Two graphs (from Scott Barber) to remind that what you get from assets depends on the currency:

They keep telling us that the recession is over so maybe now's the time to start worrying about inflation. That's the view many wealthy investors are already taking, reasoning that a little bit of the yellow shiny stuff will provide some comfort as we start piling our cash into wheelbarrows to do the weekly groceries shop.

It is gold exchange traded commodities (ETCs) that have seen the biggest investor inflows this year so perhaps it's not surprising that the gold price broke through $1,000 an ounce this week.

"Investors are concerned about sovereign risk, quantitative easing, government deficits and the outlook for the US dollar," said Nicholas Brooks, head of research and investment strategy at ETF Securities, at a Dow Jones Indexes commodities briefing on Tuesday. "They are using gold as an insurance policy."

Physically-backed gold ETC holdings are now 8 million ounces, up 33 percent versus end-2008 levels, he said. Gold inflows have been relatively steady, even when the price has corrected, with the biggest flows coming not when Lehman went bust, but when the scale of US quantitative easing and the fiscal cost of the financial bailout became apparent. This supports the view that gold is being used as a hedge against sovereign and inflation risk, Brooks said.

Billionaire hedge fund manager John Paulson has been building up a large exposure to gold this year, seemingly as part of an inflation hedge.

John Reade, head of markets strategy at UBS Investment Bank, also confirmed that UBS clients were showing an interest in assets that would provide inflation protection. "You don't need high inflation for gold to perform well - you only need an increase in the number of people who expect inflation to rise."

Over the last 30 years the returns from gold have been reasonable but not great, with high volatility, he said. But in an environment where the US dollar is weakening, the Fed Funds rate is rising and inflation is rising, gold can be expected to perform, with returns of over 40 percent per annum if CPI increases. This suggests that an investor's tactical allocation to gold should rise in the coming months, Reade said.

He forecast an average gold price of $1,050 an ounce for 2010, pointing out that gold remains very lightly owned by most institutional investors. This was not consistent with inflationary or US dollar weakness scenarios, he said.

Chukotka, a region revived in the last eight years by the $2.5 billion investment of Chelsea soccer club owner Roman Abramovich, produced a fifth of Russia's gold in the first half of this year. Gold is the region's passport to growth after Abramovich quit as governor last July.

Only South Africa holds more gold than Russia, but Moscow's fragmented industry has struggled to access vast reserves in its inhospitable Far East. The region was first mined in the 1930s by prisoners of the Gulags set up by Soviet leader Josef Stalin.

Senior Commodities Correspondent Robin Paxton and Moscow-based video journalist Heleen van Geest return from the Chukchi Peninsula with a series on the revival of gold mining in the Gulag region.

Automatic teller machines (ATMs) -- 500 of them -- dispensing pieces of gold will be available around Germany, Switzerland and Austria by the end of this year.

That at least is the plan of German precious metals online trading company TG-Gold-Super-Markt.de. The ATMs, to be located at airports, railway stations and shopping malls, are intended to accustom ordinary people to the idea of investing in a physical asset such as gold, the thinking goes.
 
Thomas Geissler, the company's chief executive, said the gold ATMs might even improve relations between the sexes.
 
"I have yet to meet a woman who does not like a gift of gold. It's better than flowers. Flowers are more expensive. They wilt and you (as a man) don't get as many points at home as if you bring gold," he said.
 
A prototype ATM on display for a one-day marketing test at the main railway station in Frankfurt, Germany's financial capital, did indeed reward your correspondent with a 1-gramme (0.0353 ounce) piece of gold.
 
It cost the equivalent of $42.25 -- a 30 percent premium over the spot market price.

It was Goldman Sachs who famously predicted oil prices to reach $200 a barrel last year, but there are a school of bullish investors who forecast a substantial rally in gold.

Take Gold and Energy Advisor, which predicts gold will soon reach $2,500 an ounce (from today's $895) then to $5,000. The Florida-based firm argues that gold is the only asset class that’s not only private (as opposed to state-owned), but also liquid, portable, fungible, divisible, and valuable enough that a small amount can store a massive amount of wealth.

It also argues that of $11.5 trillion stored in offshore accounts and other assets, if one percent were transferred into gold, that would be almost four times the entire annual investment demand for gold.

Perhaps not as bullish, but Investec Asset Management also reckons that gold could perform well in either an inflationary or deflationary environment.

Investec also argues the potential areas of concern for gold investors: an increasing supply of recycled gold and the potential return of the "Goldilocks" scenario, where the economy sustains moderate growth and inflation in a "not too hot, not too cold" environment.

