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Gold, IMF, Silver, U.S. Debt, U.S. Dollar

World Gold Council Data Shows Gold to See $2500 in 2012 Or Sooner!


“In the third quarter, we are going to see strong investment numbers, because of the European crisis, the debt downgrade in the United States and poor economic figures coming from the United States which have created a concern in investors’ mind that we may be heading back to another recession,” World Gold Council Managing Director for Investment Marcus Grubb said.

“It sends liquidity into gold,” Grubb said in a telephone interview.

David Lamb, WGC managing director for jewelry, said economic gloom will hit gold jewelry appetites in western markets, but jewelry buying in India and China – which together account for 55 percent of global jewelry demand – remains very strong.

“If you add that up, because of the biggest and most dynamic move (in gold jewelry demand) eastwards, we think this year will show an overall positive trend,” Lamb said.

Given the market volatility, a falling USD and increasing demand HCM expect to see Gold trading at $2500 in 2012, Shayne Heffernan said today.

But what was surprising back then was that gold shares barely ticked upwards even at the height of the gold frenzy. Looking at the main gold equity index of that time – the Johannesburg Stock Exchange’s – that share price take-off happened several months later when companies began publishing their profit results and the (gold) penny dropped. Investors suddenly saw the effect of the high gold price on bottom lines.

Even though the gold price faded in the following three years, sinking below $US400/oz, the South African stocks maintained a lot of their gains.

 

Gold Demand and Supply – Second quarter 2011

  • Gold demand totalled 919.8 tonnes in the second quarter of 2011, down 17% year-on-year. Improved levels of demand in the jewellery and technology sectors were more than offset by weaker investment demand, which was due primarily to a decline in ETF demand from the very strong levels seen in Q2 2010.
  • The gold price reached a series of new record highs during the second quarter and the average price for the period was up 26% year-on-year and up 9% on the prior quarter. After reaching a high of US$1,541 in early May, aided by soaring commodity prices and continued concerns over the outlook for western economies, gold corrected back to US$1,500/oz. However, gold was relatively protected from the sharp sell-off that affected many commodities and the dip provided jewellery consumers and investors alike with an opportune entry point.
  • Jewellery demand of 442.5 tonnes was 6% higher year-on-year as a number of key markets posted solid growth. India, China and Turkey (which together account for over 50% of global jewellery demand) generated combined growth of 16% although this was countered by weakness in other markets, most notably those in the west. The US$ value measure of global gold jewellery demand grew by 34% year-on-year to reach US$21.4bn.
  • A 37% year-on-year decline in investment demand was almost entirely driven by ETFs and similar products. Although ETFs witnessed solid net inflows of almost 52 tonnes during the quarter (almost entirely reversing the 62.1 tonnes of net outflow from Q1), the 82% fall in demand reflects the comparison with Q2 1010, when very sizeable levels of demand were generated by the escalation of the European debt crisis, resulting in the second highest quarter on record for
    ETFs.
  • Looking at physical demand for bars and coins, the second quarter witnessed growth of 9%. The geographical distribution of this demand was widespread, with a number of countries from all regions generating decent growth. Turkey and India were the two strongest markets, chalking up growth rates of 90% and 78% respectively. China also accounted for a significant portion of the growth in global demand.
  • Second quarter demand for gold used in the technology sector was up by a modest 2% at 117.9 tonnes. This growth was wholly generated by an increase in demand from the electronics segment, which generated a record demand value of US$4.1bn. Gold used in dentistry continued to decline.
  • The second quarter supply of gold was little changed year-on-year. Mine production, the only component of supply to make a positive contribution, rose by 7% to 708.8 tonnes. Producer de-hedging exerted a modest negative influence on supply, as did the official sector. Central banks generated another quarter of net purchases, more than quadrupling the levels of Q2 2010. Recycling activity, the final component of supply, was 3% down year-on-year, as consumers in many markets held off on selling their existing ‘loose’ holdings of gold in anticipation of higher prices.
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