In European trading this morning, spot gold reached $1762 an oz, its highest level in 11 weeks before plummeting to $1738 an oz after New York opened. Stronger than expected jobs figures saw the dollar improve against the major currencies setting gold back while stocks benefited.
Chinese Gold Imports and Production Boom
China domestic gold production in 2011 saw a year on year rise of nearly 6% to a record 360 tons, firmly establishing it as the worlds’ largest producer.
The country, which bans gold exports, also imported an estimated 490 tons at possibly twice the 2010 level according to a Credit Suisse analyst. This demand for gold should lay to rest any doubts that China is not actively seeking to substantially improve its holdings that still only account for a small proportion of its reserves compared to many other countries.
India Gold Imports Above Average
The first month of 2012 saw India, the worlds largest consumer, import a substantially above average amount of gold despite an increase in import duties, according to a UBS strategist.
Seeing Inflation In the Things You Need
With US inflation running at 3% according to the ‘unrealistic’ some say ‘seriously misleading’ Consumer Price Index the following quote reportedly from Kyle Bass, a board member of Utimco ( oversees the University of Texas $25.7 billion investments) says it all.
“ As every day goes by, I see deflation in the things you own and inflation in the things you need”.
He went on to say that he was against selling any of the $1.2 billion held in gold bullion having switched out of gold futures contracts in spring 2011.
Gold Is the Ultimate Financial Safe Haven
With the Eurocrats and private bond holders still unable to reach an agreement on restructuring Greece’s debt and time running out before pay outs due in March on maturing bonds, the Euro crisis continues to stagger its seemingly inevitable path to insolvency, recession and dissolution.
The bullish scenario for the US that many pundits are now promulgating has undertones of smoke and mirrors. The promise of zero interest rates for a further three years has a considerable downside, not least of which the printing of more dollars is a given to keep the house of cards from collapsing.
With so many fundamental issues looking to keep the bull market in gold in place for a good while yet, it would take a genius of epic abilities to come up with an argument to undermine the confidence of those who see gold as the ultimate financial safe haven.
Category: Precious Metal Investment News