SG, so I assume you don't see that a stronger global economy is actually good for gold?
I realize there are a lot of doomsday sayers on here, however my argument for the underlying reason why I think gold will go much higher over time is purely & simple demand will continue to grow particularly out of Asia & supply will not be sustained at the current price. A wealthier Asian middle will buy more gold, sure they will buy other things as well mostly things that actually contain commodities such as aluminium, copper etc. The West to will buy more jewelry etc. Gold will do well once real demand I.e consumption is again the key driver, not ETF style investment demand that can be turned back into the market as supply. I wrote a piece to clients back in 2005 when gold ETFs were being launched that the gold bought would come back to bite producers when they least wanted it & this is what we have seen in the last year or two.
The excess supply in the last two years has come from ETF selling & this is finite & has now slowed to a dribble & at some point will turn net positive. Asian demand has had a hangover from the events of last year, the huge splurge of buying by China last year & import duties in India. However the physical premiums are now rising again in both the two largest demand centers suggesting imports will need to increase to keep up with the seasonal demand.
Gold is again testing the bottom of the wedge tonight & it will be interesting if we hold or we break lower. A break lower that holds for 24 hours would suggest we will indeed test $1180 -1200 area.
The Asians consumers must love this, just as we enter their demand season the Western speculators gift them cheaper gold.
