Gold's Leading Authority Expects Gold to Break Price Record
Source: Gold World, Luke Burgess (6/30/09)
". . .GMFS expects gold investment demand to increase 57% over last year. . ."
GFMS Executive Chairman Philip Klapwijk wrote in a recent report, "Looking at the second half of 2009, investment demand, and especially its western elements, which includes activity in ETFs, futures and the OTC market, is expected to remain the driving force behind gold price movements."
The independent consultancy group, which pulls information from over 15,000 contacts across 49 countries around the world, predicted that identifiable gold investment will exceed 1,500 tons by the end of this year. This estimate would represent a significant 36% increase over identifiable gold investment demand in 2008.
In dollar terms, GMFS expects gold investment demand to increase 57% over last year to nearly $50 billion.
As a result of this surge in investment demand, GFMS expects gold prices to break through the nominal high of $1,032 an ounce, which was set back in spring 2008.
GFMS reported that global gold demand will experience a massive increase this year, particularly from net investment and official coins components as a result of rising fears over the long-term inflation threat in western nations.
Total identifiable gold investment during the first quarter of this year totaled 595.9 tons, a historical high and increase of 248% compared to the first quarter of 2008.
At the same time, silver prices are expected to outperform gold for the same reason.
In the latest quarterly report, GFMS pointed out that investment demand accounted for only 50 tons in 2008. However, silver investment demand was quite strong in the first quarter as investors mobbed the metal as a cheaper alternative to gold.
Silver investment demand is anticipated to be such that it could account for between one quarter and one fifth of total consumption in 2009. Meanwhile, silver supply is expected to decline this year, with mine output, scrap and government sales all softening.
The investment shift from paper assets to precious metals will continue pushing prices higher and eventually skyrocket prices into the classic parabolic spike.