DENVER, CO--Since the beginning of the year, gold prices have stagnantly bounced back and forth in a 50-dollar channel between $640 and $690 per ounce.

Despite this relatively uneventful and sobering price, gold averaged $666.80 an ounce during 2Q 2007, 6% higher than 2Q 2006 levels.

So last week I was very pleased to hear that the dollar demand for gold jewelry has just hit an all-time high.

Here's an excerpt from a story published last week on JCKonline.com:

The record $14.47 billion spent on gold jewelry during 2Q suggests a growing consumer acceptance of current gold prices, which, again, averaged 6% higher than 2Q 2006.

And that's extremely important to the future of this bull market because of the vital role gold jewelry consumption plays in overall demand.

Get this . . .

Jewelry consumption now accounts for an overwhelming 73.22% of the total global gold demand!

Now that's something to shake a stick at.

The World Gold Council calculates that total gold demand for jewelry in terms of tonnage increased an impressive 29% year-over-year to 675.1 tons in 2Q.

So, despite the market's endlessly yawning action over the past few months, the continuing increases in gold demand coming from jewelry consumption further strengthen the legs on the overall bull market.

Gold Jewelry Around the World

Strong economies in India and other key gold markets such as China, the Middle East, Turkey and Russia helped boost overall gold jewelry demand.

In fact, all-time records for jewelry consumption were broken in India (the world's largest gold consumer), Turkey and Russia.

Believe it or not, India's Q2 2007 total demand for gold (317 tons) increased by an impressive 89% over 2Q 2006 and was equivalent to half the global mine output for the quarter!

In Russia, where jewelry demand has grown steadily over recent years, consumption increased to a record 20.3 tons, a 27% increase over 2Q last year. Turkey also enjoyed 2Q records for both jewelry, at 52.2 tons, and net retail consumption, at 20.5 tons, an increase of 14% and 5% respectively over the previous year.

Elsewhere, the Year of the Golden Pig saw China's gold demand increase 32% from year-earlier levels to 76 tons. In the Middle East, strong economies and stable prices also influenced demand for gold, which rose 20% to 97.5 tonnes compared with the same quarter in 2006.

Other Demand

Global industrial demand saw a further steady rise over year-earlier levels of 2% in tonnage terms; this was equivalent to a 9% increase in value terms, a new quarterly record. Electronics demand, which grew strongly in 2006, also recorded a further 2% increase in tonnage compared to 2Q 2006.

Globally, net retail investment increased by 51% in tonnage terms and 60% in dollar terms compared to 2Q 2006. On the other hand, total identifiable investment fell in tonnage terms by 4.8% and was 1% higher in dollar terms than in 2Q 2006.

Overall, global gold demand hiked up a healthy 19% year-over-year. Global demand reached 922 tons last quarter and $19.8 billion, a 27% increase, in value terms year-over-year.

So, to sum it up . . .

Global gold demand is stronger than ever despite higher average prices.

What this tells me is that the bull market is still alive and kicking. And I don't know about you, but I don't want to miss the best part of this rodeo . . . when the big bull charges out of the gate and goes wild.

Stay long and stay strong. We're going to continue to make money in the metal equities market for a long time to come.

Let me leave you today with the big picture . . .

Until next time,

Greg McCoach