Gold Finally Crosses $1000 Threshold

Gold is shining brighter than it ever has before; the precious metal hit its all-time high of $1000 per troy ounce Thursday and many speculate that this price is far from the ceiling for the metal.

The price of gold has been rising in recent months due to the weakening U.S. dollar, the slow-down in production in gold mines, and the increase in inflation. Gold hit a record price when gold for April delivery rose to $1001.00 in morning trading and then dropped slightly to $980.50 in mid-morning in New York. It rose 32% in 2007.

"I believe gold is going to go higher," said JPMorgan Chase analyst John Bridges. "[Now that we have gotten] above 1000, we are going to get a whole lot of momentum driven investors who are going to drive the price higher."

Gold is traditionally denominated in U.S. dollars, although the currency stopped being backed by gold in 1971. The ongoing weakening of the dollar against other currencies of the world, particularly the yen and euro in recent days has driven investors to flock to the metal as a means of protecting themselves.

This is similar to the spike in the price of the metal that occurred in late 1979 when it hit $850 per troy ounce as investors rushed to gold on fears of increased inflation. The price of gold fell back to depressed levels in the early 1980s as the Dow Jones industrial average passed the 1100 mark for the first time. Gold stayed at these depressed levels until the recent housing slump and credit crunch brought the dollar spiraling down against the world's other currencies. The U.S. currency fell to a more than 25 year low against the yen on Thursday when it fell below 100. (See: " Yen Strengthens, Briefly Dips Below 100 Per Dollar")

A number of other factors are driving up the price of gold, including slower production in gold mines, particularly in South Africa. The country experienced a severe blackout in mid-January, causing mines to close for a week and cutting production at Gold Fields (nyse: GFI - news - people )for the three-month period ending in March by 25%. The firm is Africa's second largest gold producer, accounting for 12% of global production in 2007. Also, utility company Eksom was forced to cut power supplies to 90%. Gold Fields said this decrease in power would reduce the capacity of the mines by 20% from the next quarter onward. (See: " Gold Fields Counts The Cost of Power Crisis")

Gold mines around the world are also aging, causing a lower-quality product to reach plants and slow production. "Mine supplies have been falling and central bankers have been less willing to sell gold from stock, and at the same time Asian demand for gold has been holding up," added JPMorgan's Bridges.

The ability to invest in precious metals via exchange-traded funds, set up over the past two years, has also boosted prices, providing a conduit for the investment community to put their money into gold. These include StreetTRACKS Gold Trust (nyse: GLD - news - people )which rose 1.4%, or $1.33, on Thursday, to $98.44 .That is up from $82.46 at the end of last year and $63.21 at the close of 2006.

Gold is not the only metal that has been shining more brightly of late. Silver hit its highest in more than 25 years when it hit $20 an ounce in early March before falling back to $19.94 and platinum rose to a high of $2128.50.

Gold and Silver Shine Brighter

Gold has reached new levels of glitz as the dollar continues to fade.

The precious metal is rapidly approaching $1000 per ounce and is likely to hit that new level sometime this year. Gold hit a record price when it rose $7.60 to $975.10 after having traded as high as $978.50 in New York. It has risen 16% in 2008 on the top of a 32% increase in 2007.

Gold is not the only metal that has been shining more brightly of late. Silver hit its highest point in more than 25 years when it hit $19.92 an ounce before falling to $19.74 and palladium was up to a new six-year high of $582 an ounce before falling to $560.00. Platinum rose to a high of $2,161. The price of precious metals is being driven up by a weakening dollar; the U.S. currency fell .6% on Friday to $73.82 on the dollar index which measures the buck against six other currencies, as well as rising costs of gold production due to aging mines and depletion of product.

"There are a couple of drivers that are pretty important for the gold price right now, especially the U.S. dollar, it's an inverse relationship that's pretty tried and tested," said Dundee Securities analyst Mark Smith. "As the price of gold goes up, producers are able to mine lower grade materials and since the plants are fixed in size that makes production on an annual basis decline slightly."

