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Dillon Gage Observes Strong Demand for Gold

Aug 10, 2011 4:58 PM   By Jeff Miller
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RAPAPORT... Even though gold prices have hit record levels this week,  Terry Hanlon, president of Dillon Gage Metals, said that investment and physical demand for gold  remained strong, signaling further strength  ahead.

"Worries about the nation's debt and the possibility of sliding into another recession have weighed on stocks this month and sent investors to gold," Hanlon said. Gold is a classic safe haven, partly because it's less affected by government policies than stocks and currencies, and its value doesn't depend upon whether countries can make their bond payments.

"American investors are more concerned about S&P's unprecedented rating downgrade than about any other single event in the past year," Hanlon said. "Our government debt problem has been building for a long time but the stock market's current slump reflects increased concern about just how the U.S. will repay its debt."

Hanlon observed that interest in precious metals from the public and from fund managers has increased in the past several months. Investors have rushed to the safety of precious metals as the currencies and stock markets of most major, national economies struggle with debt and slow growth, Hanlon stated. Continued tensions in the Middle East and North Africa have also sent foreign investors to gold.

"In my conversations with dealers, trust fund managers and others who handle precious metals in IRAs, I've been told that precious metals in huge volumes are being added to accounts," Hanlon said. Precious metals tend to rise when other markets slide, making metals a necessary insurance policy, he noted.

Gold was set to close in New York on August 10, up 49 percent year on year at almost $1,793 an ounce. Hanlon stated that  $2,000 an ounce is not an unreasonable prediction.

''At times, we see hiccups in gold's climb,'' he said, ''but those setbacks are often the result of funds or pooled money taking profits in metals to offset losses in other investments.

"In today's turbulent markets, people are trying to figure out how to operate. I expect gold's higher trend to continue, at least until decent decisions are made about U.S. government spending -- which has greatly exceeded revenue for years."

The physical side of the business, including investors buying coins and bars and manufacturers using gold, remains strong. "Physical metal is a liquid asset which can be traded worldwide, and all major government mints are experiencing record gold sales," Hanlon said.


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