Gold is entering a new era,
thanks to a major rehabilitation
as a global financial asset--CPM
Gold appears to be enjoying a rehabilitation of
its historical might and role as a financial asset,
as investors look toward safe haven assets in
these volatile times, says a new CPM gold report.Author: Dorothy Kosich
RENO, NV -
A report by the CPM precious metals and commodities
research group in New York City asserts "gold is entering a new era,
" thanks to "a major rehabilitation of gold as a financial asset
around the world" as investors look for safe havens in volatile times.
"Not since the Great Depression and World War II has sentiment
about the state of financial and economic conditions
been so pessimistic," CPM noted in its newly released Gold Yearbook 2009.
"The market consensus appears to be that the gold price
will remain strong, at least through the first four months of 2009.
All of the factors that have been driving investors
to buy gold continue to be in place," CPM analysts said.
As the value of paper assets has been greatly diminished,
CPM asserts that the "value of gold has been greatly advanced."
The report projects that investors "will buy significantly
more gold in 2009" adding a record 52.3 million ounces
to their holdings this year.
"In this environment, with gold prices relatively tight,
such levels would be expected to propel gold prices to
a new record high, surpassing their record $1033.90
in March 2008," CPM analysts advised.
"Further demand for gold should be expected, and
further price appreciation most likely will follow as well," they predicted.
The analysts suggest that "the tremendous increase in investor
could buying and the consequent rise in prices since 2001
instead may represent the beginning of a major restoration
of gold as a financial asset in the world,
with a concomitant upward revaluation in the price of gold."
CPM projects that total global gold supply will rise 3.3% to
118.6 million ounces this year, as mine production recovers
from 55.3 million ounces in 2009 to 57.2 million this year.
Gold mine production could rise to 57.2 million ounces
this year with more than half coming from Indonesia.
The analysts forecast "little change in South African gold production
this year," while U.S. gold production could decline
to 7.45 million ounces.
However, China's gold output is expected to be a hefty 9.3 million ounces.
Meanwhile, CPM advises that net investor demand
for physical gold is expected to be a record
52.3 million ounces this year, up from 43.3 million ounces in 2009.
However, CPM advises that gold fabrication demand
will decline 7.9% to 71.3 million ounces this year as
gold jewelry demand remains weak with
an anticipated 7% decline to 56.5 million ounces in 2009.
The analysts also predict that central bank sales are expected
to be much reduced this year with central banks expected to be
net sellers of only five million ounces of gold or less.
"Most central banks may have sold much of the gold that they
have wanted to sell over the past two decades.
They may sell much less going forward and are likely
to sell less given current economic conditions."Author: Dorothy Kosich
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