Gold is denominated in U.S. dollars and the weakening price has driven investors to flock to the metal as a means of protesting themselves.

StreetTRACKS Gold Trust (nyse: GLD - news - people ), an exchange-traded fund that tracks the price of bullion, rose 0.2%, or 19 cents, on Friday, to $96.18. That is up from $82.46 at the end of last year and $63.21 at the close of 2006. "Inflationary pressures are something that are also playing into the market. Fundamentals are strong and I think $1,000 would not be an end. We are going to go higher from there," said Lehman Brothers analyst Michael Widmer.

The U.S. Treasury announced Monday that it supports selling some of the gold reserves held by the International Monetary Fund. The proposed gold sales could bring as much as 400 tons of gold to market. The IMF holds the third-most gold reserves in the world, behind the U.S. Federal Reserve and Germany's Bundesbank.

Gold ETF investment may increase 30% this year

As gold continues to set record highs, the World Gold Trust, the sponsor of the world’s largest gold ETF, forecasts a 30% increase in their gold ETF products this year.

Investment in gold Exchange Traded Funds (ETFs) promoted by the World Gold Council could surge almost 30 percent in 2008, if bullion prices continue to set record highs, a top fund official said on Thursday.

Gold ETFs, listed on stock exchanges around the world, offer investors exposure in the underlying commodity without taking physical delivery.

Sponsors of such funds buy a matching amount of the commodity and keep it in bank vaults. Interest has exploded recently as gold prices hit record highs above $930 per ounce.

"If all of the components that have been driving the price of gold remain in place, you could easily see our global product suite at 1,000 tonnes within a year," Stuart Thomas, managing director of World Gold Trust Services, told Reuters.

World Gold Trust is the sponsor of U.S.-listed streetTRACKS , which is the world's largest gold ETF. It accounts for 80 percent of 781 tonnes of gold -- worth over $22 billion -- held by several gold funds promoted by the World Gold Council.

Other key global gold ETFs, including Barclays' iShares COMEX Gold Trust and ETF Securities' ETFS Physical gold, have so far accumulated about 100 tonnes.

"Continued flows of new money into GLD would suggest that nothing has changed in the eyes of the average investor. People are still concerned about the weakness of the U.S. dollar, a weakening U.S. economy, an uncertain election and continued turmoil in the Middle East," Thomas said.

"The inflows have been a function of the price of gold, as I believe that GLD has achieved the status of a proxy for gold for many investors," he said in a phone interview from New York.

Spot gold hit an historic high of $936.50 an ounce on Feb. 1 and was at $905.70 by midday in Europe on Thursday. The metal has gained 12 percent this year on top of a 32 percent jump in 2007.

Inflows into StreetTRACKS, which grew nearly 40 percent in 2007 in volume terms, jumped to a record high of 652.56 tonnes in the middle of January, as investors flocked to the product attracted by a gold rally. The fund now holds 631.15 tonnes.

GROWING RETAIL BASE

Thomas said there had been a shift in the ETF's investor base since the launch of the product in November 2004, with more and more retail investors taking part now compared with predominately institutional investors at the beginning.

"Retail assets tend to be 'stickier' assets. I believe the retail investors have been buying gold not just for tactical reasons but as a valuable component of a well-diversified portfolio, which is a much longer-term view and not necessarily susceptible to short-term price fluctuations," he said.

About half the investor base now comprised retail players, he said, but added that pension funds remained slow in adopting gold as an alternative asset within their portfolios.

He said ETFs provided significant advantages for the average investor in terms of access, security and cost.

Thomas said there could be some withdrawal from the fund in case of a drop in gold prices, but the decline was not likely to be steep.

"I don't see gold falling back to $700 an ounce given the associated mining costs. Furthermore, while there would be a reduction in GLD assets, I personally believe that they would not be that great given the investor profile."

Secrets of a Mining Speculator

For the past six years, while other investors played stale blue chips, I've been showing home-run investments to people just like you, year after year.

