associated with wealth and good fortune.

So first, they’re buying Gold themselves. Second, they’re driving up worldwide inflation in natural resources all over the planet, which also drives up Gold.

This is big. It’s happening right now. And it’s not going away.

Gold is the best hedge against inflation, bar none. It’s also a hedge against social and political instability, a feature of our world that, unfortunately, is in abundant supply.

BOTTOMLINE: Gold is in a powerful bull market and is heading higher still.

For More Information Contact:

Steve Pond

enquiries [@] 1st-gold-information.com

http://www.1st-gold-information.com

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