Twelve bullish factors for gold in 2012

Jeff Nichols still believes that gold prices will go above $2000/oz in 2012. He forecasts $2000 levels in the first half of 2012 and in the longer term, the yellow metal is expected to ride higher to $3000, $4000, $5000. Because of the following twelve factors, he still believes in a yellow metal rally in 2012.


Twelve bullish factors for gold in 2012
 
--Past and prospective U.S. Federal Reserve monetary policy, characterized by low or negative real rates of interest and unprecedented central bank monetary creation.

--The U.S. federal government budget impasse, rising U.S. sovereign debt, and eroding U.S. creditworthiness.

--The expected future depreciation of the U.S. dollar in world currency markets . . . and the continuing decline in the dollar’s purchasing power for American consumers.

--The growing insolvency of some European nations - leading to the disintegration of Europe’s Monetary Union and the eventual abandonment of Europe’s common currency, the euro, by at least some of the EU member countries.

--The expected acceleration of global inflation - fueled by excessive monetary creation, world population growth, and changing diets in favor of more meat and protein . . . and led by persistently high and rising agricultural and industrial commodity prices from one country to the next.

--The increasing political instability in the Middle East and North Africa . . . as authoritarian regimes are overthrown . . . but sectarian divisions in some countries prevent orderly transitions to democracy . . . with implications for world oil supplies and prices. And then, of course, there is Iran - which remains an unpredictable “wild card.”

--The growing affluence of the “emerging-economy nations” and the associated growth in both jewelry and private investment and savings demand for gold - especially here in China - as well as India and other gold-friendly countries.

--The development and popularity of new Gold investment vehicles and channels of distribution - especially gold exchange-traded funds - that facilitate physical gold investment by both retail and institutional investors.

--The legitimization of gold as an investment class and rising investor participation . . . together reflecting a growing appreciation of the benefits of including physical gold in a well-diversified portfolio . . . and the entry of new, large-scale, professional investors - including pensions, endowments, insurance companies, sovereign-wealth funds, and especially hedge funds.

--The “stickiness” of much of the recent private sector and central bank gold demand. This is shrinking the available “free float” in the world gold market . . . and it means that less metal will be available to gold-hungry buyers, except at increasingly higher prices. Indeed, many of today’s new investors have no intention of ever selling, even at much higher prices.

--- Eleventh bullish factor, one that I believe is especially important to the long-term development of the gold market - is the affect this rising wealth is having on emerging-economy central banks . . . prompting some countries that are over-weighted in U.S. dollars and underweighted in gold to diversify their official reserves through the prudent acquisition of the yellow metal.

--And, twelfth in my catalog of bullish factors supporting a continuing long-term rise in the price of gold is the fact that world gold-mine production, although growing, will not keep pace with the expected growth in global gold demand. Even a rash of new mine discoveries would take five to 10 years - or more - to contribute significantly to supply . . . and, meanwhile, existing resources are being depleted, nationalized by unfriendly governments who tend not to be good mine operators, or are simply mined out.

Silver investment will certainly pay off

The Silver market is not trending as expected but surely it's not in the doldrums either. The silver prices are hovering around a rather steep range of $32-36 a ounce to $50 a ounce. But according to experts, the demand for silver will continue to grow as industries ask for added ounce of the metal for medicinal and industrial usage.

Experts estimate that more than half of the demand for silver comes from industries who love the metal for its unique qualities as a good conductor of electricity, good transfer agent, a good reflector of light and also a brilliant lubricant and flexible catalyst and alloy. The traditional silver market is not going great guns but yet the industrial demand is keeping the silver usage market firmly grounded.

Industrial uses
One of the major requests for silver comes from the solar industry where its use in solar panels is seeing an expansive growth. With the Japanese nuclear disaster still afresh in everybody's minds, people are realizing the scope and environmental safety renewable energy sources offer. The future of silver demand in the solar market reflect in the figures itself which has increased from 2 million ounces to about 50 million ounces in 2010.

In fact this year the demand is expect to reach the pinnacle of 70 million ounces, a 40% increase. This is because China and India are planning to expand their solar industry to 20 gigawatts and 30 gigawatts respective by 2020. The US plans to tread the same path as China as it charts to expand solar capacity to 30 gigawatts by 2020. Experts feel solar usage could reach 130 million ounces per year around 2014 and continue through 2020. In 2010, production of Silver was 750 million ounces.

Medicinal uses
The medicinal uses of silver will never end to exist as silver based bandages, artificial pacemakers, anti-bacterial and anti-microbial clothing all are dependent on the precious metal. It's also used in sportswear to lessen body odour, in food packaging and in cloth of medical faculty.

To conclude, it is interesting to note the silver price volatility as it fluctuates depending on the global developments. The silver spot price chart is the key to the theory of one world economy where every country's economy is affected by another's and is interlinked. Currently the prices on silver are surging as debt concerns in the US and Europe keeps the worries tab up ~Kyles Humphreys~

Forecast For 2012

Restock !!

A bullish outlook for gold next year, but nevertheless anticipates further strength in the U.S. dollar going into the New Year may be the next test for the yellow metal. Unlike previous periods of risk aversion that occurred in 2009 and 2010, this time U.S. dollar strength is not being accompanied by strong inflows into physically backed gold ETFs, said Deutsche Bank in its final weekly commodities report of 2011.

According to bank, liquidation in Comex Gold over the past couple of months appears to be drawing to a close, although currency trends could trigger yet another round of speculative liquidation. Overall, gold has outperformed other precious metals in recent months.

Looking ahead, Deutsche Bank wrote: “We expect the conditions that have driven gold returns higher over the past 11 years will persist into 2012, namely negative real interest rates, a high U.S. equity risk premium and central-bank buying.”

The bank is forecasting $1,750 gold in the first quarter of 2012, $1,850 in the second quarter, then $2,000 in the third and fourth quarters. For silver, Deutsche Bank is forecasting $37 in the first quarter, $39 in the second and $44 in the third and fourth quarters.