Posted on 07/23/2011 6:54:22 AM PDT by DeaconBenjamin
Gold fever is gripping Asian investors and could spread to central banks as global growth uncertainties tarnish the appeal of other assets, putting bullion on course for more gains but also provoking fears about supply.
India and China, the world's two biggest consumers of the precious metal, expect to see demand continue to climb for the rest of the year, as growing wealth and stubbornly high inflation make bullion an attractive asset.
"Record high prices won't scare away investors," said Shi Heqing. "Investors are likely to chase the rally and continue to buy gold because paper money feels increasingly worthless and they are worried about inflation."
Shi expects China's gold demand to rise to near 700 tonnes this year from 570 tonnes in 2010 as Beijing struggles to tame annual inflation of 6.4 percent in June.
"The case for gold in the longer term is still very strong. Gold may appeal to new classes of investors who previously avoided the market in favor of more mainstream investments like bank deposits, bonds and equities," said a Singapore-based trader.
"Potentially there's a whole new market for small-sized physical gold bars if these investors lose faith in paper."
Even central banks could soon be sniffing around for more of the precious metal.
Deepening worries about debt crisis contagion in the euro zone, uncertainties around U.S. growth in the second half and its impact on the greenback, are likely to increase central banks' appetite for gold.
"If you look at projections on debt for the United States and certain European countries enjoying triple A status, it's looking very likely that these countries are moving from triple A to something less," said Philip Klapwijk.
"That's surely going to burnish gold's credentials for asset managers globally, particularly central banks and some of the sovereign wealth funds."
(Excerpt) Read more at reuters.com ...
So what happens to the demand for gold and silver when there isn't enough food?
That pesky gold thing again. Wish I listened and never bought the crap at $950.~sarc
2) It is very interesting that a communist government would encourage the establishment of a competing currency to the fiat Yuan/Renminbi. I half wonder if they figured they had to follow the lead of the West, when the Western governments only grudgingly agreed to mint bullion coins.
Nevertheless, if there is "a recession/depression far worse than anything in the US or Europe" then gold and silver could well become more valuable than the yuan, further increasing demand.
Likewise, if the value of the yuan thereby collapses like the Icelandic krona, gold and silver would be much more valuable to purchase things from outside China.
They will be useful to buy things and to store value, but people will be converting their gold and silver to consumables, not buying more.
My friends gave me a hard time about it and I kicked myself later for 'wasting' all that money on something as foolish as gold.
That was waaaaay back when it was common knowledge that gold was a loser and nobody would want any other than for jewelry and such.
Now, I'm kicking myself for not buying 10x more. It's gone up over 400% since then. Oh well...
D’oh...not 400%. I meant to say over 600% since.
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