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Tuesday, 20 December 2011

Gold price supported by long term fundamentals

The price of gold is supported by a number of factors which should tend to underpin rising gold prices over the longer term.

The reasons for a long term bullish view on gold, as explained in the article: "Twelve bullish factors driving gold to $2,000 and higher despite recent setback", include:
  • the US low interest rate policy;
  • US fiscal disarray, and excessive US debt;
  • the expected depreciation of the US dollar;
  • the disintegration of the European monetary union;
  • increasing affluence of emerging economies;
  • emerging nations' central bank diversification into gold;
  • gold's increasing status as an investment;
  • long term gold exchange traded fund (ETF) accumulation;  and
  • limited gold mine production.

Central bank demand for gold has come from China, Russia, India, South Korea, Saudi Arabia, Thailand, Mexico,  Bolivia, Colombia, Venezuela, Bangladesh and Mauritius.

 I acknowledge Jeffrey Nichols for his article.

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