• 370 days Will The ECB Continue To Hike Rates?
  • 370 days Forbes: Aramco Remains Largest Company In The Middle East
  • 372 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 772 days Could Crypto Overtake Traditional Investment?
  • 776 days Americans Still Quitting Jobs At Record Pace
  • 778 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 781 days Is The Dollar Too Strong?
  • 782 days Big Tech Disappoints Investors on Earnings Calls
  • 783 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 784 days China Is Quietly Trying To Distance Itself From Russia
  • 785 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 789 days Crypto Investors Won Big In 2021
  • 789 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 790 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 792 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 792 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 796 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 796 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 796 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 799 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Why Gold Is Going Higher

While there are many reasons that gold and silver are going to keep moving higher as the fiat currencies trend lower, 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.

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.

Today, few countries prohibit gold ownership, and a far higher percentage of the world's population has transitioned out of poverty.

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 caused Chinese gold purchases to skyrocket.

China's GDP

Confirming the point, the following is an excerpt from a recent Wall Street Journal article:

Chinese investors are snapping up gold bars and coins, buying more than ever before in the first quarter of 2011 and overtaking Indian buyers as the world's biggest purchasers of the metal.

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, 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, 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, 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.

"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 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.

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 world's total while China's gold demand was only 9%.

In other words, India is no longer the only elephant in the gold vault. And they are not alone - 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.

I still don't 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. 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.

 


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. Try it now for only $79 per year... for 3 months with 100% money-back guarantee.

 

Back to homepage

Leave a comment

Leave a comment