GOLD PRICE NEWS - The gold price rose $2 to $1,134 this morning as the price of gold looked to build on last week’s $15 gain. The marginal gain in the gold price came amidst weakness in the U.S. dollar, as the euro currency gained 0.16% to 1.3651 against the dollar after French President Nicolas Sarkozy stated his belief that the European Union is ready to rescue Greece should the nation struggle to fund its mounting budget deficit. Weakness in the greenback buoyed many dollar-denominated commodities in addition to the gold price, including silver, oil, and copper, which advanced 0.3%, 0.3%, and 0.6%, respectively.


The shares of many gold companies looked to follow the gold price higher this morning, after coming last week’s impressive gains. While the docket of news was somewhat light, one such company in the news was Premier Gold Mines (PG.TSX), a Canadian-based mineral exploration and development company with several projects and deposits in Northwestern Ontario, Canada and a joint venture in Mexico. As a result of Premier Gold’s recent announcement that the company has received a National Instrument (NI) 43-101 compliant Mineral Resource estimate for its Hardrock Project in northwest Ontario, CI Capital Markets raised its price target on shares of Premier to from C$4.70 to C$5.30 - a 29% premium over Premier’s most recent closing price of C$4.01 per share. The firm cited total resources ahead of its estimates as a driving factor in the price target increase.


Meanwhile, the gold price climbed $15 in the first week of March as the Bank of England, the European Central Bank (ECB), and the Bank of Canada emerged from their policy meetings without a change in their respective interests rates. Although no action was taken on rates, each institution tepidly signaled that policymakers are aware of - if not reacting to - the inflation that is slowly smoldering beneath the blizzard of newly-minted paper currency they have rained down on their stalled or faltering economies.


Last month the Bank of England voted to halt the government bond purchases which have been used to inject liquidity into the system. But at last week’s meeting Bank governors kept rates the same as new data showed anemic fourth-quarter GDP growth of only 0.3% and an uptick in unemployment to its highest level in 13 years.


Likewise, the ECB had been slowly moving to drain liquidity from the system by shortening the term on loans made to eligible banks. Yet sovereign debt crises in the Mediterranean countries may force the ECB to abandon tightening plans and increase liquidity. Fear of backsliding into recession and lack of progress on the employment front leave the central banks with little room to maneuver.

Although the Bank of Canada left rates unchanged, it issued positive statements as to the direction of the country’s economy. And in the Pacific zone, the Reserve Bank of Australia again raised its cash rate by 0.25% to 4.0%, while the Malaysian central bank followed suit with a 0.25% raise to 2.25%. But credit tightening measures in China may stall further rate increases in Australia and the rest of the region which depend heavily on exports to China.


On balance, last week’s news from the central banks was that low-interest and loose monetary policies will continue for some time still, causing investors to extend the February gold price rally into the first week of March. Whether there is additional upside to the gold price rally in the short - term depends on any number of factors, including details of a Greece bailout, the IMF gold sale, and visibility with respect to the economy both at home and abroad.


But the factors for the long-term gold price bull market continue to emerge and coalesce. Indeed, they have been mounting for most of the past decade. The amassing of public debt through rising fiscal deficits has grown to magnitudes that few if any of us can comprehend. In the February Coxe Strategy Journal, publisher Don Coxe noted that global fiscal deficits this 2009 and 2010 amount to $14 trillion. “Dennis Gartman quotes a friend who explains a trillion by saying that a pile of US $100 bills totaling a trillion dollars would be 800 miles high,” Coxe writes.


Deficits, Coxe goes on to say, are rooted in central bank policies. “Since the invention of paper money and the development of foreign exchange markets, there has never been a time when the central bank of almost every industrial nation in the world that matters is pumping out money at near-zero nominal rates - and government deficits continue to explode.… ”


Printing money is a form of wealth redistribution. The process of paying for social programs, entitlements, pension liabilities, bank and country bailouts - and even wars - by printing more money robs value from those who save it. So long as central banks go on papering over debts and deficits the socialization of wealth will continue. Given the ubiquity of the practice throughout the world, there are few places for investors to turn for protection.


But one such place is available to all investors: the time-tested safety of gold. As more investors - and a growing number of central banks - awake to the plight of withering currency value, gold is becoming a key component in wealth conservation strategies. It is this investment demand for gold that will continue to drive the gold price in the long-term.