Tuesday, June 14, 2011

Barbarous No More

Control-freak politicians abhor gold because it ignores them; it won't do what it's told. It defies economists and laughs at central bankers. Jeff Randall

 Standard Chartered has just published a fascinating report on the outlook for the price of gold (ht zero hedge). Long story short (and it's 68 pages long): when it's easier to print money than it is to find gold, then there's only one way the price is going to go...

One interesting factoid:
The limited supply comes at a time when central banks have completely changed their tune on selling down their gold stocks and now appear likely to accelerate their net buying programmes. China is way behind the curve. Currently, only 1.8% of China’s foreign exchange reserves is in gold; if the country were to bring this proportion in line with the global average of 11%, it would have to buy 6,000 more tonnes of gold, equivalent to more than 2 years of gold production.
Could be a good time for the Central Bank of Ireland to stock up on some bullion. Though don't tell the IMF/ECB we've got it...

It looks like the old relic is barbarous no more.

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