"This Goldilocks economy would completely remove the safe-haven investment case for gold as a form of insurance against inflation or as an alternative currency. Real yields could once again be obtained in cash and bonds, and equities could begin discounting economic growth," it says.

This week we've brought you interviews with some of the world's best-known mining and steel companies. One thing that we've heard over and over again is: gold is king. Industry watchers say thinking of gold as an investment is not a bad idea. Check out Conway Gittens' story:

Marilyn Monroe, who sang "Diamonds are a girl's best friend" in the 50s, might be shocked to find out that the value of dimonds has fallen rapidly in the past six months.

According to Nomura, the average best price for to quality 1-Carat diamonds has fallen below $7,000 from hitting a multi-year high near $9,000 in September 2008.

Perhaps gold might grab her attention. The metal has surged towards $1,000 an ounce in the past weeks as investors rushed to seek save-haven gold when stock markets came under renewed pressure.

 Despite their calm assurances, executives at the world’s biggest gold miner Barrick Gold must be at their wits’ end over their stalled Pascua Lama project.

    For two years, Argentine and Chilean officials have been bickering over how to share the lucrative tax proceeds from the cross-border mine, which has been poised for construction to start since late 2006.
    One government official after another  has suggested the green light is imminent. But after making some impatient noises last year, Barrick seems to be biting its lip — resolved for an even longer wait.
    When Barrick reported fourth-quarter results last week, new Chief Executive Aaron Regent put on a brave face about the delay, but his pledge to give an update on the progress in the second quarter suggested a solution is still some way off.
    It is ironic that a diplomatic spat over sharing the spoils of the mine has put the ambitious and controversial project on ice.
    Pascua Lama straddles a freezing, inhospitable spot high in the Andes and faced a storm of protest from Chilean environmentalists before President Michelle Bachelet finally gave it the go-ahead.
    Late last year, an Argentine law protecting Andean glaciers looked like it might be the nail in Pascua Lama’s coffin until a surprise presidential veto kept it off the statute books.
    But none of that matters while the tax row drags on, and the harsh Andean winters mean construction is unlikely to be able to start now until September 2009 at the earliest.
    Company officials have declined to say how much it is costing to maintain the site. Some industry analysts have even hinted Barrick might abandon it altogether.
    But it will take a lot more for the Canadians to lose interest in Pascua Lama. One of the world’s largest untapped gold fields, the site will become even more appealing as prices for the metal nudge up to above $1,000 per ounce again.

Gold comes off but oil futures work to recoup $100 and at least one commodities-linked exchange is outperforming as central banks pump money into distressed markets. (Toronto’s benchmark stock index is rising over 2% at this moment. No such luck in Australia overnight and the reeling Russian market remains shuttered)

Still the banks crisis remains a potent presence. Energy trading heavyweight Morgan Stanley elected to withdraw from the Platts benchmark oil trading window in Asia on Thursday, steering clear of a possible test of its credit acceptance among counterparties.

The Australian picks up on a concern the credit crunch squeeze is hitting smaller exchange players, quoting Philip Gotthelf, president of Equidex Brokerage Group that some brokerage houses

“are at 150 per cent of exchange margin. They’re essentially shutting the little guy out completely”. It is harder to buy or sell crude, because “there’s less credit around to do it.”

On the plate today:

• A lack of sufficient investment in new natural gas supplies and delays remain a major problem in most markets, Nobuo Tanaka, IEA executive director says.
• U.S. ethanol makers wrestle with unpredictable corn prices and dwindling cash pile
• MMS releases updated production data from Gulf of Mexico (1800 GMT )

On the plate today:

• Gold prices posted their biggest one-day rise in absolute terms since 1980
• As financial worries spread, Russia halted stock and bond trading in a response to the worst market falls since 1998.
•  The White House may decide as soon as this afternoon whether to ask members of the International Energy Agency to release emergency gasoline and diesel fuel inventories into the U.S. market, Energy Sec. Sam Bodman tells reporters
• Chinese Premier Wen Jiabao called a meeting of the cabinet to back plans for a national inspection of milk products, the UK Press Association reports.

A news website devoted to American politics picks up the threads in the oil market speculation story. Politico outlines the scope of the lobbying by the airlines-to-truckers backed “Stop Oil Speculation Now Coalition” and its new sparring partner, the Wall Street-backed “Coalition to Protect Competitive Markets”.

Regulation is in the air. Politico notes that gas stations owners have put out signs calling for customers to urge Congress to “take action against speculators”