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Today from Fat Prophets.

The Good News From The Bank's Share Price Woes

Repeat after us…

What's bad for financials is good for gold.

What's bad for financials is good for gold.

What's bad for financials is good for gold.

Got it?

This week, yet again, gold reached an all-time high, hitting over US$985. The gold price is now up more than 17% in 2008 alone.

We've been saying it for a long time now, and now many others are finally cottoning on too…the gold price is headed for US$1000 an ounce.

With the gold price moving so quickly, by the time you read this it may already have breached the psychologically important US$1000 an ounce mark. Even if it hasn't, we think it's surely only a matter of time before it does.

We Are Targeting A Gold Price Of US$1100 In 2008

As we've been saying for a long time now, the long-term fundamentals for gold are still very strong.

Gold is a currency, not a commodity.

Because of gold's unique qualities, for thousands of years it has been used as a store of wealth and a medium of exchange. Because of its inability to be freely created (unlike government controlled money) gold has always been the anchor of financial systems, providing stability and trust.

With stability and trust in the world's monetary system evaporating rapidly, and US interest rates set to fall further as the world's biggest economy edges inexorably closer to recession, gold is set to continue to be a major beneficiary.

In fact, we think gold's biggest moves may still be in the years ahead.

When adjusted for inflation, gold remains well below its all-time high. An ounce of gold at US$875 in 1980 would be worth around US$2,200 today, or US$5,000 an ounce if more traditional measures of inflation were used.

The Bull Market Has A Long Way To Go - So Vote For Gold

As we said in an article we recently were asked to write for the Sydney Morning Herald and The Age…

"…the bull market in gold has a long way to go. The only event that would change our mind would be if US officialdom conceded that ultra low interest rates were not a panacea for all the world's economic ills. But in reality, this is unlikely to happen. As George Bernard Shaw said:

'You have to choose between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold'."

Given that background, it's not hard to see why our target price for gold for 2008 to US$1100 an ounce.