Over the past week, gold prices have been steadily rising. After the Comex pit session, the most active contract settled at $1,660.20, an increase of $30.10 since April 5.

Chief investment officer and founder of Steel Vine Investments, Spencer Patton, sees gold price rising even more in the near future. Gold has held above $1,600 over the past several months, and with each drop buying interest increases, causing the prices to rise again.

Buying in India has resumed since jewelry shops have called off their strike. Shop owners were on strike for three weeks in protest to the increases in taxes on gold. The Indian finance minister agreed to consider rolling back the excise duty.

Patton believes there will be some some type of easing moves from the Federal Reserve or the European Central Bank, causing gold prices to rise again. He says the Fed can be quite creative when it comes to stimulating the flow of money.

Gold has dropped since the highs seen in February. The largest drops seeming to be on days when the Federal Reserve released some comments investors understood to imply reduced prospects for QE3. Even so, the market is known to fluctuate as traders speculate the next move. Expectations began shifting again after the lower-than-expected report of 120,000 new, non-farming jobs in March.

Market analyst, Sterling Smith is among those who believe weakness in the stock market, combined with the weak economy, will keep the idea of quantitative easing foremost in the minds of investors.

Smith said that on the chats, gold appears to be taking a nose dive. However, if the market could keep trading at the rate it has been, new buying would be inspired and the gold pricewill likely rise back to the $1,700 level.

= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
Open your GoldMoney holding and enjoy complete ownership of the metal you buy.
You will hold and own the allocated metal in your name, in contrast to ETFs and certificates.
Goldmoney always maintain a one-to-one ratio of metal in their vault and in their database.
Click here to find out more about 100% Metal Ownership >>>
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =

Gold Price On A Rise

However, as it was indicated in one of our previous newsletters, gold, in the inflation-adjusted terms, is nowhere near the previous highs. What’s more, despite the increasing appeal of gold among the broad investment community, the fact that everybody is talking about gold as a preferred investment has not deterred some of the most renowned institutional investors and financiers to continue to buy gold at the current prices.

One of such financiers is Jim Rogers, who continues to advise investors to invest in gold, and, in particular, to buy gold bullion.

 
Jim Rogers, who earned his reputation as a cofounder of the Quantum Fund with George Soros, has been bullish on gold for a long time. For several years, he has been accumulating gold bullion, along with other precious metals, including silver, platinum, and palladium. His arguments in favor of gold are simple and logical: the investors’ concerns about inflation, ignited by the excessive supply of the U.S. dollars, which is undermining the value of the greenback, support the argument in favor of the yellow metal. His advice to buy gold bullion is therefore based on the assumption that gold prices at the current levels are still attractive, given the prospect of higher inflation in the near future, which will drive gold prices much higher from the current levels. Therefore, in his opinion, gold is undervalued at the current prices and, if adjusted for inflation, it should be hovering around $2,000 per ounce.

 
Jim Rogers is generally bullish on all commodities—and especially on precious metals—for several reasons. First, the general scarcity of commodities will increase their value over time. If the world’s economies perform well, an increased demand for commodities will boost the prices. This is the most likely scenario given the expected robust performance of the emerging markets, most notably of Brazil, Russia, India, and China. A robust economic growth in these countries will also boost the affluence of their citizens, thereby increasing the physical demand for gold and silver bullion, especially in China and India, which have a high demand for gold and silver jewelry. On the other hand, a weak performance of the global economies will require an increased supply of the paper currencies, which will erode the values of those currencies, thereby increasing the appeal of gold as a store of value.

 
Hence, based on the arguments above, gold will continue to shine in the years ahead. Regardless of a recent spike in prices, the current price levels do not suggest that gold will lose its appeal among the investor community. On the contrary, it is still maintaining its allure among the most insightful investors, who continue to propagate the expected outperformance of gold as an investment asset. Therefore, investors who buy gold bullion should rest assure that their investments will not only preserve their capital, but will also produce strong investment returns in the future.

= = = = = = = = = = = = = = = = = = = = = =  = = =  = = = = = = = = = = = = = = = = = = =
Open your GoldMoney holding and enjoy complete ownership of the metal you buy.
You will hold and own the allocated metal in your name, in contrast to ETFs and certificates.
Goldmoney always maintain a one-to-one ratio of metal in their vault and in their database.
Click here to find out more about 100% Metal Ownership >>>
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =

GoldBuzzer,
Newsletter of the 31st December 2009

Click Here To Read The Science of Gold & Other Precious Metals.

You’ll enjoy it.

GoldBuzzer

= = = = = = = = = = = = = = = = = = = = = =  = = =  = = = = = = = = = = = = = = = = = =
Open your GoldMoney holding and enjoy complete ownership of the metal you buy.
You will hold and own the allocated metal in your name, in contrast to ETFs and certificates.
Goldmoney always maintain a one-to-one ratio of metal in their vault and in their database.
Click here to find out more about 100% Metal Ownership >>>
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =

Since China began to embrace economic progress in the 1990s and let the compelling forces of capitalism take hold to raise living standards in that country, its impact on world markets has been profound. Chinese capital has become a major influence in the global economy, and demand from China has had a huge impact on commodity prices. But an exception to the Chinese influence has been gold.

China has had little impact on world gold markets. The reason being that Chinese domestic gold production, which over the past several years has grown to make China the largest gold miner in the world, was sufficient to satisfy domestic demand. Consequently, in contrast to other markets in which China has become an important source of demand, it has had little impact on the demand for gold.

Just over a year ago, however, the balance between Chinese gold production and demand began to change. Chinese mining companies were unable to produce enough metal to satisfy the growing domestic demand, with the result that China began importing gold.

The trend for importing gold began modestly, and received little attention. But last year this growing trend started to get noticed. The Financial Times in September 2011, for example, reported: “Data from the Hong Kong government showed that China imported a record 56.9 tonnes [of gold] in September, a six-fold increase from 2010. Monthly gold imports for most of 2010 and this year run at about 10 tonnes, but buying jumped in July, August and September. In the three-month period, China imported from Hong Kong about 140 tonnes, more than the roughly 120 tonnes for the whole 2010.”

More recently, Reuters reported: “China imported nearly a fifth more gold from Hong Kong in November [2011] than the previous month, continuing a trend of sharply rising purchases that has seen bullion flows to the mainland more than treble in the first 11 months of the year. A record 102.525 tonnes of gold entered the mainland from Hong Kong in November, the Hong Kong Census and Statistics Department said.”

These are huge numbers. Last year India imported approximately 900 tonnes of the roughly 2,800 tonnes of gold mined last year. But China is rapidly closing the gap, and is likely to overtake India in the next few years. The impact on the global gold market from such an event, if it were to occur, would be profound and obviously very bullish. But even if China does not become the world’s largest gold importer, the inability of Chinese producers to mine enough metal to meet domestic demand will alone be very bullish for the gold price.

Given the above it is clear to see that China has become an important influence in the gold market and consequently, on the gold price. It is therefore another reason to remain bullish on the prospects for the metal of kings.

Author: James Turk