Recently gold has reached to all time high level 31000 Rs/-. We have seen continual rise in gold price for the month of august, 2012. Many investor has question in mind that this bullishness of gold will last in future or not? We are here to throw light on gold bullishness & important facts affecting gold price.
You must have read article published by us on “Gold price prospective -2013 and beyond” in the month of May, 2012. In this article we have incorporated prediction about gold price saying gold price will defiantly increase. That prediction seems to be correct, we have seen from July month onwards gold price is rising continuously.
Another important & positive development for the gold market is billionaire financiers George Soros and John Paulson have again increased their allocations to gold. George Soros more than doubled his shares in the SPDR gold trust ETF.
Another billionaire investor John Paulson has increased his Gold holdings by 26%. These two events had made positive effect on gold price.
Our observation & finding about various facts on gold throughout world is as follows:-
In first half August, 2012 over all gold holding of world has reached to its peak. In first quarter of 2012 central bank of various country had purchased approximate 158 ton gold. World largest economy America & china is showing negative turn. Euro zone crisis is about to touch its peak. Although world’s economy is in bad condition gold price is increasing.
Gold purchased by Central Bank of various countries:-
|2011 Quarter – 2nd||2012 Quarter -2nd||Changes in %|
|Purchase in Tons||66.2||157.5||138%|
|Value in million dollar||3207||8148||154%|
Due to slowdown in economic condition it is quite possible that government of various countries will take steps to increase liquidity in market. These steps will further boost gold price.
If we consider above facts than gold price will defiantly grow but if we look at demand of gold than compare to previous year this year demand is at lower side.
Demand of gold by various countries:-
Overall gold demand in world is reduced by 10%. If we talk about India than physical gold demand is reduced by 51%. This may be due to sudden rise in gold price or may be due to bad monsoon condition.
Although demand is low price is continuously increasing quite possible that gold bubble may blast and gold price may reduce by 5%-7% in short run, but for long run than at long run gold has always given better return compare to any other asset class. That is the reason gold is called as safe heaven by many investors.
Although Gold is considered as safe heaven and we observe continuous increase in gold price but gold price is governed by news and speculation only. Although increase in price is causing reduction in demand, we have to wait and watch that bullishness in gold will last in future or not.