Why Gold Is Going Higher

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Why Gold Is Going Higher
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By David Galland, Casey ResearchWhile there are
many reasons that gold and silver are going to
keep moving higher as the fiat currencies trend
lower,
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at our recent Casey Research Summit in Boca
Raton, faculty member Mike Maloney pointed out a
fact that, while obvious in hindsight, I had
never heard mentioned previously.
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Namely that during the last major precious metals
bull market in the 1970s, only about 10 of the
world could own gold either due to legal
restrictions or a lack of liquid capital.
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Today, few countries prohibit gold ownership, and
a far higher percentage of the worlds population
has transitioned out of poverty.
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China provides the most germane example, having
legalized gold and silver ownership for private
citizens in 2004, and through the explosive
growth in national GDP that has
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caused Chinese gold purchases to skyrocket.
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Confirming the point, the following is an excerpt
from a recent Wall Street Journal
articleChinese investors are snapping up gold
bars and coins,
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buying more than ever before in the first quarter
of 2011 and overtaking Indian buyers as the
world's biggest purchasers of the metal.
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A growing middle-class in China is raising the
appetite for gold there.China's investment
demand for gold more than doubled to 90.9 metric
tons in the first three months of the year,
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outpacing India's modest rise to 85.6 tons, the
World Gold Council said in its quarterly report
on Thursday. China now accounts for 25 of gold
investment demand,
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compared with India's 23.The report underscores
the rising appetite for gold among the growing
middle-class in China. Fears of the country's
soaring inflation,
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as well as a search for new investments, is
luring investors to gold, and marketing of the
precious metal has also increased in recent
months.
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"I think people will be surprised by the strength
in the Chinese demand, but we think this is a
trend that is set to continue," said Eily Ong, an
investment research manager
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at the gold council.Notoriously active savers,
stashing away on the order of 50 of their
income, the Chinese are increasingly opting for
gold over the renminbi to stash their wealth.
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For those wondering just how big a development
this is, consider that in 2007, just before
investing in gold became the thing to do, gold
demand in India was 61 of the worlds
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total while Chinas gold demand was only 9.In
other words, India is no longer the only elephant
in the gold vault. And they are not alone
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investors around the world are now able, and
willing, to buy gold as a way of protecting their
wealth from the inevitable decline of the fading
fiat currencies.
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I still dont think we are out of the woods on a
commodities correction, but there are so many
black swans floating overhead that literally
anything can happen, at any time.
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Thus buying in tranches on pullbacks over the
next four to six months still makes a lot of
sense.But in the longer term, gold has almost
nowhere to go but up.
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The current edition of BIG GOLD tells you how to
take full advantage of corrections in gold and
silver and how to get the most bang for your
buck.
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