Greg McCoach is the managing editor of the Mining Speculator and President of AmeriGold, a gold bullion dealer.

His stellar track record is one of the reasons why many of Hollywood's elite go to him to buy physical gold.

Greg's portfolio returns are nothing short of astonishing. Check this out...

2001............+129%

2002............+291%

2003............+348%

2004............+137%

2005............+154%

2006............+144%

Had you invested $10,000 in Greg's portfolio at the beginning of 2001 and reinvested the gains and the original invested capital at the beginning of each year, you'd be sitting on $2.4 million. Now that's the magic of compounding!


This year's not going to be any different.

Now, other analysts might call my stocks "speculative." But the thing is, I don't just pick up any old low-priced stock.

No, no, no. There's a reason why we're sitting on these consistent, massive gains - and luck has a lot less to do with it than you might think.

You see, over the past two decades, my experience has shown that there are three critical elements to raking in eye-popping returns.

Number one: The Advantage of Junior Mining Companies

Why invest in juniors?

That's easy - money and unparalleled leverage.

You see, it's not uncommon for junior mining companies to experience huge gains (tenfold or more) very quickly as news of a discovery leaks out.

On top of that, the exploding bull market in precious metals not only focuses more attention on the sector, but also causes even more money to be spent on exploration. And the payback for a new find increases exponentially.

It works like this:

Say, for example, we find a million-ounce deposit of gold. And an engineering study suggests it could be mined over ten years at a cost of $250 an ounce, including capital. Now, let's assume gold sells for only $350 an ounce.

That deposit's worth roughly $100 million.

But check this out:

If gold shot to $400 an ounce (a 15% increase), the value of the same gold deposit launches to $150 million (a 50% gain). That's over 300% leverage to the gold price (50/15).

Now, with today's gold price of $906, that deposit's worth $656 million. And if gold hits $1,000 an ounce, just like many analysts are predicting, that same deposit would be worth $750 million!

Now that's leverage!

And that's why I like this tiny $2.99 gold company in China so much. With the gold price as high as it is right now and the size of their property - 2.9 million ounces - it's a no-brainer.

But there's more.

You see, in the mining world, it's no secret that the majority of mineral deposits are found by junior mining companies and individual prospectors.

There are several reasons for this:

* Junior explorers are not slow-moving bureaucracies like many senior companies. Juniors make fast decisions both in the boardroom and in the field.

* Senior resource companies generally have a different role to play, namely, to fund and put into production deposits discovered and developed by juniors.

* But it's the talent, motivation and dedication of their management teams that is the secret to most juniors' success.


Number two: Know the Management Team Inside and Out

Listen.

When I'm looking at a company, I spend hours, days, and weeks with CEOs and geologists-even with the companies I would NEVER recommend.

It's the only way you can truly get a feel for their expertise.

After all, in the mining business, if an exploration geologist finds a mine, it's likely that he'll find others.

That's because far fewer than 5% of all exploration geologists will ever be credited with a discovery leading to a producing mine. What's more, less than one out of every 1,000 exploration sites will ever turn into a mine.

But those select, gifted explorers who find numerous mines seem to have a sixth sense that helps them to succeed.

Finding these geologists isn't the easiest task in the world.

I'll admit that it took quite a few failures before I started finding the perfect traits in an exploration company.

But they're all drawn to it for the same reason... money.

It's the huge potential that comes when a discovery's made.

You see, as part of a junior mining company, the geologist who makes the discovery might get $10 million, $20 million or $100 million in capital gains for his efforts.

After all, in the life cycle of a mining stock, it's the exploration phase that provides the biggest move in share price (leverage). A jump of several thousand percent isn't too uncommon - especially with a massive find like the one in Northern China.

The best and brightest mine finders know it. And they'll search the world over to make a new discovery. When they do, the monetary rewards are tremendous, for both the management team and for investors.

In your free report, you'll learn all about the dedicated management team behind my number-one play for 2008.

