|As I had mentioned enough times, my gold is a china play, as well as a hedge for all other china plays|
From some report named "on target"
"... A J-Curve Forecast for Gold
The price of gold is not likely to fall far, or for too long, says Daily Telegraph commentator Ambrose Evans-Pritchard, even though “it has reached a half- century high against a basket of indicators – equities, Treasuries, homes, workers’ pay.”
The root cause of the troubles of the world economy remains – “the deformed structure of globalization, with a $10 trillion reserve accumulation by the emerging powers, and an investment boom in manufacturing to flood Western markets, disguised by debt bubbles in the Anglo-sphere and Club Med.”
Indeed, in some respects things are worse.
Consumer demand is an even smaller proportion of the Chinese economy, having shrunk to 37 per cent of GDP compared to 48 per cent a decade ago.
“The mercantilists (chiefly China and Germany) are still holding on to trade surpluses through rigged currencies... exerting a contractionary bias on the deficit states.”
There is still over-supply in the global economy, as there was in the Great Depression years.
If the central banks keep printing money, the Asian surplus powers, as well as Russia and the Gulf states, will have to find somewhere to park their growing foreign reserves. Those countries won’t want to accumulate more of the deficit countries’ paper promises.
Russia is raising the gold share of its reserves to 10 per cent. China is known to be considering acquiring large gold reserves to boost its currency, the renminbi, as an international rival to the dollar.
Sasha Opel of Orsus Consult expects Beijing to boost its holdings by “several thousand tons” over the next five years to match America’s 8,000 and the Eurozone’s 11,000.
HSBC’s James Steel says $1,450 is a natural floor for the gold price as that is now the marginal cost of mining additional metal, and “peak gold” is a closer reality than “peak oil.” World output has been stuck for a decade at around 2,700 tons a year, despite a fourfold increase in investment. No great find – another Witwatersrand – is in prospect.
The consultancy Thomson Reuters GFMS reckons the immediate outlook for gold is a “rough patch” taking prices below $1,600.
Then several factors could rekindle investment interest in the yellow metal such as the debt crisis in the Eurozone, looser policy from the US central bank such as money printing ahead of the November presidential election, a let-up in China’s tighter-money policy, a jump in oil prices raising fears of runaway inflation.
Together, such factors could trigger a fresh wave of interest in gold, boosting investment demand to nearly 2,000 tons, worth more than $100 billion, surpassing the 2009 record of 1,922 tons, and taking prices to a new record above $2,000 in the next 12 months ..."