 Casey Files:
Gold Buyers Smash Records
Doug Hornig, co-editor of
BIG
GOLD, from Casey Research
Dec 4, 2008
The spot price of gold has
fallen more than 20% from its all-time high, reached in March
of 2008. But if you think that means demand has declined, think
again.
Gold demand has in fact exploded,
and not just here and there. Everywhere. Around the world, customers
have been queuing up to strip coin shops' shelves bare. Mints
have been running 24/7 and still have been forced to ration coin
shipments to their dealers. ETF vaults are bulging.
Now, the World Gold Council
has confirmed the trend with hard numbers for the third quarter
of this year. In a page-and-a-half press release summarizing
3Q2008 activity, the WGC had to use the word "record"
ten times.
Some highlights:-
- Dollar demand for gold in
Q3 was a record US$32 billion, 45% higher than
the previous record, set in 2Q2008.
.
- Identifiable investment demand,
which incorporates demand for gold through exchange-traded funds
(ETFs), bars and coins, rose to $10.7 billion (12.3 million ounces),
double year-earlier levels.
.
- Retail investment demand rose
121% to 7.5 million ounces, with strong bar and coin buying in
the Swiss, German, and U.S. markets. Europe as a whole saw an
all-time record 1.64 million ounces of bar and
coin buying. France became a net investor in gold for the first
time since the early 1980s.
.
- Gold ETFs posted a record
quarterly inflow of 4.8 million ounces in Q3. After the collapse
of Lehman Brothers in late September, ETF inflows shot higher
by an unprecedented 3.6 million ounces in only five days.
.
- Demand for gold jewelry hit
a record $18 billion. Leading the way was India,
which witnessed a rise of 65% in dollar value (1.3 million ounces)
compared with 3Q2007. The Middle East, Indonesia, and China all
experienced increases of more than 40% in value or 10% in weight,
year over year.
At the same time that demand
is setting records, supply has been unable to keep pace, falling
9.7% from year-earlier levels, the WGC reported. The drop was
largely due to inaction on the part of central banks, which have
increasingly shut their vault doors.
Heavy demand, declining supply...
small wonder that gold prices have remained near record highs
in most of the world's currencies; that dealers have been marking
up coins by 10% or even 15% (when they can get them); and that
one-ounce coins still fetch bids close to $1,000 on eBay.
When will the spot price in
U.S. dollars, which is set by the futures market, catch up? No
one knows. But it will.
The world's hunger for gold
will only grow into a future awash in fiat currency. Gold is
the ultimate and, at day's end, the only safe haven from
the kind of currency destruction that is being visited upon the
dollar, the euro, even the renminbi, as governments everywhere
desperately try to stave off a deflationary depression the only
way they know how: by turning on the printing press.
We are in a period of intense
monetary inflation. It will be followed, inevitably, by a long
period of price inflation. People will be desperate to preserve
the buying power of their dollars, euros, etc., and they will
turn to the one thing capable of doing just that. Gold.
As gold rises, it will lift
the shares of selected mining companies with it. The ones that
prosper the most will be those that have positioned themselves
to survive the credit crisis -- by stockpiling cash, keeping
production costs down, and locking up borrowed money on favorable
terms.
Companies that have failed
to do this will go under, unable to get credit in a frozen market.
That will both diminish competition and further curb supply,
and those that properly planned ahead will rake in enormous profits
as gold goes through the roof. Or more likely, as Casey Research
founder Doug Casey puts it, gold "heads to the moon."
But which are the companies
poised to profit the most? The ones we cover in our monthly newsletter
for conservative investors, BIG
GOLD.
We are dedicated to bringing
you the information that will allow you profitably to pick your
way through the present economic minefield. We search the world
of producing gold miners, to find the best of the best. We pinpoint
the investments that will not only hold on through a market downturn,
but will rebound spectacularly as the commodities market recovers,
which it must.
In addition, we bring subscribers
the best ways to invest in physical gold, including where to
find coins and bars at affordable prices in times of extreme
scarcity -- like right now, when mints are not minting, most
dealers are out of stock, and those still taking orders are charging
exorbitant premiums.
While we specialize in producing
companies, we also cover such alternative gold investments as
ETFs, mutual funds, royalty companies, and closed-end funds.
We strive to find what's best for you. And we answer your
specific questions, each month in our BIG
GOLD Responds section.
The elaborate world financial
structure that has been erected over the past two decades created
a humongous bubble that has now popped. What will come in the
aftermath of this cataclysm cannot be foreseen, but it will be
different. One thing is for certain, though, gold has been money,
in all times and places, for thousands of years. The people of
the world are already returning to it as the sole store of value,
and that's a trend that will accelerate in the coming years.
You can count on it.
Learn how to make the trend
your friend with a 3-month, no-risk subscription to BIG GOLD...
and as an added bonus, receive our hot-off-the-press special
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charge. Click
here to continue...
Dec 3, 2008
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