Thursday, February 18, 2010

Gold still glitters?


Global demand for gold dropped 11 per cent last year, but the the gold price gained 35 per cent - the biggest annual rise in three decades . Why?

  • Just like oil priced in USD and its weakening outlook, the sellers of these commodities have to asked for higher prices in USD to compensate for its weakness.
  • It is an alternative perennial store of value against expectations of long-term inflation as the world economy emerges from recession. (Is this still valid?)
  • Just pure madness when there are millions of tonnes of gold sitting idle with central banks of the world.
What do you think?