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Saturday, June 16, 2007

Gold Update

Myra Saefong at Dow Jones Marketwatch (I talk to her a lot, but not for this particular story) gives us the latest on gold. It's a good read. Unfortunately, is having a brain cramp, so just CLICK HERE.

Some factoids:
  1. There has been a liquidation recently of more than 180 metric tons of gold sales by central banks -- likely in the past three months
  2. There was a decline of 26% in gold-investment demand, in tonnage terms, though jewelry demand was up 17%, according to a World Gold Council report released last month. The StreetTracks Gold Trust ETF "dumped" 31 metric tons of privately owned gold into the market in May.
  3. Supply is growing, with the $22 billion that has been "plowed into exploration" over the past five years now starting to pay off. More than 50 operations will come into being between 2007 and 2012, with a combined annual output of about 450 metric tons, In a 3,300 metric-ton total market supply, that is 13% incremental supply.
It sounds a bit bearish. But you know what looks bullish? This chart ...And points one and two in those factoids are backward looking. While there is more supply coming into the market, we are seeing some potentially huge demand growth in China, India and the Middle East. $700 gold might be a lot closer than anyone thinks. But we shall see what we shall see.


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