August 26, 2010 - Why Gold Seems Unbreakable

SPECIAL BOND BUBBLE ISSUE

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3) Why Gold Seems Unbreakable. While the rest of the world has been going to hell in a hand basket, gold (GLD), (GDX) refuses to take a serious dip, and is threatening the old $1,260 high. Today, the World Gold Council, the ultimate go-to source for figures on global supply and demand for the barbaric relic, published its 2010 Q2 assessment yesterday. The report paints a positively bullish outlook for the yellow metal (click here for the link at http://www.gold.org/).

Investment demand has been skyrocketing, causing total buying to jump 36% to 1,050 metric tonnes YOY. Purchases from the new exchange traded funds have soared 414% to 291 tonnes. Hoarding of gold bars, primarily in emerging markets, is up 29% to 96 tonnes. India and China will continue to be the new demand driver for the foreseeable future.

A flight to safety bid from Europeans desperate for a hard alternative to the Euro has been strong. A recovering economy has caused industrial electronics gold consumption, especially from Japan, to jump 14% to 107 tonnes, near all time highs. Substantially higher prices caused jewelry demand to fall 5% to 408 tonnes, driven by a pull back in buying from India.

I'm starting to wonder if my long term target of $2,300/ounce is too conservative (click here for 'What to do About Gold'). Overall, it is one of the most positive reports I can recall. Gold bugs should print it out so they can sleep with it under their pillows at night.

Gold Continuous Contract (EOD) Indx

Sleeping Better With Gold Coins Under Your Pillow

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