Gold Book predicts volatile year ahead

CPM Group, the US mining consulting firm, has published its “Gold Year Book 2008″.

The report presents an overview of gold supply and demand, and global market mechanics. It is used by gold mining companies, investors, central banks and governments.

The Year Book predicts a volatile time ahead for the gold price stating: “Investors are buying gold as an inflation hedge, as protection against a falling dollar, as an alternative to stocks and bonds … in the world they perceive to have greater risks to their wealth and well being than at any time since the early 1980s.”

Jeffrey Christian, CPM’s managing director, believes the 2007 gold market “helped re-define volatility. Gold prices rose to record levels, while supply and demand trends moved in exaggerated patterns. All of this has spilled over into 2008, which promises to be even more volatile in many ways.”

Mr Christian describes the gold market is in “disarray”, with companies involved in trading and refining gold overwhelmed by volumes of business.

He warns that: “This year is expected to be even more extreme than 2007 both in terms of the economic and political conditions that affect gold prices, and the gold market trends and developments themselves.”

Gold prices averaged $700.11 oz in 2007, a 15.6% increase over the $606.67 average for 2006 and the report states: “While gold prices were already at record levels, they should be expected to stay high and even rise further until such time as investors around the world reduce the level of fears.”