Check out Gold's historical norm and see that Gold is extremely cheap compared to its own historical norm, towards the Dow, towards the CRB and Oil. Gold bottomed out in 2001 after a 20 year bear market and marked there the start of a new multi year bull market in Gold. Still very few investors have picked upon it. Legendary profits are to be made. DOW/GOLD chart topped out above 40 in 2000 and is heading down fast (currently at 25). Someday during this decade the DOW/GOLD ratio will fall below 2 again pointing to far higher Gold prices the years ahead.

This chapter discusses the forces dragging down the US$. The US is facing a Current Account Deficit exceeding 5% of GDP which raises many alarm bells. The US economy is addicted to an inflow of $2 billion dollars every single working day. This is  simply not sustainable since it requires almost 80% of world savings. Even FED officials pointing towards a lower dollar. Foreign Central Banks just started selling US dollars in order to diversify its currency reserves. A Dollar devaluation is very Gold friendly since Gold is still a monetary asset and trades like a currency. If the Dollar goes so will Gold but in opposite direction.

Gold & Inflation is chapter III of the Gold drivers 2005 report. It discusses the possibility of Inflation picking up steam and how it could affect Gold. As long as the FED doesn’t raise interest rates fast enough in order to contain Inflation, real rates will stay negative. History suggests that negative real rates are on of the strongest drivers for the price of Gold. Furthermore Inflation is much higher than reported by Government.

This chapter focus on a declining Gold production coming years. A declining Gold supply only increases the pressure on a already tight physical Gold market. Many alarm bells were being raised since 2002 regarding future mine supply. In 2004 mine supply dropped already by 5% and this problem won't be solved anytime soon. Newmont president Pierre Lassonde said : “The 20-year bear market in gold has weeded out marginal gold producers and significantly curbed exploration and production.”. "If gold was $1,000 an ounce, it still takes four to seven years to open a mine," END.

Demand for Gold is growing these days. It comes from several sectors such as , producer dehedging, increase of investment demand, shift from CB selling into CB buying etc. Just China itself will contribute considerably to the expected increase in demand for Gold. Last year the Honk Kong edition of Friday’s China Daily quoted the Bank of China’s bullion guru saying : “local consumers could pour $36 billion into the metal, equivalent to around 2,950 tonnes, or more than one year of supply, at current prices.” Xi Jianhua, the Bank of China's gold business expert, is also quoted saying that it would be "safe and feasible" for China swap to some foreign exchange reserves for gold.

This chapter discusses the ongoing manipulation in the Gold market.  More and more heavyweight Gold industry experts do support GATA's claims that the Gold market is not free and not fair. The problem with every manipulation scheme is that no single item can be manipulated against its primary trend for a long period of time, so when the manipulative efforts fail Gold is about to explode. Signs are surfacing everywhere that this is just about to happen. Even the Russian central bank acknowledges that the price of Gold should be trading above $700 nowadays.

Since 1971 no currency with any kind of Gold backing does exist so many analysts do argue that Gold hasn’t  any monetary status anymore. Well, nothing could be further from the truth. In 1971 president Nixon closed the Gold window. Critics of Gold  back then argued that Gold had lost its monetary use and therefore would collapse below  35 US$ / ounce. They assumed that the paper dollar gave value to Gold, not the other way around, they did not know that Gold was money. So what happened ? Instead of falling below $35 it took off  skyrocketing all the way up to its all time high of $850 US$ / ounce.

This chapter discusses the historical Gold/Oil ratio  and shines a light on previous oil shocks and their consequences. Furthermore it discusses PEAK-OIL and why it is about to bring a nasty Oil shock coming years. The End of Cheap Oil means continuing rising Oil prices which translates itself into Oil shocks. Previous Oil shocks were an perfect call for recession/Inflation. Gold is the ultimate Hedge against Inflation. Rising Oil prices brings the historical Gold/Oil average way out of balance. Historical average of the Gold/Oil ratio suggest a price of Gold exceeding $800 nowadays. High Oil prices are here to stay so what gives, Oil going down or Gold catching up ?

This  chapter focus on investment in junior exploration companies. Major Gold producers are desperate for new major discoveries in order to replace their dwindling Gold reserves. 75% of all discoveries are made by juniors therefore juniors on the verge of discovery could be huge winners in a rising Gold environment. Anglogold CEO Bobby Godsell said :  "The race to replace ounces is about to begin. It will take the form of takeovers of small producers with long reserve lives and high quality junior mining companies with large in ground reserves that can be mined economically"END.