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Gold Shipments to China Surge 62%

Release Date: 
Tuesday, June 5, 2012

The price of gold was steady Tuesday despite a weaker euro following news that G7 finance ministers intended to hold emergency talks on the Eurozone debt crisis. Gold was $0.60 higher as of 6:38 a.m. Pacific Time on the New York Spot Market, trading at $1,619.90 per ounce. Spot silver was $0.21 higher, trading at $28.57 per ounce. (Click here for the most current spot prices.)

Hong Kong's gold shipments to mainland China in April increased 62 percent to the second-highest level on record. "Gold prices may be supported by China's growing appetite for bullion, as imports from Hong Kong climbed to record highs," HSBC said in a note. "Furthermore, imports of gold coins, which are reported in a separate category in the trade data, increased significantly to 1,876 kg in April from 5 kg in March."

"The ability of China to sustain gold imports is impressive, considering that the economy is showing signs that growth is cooling and income growth is moderating," HSBC said.

Commerzbank said in a note that it expects the price of gold to rise further following a pause, having "regained its safe haven status." The bank noted, "we expect the precious metal to stay above its late May high at 1,584.20 on a daily closing basis in the course of this week and for it to head higher still in the near future."

Lance Roberts, CEO of Streettalk Advisors, said, "The boom’s not over. We have more to go in gold. And it simply is a function of the way investors look at gold. They look at it as a place that’s a safe haven against economic collapse. And that is the fear. The fear is will the United States be the next Greece?"

Financial Adviser and Market Analyst Peter Grandich, publisher of the blog The Grandich Letter, believes the gold bull market will continue. "My feeling during this price rise has been that gold will eventually reach not only a nominal new high in price, but an inflation-adjusted, all-time high. Right now that is somewhere in the $2,300 - 2,500/oz area depending on what factor you use for an inflation rate. And, that's what I think is the minimum target that we can look for before this great bull market even comes close to an end."

(Source: "Gold Run Not Done Yet," The Street, June 5, 2012; "PRECIOUS-Gold steadies as link to risk assets weakens," Reuters, June 5, 2012; "Hong Kong gold flows to China up 62% in April," MineWeb, June 4, 2012; "Raging gold bull vs muted gold bear - Grandich vs Palmer," Mineweb, June 4, 2012)

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†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.

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