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Hi demiller,
While I agree that the recently announced sale by the Dutch central bank of 300 tonnes of gold will not have a major influence on the gold price, I'm not so sure that physical demand alone will drive gold above US$300 an oz for long. The Gold Council's third quarter figures showed a record level of physical demand, particularly from some of the Asian economies, which, despite your pessimism on the subject, are recovering, and yet the spark to set off the gold price rally was the Euro banks announcement forcing short covering.
I think sentiment will continue to drive the price in the short term, added to the continued short covering by the bullion lending investment banks you have referred to in previous posts, until we see co-ordinated strong economic growth from all three major economic areas, (North America, Japan and Europe).
Again, I'm afraid I must disgree about Japan's GDP, as they revised up the second quarter from 0.1% to 1.0%, and it is very likely the same thing will occur when they revise the third quarter. Korea benefits from a strong yen, as Korean products (cars, ships, steel and electronics) are direct competitors of Japan, and a cheaper price allows the inferior Korean product to sell (would you rather buy a Hyundai or a Honda if the prices were about the same?). Finally, China's domestic economy is recovering from two years of recession, as witnessed by the strong sales of TVs, computers and mobile phones, and there are now some signs of price rises in the big cities like Shanghai and Guangdong.
What all of this means, of course, is that growth will be stronger than anticipated next year, inflation, already apparent in the prices of financial assets like stocks and property, will be higher, and the gold price will settle above US$300 an oz. Of course, the gold producers may have blown their chance of benefiting from this by hedging too much of their production, even if they haven't done an Ashanti.
Don't worry about rambling on after a party;it's natural tendency.
Hope this helps,

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