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Gold Investors Have Much To Be Thankful For, Says Jeffrey Nichols, Senior Economic Advisor For Rosland Capital

NEW YORK (November 16, 2011) - Jeffrey Nichols, Senior Economic Advisor to Rosland Capital (www.roslandcapital.com), had the following commentary based on recent market activity:

Even allowing for gold's recent price decline from its all-time high near $1,924 an ounce in early September, gold investors have much to be thankful for: After all, the metal's price is still up some 25 percent from the levels prevailing at the beginning of the year - and gold is just about the best performing asset class since New Year's Day. Long-term holders have even more to be thankful for, given the metal's sterling performance over the past five or ten years.

Thanksgiving Buying Opportunity

Now, the latest sell-off that has brought gold back down to $1,700 an ounce or thereabouts (and briefly as low as $1,670 early this week) presents investors an opportunity to buy at prices that some day in the not too distant future will seem like a bargain, given the yellow metal's long-term bullish prospects.

Gold's recent price decline is not a symptom of any fundamental softening or reversal in physical gold demand - and pundits who dismiss gold as a "has-been" fail to see the increasing underlying strength of the market.

In U.S. dollar terms, gold may be off its all-time high, but when measured in many other currencies - the euro, the British pound, and the Swiss franc, for example - or in the currencies of the two biggest gold-consuming countries, the Chinese yuan and the Indian rupee - gold is today trading at or near its historic all-time highs and perceptions of the gold price among residents of these countries is somewhat more positive than those of us who think of gold only in U.S. dollars.

Dollar Appeal Temporary

It is important to recognize the current episode of gold-price weakness as nothing more than a reflection of the U.S. dollar's temporary appeal as a safe-haven for those institutional investors and traders seeking to limit their exposure to the increasingly risky euro, Europe's single currency, and the difficulty the southern-tier countries - from Portugal and Spain to Greece and Italy - are having refinancing their massive sovereign debts even at progressively higher interest rates.What's happening behind the scenes, so to speak, is that safe-haven and short-term speculative demand for U.S. dollar-denominated U.S. Treasury securities has been disproportionately large compared to safe-haven and short-term speculative demand for gold.

Investors are switching out of euros and into dollars, not because the dollar promises to maintain its purchasing power, but simply because there is no other capital market big enough and liquid enough to accept the tsunami-like flow of funds seeking a safe haven. Certainly the gold market, as appealing as the metal may be as a store of value, is just not big enough to harbor but a tiny fraction of this flight capital.

I have no doubt that the recent downward pressure on the gold price arising from the U.S. dollar's "apparent" strength will prove to be temporary - offering investors the opportunity to build their golden nest eggs at what will one day in the not too distant future prove to be very attractive price levels.

Strong Demand Fundamentals Promise Much Higher Prices

Just consider gold's strong global demand fundamentals: For one thing, a tour of major world gold markets - from China to India and Europe to the United States - reveals continuing firm demand from investors everywhere.

Perhaps even more important to gold's fundamental strength and future price has been the expansion of demand from a growing list of central banks - who together this year may buy as much as 400 to 500 tons - or even more counting central banks that prefer not to report their purchases but buy in secret to avoid boosting the metal's price.

Significantly, much of this buying, from private investors is long-term demand that will not come back to the market anytime soon - not in the next week or year or even this decade. Chinese and many other Asian investors are likely to hold onto newly acquired gold for many years, if not generations, barring an unlikely economic or political catastrophe that renders their currency worthless.

Similarly, much of the gold bought in recent years by central banks will not be sold back to the market for decades, if ever.

Few gold investors and analysts recognize that, as a consequence of this very long-term demand, the amount of physical gold available in the world gold market - let's call it "free float" - is shrinking. As a consequence, future demand will have a much more high-powered affect on the price of gold - and this is one reason we expect much, much higher prices in years to come.

To arrange an interview with Jeffrey Nichols, please contact Carrie Simons of Triple 7 Public Relations, LLC at (615) 254-9389 or carrie@triple7pr.com.