Looking ahead, most of the fundamental factors seem favourable.

Although demand from dehedging is disappearing - the overhang of the outstanding surplus of hedging contracts has now shrunk to less than 150 tons - trends in the more-important jewellery/scrap sector are turning favourable and starting to have a positive impact.

There are signs that demand for jewellery is adjusting to higher prices, while the supply of scrap is stabilizing - there are fewer owners keen to convert their old pieces into cash (although it's estimated that half the world's stockpile of gold built up over thousands of years - now about 166,000 tons - is held in the form of jewellery).

Investment demand, which last year accounted for a third of global demand for gold for all purposes, seems likely to grow in an environment of growing disquiet over sovereign debt and profligate "printing" of currencies.

Having made fools of themselves by selling off so much of their gold stocks too cheaply, the central banks of the advanced economies that still hold plenty of bullion are less keen to do so. The asset managers of developing nations are starting to view gold as an attractive alternative to reserve currencies.

The overall balance of activity by the official sector has swung from heavy sales to moderate purchases, amounting to a net 73 tons in 2010. They are predicted to reach about 250 tons this year.

Private-sector investors, too, are increasingly attracted to the precious metals. The University of Texas, for example, has just announced that it has moved a billion dollars -- 5 per cent of the assets of its endowment fund, the second largest in the US after Harvard's -- into gold.

In China, investors are emerging as a new major source of demand for bullion bars. It is growing at very high rates, perhaps as high as 40 per cent year-on-year, as banks increasingly make gold available to a wider group of customers. High inflation and negative real interest rates favour gold.

Chinese demand for gold jewellery is also surging ahead… perhaps by as much as 25 per cent this year. Gold retailers are adding hundreds of new stores, especially in the second- and third-grade cities.

David Fuller's view There is little that Martin Spring does not know about gold and this is one of better summaries that we are likely to see.

This issue of On Target also contains a number of other refreshingly non-PC features. My favourite is "The Land of Dottiness."