News Header


Analysts See Increasing Price and Demand for Gold

Release Date: 
Wednesday, June 15, 2011

Gold prices are expected to continue their eleven-year rally as investors seek a safe haven asset against currency debasement and inflation, according to India's Quantum Asset Management Co. India and China, the world's two largest gold consumers, reported faster inflation last month. India's wholesale inflation accelerated more than 9 percent in May from a year earlier. In China, consumer prices jumped 5.5 percent last month, the fastest pace in almost three years, according to the statistics bureau in Beijing.

"There has been a lot of discomfort amongst the retail public in terms of inflation," said Chirag Mehta, a commodity fund manager at Quantum. "Inflation has been persistently on the higher side." Daniel Major, analyst at RBS, said "Chinese and Indian inflation is underpinning what has been resilient physical metal demand so far this year."

"There will be more people moving towards the safety of gold which will take gold prices much higher," Mehta said. "The gradual increase in gold price will continue." Prices have advanced 7 percent this year so far.

"Even if a small fraction of financial assets move to gold, I think the price will go much higher than what it is currently," Mehta said yesterday. "The diversification to gold will continue, gold is still under-owned."

"There's a tidal wave of gold demand coming," Jason Toussaint, the World Gold Council's managing director of U.S. and Investment, said yesterday. "A key is the long-term fundamental change in emerging markets. The biggest markets of growth are China and India." Gold demand in India may increase to more than 1,200 tons by 2020 as economic growth boosts incomes and household savings, the council said on March 31.

"Euro zone - and perhaps soon U.S. - sovereign debt concerns remain critical, there is a lot of liquidity still and China's growing middle class can't get enough of the yellow metal," said David Thurtell, the analyst at Citi. "Investors want to avoid the dollar, euro and yen. It doesn't leave much, especially if you can't access the yuan."

(Sources: "Gold to Extend Gains as Buyers Seek ‘Safety' Against Inflation, Fund Says,"Bloomberg, June 15, 2011; "Gold Slips Near $1,517 on Stronger Dollar," CNBC, June 15)

News Footer


†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

You should review Goldine's Account Agreement along with our risk disclosure booklet, Coin Facts for Investors and Collectors to Consider ®, prior to making your purchase. Goldline has a spread or price difference between our selling price, called the "ask", and our buy-back price, called the "bid". That spread varies depending on coin or bar you acquire. Spreads on 1 oz bullion coins, 90% silver dimes and quarters, and one ounce and larger bullion bars are 13%. All other coins have a spread of 28%. There is also a 1% liquidation fee when you sell your coins back to Goldline. The market must go up enough to overcome this spread before an actual profit is achieved. Precious metals and rare coins can increase or decrease in value. Past performance does not guarantee future results. Coins are a long-term, three- to five-year, preferably five- to ten-year investment. We believe precious metals are suitable for 5% to 20% of the average investment portfolio though others may recommend a different percentage.

To receive free information package on gold and precious metals investing, call Goldline at 1-800-963-9798.