18
Mar
2015

Gold Price to Surge Over $2,400 Per Ounce – Doubling Asian Demand in “Asian Century”

– Gold price set to soar to new records in ‘Asian century’
– Gold price to double by 2030: ANZ
– Gold to exceed $2,400 per ounce
– Gold demand in Asia set to double
– “Greater demand from investors and central banks will see gold prices rise materially over the long-term”
– “Most of the time you don’t want to pay for it. But if you need it, you’re glad you have it”

The price of gold is forecast to double in the next 15 years, and growing wealth across Asia, particularly in China and India, will lead to demand for gold bullion and send its value soaring, a new study from ANZ predicts.

Gold in US Dollars - 5 Years (GoldCore)

Gold in US Dollars – 5 Years (GoldCore)

 ANZ’s just released report `East to El Dorado: Asia and the Future of Gold’ says the price of gold could exceed $2,400 per ounce by 2030, more than double its current value of around $1,150.

Since 2003, we have said that gold was likely to surpass its real record high or inflation adjusted high of $2,400 per ounce due to store of value, investment and central bank monetary demand.

“Asia’s rise will have profound implications for the gold market,” ANZ chief economist Warren Hogan said. As incomes rise across Asia, so will the appetite for gold rings and necklaces, the report predicts. “A growing middle class will buy more jewellery,” Hogan said.

There will also be an increasing appetite for gold coins and bars as stores of value.

Gold holds cultural significance in China, India and across much of Asia, where gold is considered an ideal gift for weddings in the hope it can bring luck and happiness.

Difficulty in obtaining gold in China and India in the past also adds to the allure, according to the report. The Chinese government has a history of nationalizing gold stores and prohibiting gold ownership, while in India gold imports were largely banned until 1990.

Developments in money management practices in Asia, and rising demand for diverse financial products, will also help fuel demand for physical gold, the report says.

“A larger body of professional money managers will drive investment demand,” Mr Hogan said.

“And regional central banks will purchase more gold to provide confidence in newly floated currencies  …  These factors will support a long term and significant increase in the gold price.”

ANZ’s report predicts annual gold demand from 10 key Asian countries – including China, India, Japan, Indonesia and South Korea – will double from 2,500 tonnes to 5,000 tonnes.

ANZ said it believes the gold price will  rise above $2,000/oz by 2025.

“While the near-term could see prices trade only marginally higher over the next few years, we believe the combined effect of greater demand from investors and central banks will see gold prices rise materially over the long-term,” it said.

“Beyond its role as the world’s largest producer and consumer of physical gold, we believe China will eventually dominate the price discovery process too, as Asia’s financial centres gradually open up. There is no reason why Shanghai should not become a major centre for gold trading provided the appropriate institutional and legal reforms take place.”

A climbing US dollar has dampened investor demand for gold so far in 2015, but investors still see gold as a safe haven during periods of share market and economic decline the report says.

“One things that’s never changed for the gold market in the last 30 or 40 years is its safe haven appeal,” he said.

“Most of the time you don’t want to pay for it. But if you need it, you’re glad you have it.”

 

Must Read Guide: 7 Gold Must Haves

 

MARKET UPDATE

Today’s AM fix was USD 1,149.00, EUR 1,080.50 and GBP 782.91 per ounce.
Yesterday’s AM fix was USD 1,154.75, EUR 1,087.54 and GBP 781.50 per ounce.

Gold fell 0.55% percent or $6.40 and closed at $1,148.50 an ounce yesterday, while silver slipped 0.58% or $0.09 at $15.56 an ounce.

Gold in US Dollars - 1 Year (GoldCore)

Gold in US Dollars – 1 Year (GoldCore)

In Singapore, bullion for immediate delivery ticked down  0.2 percent at $1,146.20 an ounce near the end of day. Comex U.S. gold futures for April delivery inched down 0.2 percent to $1,145.40 an ounce.

Gold is holding above yesterday’s 3-1/2 month low at $1,142.86/oz. Its 14-day relative strength index (RSI) remains in oversold territory at 25.5. Gold’s RSI has been below 30 for the best part of a fortnight.

Yesterday, SPDR Gold Trust ETF saw further liquidations and holdings fell 0.4 percent to 747.98 tonnes.

