Publication of Gold Survey 2006
GFMS
Date: September 14, 2006
Growth in investment demand in the fourth quarter to drive gold through $700.
...the first six months of the year saw heightened investor activity in the precious metal. In contrast to the principally buy-side market of the last six months of 2005, this year has seen increased two-way trading...
Looking ahead, having recently gone through a relatively calm period and notwithstanding more recent weakness, GFMS believes investment demand has the potential to come back strongly. Specifically, Philip Klapwijk, the consultancy’s executive chairman, noted that “investor buying over the last quarter of 2006 could drive the gold price back through the $700-mark.”
...Firstly, signs of a problematic US housing market create a bleak outlook for both the US economy and, importantly, the country’s currency. Elsewhere, despite tensions having somewhat eased recently from the peak they had reached during the crisis between Lebanon, Israel and the Palestinian Territories, the situation in the Middle East remains extremely volatile, contributing to a general sense of unease and helping to maintain oil prices at still high levels. Finally, recent events in the United Kingdom have reminded the world of the perceived threat of global terrorism, adding to the overall feeling of insecurity. All the above make gold’s safe haven properties particularly attractive.
...should commodity prices come under pressure (which arguably has been happening recently), it believes it is unlikely that a full blown exit by investors will take place. In contrast, the problematic nature of the world economy and particularly in the United States, is expected in time to boost gold’s attraction as a safe haven asset and probably outweigh the negative impact of the bursting of the wider commodity bubble.
Note to Editors about GFMS Limited:GFMS Limited is the world’s foremost precious metals consultancy, specialising in research into the global gold, silver, platinum and palladium markets. GFMS is based in London, UK, but has representation in Australia, China, India, Spain, Germany and Russia, and a vast range of contacts and associates across the world.
The above information has been redacted from the press release as it originally appeared on GRMS.co.uk on September 14, 2006.
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