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Gold Boom or Gold Doom?

By Charles Kubach, Mine-Engineer.Com
August 10, 2013

After a little correction for the yellow metal, it is poised for a comeback. US gold investors are pessimistic but they account for only 4% of the demand for physical gold (March 2013). Investors in Asia are much more long term oriented, and are buying gold. Fortunately, they account for 49% of the physical gold demand. In addition, the largest buyer of gold, citizens of China, are optimistic on the outlook for gold. They are buying.

More interesting is the breakdown of who is buying gold. Central banks buy only 12%, while Gold EFT's hold 6%, and industrial users of gold account for 9% of the gold sold. That leaves consumers with the lions share of gold purchases, at a whopping 72%. Unlike 10 years ago, this is not jewelry, but the majority is in the form of coins and bars for investment or wealth preservation. Yes, more have discovered that national governments can fake their national data, like the USA unemployment numbers, inflation and job growth. But they can not manipulate the price of gold, without getting rid of one of the only items they have that is actually worth something, gold.

Further, most Asians plan on buying more gold the rest of this year and next year, as well. And if the global economies pick up next year, jewelry sales will increase considerably, as well. With gold currently selling for $1,314/ounce, I see it easily finishing 2013 at $1,500/ounce and going higher in 2014. The dollar may be worth a dime, but gold is going places.

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