“Gold, tin head for stars” & INVESTORS clearly have the gold bit between their teeth.

Gold’s rise to $1424 clearly has Robin excited.. but he does ask a valid question: How will the world’s gold miners meet the demand now that it is soaring? Over the last few weeks there has been a steady stream re China’s gold imports and China’s governments change to their gold importation policy and ownership that now allows for individual Chinese to buy and hold gold and how that has resulted in a massive surge in Chinese gold imports. In Bromby’s story he outlines how Vietnam is restricting exports of gold via the introduction of an exports tax. Bromby’s answer is that the miners will NOT be able to meet the new supply demands.

Once demand exceeds supply we should see a massive lift off in the gold price that may eclipse the recent gold rises…. some more adventurous Gold bugs are predicting that we will see inflation adjusted new highs that will take gold past $2000 an ounce.

Yesterday I read an interesting article that suggested that silver may be about to return to its historical silver gold ratio of 16:1. And that in troubled times that may come (Korea/Iran et al) silver may do as it did in what it did in the past and return to the 16:1 ratio seen during WW11… Interestingly the ratio of silver to gold in the earth’s crust is 16:1 but perhaps more tellingly nearly all of the gold mined (since gold mining began) is still in existence whereas the vast majority of silver mined has been consumed, and is being consumed at an ever increasing rate. Put another way: What would happen if all the gold in the world suddenly vanished? (very little apart from the financial dislocation). But if silver were to suddenly disappear our modern world would come to a total halt. No cars, no electronic devices etc as silver is a vital component that cannot be replaced.

So yes buy gold… but buy some silver as well…..