NOOB
16th June 2010, 06:43 AM
Demand, especially for small denominations is tremendous, particularly in Europe but, there are some dangers to be found in a uni-dimensional metal.
Geoff Candy
Friday, June 11, 2010
www.mineweb.com
GRONINGEN
Investor demand for small gold bars and coins is tremendous and it is not just the small investor who is taking possession of the metal.
Flat from 2000 to 2007, investor demand for gold picked up significantly from 2008, and, currently, is the dominant driver behind record prices seen recently.
Speaking on Mineweb.com's Gold Weekly podcast recently, Bernhard Schnellmann, director of precious metal services at Swiss gold refiner Argor-Heraeus, said you have both large and small investors buying small denominations, starting from as little as 10 grams, up to 100 grams.
It is, he says, "Clearly a sign that people are concerned about the currency - it's not only the person who is buying two pieces of one ounce bars, but it's also those who buying 1,000 pieces of one ounce bars.
"Just recently I looked into our own figures and it's maybe 10 to 12 times more than at the beginning of this year."
GFMS MD, Paul Walker, says the strong demand is a reflection of the broader macro economic malaise.
"There is no doubt that in the European context - just have a look at what's happened in the German market - at one juncture a few weeks ago people couldn't actually ship enough gold into Germany to meet demand over periods of time... there is a deep rooted fear here i.e. I am one who doesn't believe that the euro is about to disappear, but amongst certain Germans who obviously have a long history of worrying about these things. Some people are voting with their pocket books and just saying lets get gold in whatever form and taking some physical metal in the form of bars and coins is satisfactory for these investors," he says.
Walker adds that there is still a lot of very nasty economic news that's got to come through so, he says, "We've still got some way to go and you'll see the retail markets actually driving gold and to an extent silver higher on the back of these very well founded fears.
This Schnellmann agrees with saying, "the market is very interesting at the moment. On the one side you have large investors who are buying gold not because they want to buy gold necessarily but rather because they want to sell other of their assets that are no longer attractive and, on the there are small investors who, given the crisis in Europe currently no longer trust the euro.
"If that should change it will calm down on the gold side. The question is not that much what is happening on the gold side but what is happening with the euro and for the larger investors, what is happening on the stock exchanges and other investment opportunities," he adds.
Walker adds, that in calendar year 2009 roughly 50% of mine production found its way directly into investors' hands as opposed to into fabricated products. And, given the generally still very poor macro-economic backdrop across the world, "you have to start thinking to yourself there are some real legs in this rally and we could see it going beyond the levels we saw in 2009."
But, Walker does warn however, that there is a danger lurking within the dominance of the investment side of the gold equation.
"There are all of the signs that gold is becoming an incredible uni-dimensional metal... once you become almost entirely dependent on the investment universe. You have to start asking the question, 'how much longer does investment demand remain positive'. And the important point to make in this context is that this is not about investors deciding just to go neutral for a while - just sit on their hands for five minutes.
"The dynamics of the current gold market demand that investors are there every second of every day of every week of every month of every year. There can't be a hiatus in that - if you do see that that's when you're going to see some real downside risk for the gold price and when a market becomes as uni-dimensional as - well it's all about investment and virtually nothing else, you do have to start asking the question, 'well how much longer does investment carry on flowing into gold at the sustained rates that it is at the moment'"
"And there will come a point at some time - I don't think it's right around the corner - where investment flows will slow or go neutral, or dare I say it, go negative where you see some people liquidating their positions. That's when gold is going to have some real hard work to do to sustain anywhere near the kind of price levels we're seeing at the moment.
But, Walker does warn however, that there is a danger lurking within the dominance of the investment side of the gold equation.
What say you? Investment speculation or return to hard assets or both?
NOOB
Geoff Candy
Friday, June 11, 2010
www.mineweb.com
GRONINGEN
Investor demand for small gold bars and coins is tremendous and it is not just the small investor who is taking possession of the metal.
Flat from 2000 to 2007, investor demand for gold picked up significantly from 2008, and, currently, is the dominant driver behind record prices seen recently.
Speaking on Mineweb.com's Gold Weekly podcast recently, Bernhard Schnellmann, director of precious metal services at Swiss gold refiner Argor-Heraeus, said you have both large and small investors buying small denominations, starting from as little as 10 grams, up to 100 grams.
It is, he says, "Clearly a sign that people are concerned about the currency - it's not only the person who is buying two pieces of one ounce bars, but it's also those who buying 1,000 pieces of one ounce bars.
"Just recently I looked into our own figures and it's maybe 10 to 12 times more than at the beginning of this year."
GFMS MD, Paul Walker, says the strong demand is a reflection of the broader macro economic malaise.
"There is no doubt that in the European context - just have a look at what's happened in the German market - at one juncture a few weeks ago people couldn't actually ship enough gold into Germany to meet demand over periods of time... there is a deep rooted fear here i.e. I am one who doesn't believe that the euro is about to disappear, but amongst certain Germans who obviously have a long history of worrying about these things. Some people are voting with their pocket books and just saying lets get gold in whatever form and taking some physical metal in the form of bars and coins is satisfactory for these investors," he says.
Walker adds that there is still a lot of very nasty economic news that's got to come through so, he says, "We've still got some way to go and you'll see the retail markets actually driving gold and to an extent silver higher on the back of these very well founded fears.
This Schnellmann agrees with saying, "the market is very interesting at the moment. On the one side you have large investors who are buying gold not because they want to buy gold necessarily but rather because they want to sell other of their assets that are no longer attractive and, on the there are small investors who, given the crisis in Europe currently no longer trust the euro.
"If that should change it will calm down on the gold side. The question is not that much what is happening on the gold side but what is happening with the euro and for the larger investors, what is happening on the stock exchanges and other investment opportunities," he adds.
Walker adds, that in calendar year 2009 roughly 50% of mine production found its way directly into investors' hands as opposed to into fabricated products. And, given the generally still very poor macro-economic backdrop across the world, "you have to start thinking to yourself there are some real legs in this rally and we could see it going beyond the levels we saw in 2009."
But, Walker does warn however, that there is a danger lurking within the dominance of the investment side of the gold equation.
"There are all of the signs that gold is becoming an incredible uni-dimensional metal... once you become almost entirely dependent on the investment universe. You have to start asking the question, 'how much longer does investment demand remain positive'. And the important point to make in this context is that this is not about investors deciding just to go neutral for a while - just sit on their hands for five minutes.
"The dynamics of the current gold market demand that investors are there every second of every day of every week of every month of every year. There can't be a hiatus in that - if you do see that that's when you're going to see some real downside risk for the gold price and when a market becomes as uni-dimensional as - well it's all about investment and virtually nothing else, you do have to start asking the question, 'well how much longer does investment carry on flowing into gold at the sustained rates that it is at the moment'"
"And there will come a point at some time - I don't think it's right around the corner - where investment flows will slow or go neutral, or dare I say it, go negative where you see some people liquidating their positions. That's when gold is going to have some real hard work to do to sustain anywhere near the kind of price levels we're seeing at the moment.
But, Walker does warn however, that there is a danger lurking within the dominance of the investment side of the gold equation.
What say you? Investment speculation or return to hard assets or both?
NOOB