THE PRECIOUS METAL: NEW DESTINATION FOR CENTRAL BANKS
Precious metal stocks
In the era of financial instability and slow down of paper currency gold has emerged as a best thing to invest. Especially after the recession of 2008 and economic fallout in Greece and Italy has proved that old is gold, literally. Currently Central banks around the world are persisting on gold bullion investments for the best security. All the central banks have become buyers of the Precious metal stocks to the tune of 80.8 tons. Russia, Vietnam and Mexico are the leaders on this path. For obvious reasons demand of gold is skyrocketing. Investors are running for the shelter for incoming predicted recession and buying gold is their umbrella in coming storm. The average price for gold bullion was higher than it was last year; 22% higher at an average price of $1,690.57 per ounce. U.S. Economy is not in the best phases. World’s second largest economy Chinese economy is also on down slide. It forces to investors to turn toward to gold. But due to high prices of gold bullion in the first quarter of 2012 , gold bullion demand fall flat by five percent when taking into account jewelry and technology demand. India has been a crucial factor in worldwide demand for gold. Everyone knows, Indians are crazy over gold. Gold hold a significant spot in their culture and day to day life. But the numbers were hugely affected by the one year drop in demand from India. A jeweler’s strike has been proved fatal to the demand from India. Indian Finance Minister increased some extra duties on gold and all the jeweler’s went on for a strike. Indian government has trying desperately to attract Indian investors to invest other sectors other than gold. Stimulating the slowing economy was main motive behind this move. Jewelers instead went on strike and so did not increase their inventories of gold bullion during the quarter—which meant no demand. Experts thinks, what is critical to note is that, had India simply maintained its purchases of gold bullion, demand would have hit another record. Also, considering the staggering 46% decline in gold bullion demand from India year-over-year, the slack was more than picked up by the central banks in the world and other investors. But if you already written off the gold bullion market then there is possibility that you are dangerously wrong. Even though these negative signs avail Central banks all over the world have strong faith in gold bullion market yet.
The vacuum created by less demand of India the largest purchaser of gold has fulfilled by other buyers like central banks all around the world.
Veteran investors are not very happy about current financial health of the world and technical chart patterns all over the world. So increasing gold demand will not only help gold investors but also overall global economy.
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