Two secular themes we have highlighted for the past two years has been gold and water. As far as gold is concerned, the annual GFMS report concluded that gold could well top the Jan/80 peak of $850/oz in the next twelve months. Investment demand rose 8% in the past year to a record 640 million tons (double the 2003 level), with ETFs providing a big lift, at a time when global mined output fell 3% to 2,471 tons, which was a 10-year low. Moreover, average production costs continue to rise and establish a rising floor under the gold price – rising $45/oz last year to $317/oz. And opportunities for the world's water companies are rising inexorably – a conference on underinvestment in water resources took place in Barcelona last week. Fully 40% of the world's population will suffer from acute water shortages by 2050 (according to UN estimates). China intends to tender water services for 100 cities by 2010 and it is unveiling a $125 billion program aimed at improving water treatment capacity and recycling facilities. Saudi Arabia is embarking on a privatization program. Even in the U.S., the EPA estimates that over the next 12 years, $122 billion in will be needed for waste water treatment and an additional $100 bln for drinking water safety. This could be the #1 growth industry worldwide with estimated investment needs near $1.2 trillion over the next two decades. Great piece in the April 9th FT on this file worth looking at.