Merrill Lynch ^[1] (NYSE: MER) issued a report ^[2] this morning which indicates that the number of high net worth individuals in the world increased by 6 percent in 2007 to 10.1 million, the number of ultra-high-net-worth individuals increased by 8.8 percent, and for the first time in the history of the report, the average assets held by high net worth individuals exceeded USD $4 million.

Gold investors will be most interested in the asset allocation strategies which have been demonstrated by these individuals in addition to their geographic location. According to the report, “as the year wore on, and financial market turmoil and economic uncertainty intensified, HNWIs began to retrench, shifting their investments to safer, less-volatile asset classes.” With India, China and Brazil experiencing the highest HNWI population growth at the country level, an implicit consequence should be that luxury goods will continue to draw demand.

As HNWI portfolios continue to grow and diversify over the long term, the investments become increasingly mobile and are spread across international boundaries and asset classes. Jewelry, gems and watches attracted the largest share of passion investment allocations in the Middle East and Asia, while ranking third last year, on a global basis, according to the report. As gold is an important component in manufacturing these luxury products, it underscores the historical value that gold has always maintained during periods of economic uncertainty and financial crisis.

Yesterday, Great Basin Gold ^[3] (TSX: GBG) announced that surface exploration drilling has discovered a previously unrecognized vein system, located approximately two kilometers from its Hollister Development Project in Nevada, USA. President and CEO of Great Basin, Ferdi Dippenaar, commented: “The discovery of the new vein system has exceeded our expectations as this could have a significant impact on the size of the Hollister Property resource. Our decision to embark on an extended exploration program is delivering the planned results."

This announcement ^[4] comes on the heels of last week's updated resource estimate ^[5] for the Hollister project. The company was pleased to report that both measured and indicated resources have increased by 60%, although estimated average grades decreased for both gold and silver. The increase in measured and indicated resources is likely to result in increased reserves at the project compared to those assumed in the feasibility study. Great Basin Gold is an exploration and development company with a market capitalization of approximately CAD $679.8 M. The market has not reacted significantly to the news, with the stock trading slightly down 1.2% to finish at CAD $3.21. On a year to date basis, the share price has been a very strong performer, with the stock climbing over 20%.

The company's stated strategy ^[6] is to become a mid-tier gold producer by developing prospective projects into high margin productive units, increasing a resource base through focused exploration programs, and acquiring prospective companies or assets. Currently, Great Basin Gold is exploring and developing prospects in the Witwatersrand Basin in South Africa and the Carlin Trend in Nevada.

Emerging Australian gold producer Avoca Resources Limited ^[7] (ASX: AVO) has had a strong week with shares climbing to AUD $2.43 which is up 7% from the previous day's closing price and over 10% from last Tuesday. The catalyst for this appears to be a number of recent bullish analyst reports ^[8], in addition to positive company news from last week. The company was pleased to announce ^[9] that the Higginsville plant is presently undergoing full commissioning and is on target and on budget for treatment of high grade Trident feed at the beginning of July. The site represents the first sizeable new Australian gold project to come on line over the last few years. Drilling within the flagship Trident underground development continues to deliver solid results, with thick high grade results. A recent visit to the site by Argonaut analyst, Troy Irvin indicates that “ground conditions are terrific (shallow depth and competent rock types) with limited water to manage”. The report continues to address the excellent site facilities and the ability of Avoca Resources Limited to attract key personnel, “AVO has had tremendous recruitment success, with all key on-site positions filled. The architecturally designed camp is a big draw card, with high quality messing facilities for the FIFO workforce.” Mr. Irvin has placed a buy recommendation on the stock with a price target of AUD $2.87, which would imply a discount of over 18% at current market valuation.

The spot price of gold closed the day at USD $892.18 / troy ounce, which was slightly up 0.29% from Monday's trading session. Tomorrow the eyes are on the Federal Reserve, which many expect to end its nearly year-long campaign of steep interest rate cuts. Investors, market analysts and economists will be waiting with keen interest, to scour the policy statement and search for their own clues of gold.