Platts reported that precious metal ETPs won out over all other exchange-traded fund products in third quarter 2011, attracting the highest inflows.
In the wider context of central banks direct gold investment and gold price volatility within the shorter term, a noteworthy observation is the relatively stable investment in gold equity research by the Bank of Nova Scotia earlier this week.
In reviewing the results of a recent survey, Global Head of Metals Analytics, Philip Klapwijk indicates, We are seeing central banks now operating very much on the buy side of the market. The selling we had seen from Europe has dried up and that’s left those buyers of choice really the only active players in the market."
The gold price saw its biggest decline in nearly three years last month as considerable stock market losses resulted in the liquidation of gold positions bringing gold down more than 20 percent from a record high of $1920.30 per troy ounce and provoking a period of intense volatility for gold.
William Rhind, Head of US Operations for ETF Securities described his perspective on relative gold price movements, “we are going to see a little bit more consolidation and stability around the gold price we saw a big move in the last few days over $100 as its moved up from its low in the $1500s.I think that right now we are looking for a little bit of stability.”
In 2010 some analysts thought John Embry's forecast of the 2012 gold price, which placed the yellow metal between $1,500 and $2,000 an ounce, was too optimistic. Now it seems that Embry may have undershot the mark.
Looking forward into the next few decades, the relative position of the US is expected to change as the economic power and geographical base shifts towards faster growing emerging economies, particularly in Asia.
Prices for gold have lately been demonstrating greater sensitivity to news flow out of Europe than positive data out of the United States. With the market seeking out bullish news, confirmation of the European debt crisis will continue to be the strong triggers that will take gold prices up.
With the parliament of Greece passing the first of two austerity measures, gold prices have been rising with growing investor appetite for risk. Analysts expect the vote to be in favour of the final austerity bill, which might gesture a bullish impact based on a weaker dollar.
While investors make the decision between Gold Equity funds versus Gold ETFs, a primary consideration should be whether they prefer to own an actively managed fund or to minimize investing fees and limit the security or market timing risks of failing to correctly anticipate the future.
Tuesday, November 15, 2011