Demand for gold is likely to rise as the world heads toward a multi-currency reserve system under the impact of uncertainty about the stability of the dollar and the euro, the main official assets held by central banks and sovereign funds.
Gold buying by the global central banks will hit a new high this year of more than 500 tons up from 465 tons in 2011, according to data compiled by the World Gold Council. Only Tuesday the Bank of Korea announced that its gold reserves rose by 14 metric tons.
If global banks’ are realistically going to improve their balance sheet diversification and liquidity profiles, gold will have to be part of that process. It is ludicrous to expect banking to regain a sure footing through the increased ownership of government securities.
With President Obama safely back in the White House investors in precious metals can justly feel that the president’s promise that “the best is yet to come” is aimed at them. For gold and silver outperformed every other asset class in his first term.
Who knew that the yuan would be one of the big winners from Ben Bernanke’s QE3? Since the surprise announcement in mid-September, the Chinese currency has appreciated by 1.1%, and higher climes beckon.
Gold's failure last week to sustain gains over $1,790 an ounce triggered profit-taking by frustrated longs and technically inspired selling by institutional traders and speculators in "paper gold" derivative markets.
He considers it has not caused increases to inflation expectations or commodity prices. We disagree. Ultimately, the Fed may have reached too far, bringing risks to economic stability and elevated levels of volatility.
Gold continues to eke out gradual gains in all currencies. It looks set for the best quarterly gain in more than two years, as central banks and investors diversify into gold to hedge against the prospect of weaker currencies and slowing growth.