Despite last year’s high precious metal price it does not stop investors getting into gold investment. Moreover as the inflation in developing markets continues, coupled with currency debasement and deflation, venture capitalist search for more stable form of investment such as gold and silver. Thus, Investors Are Demanding More Gold this coming year.
With this, here is Eric McWhinnie to give us some insight about this increasing demand in the precious metals market.
Investors Are Demanding More Gold
The annual value for gold demand in 2011 equaled $205.5 billion, an all-time high and a 29 percent gain above the 2010 value. Jewellery accounted for $99 billion in gold demand, while investment demand was close behind with nearly $83 billion. Interestingly, the majority of investment demand value was due to physical bar and coin demand, which represented $75 billion. As more investors remain skeptical and lose confidence in the global financial system, they turn to physical gold for protection. The annual report explains, “The bar and coin story is one which has traversed borders led by China, India and Europe, but other markets have also participated in terms of relative growth rates. Store of wealth demand, diversification, negative real deposit rates, the threat of inflation in developing markets, deflation in developed markets and currency debasement have all contributed to driving up demand over the last few years.”
In 2011, the average price of gold averaged $1,571 per ounce, which was more than 28 percent higher than its 2010 equivalent. Record high gold prices also failed to significantly curtail the appetite for industrial demand. The technology sector demanded 463.5 tonnes of gold in 2011, down from 466.4 tonnes in 2010, but still above the 456.3 tonne average of the preceding five year period. Within the sector, electronic demand increased from 326.9 tonnes in 2010 to 330 tonnes in 2011. The dental segment is the one area that appears to be affected by rising gold prices. Dentistry gold demand fell 10 percent year-over-year to 43.8 tonnes
Even though 2011 was filled with volatility and higher gold prices, the world still craves the only world reserve currency that can not be printed. The current trends that have fueled the 11-year gold bull market remain in place. Furthermore, gold prices continue to receive additional support as central banks not only devalue fiat currencies, but also purchase gold themselves. In the past two years, central banks have purchased more than 500 tonnes of gold. Read the full story here.
As gold bars and gold coins are a more tangible form of investment and is more secure than stocks, and with the current situation in certain markets, it is understandable why Investors Are Demanding More Gold this year.
As more and more investors are getting into precious metal ventures as a way to protect their assets, it is expected that that great opportunities for capitalist will arise as the demand for gold and silver bars and bullion coins increases.