Gold has traditionally been a source of shelter against the dollar. The threat of outbreak inflation also generates fears of a loss in the purchasing power of the currency leading investors to protect their wealth acquiring the metal. However, there are still no signs of inflation rising, at least in more developed countries and in so far this year the precious metal has increased by 13 percent but the U.S. currency has also been appreciated by 9%.
We believe that the estimates of analysts are totally undervalued in relation to its recent rise with an estimate of consensus of just $1,214 by the end of 2010.
The relationship between the dollar and gold has been broken and the current weakness in the global economic recovery is a predominant factor to the choice of a safe compared to the implied volatility in markets, which has soared to overcome the mark of 40 per cent.
Despite the commitment of 750,000 million Euros by the International Monetary Fund and the European Union and the attempts to bring calm, the debt of the Euro zone remains a contentious issue and its currency was bare to arise a division between the strong countries like Germany and France seeking strong adjustments and the weak, the PIGS and Italy.
Another factor to take into account is the rising inflation in China. The bubble in the property sector in that country becomes increasingly real after published an annual increase in their prices in 70 cities of 12.8 percent in April.
On the other hand, its level of inflation advanced to the roof of the last 18 months, rising 2.8% in April in the form. For now, there is threat inflation in the United States and Europe, although the gold will remain an option to protect the purchasing power of individuals to measure the economies will recover and begin at some point to put pressure on prices.
Last year, 41 percent of the demand for the metal was for purchases of jewelry and 44 percent for investment. The 6 percent of the purchases were made to close hedging and 9 per cent for use in the manufacture of products.
For 2009, the operations recorded an increase of more than 400% and otherwise occurred with the purchase of jewelry, as well as for other uses. It is evident that investors are those that are increasing the price of the metal.
On the side of the offer, 62 per cent of the offer came from the mine production last year while sales of the central banks and official bodies accounted for only 1 per cent. The 37 per cent, it was gold residual.
Meanwhile, the world production of metal increased in 2009, a 7 per cent, or 163 tonnes in the previous year until located in 2,572 tonnes. Thus, reversed the falls during the previous three years.
While the production of the Chinese mines grew by 11 percent of Indonesia did so in a 66 per cent, Russia 9 per cent and Mexico a 9 per cent. In the USA, in contrast, fell 6 percent in the form. Beijing continues to occupy the first place as the largest producer at global level followed by Australia, South Africa and the United States.
The largest holders of gold are the central banks, international agencies and governments that have approximately 29.787 tonnes or approximately 20.5 per cent of existing in the world. The uncertainty as to what is the currency more suitable as a reserve asset is generating that remains net buyers of the metal.
In the last 20 years, central banks were vendors, but since the last crisis, this trend was reversed because of economic uncertainty and the natural stability that presents these commodities. China has bought huge quantities and India purchased nearly half the amount that the IMF sold during the last year.
For this reason, we recommend that investors look also other metals. The most traditional is silver, which touched 19.82 dollars per tonne, also a historic peak. There are reasons to believe that the gold fever that is protagonist spread to the rest of the precious metals, some of them so-called “emerging”.
It is the “platinum group” (the platinum and palladium) that had until last year a use basically industrial (catalyst manufacturing of automobiles), by what is expected to increase the demand for rebuilding stocks.
Please note that the palladium has been ignored until now because it is much cheaper, or because it is more rare, but it is used for the same purposes that platinum in the automotive industry in the manufacture of catalysts, with a savings of 25 per cent in their use.
Think that companies can move from platinum palladium is reason enough to buy the metal, which is almost half the value it had in 2000, when have made a peak historic.