Ann: Emerald's Growth Strategy Underpinned by Okvau Excellence, page-8

POG at $A3,144 close to it’s all time high of $A3,148 set in November 22. POG $US2,044 much lower than its ATH but still high.

But then this article in ST.OC.Kh.e.a.d by Barry Fitzergerald suggest POG may go higher.

“Gold is also a supply/demand story with central banks key players because they are the biggest owners of the metal which they treat as a currency, as well as being the biggest gold traders.

Just as central banks caused a gold collapse in the 1990s when they were heavy sellers (it fell to below US$250/oz when the Bank of England dumped most of its gold) now it is the reverse with central banks soaking up 1000 tonnes of gold in each of the last two years.

More importantly, a little-known research report from the Bank for International Settlements (BIS), the central bank for central banks, reckons China, Russia and a large number of lesser countries will be gold buyers until at least 2030.

Demand will be driven by a BIS recommendation that gold should represent 10% of a central bank’s reserves.

Most advanced economies already exceed the 10% rule, the U.S., Germany, France and Italy are over 70%, but China has just 4.3% of its reserves in gold, India has 8.8%, and Saudi Arabia has 4.7%.

Strong central bank buying sits comfortably with a theory championed by billionaire prospector, Mark Creasy, that the best time to buy any asset is when the biggest owners of that asset are buying more – because they best understand the asset and its real value.

In the case of gold, it can be argued that the central banks have the inside running (let’s not call it inside trading) because they set interest rates and it is rates which are gold’s biggest competitors and when they start falling later this year, gold could boom.

Citi, in a note to clients earlier this month, said gold could hit US$3000/oz as rates fall and the U.S. struggles with budget problems, excess debt and a presidential election.”