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Gold price soars as shares plunge
by The Sunday Telegraph (Australia)

THE 21st-century gold rush is gathering pace as stock markets around the world continue to plummet.

While the Dow Jones Index closed at its lowest level in six years on Friday, investors worried about the global recession were piling into the precious metal, which broke through the $US1000-an-ounce barrier for the first time since March last year, closing at $US1001.80

The Perth Mint, Australia's biggest wholesaler of gold bullion bars and coins, is experiencing such unprecedented demand that it has been forced to ration its sales for the past three months, suspending sales of all gold coins and bullion bars and only selling one-ounce gold coins.

"We are still struggling to meet demand," Perth Mint CEO Ed Harbuz said.

"But we can still service customers who want to buy gold one-ounce coins, or buy larger amounts and have us look after it for them in our depository."

Mr Harbuz says some customers have bought tonnes of gold at $32 million a tonne, or numerous 400-ounce bars, which "look like gold bricks", at $400,000 each.

"Traditionally, the biggest driver of gold demand is jewellery," Mr Harbuz said. "But not any more. Today, it's all about the financial crisis and wealth preservation."

Perth Mint's sales were up 194 per cent in the December quarter, compared to a year earlier.

Many experts expect the price of gold to rise substantially over the coming months and years as more people want to put their money in a tangible asset, rather than stocks and shares whose value can literally vanish.

More than $834 billion, or 51.1 per cent, has been wiped off the value of the Australian stock market since it peaked in November, 2007.

Meanwhile, gold has risen by 72 per cent.

Although the gold price is typically quite volatile, charts for both the long- and short-term show a steadily rising price.

"In Australian dollar terms, gold was trading at $A950 in late September, but it has risen to $A1540 today," said Gavin Wendt, of analyst Fat Prophets.

"We expected it to go above $US1000 at some point in the next few months, but didn't expect it to happen quite so soon."

Peter Schiff, the US analyst who predicted the credit crunch as long ago as 2006, is advising his clients to buy gold and predicts that the gold price and the Dow Jones Index will eventually reach parity.

"If you say that each point in the Dow is a dollar, then I think that it will equal out over the next few years," he said.

"Whether the Dow falls to 5000 and gold rises to $5000 an ounce, or it's higher or lower than that -- either way, it will reach parity at some point."


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