LBMA 2011: Two Charts and An Opportunity

By: Adrian Ash | Tue, Sep 20, 2011
Print Email

Plenty of reasons to be cautious were flagged up in today's "Bubble or Not?" debate...

Lots more to share from the second and last day of this year's LBMA Annual Conference here in Montreal. But the red-eye for London won't wait, not with Air Canada cabin staff starting a strike at midnight.

So two quick charts, both highlighted by Edel Tully, precious metals strategist at UBS, in her conference summary. First, she said she's adding this chart - hoisted from this morning's opening presentation by Albert Cheng of the World Gold Council in the China & India session - to her slide deck:

China Gold Demand and Supply

It shows the yawning supply-demand gap inside China's domestic gold market. Now the world No.1 for gold mining output four years running, China cannot satisfy its own private household demand.

Bigger picture, the chart makes a neat pairing with this slide, used by Franco-Nevada chairman Pierre Lassonde in Monday's keynote speech - and already a key fixture in any analyst or strategist's PowerPoint slides, according to Tully:

Global Assets under managment

Plenty of reasons to be cautious on gold were flagged by this afternoon's "Bubble or not?" debate. In particular, the risk of a parabolic rise - similar to how silver shot higher this spring - could see "safe haven" buyers scared off by volatility. (Silver investment flows have certainly turned "hesitant" since then, noted GFMS's Philip Newman.) Or maybe existing investors will soon begin tiring of year-on-year gains in gold, and start rotating into other asset classes instead of waiting for what they might forecast as a "top". Or maybe a blow-up in China - sparked by its own domestic credit and real estate markets, if not central-bank action to try and cool them, along with inflation - could see its tug on the world's gold supplies pushed the other way, as the feel-good affinity for gold is reversed by economic slowdown or even recession.

But for now, as one panellist put it in the Oxford-style debate - and with gold investment accounting for just 1% of the world's financial assets today - "This looks less like a bubble than an opportunity."

 


 

Adrian Ash

Author: Adrian Ash

Adrian Ash
BullionVault.com

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the head of research at BullionVault, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

About BullionVault

BullionVault is the secure, low-cost gold and silver exchange for private investors. It enables you to buy and sell professional-grade bullion at live prices online, storing your physical property in market-accredited, non-bank vaults in London, New York and Zurich.

By February 2011, less than six years after launch, more than 21,000 people from 97 countries used BullionVault, owning well over 21 tonnes of physical gold (US$940m) and 140 tonnes of physical silver (US$129m) as their outright property. There is no minimum investment and users can deal as little as one gram at a time. Each user's unique holding is proven, each day, by the public reconciliation of client property with formal bullion-market bar lists.

BullionVault is a full member of professional trade body the London Bullion Market Association (LBMA). Its innovative online platform was recognized in 2009 by the UK's prestigious Queen's Awards for Enterprise. In June 2010, the gold industry's key market-development body the World Gold Council (www.gold.org) joined with the internet and technology fund Augmentum Capital, which is backed by the London listed Rothschild Investment Trust (RIT Capital Partners), in making an $18.8 million (£12.5m) investment in the business.

For more information, visit http://www.bullionvault.com

© BullionVault 2006-2014

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events - and must be verified elsewhere - should you choose to act on it.

</body>
All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/