The Obama Cabinet appointments look highly gold positive - inflation is coming back big time. Beside Bernanke in his helicopter is dropping money already.

Fair comment, EXCEPT Gold has reached record levels against many currencies in the past few weeks. Therefore, investing in Gold is not such an obvious choice outside the U.S. as there will be a very limited upside, even if it does surge ahead (which is likely to be on the back of a weaker Dollar).

http://www.moneyandmarkets.com/more-on-the-new-monetary-system-6-28166

Published: November 18 2008 02:00 | Last updated: November 18 2008 02:00
T he following are excerpts from this week’s View from the Markets interview

FT: It’s a year since we last interviewed you. You were aggressively bearish about the dollar, but you thought there would probably be a rebound and you would take that as an opportunity to get further out of the dollar. Have you made a further exit from the dollar?

JR: Not yet, no. And the reason I haven’t is because we’re in a period of forced liquidation of everything. We’ve had only eight or nine periods like this in the past 150 years, where everybody has to reverse their positions on everything. There is a gigantic short position in the dollar and they’re all having to cover as they reverse their positions, so this rout is going to go on much further than I would have expected - to my delight, because then I’ll get to sell at higher prices. I don’t know whether I’ll get out this month or this year even - maybe next year, but I do plan to get out of the rest of my US dollars, because this is an artificial rally caused purely by short covering.

FT: How will you tell when that deleveraging is finally over?

JR: I’m sure I won’t get it right, but I do hope that when there’s a lot of euphoria about the dollar and everybody’s saying, well, see, there’s no problem with the dollar . . . I hope I’m smart enough to recognise it and finally get out of the dollar, because it is a flawed and, maybe, even doomed currency.

Sales of gold coins and bars reached their highest levels for more than a decade in the third quarter while gold exchange traded funds saw record inflows as investors sought a safe haven from the crisis in financial markets following the collapse of Lehman Brothers, the US investment bank.

The enormity of that rush into the gold market in the third quarter was revealed by the World Gold Council in its latest Gold Demand Trends report, published on Wednesday.

The industry sponsored WGC said consumers spent more than $6.5bn in buying 232.1 tonnes of gold coins and bars in the third quarter of 2008, an increase of 121 per cent in volume terms over the same period a year ago, and the strongest three-month period since the mid 1990s.

The WGC’s report provides confirmation of previously anecdotal evidence of record investor interest.

The third quarter saw media reports that mints around the world had run out of gold coins as Lehman’s collapse sparked concerns among investors about the health of the world’s financial system.

However, the WGC’s data indicates that retail investment interest in gold has been increasing steadily over the past year.

In the first three-quarters of this year, net retail investment in coins and bars reached 443.6 tonnes, 10 per cent more than all of 2007.

Germany and Switzerland experienced a surge in demand for coins and bars in the third quarter with net retail investment of 19 tonnes and 21 tonnes respectively, up 533 per cent and 500 per cent compared with the same period a year ago.

In Europe, coins and bar sales in the third quarter alone reached 51 tonnes, exceeding each annual total for retail investment demand during the entire 18½ years of available data.

Meanwhile, gold Exchange Traded Funds also saw record buying interest with inflows of 150 tonnes in the third quarter, up 8 per cent over the same period last year, with investors spending more than $4.2bn accumulating holdings in ETFs.

Lehman’s implosion in September led to a jump in ETF inflows, which surged by an unprecedented 100 tonnes in just five consecutive trading days.

Strong growth was also seen in the jewellery sector where demand reached 647.6 tonnes in the third quarter, up 8 per cent compared with the same period last year, and taking spending to $18.2bn.

India, the world’s largest jewellery market saw demand reach 178.5 tonnes up 29 per cent compared with the same period last year as consumers rushed to take advantage of lower prices ahead of the Diwali festival in October.

Total identifiable gold demand (investment, jewellery, industrial and dental) reached 1,133.4 tonnes in the third quarter, up 18 per cent compared with the same period last year. in value terms, this represented spending of $31.8bn, a record, and an increase of 51 per cent compared with the third quarter of last year.

The WGC said strong demand for gold coins, bars and ETFs had continued into the fourth quarter but cautioned that this was being offset by ongoing weakness in jewellery markets in the US and UK.