Bob, that's true, but
gfms.co.uk
gold investment demand last year was 417 mt, a 150% increase from 172 mt in 2001. This is considerable, even on the scale of de-hedging, although still less. I believe it was in the ballpark of 600mt. This is what produced the gold rally, even as jewelry demand declined 12%.
I think the assumption that gold investment demand won't grow may not be correct, given the plans of the governments (Japanese, primarily, and now US) to introduce negative interest rates via strips on the currency which would cause the currency to lose value with time. Investment, not jewelry, demand drives gold bull markets during bad economic times. Of course, should the assumption that investment demand won't pick up be proven correct by the markets, gold price will drop. Certainly, the gold market is tiny - even 4,000 mt is worth about
$45 billion dollars. Basically, if even a tiny demand appears, it will push the gold price upward very strongly |
