Provocative article on the gold market in the Telegraph, Barrick shuts hedge fund book as world gold supply runs out. Gold production has been falling by about 1 million ounces a year for this decade and the quality of the ore has fallen. (Ore grade has fallen from 12 grams per tonne to 3 grams in the some major mining areas since 1950.) Less supply at higher cost. We may have hit peak gold at exactly the time that more people want it as a substitute for fiat money. There is no reason for a mining company to run a hedge book under the type of environment.
You have emerging market central banks bigger buyers of gold. Central banks used o be the largest sellers of gold especially those int he EU, but now gold is being shuffled between central banks. If central banks want to diversify their foreign exchange holding as a percentage their total then it would be a significant increase in gold holding only because the amount of fiat money is higher.
Those with excess foreign exchange reserves are trading paper money for a hard asset. Gold ETF's what some have called the "People's Central Bank" is now the fifth largest holder of gold bullion at 1778 tonnes.
Short of a decline in money outstanding, there is little reason to see a significant reversal of the gold price increase.
You have emerging market central banks bigger buyers of gold. Central banks used o be the largest sellers of gold especially those int he EU, but now gold is being shuffled between central banks. If central banks want to diversify their foreign exchange holding as a percentage their total then it would be a significant increase in gold holding only because the amount of fiat money is higher.
Those with excess foreign exchange reserves are trading paper money for a hard asset. Gold ETF's what some have called the "People's Central Bank" is now the fifth largest holder of gold bullion at 1778 tonnes.
Short of a decline in money outstanding, there is little reason to see a significant reversal of the gold price increase.
No comments:
Post a Comment