Just noticed an article I missed a few days ago regarding Venezuela reducing their supply of US dollars in their reserves and their push for Euros.

When Iraq attempted this, the US attacked them — twice. When Iran and Syria threatened it, we ramped up attention to those States. I’m really interested in seeing what comes to Venezuela early in 2006 from their desire to reduce dollars. Venezuela is a large oil exporter, and the US has fought to keep the dollar the official trading element for oil, internationally.

A weakness in the dollar-oil bond could cause gold to appreciate quickly. One of my biggest recommendations for gold comes from the weakness of the dollar if oil would be for sale for any other currency.

Short of a major sell off by central banks and investors or a major discovery by mines, gold looks to close almost 18% up for the year.

The last few bumps in the price are hard to qualify — this is a quiet market, and the price of gold as affected by the 14% of gold traders who are investors is not a good judge of what is happening in the rest of the gold world.

The price of gold as we see on the NY spot market is not readily affected by people like me — I buy from local dealers that I have a relationship with, and they buy from people looking to sell gold. I try to make sure I am the first one who gets a phone call when a coin enters a dealer’s hands, and dealers know they can buy gold and sell it to me at a profit.

What about all the other gold bugs? Do they count at all in the demand for gold? Do most buy from “reputable” gold houses, or are they trading with each other and other gold holders?

How about industry? Do the users of gold count towards the demand, at least in the eyes of the investors?

I don’t really know, but I plan on researching it over the weekend. It is an important question to ask — I’d love to know how they count the trades that go on. The commodity of gold is probably unique in that the majority of the commodity isn’t traded on any floor of any stock exchange. Some of the gold is traded in the black market, some of it is traded by the massively wealthy, and some of it is traded by end users who put it into wires, microchips and jewelry.

We will see some big opinions of where the price of gold will go in 2006. I think it is safe to say that we will see some big drops (central banks are allowed to sell gold in large quantities) and we will see some big rises (terrorist acts, natural disasters and central bank counterfeiting all will happen). My uneducated guess is to see gold down to the US$460s after the end of February, and to see it as high as US$600 in the late fall before the holiday season. 2006 will be the first BIG year where investor manipulation will truly affect the price, which is something I don’t want to see.

Even if it hits US$1000, I’ll still be trading in my worthless paper notes for the metal with infinite value to me: gold.