Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
S&P Stock Market Trend Forecast to Dec 2024 - 16th Apr 24
No Deposit Bonuses: Boost Your Finances - 16th Apr 24
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Chinese and Indian Gold Demand Rising as Zero Interest Rates Distort Investment Markets

Commodities / Gold and Silver 2012 Feb 02, 2012 - 10:47 AM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleThe WHOLESALE-MARKET gold price slipped 0.5% from a new 8-week high in London Thursday morning, while global stock markets stalled after a 3-day rise and commodities also edged back.

The Euro fell from $1.32 on the forex market for the third time this week after chief finance minister Jean-Claude Juncker said new proposals for stemming the currency zone's debt crisis – agreed at a summit on Monday – were "largely insufficient".

The gold price in Euros touched €43,900 per kilo, a level breached only five times during the surge to all-time record highs of summer last year.

Beijing meantime said China's full-year gold mining output in 2011 – all of which was bought domestically, since exports are banned – hit a record 361 tonnes, a rise of 5.9% on 2010.

China's 2011 gold imports may have reached 490 tonnes, perhaps twice the 2010 level, according to Credit Suisse.

So far in 2012, imports of Gold Bullion to India – the world's No.1 consumer – have been "significantly above average" reports UBS strategist Edel Tully, despite last month's doubling of import duties.

The central bank of Vietnam said today it plans to "mobilize" private gold holdings via "credit institutions" which would effectively replace the private operations banned last year.

"For now, gold may well remain volatile," says Dirk Wiedmann, head of investments at Rothschild Wealth Management, now running some €12 billion ($15.7bn) in client funds.

"[But] it is increasingly attractive as the only truly hard currency...[Our] large positions in gold seek to preserve and grow the real value of our clients' wealth."

"We can't put $100 trillion of credit in a system-wide mattress," says Bill Gross, founder and co-manager of the giant Pimco bond-funds group. "But [savers and creditors] can move in that direction by delevering and refusing to extend maturities and duration."

Because interest rates cannot go down from zero, bond prices have little room to rise, says Gross, and so "Zero-bound money may kill as opposed to create credit.

"It may, as well, induce inflationary distortions that give a rise to commodities and gold as store of value alternatives when there is little value left in paper."

January's sharp rise in global stock markets, however, means that "Strategists at the biggest banks are capitulating on their bearish forecasts," reports Bloomberg today, citing a sharp reversal in predictions and recommendations after last month's 7% jump in emerging-economy equities.

"We have been increasing exposure to risk assets over the past six weeks," says Andrew Cole, director of strategic policy for Baring Asset Management's £9 billion multi-asset portfolios.

"We see a self-help cycle materialising" thanks to the European Central Bank's long-term banking loans, Cole tells Investment Week after buying £350m in Italian government bonds.

"Italy is not going to go bust and this is our way of getting exposure to the improved liquidity."

"We believe that the 'risk off' attitude of investors which took hold in the second-half of 2011 is largely over," agrees Angelos Demaskos, chief investment officer of the £35.6 million Junior Gold Fund ($56m) at Sector Investment Managers in London to Proactive Investors earlier this week.

Anyone who "wanted to sell" junior gold mining stocks has already sold, Demaskos believes, "and there is a very strong possibility they will be re-rated to catch up with the underlying commodity."

Over the last 12 months, Sector Investment's Junior Gold Fund has lost 9.0% of its value, according to TrustNet.

The physical gold price has risen 29.7% in British Pound terms.

Silver bullion has risen 11.9% over the last year.

"It's been a good month" for US silver coin demand, says Michael Kramer of authorized US Mint distributor Manfra, Tordella & Brookes, quoted by Kitco News and pointing to January as the second-strongest monthly sales of silver bullion Eagle coins on record.

Demand was "greatly" helped by the launch of new 2012 coins however, Kramer added., because "People always want the brand-new coins, so January sales are always pretty good."

By Adrian Ash

Gold price chart, no delay   |   Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in