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Gold seems to be bouncing off its correction lows. The
latest Thomson Reuters report/survey suggests that analysts see the price
surpassing last year’s high as it marches over $2,000.00 an ounce. From
The Guardian:
The Thomson Reuters
GFMS annual gold survey, published on Tuesday, reveals that global investment
in gold jumped more than 20% last year to a record $80bn, pushing the price
to its peak of $1,920 an ounce in September. Much of this was due to physical
buying of bullion: purchases of gold bars rose by more than a third to almost
1,200 metric tonnes, particularly in China,
Germany, Switzerland and Austria. East Asia accounted for 456 tonnes of the total (up 53%),
western markets bought 335 tonnes (up 41%) and
India 297 tonnes (up 9%).
Philip Newman,
research director in precious metals at Thomson Reuters GFMS, said that with
the spectre of 1920s hyperinflation haunting
Germans, the last two years have seen strong growth in the number of smaller
investors buying gold bars and coins. "For many years now, these
German-speaking markets have had a well-developed infrastructure for
consumers to buy product."
The report predicts
that the second half of the year will see the return of concerns about the
health of the US economy, prompting a fresh round of quantitative easing.
Newman said despite some encouraging recent economic indicators in the US,
the country's huge debt problems remain unresolved
and are unlikely to be tackled during an election year, which will make
investing in the dollar less attractive. Coupled with exceptionally low
interest rates across Europe and the US, and rising inflation, this should
benefit bullion.
A survey of mining
executives by PricewaterhouseCoopers last week found that 80% of mining
companies expected the price of gold to continue to increase this year, with
the majority expecting it to peak at $2,000 an ounce. Tim Goldsmith, global
mining leader at PwC, believes that amid the current market volatility,
companies that are flush with cash will swoop on smaller players, which are
more vulnerable to market fluctuations and have difficulty raising capital
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