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Gold’s 25-Year High Due to Central Bank Buying



By: Addison Wiggin, The Daily Reckoning


-- Posted Monday, 23 January 2006 | Digg This ArticleDigg It!

BALTIMORE, MD: Gold rebounded on Monday after slipping more than 3 percent from Friday's 25-year high. While most believe that this recent surge is due to worries over U.S. inflation, high oil prices and strong retail demand in the Far East, New York Times bestselling author Addison Wiggin, asserts that the yellow metal’s soaring price has more to do with buying from second and third tier central banks who find themselves burdened with U.S. dollar reserves.

Despite recent dollar strength, central bankers are increasingly exploring alternatives to U.S. and European currencies, as well as stocks and bonds.

“In the past month, Russia, Argentina and South Africa decided to increase the amount of gold in their reserves – and Japan is likely to follow suit,” says Wiggin, whose book, Empire of Debt, debuted at the number six spot on the New York Times bestseller list this week, and was listed by the Economist as one of the top 10 books that will “tell you what's really going on.”

This diversification out of currencies like the U.S. dollar and the euro has caused the price of gold to skyrocket.

“All the world’s governments want weak currencies and mild inflation. And all the world’s speculators, including ordinary homeowners, are convinced that central bankers will make sure nothing interferes with existing trends,” continues Wiggin.

“The more sure they are, the bigger the bets they are willing to make, and the greater the risk to the financial system. No one knows what will happen, but smart investors are buying insurance: gold.”

For more from Addison Wiggin, see http://www.dailyreckoning.com.

Addison Wiggin is editorial director and publisher of The Daily Reckoning. He is also the co-author, along with Bill Bonner, of the recently released New York Times bestseller, Empire of Debt: The Rise of an Epic Financial Crisis.

Brought to you by Agora Financial, and written by the New York Times bestselling authors, Bill Bonner and Addison Wiggin, The Daily Reckoning is a daily, free e-letter that weaves information about the financial world, investing and everyday life into an educational and entertaining format that has been engaging their readers for over six years.

SOURCE www.dailyreckoning.com


-- Posted Monday, 23 January 2006 | Digg This Article



We'd like to offer you The Daily Reckoning, a FREE daily e-mail service written by entrepreneur and master financial newsletter publisher Bill Bonner. It offers a 'refreshingly witty, erudite... sensible' look at the day's stock news. One reader says The Daily Reckoning offers 'more sense in one e-mail than a month of CNBC.'

You can begin your free subscription by clicking here, entering your email into the box, and clicking 'Subscribe'.



 



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