BLOG WATCH

• GFMS: “Short-term forecast is that silver will trade between $28.70 to $32.90 per ounce in the second quarter, broadly shadowing gold … forecasts a high of just above $40 for silver this year”

• Scotia Capital: “Average gold price of $1,750/oz for 2012 through 2014, $1,500/oz in 2015, $1,400/oz for 2016, and $1,200/oz for 2017 and beyond”

• ANZ Research: “We're looking for a little bit above [$1,800] for a year-end target. ... If [the $1,630 area] holds, then we should start to see the prices move back up to $1,700, probably in $20 increments”

and for some balance …

• Westpac: “We don't see gold breaching $2,000 an ounce in any meaningful way … forecasting gold will average around $A1,780 an ounce next year but that this will be the peak and prices are set to nudge back to around $A1,500 a ounce by 2014.”

Read more: Blog Watch120427 (pdf 243kb)

ALL THAT GLITTERS

Reuters blogger Felix Salmon tries to spend 1 gram of gold in Times Square, New York. Even though he has a fairly hard time, his attempts show that the unlikliest people know how much a gram of gold is worth. It ends up being a fun and, if nothing else, tasty experiment!

ALL THAT GLITTERS

Indians are buying gold today. It’s the holy festival of Akshaya Tritiya, a day deemed particularly auspicious to buy gold.

Like many in the West, Indians are motivated to buy gold as an investment.

But a mix of religious and cultural traditions also contributes to the nation’s “unfettered love” for the yellow metal, making it the world’s biggest gold market.

Indian households are thought to contain more than 18,000 tonnes of gold. “This is enough to supply Americans with all the gold they want for the next 100 years,” economictimes.com noted recently.

Average gold sales of between 40 and 42 tonnes have been reported during recent Akshaya Tritiya festivals

This year, higher gold prices are expected to dent sales – but only marginally. As economictimes.com’s recent poll revealed, 85% of respondents are keen to buy more gold this time around.

So how do Indians prefer to buy gold gold? According to World Gold Council figures, 500 tonnes was used in jewellery last year. Gold jewellery is a symbol of wealth, status and good fortune in India - more than 70% of purchases are marriage-related.

Investment product purchases accounted for 366 tonnes, or one quarter of world’s demand for gold bars and gold coins!

Even though the total is down on the previous year, India’s combined investment and jewellery demand for gold added up to a whopping 933 tonnes in 2011. No wonder it’s their second-largest import after crude oil.

So is there anywhere else on Earth to rival such an insatiable appetite for gold?

Just recently, the World Gold Council predicted that China was poised to overtake India to become the world's biggest gold market in 2012 “while India’s importance in the gold market will not diminish.”

RESEARCH AND ANALYSIS

The Silver Institute has released its World Silver Survey 2012.

Key Findings:

Strong silver investment in 2011 paved the way to a record annual average silver price in a year marked by steep price volatility, the Institute said. Despite significantly higher silver prices, total fabrication demand posted its second highest level since 2000, while retail silver investment demand for both physical bullion bars and coins and medals surged to record levels.

Summary in full: The Silver Institute.

GFMS Sees “decisive break-out to the upside” in 2012

Launching the World Silver Survey 2012, Philip Klapwijk, global head of metals analytics for Thomson Reuters GFMS, said the group's short-term forecast is that silver will trade between $28.70 to $32.90 per ounce in the second quarter, broadly shadowing gold.

But quoted in this article on Mineweb, he said: "Before the end of 2012 a more decisive break-out to the upside is probable, although a repeat of 2011's high is less likely, as investors will be more cautious following last year's extreme volatility."

Klapwijk said GFMS sees a range for silver north of $40 in the second half of 2012 and maybe getting to a low of $28 per troy ounce this year.

Silver is forecast is rally in the second half of 2012

The World Silver Survey was compiled by the London-based metals consultancy Thomson Reuters GFMS. The report has been published annually since 1990 by the Silver Institute, an international industry association that includes silver producers, refiners, manufacturers and dealers.

STATISTICS

Total ounces of gold and silver sold by The Perth Mint in March 2012 as coins and minted bars:

Gold (Au):     35,957.28oz           

BLOG WATCH

Speaking at the Denver Gold Group European Gold Forum, Philip Klapwijk of GFMS is reported by Mineweb as ‘providing both side of the argument’ (often called sitting on the fence, although that’s probably being a bit harsh) on the issue of “whether or not there is a massive weight of money sitting on the sidelines of the market at the moment or, if those investors that want gold now have enough.”

Quote: “If you look at the value of gold investment, gold remains a tiny portion of the overall markets so, theoretically there is a huge scope for investment demand but, one does have to ask the question, Why after 10 years of a bull market you havent seen more of these mainstream portfolio managers come into the markets?”

My view is that we are going sideways price wise at the moment because those that want gold have enough. We need another economic shock or obvious bad trend in economic figures to trigger investors to realise things aren’t rosy and push them into action to look for ways to protect themselves.

And the reason we haven’t seen more mainstream portfolio managers come into gold is, well, because they are mainstream. They’ll be the last ones in and will be the buyers that current gold holders sell to - although you’ll want to be sure you can distinguish between a bubble and nascent hyperinflation before you make that decision to sell.

The answer to the question really is that individual investors all have different views on whether, as Philip puts it, “we are going to see a loosening of monetary policy globally, continued crisis in the eurozone and negative real interest rates, inflation expectations rising” all of which is “a pretty powerful stimulus for gold investment.”

Download today’s full Blog Watch (pdf 199kb) for more reviews, including:

SPROTT SILVER TRUST PREMIUM A TRADING SIGNAL

In this 321gold.com article Bob Moriarty says that investors “can use extremes of emotion as measured by the Sprott Silver Trust [premium] to gage silver buy points and sell points.”

GOLD:PLATINUM RATIO

In his short article Hubert Moolman looks at the ratio of gold prices to platinum prices and concludes that “the Gold/Platinum Ratio also supports significantly higher gold prices over the coming months.”