Number three: The Final, Simplest, and Most Overlooked Part of Making a Fortune Investing

It's best summed up by J. Paul Getty, one of the most successful investors of modern times. What did Getty know about building wealth and investing for spectacular gains that his contemporaries didn't?

Several years before he died, Getty shared his "secret." In his autobiography, he explained that whenever he made an investment, he tried to apply this simple principle:

If you want to make money, really big money, do what nobody else is doing.

In Getty's own words, "Buy when everyone else is selling and hold until everyone else is buying." This isn't merely a catchy slogan. It's the very essence of successful investing.

But as simple as it sounds, too many people do just the opposite. They buy high and sell low. They're trend followers or, to put it more bluntly, they follow the crowd..

The successful investor is a trendsetter, not a trend follower. He gets in - and out - ahead of the crowd.

The ones who do, especially during a precious metals bull market, are rewarded with explosive rewards.

How big?

Well, the last super bull market in precious metals, from 1975 to 1980, saw many mining stocks go from under $2.00 a share in 1975 to hundreds of dollars per share by 1980.

A $5,000 investment in Lion Mines in 1975 turned into $27.14 million. That's right. Over $27 million from just $5,000.

In 1986, a $5,000 investment in Barick gold would have turned into $329,787!

That's what J. P. Getty was talking about when he said, "If you want to make big money, really big money!"

Guess what?

We're entering another bull market for precious metals.

If you had invested just $5,000 in Denison Mines in 2003, you would have made more than $395,000.

A $5,000 investment in Aurelian Resources in early 2006 would have turned into $390,000!

Mark my words: This new bull market is just getting started. The second I realized how explosive these gains were going to be, I had to seize the opportunity.

China Is Expected to Become the World's Largest Gold Producer.

That's right.

Last year, China was the fourth largest gold producing country in the world. Only South Africa, Australia and the United States were ahead of it.

But here's the thing... since 1996, China's gold production has increased 41.39%. And China is just getting started in terms of exploring for the yellow metal.

South African, Australian and U.S. production slipped by 40.9%, 9.19%, and 20.53% during the same time period.

In fact, according to Goldletter International, China's going to become the world's largest gold producer within the next decade.

And this tiny company is lined up to reap some of the fastest profits the Far East is going to produce.

That's pretty easy to do, considering they have some of the best geologists in the business.

And the geologists and management in this company are second to none. After a few meetings and viewing the sites with my own two eyes, I'm a firm believer. Their head geologist is so elated, he talks about the areas like a man possessed. If these guys get excited about an area, I and my fellow investors are thrilled.

Why, the last time I saw a play this profitable, we were sitting on more than 1,803% gains inside of 19 months!

Heck, for the past six years, we've been crushing the market averages. While the Dow's barely been treading water, we've strolled to the bank with 212% annual gains.

The fourth largest gold mine in China went online in July. Now, this tiny company prepares to become a GIANT.

Right now, they're a fresh producer. They still have a market cap of only $443 million. Heck, shares right now are $2.99 apiece!

But that's all changing over the coming months.

As they pour each bar, their tangible valuation skyrockets.

That's because this company's going to produce more than $2.62 BILLION worth of gold - which would mean a share price 486% over the current valuation.

For a few investors loading up right now, the potential turnaround is just massive. We're talking about making $5.68 for every $1 put in.

If this company was trading at fair value, the price would be $16.98.

And that's just from one mine. I haven't even factored in the company's...

Six new exploration permits issued in Asia's largest producing gold belt.

The Tian Shan Gold Belt is often compared to the famous Witwatersrand in South Africa - the world's largest gold belt.

Crossing the borders of Uzbekistan, Turkmenistan, Tajikistan, the Kyrgyz Republic, Mongolia, and China, it's the second largest belt in the world.

This belt, not even completely explored, already holds the largest single gold deposit in the world - 175 million ounces.

The average of the major deposits in this belt is 31.7 million ounces.

But here's the thing.

