INDIA CENTRAL BANK BUYS 200 TONS OF GOLD

The IMF revealed it sold 200 tons or half of its entire gold allotment to the central bank of India. The fact that this was an off-market transaction is extremely encouraging for the market and helped gold to rise nicely. The speculation is that Russia or China's central banks will buy up the remainder of the gold. One analyst told Dow Jones Wire Service, "It is very positive that one central bank takes half of the gold. That means there is demand for it. And it's a developing country bank at that, which is interesting."

In reaction to that news, gold rose to a high of $1,066.90 and even after some profit-taking remains up over $7. That is in spite of the fact that the dollar is up 45 basis points at 76.74. The equity market is lower with the Dow trading down more than 40 points. Oil is also lower, down $.94 at $77.20 a barrel. Silver and the platinum group metals are also lower, even though gold is higher. However, I would suspect those metals will play catch-up as gold hangs on to the gains throughout the day. In other reports, the Dow Jones Wire Service said, "Spot gold sharply higher as positive U.S. manufacturing data boosts confidence in economic recovery."

Gold is now moving to trade at a level that is close to a significant breakout point to the upside. Many analysts have said that a break above $1,070 to $1,075 would result in a move to $1,100. Barclay's has been forecasting a move to $1,100 this month. One has to wonder whether Barclay's had some information on this IMF gold sale, several weeks ago. In addition, it was announced yesterday that Barrick Gold bought back one million ounces of gold hedges during the month of October. That shows extreme confidence in the market and it also shows the expectation that gold prices will be moving higher for a protracted period of time. Since Barrick Gold is among the most sophisticated mining companies in the world with excellent analyses and understanding of the markets, it may serve investors well to follow their lead and accumulate gold at these levels.

In another positive development, Dow Jones Wire Service said, "Investors are increasingly looking to buy physical gold and are moving more gold to allocated accounts, which means bars are stored and can't be lent out by the banks storing them, said JP Morgan Managing Director Neil Clift." This too would appear to be an extremely bullish development indicating that the sophisticated investors, including institutional investors are demanding physical gold rather than paper proxies. Dow Jones Wire Service also reported, "Gold may reach as high as $1,150 per troy ounce by the end of 2009 on continued dollar weakness, Red Kite Capital Management Precious Metals Manager Michael Sheehan told Dow Jones News Wire Tuesday."

Clearly, this is in line with Barclay's forecast of gold above $1,100 this month. Dow Jones News Wire also ran an article entitled "Spot Gold May Rise More After India Gold Buy." In the article they said, "Spot gold could gain further traction as speculation of central bank of India diversification erodes demand for the dollar and fiat currencies."

In this environment, investors should seriously consider owning gold or perhaps increasing their allocation if they feel they are underweight. Call Goldline at 1-877-341-2646 for assistance getting started. You may also wish to ask for the free information package, which investors will find very helpful. Call Goldline at 1-877-341-2646 for your free information package.

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