Gold Investment Demand Up a Staggering 33% Y/Y

Nov. 28, 2011 - PRLog -- Goldcore reports: [ Gold Demand Trends (Q3 2011) released today by the World Gold Council Click Here shows that investment and central bank demand for gold were key drivers of total gold demand last quarter. Third quarter gold demand increased 6% year on year to 1,053.9 tons with investment demand rising a significant 33% y/y to 468.1T. A huge paradigm shift in the gold market is central bank buying which rose 556% to 148.4T from 22.6T in Q3 last year. For the past 15 years there has been net selling of around 400 tons per annum from central banks. The fact that there is 100 tons of new central bank buying that is unaccounted for is not surprising to GoldCore and analysts who have long been saying that the People’s Bank of China and other central banks are likely continuing to quietly and gradually accumulate large quantities of bullion. They are not declaring their purchases due to concerns that this may further devalue their currency reserves which are mostly in US dollars and also in euros and would result in them having to pay higher gold prices for their new gold reserves. Given gold’s proven risk mitigation, hedging and safe haven properties, it is likely that savers and investors will continue to seek protection from economic uncertainty.

This uncertainty shows no signs of abating and indeed appears to be set to deepen in the coming weeks and into 2012. Scaring investors from diversifying into gold by comparing the gold market today to the 1970s boom and bubble burst continues to be unfortunate and imprudent. It is a simplistic theory propagated by the biased and by those who have not bothered to inform themselves about the gold market. ]

If all is well in the fiat currency world that is saturated in $1.5 QUADRILLION worth of derivatives. . . . why then have central banks gold buying trends risen a staggering 556% year over year?!? The answer is that all is not well in the paper money printed out of thin air banking world. When the global economy will support the bottomless expansion of the paper money supply and permit ‘Irrational Exuberance” in the words of the former sound money advocate Alan Greenspan, we see the banks have no desire to purchase physical gold what so ever. On the other hand, when the market becomes inhospitable to the fractional reserve leveraging of the paper money supply into an inconceivable volume of derivative funding instruments, gold suddenly comes back in vogue even amongst the very banks who call it a stupid investment. Why would this be the case . . . ?

The answer is that gold is honest money that in a TRUE free market should rise accordingly along with more paper assets coming into existence that are only possible through the creative financing shenanigans that banks have seemingly abused for the last 2 decades. As the paper money value is watered down by the introduction of waves of newly printed additional dollars the logical free market response would be the elevation of the price of gold & silver to offset the dollar devaluation. Wall Street & the banks have done a very good job of discouraging the massive appreciation of gold & silver that would have ordinarily happened by this point with precious metals derivatives. The definition of the term derivative is: A security whose price is dependent upon or derived from one or more underlying assets.

Wall Street has taken the derivative model and created several methods by which ‘investing’ in gold & silver can be done in such vehicles as ETF’s, futures and options to name a few. The very idea that hundreds of billions of dollars that over the past decade would have gone directly into the purchasing of physical metal which would remove the inventory from the market and drive prices dramatically higher has instead been redirected into one or more of these derivative instruments. The redirection of this huge volume of money has deprived the true pricing mechanism of the precious metals and caused a distortion in the prices. This distortion has allowed the paper money system to flourish only because the precious metals price has been artificially suppressed. Had the metals market been allowed to rise organically and uninhibited by the Wall Street sabotage we would have much higher prices in precious metals and investors long ago would have opted to simply buy gold and silver, thus allowing them to dodge the stress of stock market losses altogether. The amazing thing about all of these sovereign debt crisis we are seeing around the world is that this is allowing the precious metals to begin to break out of the redirection scheme and soon will regain their rightful price and I can assure you it is far higher than anything you have seen so far! Buy your gold and silver now before this massive correction sends the metals to the moon!

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