Because of a 53-year gold ban in China since 1949, the massive Tian Shan gold belt inside that enormous country has yet to be exploited. And as you can see below, it runs through all of China.

And this $2.99 company is expecting to find even bigger gold deposits along the belt.

How much gold are we talking about?

Well... China's Ministry of Land and Resources estimates there to be a whopping 22,000 tons of gold under the soil.

That's enough to exceed the world's demand for the next 25 years!

And this company's picked up six more exploration permits, right in the heart of this massive under-explored belt.

In fact, judging by the average deposit size, each one of their permitted sites could be several times larger than their most advanced project, the one that went online in July.

I'll fill you in on all of the company's properties and show you exactly how much investors like yourself stand to make from them in your free report.

But you've got to step on it. The amount of gold in China is turning out to be far greater than anyone expected.

Just over the past decade, China has come up in the ranks to become the world's fourth largest gold producing nation.

Why Gold Is 2008's Best Investment

GOLD has just traded over $900 an ounce. And you need to hedge your bets NOW!

JANUARY 1980
Gold prices set an all-time high of $850/ounce as the dollar fell, oil prices soared, and global peace was strained to exhaustion because of political and religious differences worldwide.

JANUARY 11, 2008
Gold prices crush the 1980 high and hit $900.10 an ounce for the exact same reasons.

Except this time there's a huge difference: All of the underlying fundamentals that skyrocketed gold in 1980 are magnified by at least a thousand this time...

This time the dollar is in an irreversible death-spiral, crude oil prices have topped +$100/barrel, and the stability of societies around the world are becoming more and more fragile by the day as political and religious factions furiously battle.

It's as simple as this: There are absolutely no fundamentals out there right now that point to lower gold prices.

So, buy physical gold? Yes, absolutely!

But you're also going to want a little more risk in your portfolio. More risk, more reward. And the only place to get what you're looking for (mind-blowing investment gains) is in the speculative stock market.

Put it like this: Are you looking for 10:1...20:1...or even 50:1 returns? Of course you are.

The so-called and mostly self-proclaimed "experts" on the boob-tube will tell you that the modern markets are far too efficient to consistently generate those kinds of profits.

Now that may be true for the DOW and NASDAQ companies that the Wall Street guys are trying to ring out. But when it comes to the lightly-covered junior mining sector, it's a completely different story.

You see, it's not uncommon for junior mining companies to experience huge gains (tenfold or more) very quickly as news of a discovery leaks out.

On top of that, the exploding bull market in gold and precious metals not only focuses more attention on the sector, but also causes even more money to be spent on exploration. And the payback on a new find increases dramatically.

It works like this:

Say, for example, Company ABC finds a one million-ounce deposit of gold. And an engineering study suggests this deposit could be mined over ten years at a cost of $250 an ounce, including capital. And let's assume gold sells for only $350 an ounce.

That deposit is worth roughly $100 million.

But if gold shot to $400 an ounce (a 15% increase), the value of the same gold deposit launches to $150 million (a 50% gain). That's over 300% leverage to the gold price (50/15).

Right now, with today's gold price of near $900 an ounce, that deposit is worth $650 million! At $1,000 an ounce it's worth $750 million and at $1,500 an ounce it's worth $1.25 billion.

And if you think gold at $1,500 an ounce is out of the question, think again!

The 1980 record for gold prices of $850 is only the nominal high. When you factor in inflation, you find that gold's value was actually as high as $2,200 an ounce. And I think it's going even higher than that this time for the reasons I've previously mentioned.

For Company ABC and it's shareholders this means heart-pounding investment returns.

I'm talking about gains so big that most people could never even afford to pay the taxes on them right now.

The problem is this: The gold and metals equity markets have grown extremely large over the past few years and have become difficult for untrained investors to successfully navigate and profit.

And to enjoy the gains that have already made countless fortunes for early investors you have to know what to buy and when to buy it.

Try squeezing that kind of return out of Wall Street. Good luck.