Investor Interest In Gold ‘Remains Strong’
Revisiting $2,000 Gold Prices
Oil Settles For $100 But Gold Shines Again
Next Stop: $2,000 Gold
Jewelers Say Gold’s Rising Price Has Not Hurt Business
Gold Rebounds Amid Broad Commodities Rally
Gold Prices On The Rise
Gold Price Hike Triggers Gold Mining Investment Tide
Gold ETFs Shine With 37% Returns In A Year
A Time Of Golden Opportunities
A Flight To Bullion And Fields Of Gold
US Dollar Down, Gold Up In Late European Trading
Is The Fed Really In Control As The $ Plummets And Gold Vaults?
***Last week we were all aware of the threats to the money system, but now the Tsunami is hitting. Is the rescue a sign that the crisis has been conquered? Not at all! Most now doubt that it has even been contained with some thinking it has been engineered by the Fed to worsen. The cancer that started last August has now spread to the consumer from the blue collar worker through to executive level as they are changing from their “live now, pay later” culture to one of “pay now and live as best you can”. The checks eagerly awaited from the stimulus package from President Bush in May are now more likely to fight the debt fires than to go to more “living today”. As inflation begins to point to a higher cost of living, as the oil price now points to a further doubling to $200 and gold has vaulted the $1,000 level [although it then was dumped all the way back to just above $900], an awareness is dawning on all from the financial towers down to ground level that the empire of debt on which the last decade of boom has grown is shrinking far faster than thought possible. Since last August dubious mortgage debt to asset backed commercial paper [made up of mortgages, credit card debt, car loans and business loans] are finding it harder to stand as collateral for finance. To counter this shrinking credit, the Fed alongside European central banks, have pumped in billions of dollars worth of Treasury Securities, in the hope of stopping the atrophy. Interest rates were rapidly lowered and continue to be so with last week’s 0.75% drop, in the hope of easing credit and giving dubious debt more substance. Meanwhile the disease spread from “collateralized debt obligations” to “structured investment vehicles,” a more senior form of debt. But then, after a lull in which it was hoped the crisis had been contained, in December it reappeared when it began to be seen just how far the cancer had spread, as major world-class banks [from Europe as well as the States] reported the billions lost in write-downs of asset values on which their survival depends. “The future for Gold ETFs in India is good as investors are beginning to realise the merits of treating this as a class of investment. There is a good deal of educating which is also happening at the investor level,” said an official with one of the fund houses which has a Gold ETF. However, what appears to be curious is the case of the DSP Merrill Lynch World Gold Fund, which manages around Rs 1,770 crore, which is about thrice the AUMs of the Gold ETFs. The World Gold Fund, it needs to be pointed out, is an equity scheme which invests in the stocks of global gold mining companies. Ian MacDonald, executive director for gold and precious metals at the Dubai Multi Commodities Centre (DMCC), said in a statement that the increasing number of investors has driven the rise in gold price. “Gold price fundamentals have continued to remain extremely strong over the past months, making a strong case for investing in the metal,” he added. Barakat said that buying gold is a good investment that can be a hedge against inflation. “We have seen that investor interest has remained strong, and, as the price stabilises, gold jewellery-buying consumers will further adapt to a higher floor price,” he added. He stressed that investors in key gold markets worldwide are taking the “flight to quality”, with the price of gold reaching the $1,000-per-ounce-mark. This means an annual increase of 52 per cent on the average price of $655.89 per ounce in March 2007. He also said that investment demand for gold reached a record-high $79 billion last year, $8 billion of which was for the last quarter of 2007. Tawfique Abdullah, chairman of Dubai Gold & Jewellery Group (DGJG), said the upcoming gold conference would discuss ways to boost growth in the Dh536.2-billion ($146 billion) global jewellery industry, 10 per cent of which or Dh53.2 billion ($14.5 billion) was in the Gulf countries. During the first half of 2007, overall investment in gold was relatively weak; identifiable investment was 22% lower than one year earlier while statistically residual “inferred investment” was substantially negative. In Q3, while inferred investment was close to zero, identifiable investment soared as a result of record quarterly inflows into gold Exchange Traded Funds (ETF). In Q4 identifiable investment was more subdued, as retail investors took profits and ETF inflows steadied, but inferred investment became strongly positive. In dollar terms total net gold investment in Q4 reached just over $8bn – a quarterly record. “Every gold rally ends with someone being thrown out of a helicopter,” says Daniel Sacks, gold fund manager for Investec Asset Management. In spite of this cynical attitude, and in spite of the fact that gold has recently soared in price, Mr Sacks thinks the precious metal will continue to be a good investment for some time to come. On the demand side, the factors are equally positive. “Investment demand for gold is strong, because it’s a wonderful diversifier,” says Mr Hambro. Not only does the price of gold go in the opposite direction to that of the dollar, it also has a zero correlation with equity markets. Given that institutional investors are increasingly looking to uncorrelated asset classes to manage risk, this should make it an ideal asset class for the diversified portfolio***
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