treat the subject of gold in Gold at $ 2000, where we review what happened in the late 70's when gold rose from just over $ 100 to $ 850 in 1980, then fall back and do not exceed $ 500 up 2006, no less than 26 years later.
I will not discuss the consideration of safe haven of gold. It is true that gold is money that can not be created at will by central banks. It is true that if the financial system collapsed, the gold would enjoy their status as safe haven for self-destruction of other currencies. We must also bear in mind that if between the two extreme scenarios of deflation or hyperinflation , eventually succeed the second one, the gold would become excellent protection. It is also true that gold retains value much better than fiat money, since gold is extracted each year no more than 2% of the existing and extracted, estimated at 150,000 tonnes, while fiat money is created at the discretion of the governments. Not discuss these irrefutable facts is the intention of this post.
However, the fact remains that unless the money liquidity, there is virtually no other assets to behave worse in the long term gold .
A look at the chart above makes us realize that, compared to buying gold, there's only one thing less profitable to do with the money, put it in a drawer.
seems obvious that gold is the enemy of bank money, and therefore an enemy of the banks, who would prefer we did not know of its existence in order to "play" with our money banking multiplying at will through the bank multiplier, or placing their great intangible investment products.
However, currently there is a paradox that a large part of investment banks recommend investing in gold, with target prices of $ 1,500 in the case of Merrill Lynch, or $ 2,000 in the case of Citibank . As usual investment banks to buy those that they have too much and want to sell expensive, we will take the recommendations of purchase as a warning. It is still too recent the Goldman Sachs forecast $ 200 for a barrel of oil , when it traded at $ 129 and just before the crash will take price below $ 40 a barrel.
But what is making the final investment?, That they often buy an asset when it is time to sell.
Well in this article and in that other show him:
Marta DomÃnguez, director Gold Direct, a company founded in Valencia in 2006 by Austrian Michael Berger, said that "the number of customers has increased tenfold in two months. We have about $ 2,000." The average value of purchases has also skyrocketed. "Before, the average investment was about 5,000 to 10,000 euros. It is now between 25,000 and 40,000," he says. This year the company will sell two tonnes of gold, something never seen before. Joaquin
Van den Brule, head of ciodad a company with more than two decades of life, says demand has increased 15-fold in the last month and a half. "We now have customers coming to buy five or ten kilos of blow," he says.
We
investment banks to recommend buying gold when it was supposed that gold is the enemy number one bank, and the particular buying gold as never seen before.
Let's look at the supply of gold. According www.gold.org, demand for gold jewelry was in 2008 of 2,146 tons. Demand this year is experiencing a fall of 44%. Do not forget that this is the main use of gold, and therefore its main consumer. The demand for physical gold investment in 2008 was 766 tons, a slight decrease this year of 8%.
If the demand for jewelry has fallen so far, what has replaced it demand? Well the increasingly popular ETF and hedge funds, with increases of 121% and 305% so far this year compared to 2008. Speculative demand, and as fast as it comes, it falls. We saw the effect that caused the withdrawal of speculative demand on the price of oil.
Will he recover the gold demand for jewelry when you remove the speculative demand? In today's environment of long recession, hard.
On the supply side, new mine production is maintained over 2,000 tons per year (other sources indicate a production of about 2,500 tons per year), while gold has barely increased recycling and involves about 1,400 tons per year (this is not new production, but offer). However, some people think that lately there is growing offer recycled gold, helped by high prices :
The major Swiss Argor-Heraeus refinery said the supply of scrap metal has been " nearly doubled "in the last six months.
The UBS metals strategist John Reade said scrap flows are entering unprecedented levels.
"All I talk refineries are full, some are really rejecting junk, "he added.
Much of that scrap gold sell comes from" grandmother's jewelry "which is quite common in times of crisis. This is the so-called junk old. The new scrap mainly from industrial uses of gold.
What is clear is that hardly can lower the price of gold below the cost of extraction, but it is around $ 300-400, well below current prices.
A curiosity: 50% of gold in the world has been produced since 1960. Put another way: has produced more gold in 1960 than in all of human history until 1960.
the chart below taken from cumulative gold:
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