Wells Fargo Rings “Warning Bells” on Gold Bubble

Gold has reached bubble territory and is “poised to burst,” according to a recent report from Wells Fargo.

Analysts at the firm, led by Dean Junkans, wrote that “We have seen the economic damage” of previous bubbles and “feel compelled to ring the warning bells.

Well Fargo went on to say that “There could be substantial risk to gold once the fear that the world is coming to an end subsides.  We are worried about the downward risk.”

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Gold Price to Hit $5,000 per Ounce

GOLD PRICE NEWS – The gold price, at $1,785 per ounce, traded near unchanged Wednesday following the news that producer prices rose more than anticipated. The price of gold showed a muted reaction to the release of the Producer Price Index (PPI), which rose 0.2% month over month and 7.2% year over year – both slightly hotter than a Bloomberg survey of economists. Commodities moved higher across the board with crude oil rising 1.5% to $87.99 per barrel and copper advancing 0.6% to $4.04 per pound. Silver rose above $40, climbing $0.15 to $40.05 per ounce.

On Tuesday, the gold price rallied $18.59 to $1,784.89 per ounce amid the return of risk aversion. The price of gold briefly dropped to $1,766 in morning trading, but rebounded well into positive territory as trading progressed. COMEX gold futures, per the December contract, settled at $1,785 per ounce, a new all-time high on a closing basis. However, gold futures remained below their intra-day record high of $1,817.60, reached last Thursday. Silver moved higher in concert with the gold price. With their gains, the price of gold and silver extended their year-to-date returns to 25.6% and 29.3%, respectively.

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Premier Gold Completes Acquisition of Goldstone

Premier Gold Mines (PG.TSX) announced the completion of its acquisition of Goldstone Resources (GRC.TSX).  Under the terms of the Arrangement, each Goldstone shareholder will receive 0.16 of one Premier common share and a nominal cash payment of $0.0001 for each Goldstone share held.  In completing the acquisition, Premier has issued approximately 16.8 million common shares to former Goldstone shareholders.

The transaction was previously approved by the Goldstone shareholders and by the Ontario Superior Court of Justice.  It is expected that the common shares of Goldstone will be delisted from the Toronto Stock Exchange at the close of business on or about August 18, 2011.

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