Indonesia curbing nickel supply to support locals, Eramet says
The French miner was this year given a sales quota by the Asian nation that was 29% less than it expected.
The World Gold Council has spoken: Stop holding your breath at every word out of Ben Bernanke’s mouth.
In a research paper titled “Gold and the US interest rates: a reality check” the organisation warns against putting too much weight on the US Federal Reserve’s hints that it may or may not wind down QE.
“While negative interest rates support gold investment demand and rising rates increase the cost of investing in it,” the report reads. “A normal rate environment – with real interest rates ranging between 0% and 4% or approximately 2.5% to 6.5% in nominal terms – is not automatically adverse to gold. In such a rate environment, gold’s inclusion in a portfolio has historically been beneficial to investors.”
Just last month the precious metal dropped to September 2010 levels after Ben Bernanke, soon-to-be-former chairman of the Federal Reserve, said that he had a “moderately optimistic forecast” for the US economy.
Most recently Bernanke answered a US senator’s question about the gold price with:
“Nobody understands gold prices and I don’t really pretend to understand them either.”
In fact, the impact of US monetary policy on the gold price has gone down, the WGC says. With markets booming beyond American borders the WGC emphasizes that “gold is not solely tied to US sentiment and behavior.”
Emerging markets make up nearly 70% of world-wide physical gold demand (including ETFS), while the US represents less than 10%.
Gold investments have been historically quite positive, the WGC claims, with long-term average annual returns of 6-7%.
Putting too much emphasis on the US interest rates “oversimplifies the issues currently at play,” said Juan Carlos Artigas, head of investment research at the Council.
“In the event of a return to a more normalised real rate environment in the US it is worth remembering that investment demand is not the only arbiter of gold prices, nor does it originate solely in the US,” said Artigas, citing the Chinese market where gold consumption jumped by 132% between 2007 and 2012.
“Even with the highest rate of interest, the core value of gold is to balance out a portfolio,” says Artigas. “Most investors are under allocated; optimal levels are identified as between 2% and 10%.”
To view the full Journal, please visit: http://www.gold.org/investment/research/regular
Comments
John M
No, Ben Bernanke does not control the price of gold, but the Bank of England does, or at least, has been deeply influencing its price since February 28th, 2013. That central bank happens to have thousands of tons of gold that actually belongs to other nations locked up in its vault. Alastair MacCloud proved, from documentation contained within its own website and annual report, that it supplied 1,300 metric tons of gold in the three months running from Feb. 28th to June 1st. These months happen to mysteriously correspond to the deep price reductions from $1,600 down to the current $1,250 to $1,350 range.
The UK, itself, happens to own only about 350 tons, so the rest is foreign gold held in BofE vaults. They get away with what is essentially fraud upon depositors because most of the gold is held in “non-allocated” accounts. They deliberately charge very high storage charges, and then offer other sovereigns the ‘opportunity” to both avoid storage fees and earn interest on the gold. Why other sovereigns are stupid enough to go along with it, and why they don’t simply demand their good back,
Anyway, the last time the corrupt Bank of England intervened in gold markets, was in year 2000, when it sold 400 tons of its people’s gold to force the price of gold down. Gold was crashed and then held for about a year, in the mid-200s per ounce. The price was initially taken down from $310 (which price was bankrupting the heavily short Goldman Sachs) to $255, or a net reduction of 17.7%. This time, they used more than 4 times as much gold to save a bullion bank, maybe, Goldman Sachs, again. but, probably, another one, such as JP Morgan. At any rate, they’ve used 1,300 tons to back up physical deliveries on a much more massive paper manipulation, achieving a price reduction from $1600 to about $1,200 or a net reduction of 25%. But, unlike in 2000, the thieves have not been able to consistently hold the price down at $1,200. Recently, the demand was so strong that it went back to $1350, even in the midst of their operation, and in spite of the ongoing deliveries made from the 1,300 tons of stolen gold. If we assume that the price stabilizes at $1,300 or so, until they use the 1,300 tons up, maybe 6 months from now, the net price reduction is actually only 18.75%, almost exactly what they were able to achieve for over a year, back in 2000-01, with only 400 tons!!
The smartest thing anyone can do, right now, is buy, buy, BUY!!! Because neither the Bank of England, nor the lesser amount of gold that appears to be contributed from the NY Fed basement vault, to supply COMEX, is going to be sufficient to hold prices down forever. We are at a new base, similar to 2000, and the price of gold will go up, from here, over the next few years, by a far larger multiple than it did back then. We may see gold selling for $15,000 + per ounce, in 5 years, if things take a course similar to what happened in the 1970s (and of course things are much worse now).