The Dubai Gold and Commodities Exchange (DGCX) is in an advanced stage of talks with a local bank on its plans to launch a spot gold contract, a senior executive at the exchange said. DGCX had said early last year that it planned to introduce a spot gold contract as part of its growth as a top trading centre for the precious metal. The launch had originally been scheduled for last June, but has been delayed. “We are in advanced stages of talks with a local entity,” Ian Wright, chief business officer at DGCX, told Reuters. He did not disclose the name of the local bank, but said the contract should be launched in the “near future”.

Thousands of anti-austerity protesters clashed with riot police near the new headquarters of the European Central Bank (ECB) in Frankfurt on today, hours before the ceremonial opening of the 1.3 billion euro ($1.4 billion) building.

Several cars were set on fire and streets were blocked by burning stacks of tires and rubbish bins. At least one police officer was injured, police said. Police used water cannon to try to make a path through the mass of protesters to the entrance of the building, which is blocked off from the street by police barricades.

ECB President Mario Draghi was due to make a speech there this morning

Gold fell to its lowest in nearly four months, as markets await the outcome of the U.S. Federal Reserve meeting today.

As always language from the FOMC’s policy statement will be used to infer any hints on when interest rates might be raised. Analysts are focusing on the word, “patient” to determine whether the rate hike will come in June or September or be delayed again.

If the word “patient” is absent from the statement, some analysts predict further price falls for the precious metals.

In London, spot gold in the late morning is trading at $1,150.47 or up 0.07 percent. Silver is trading at $15.56 or up 0.12 percent and platinum is trading at $1,094.46 or up 0.05 percent, at a five and a half year low.

 Updates and Award Winning Research Here

 

Mark OByrne

  • LibertarianUSA42

    Mark, do you see any miner bankruptcies coming up?

  • Au_Canary

    Blah blah blah, bark bark woof woof.
    Look, I hold lots of PM. I am a gold bug and well OVER hedged in PM. I don’t disagree with the numbers and the doom and gloom “facts” discussed. This is in fact GOLDcore not BANANAcore — If it was, then the long term rising price of fruit would be justified.
    Regardless of the man made phoney fiat economics and debt based sovereign leverage, in the end demographics and cultural “norms” will rule. Gold and other jewelry – you can also wear it — in Asia most do, rather than stick it in a safe.
    I have not seen a comparison to the long term price of Gold to the price of of other traditional stores of wealth in Asia. For example: Jade. I don’t own jade, because for me, livining in North bumphuck Ohio, jade is as liquid as dried dog crap. I hold gold. But if I lived in Beijing, I would prob feel much different. Have you ever looked at a price chart for Jade? No, because we have a western mindset — “WTH is Jade worth – its a barbaric Asian relic.” Check it out sometime. http://www.forbes.com/sites/china/2010/09/30/the-soaring-price-of-jade/
    There are luxury items and commodities that few discuss (outside of art), that have had returns that blow any currency or metal into the weeds.

    Some of these physical assets have both collector value AND potential practical value at the same instant. Baring government interference and moral hazard, they could outperform PMs 5-10 fold in the next 15 years. Classic automobiles for example. (“If I just would have kept my 65 Mustang”)

    Another example often overlooked or dismissed as a red neck sub culture item is : High end firearms and surplus ammunition. You don’t need to shoot them, you just need to get educated on the most popular items (most liquid types), and know how to properly preserve and store them, securely. (Just think of them as a bunch of metal and wood) Some examples: Sealed crates of surplus Yugoslavian ammunition 10 years ago sold for $45 in the US — today $300+. PKMs built by an armorer from a parts kits 6 years ago sold for $4K, today $7-$12K. One of those manufactuers is now building Czech guns and offering them for $4500-$6500. (http://www.marcolmarfirearms.com/) Auction sites offer un-assembled parts kits fully legal to own in all 50 states (they are not a gun – just a box of “parts”) http://www.gunbroker.com/All/BI.aspx?Keywords=parts+kit&Sort=5
    In 15 years you your initial investment of $5500 could quadruple. Like gold, firearms and ammunition will never go to zero, but also like gold the government could effect ownership and resale.
    Lots of other items and examples that you may know about that I have never heard about or considered.
    Gold as a LONG TERM wealth preserve (15 years quoted here) is meant to be just that – preservation of wealth with some premium. Short term liquidity WITH a positive return is a truly crap shoot.
    For longer term investment stack some some freeze dried bananas and perhaps some “jade” on top of all those Mint sealed red monster boxes you accumulated.

    • Gold for wealth preservation, now I’m in agreement (head noding)..

  • I do think that the new levels around $1200 are a clear indicator that lends credibility to the referenced study.