Britannia Radio

This is less about the actual price of gold (£18,700 a kilo when I 
last looked! ) than the lack of confidence throughout global 
markets.  As long as idiot governments persist in driving down 
interest rates to the point that nobody will either save or spend 
there are only two alternatives - and one is gold.

The other is equities.  Soimetime they will bottom out and if one 
gets the timing right and picks the winners too there'll be a killing 
to make!  So a profitable evening might be spent in trying to pick 
the winners - the new party game!   The sound companies will survive 
and buying shares in them won't now produce much income - but then 
what does ?   But they'll emerge smiling from the wreckage.  People 
like firms of Chartered Accountants (sorry no shares), John Lewis 
(sorry only shares for employees);   food will always be needed - 
undertakers (?  Any public companies ?) - - OK I'll leave it to you.  
I have my own ideas but Quien Sabe?

xxxxxxxxxxxxxx cs
===================
TELEGRAPH     9.1.09
Merrill Lynch says rich turning to gold bars for safety
Merrill Lynch has revealed that some of its richest clients are so 
alarmed by the state of the financial system and signs of political 
instability around the world that they are now insisting on the 
purchase of gold bars, shunning derivatives or "paper" proxies.

By Ambrose Evans-Pritchard

Gary Dugan, the chief investment officer for the US bank, said there 
has been a remarkable change in sentiment. "People are genuinely 
worried about what the world is going to look like in 2009. It is 
amazing how many clients want physical gold, not ETFs," he said, 
referring to exchange trade funds listed in London, New York, and 
other bourses.
"They are so worried they want a portable asset in their house. I 
never thought I would be getting calls from clients saying they want 
a box of krugerrands," he said.

Merrill predicted that gold would soon blast through its all time-
high of $1,030 an ounce, and would hit $1,150 by June.

The metal should do well whatever happens. If deflation sets in and 
rocks the economic system it will serve as a safe-haven, but if 
massive monetary stimulus gains traction and sets off inflation once 
again it will also come into its own as a store of value. "It's win-
win either way," said Mr Dugan.

He added that deflation may prove the greater risk in coming months. 
"It's very difficult to get the deflation psychology out of the human 
brain once prices start falling. People stop buying things because 
they think it will be cheaper if they wait."

Merrill expects global inflation to hover near zero, with rates of 
minus 1pc in the industrial economies. This means that yields on AAA 
sovereign bonds now at 3pc will offer a real return of 4pc a year, 
which is stellar in this grim climate. "Don't start selling your 
government bonds," Mr Dugan said, dismissing talk of a bond bubble as 
misguided.

He warned that the eurozone was likely to come under strain this year 
as slump deepens. "There is going to be friction as governments in 
the south start talking politically about coming out of the euro.
I don't see the tensions in Greece as a one-off. It is a sign of 
social strain in countries that have lost competitiveness."