Gary, responding politely, of course.
While I accept that the WGC info is already history, it is nevertheless important to recognize that, despite the large increase in the gold price, demand in most countries actually fell. Increases were seen in only Japan and Turkey.
Thus it must be clear that the increase in the gold price was effected, not by purchase of the metal itself, but of derivatives. For this reason, the price rise has to be seen as highly speculative and very "brittle".
m1.mny.co.za
Since the "fundamentals", such as they are, do not support the idea that the gold price rise over the past two years has come about by serious, long-term, investment in the metal, one has to view the price action as a "thing in itself" and analyse it accordingly. In my opinion, therefore, the uptrend we have witnessed has expired (for reasons which I have mentioned previously).
The lack of investment demand for gold bullion is confirmed by this table which shows that jewellery is still, far and away, the main use for gold. In the circumstances, if you expect a downturn in the world economy, as I do, then, surely, there will be even less demand for physical gold, not more.
m1.mny.co.za
However, if you believe that future currency instability will cause people to turn to gold, then that is your belief and you are free to act on it. I prefer something something more substantial to prompt me to invest eg attractive chart action or a long-term, rising trend in investment profits or underlying value (cheap price) or a demonstrable, real demand, none of which pertain to gold at this time.
In addition, in South Africa, there are other negatives which affect not only me, as a resident, but any investor in SA gold shares.
1. The strong rand vis a vis the USD. This has caused or will cause the profits of the SA gold mines to fall substantially.
2. New legislation which demands a substantial royalty to the State from all mines, including gold mines. |
