February gold futures broke $ 1200 for the first time after a little time New York 4. The main current in February 2010 next month contract after the end of the contract in December November 30.Gold futures rose 14% in November, the best monthly performance in ten years. Silver also rose 14%. Gold was trading down only three days in November and reached an all time high one after the other during that time. While the major U.S. stock indexes also rose, gold and silver shine in comparison. Weak oil seasonal average for a month. Trade-weighted U.S. dollar opened on November 76 and closed above under 75, hitting a new yearly low of 74.23 while.
Gold price increase is caused by the positive supply demand picture for both physical and metals futures trading in the pit. During the last twenty years has happened three main sources of gold supply and demand three main objectives gold. Supply source has been mining, memo (also known as gold recycling) and the central bank selling. Three departments to use for gold is jewelry, investment and industry (contrary to popular belief, gold has many uses in manufacturing, especially electronics). Complicated picture has been leasing the central bank for the miners, big banks and hedge funds who were stranded in significant quantities in the gold market in the 1980s and 1990s and was a major factor in maintaining the gold price down. The unwinding of this position, Barrick Gold closed the fence out with a book is the most recent example, has created upward pressure on gold prices for a few years now.
There are two main currents in the supply and demand shifts in the market. The central bank has shifted from supply side to demand side and ETFs has caused a large increase in investment demand. Until the mid-decade, the central bank sold contributed 14% of the market supply of gold, but in the first half of 2009, the central bank into the net buyers of gold. As supplies dry up from the central bank a new increase in demand created by the ETF is buying and storing physical gold. Now there is this global eleven and did not exist before 2003. Ownership of gold they have gone from zero to 1766.40 tons in the last six years. The largest ETF, gld, is now the sixth largest holder of gold in the world (between France and China).
Gold mining has provided at least 60% of the market supply in recent decades. So far gold mine production peaked in 2001. It then fell seven consecutive years until 2008. The only major producer to increase output have been China and Russia. This may be more related to the transition from communism to a more capitalist economic model than with the content of their gold mines, however.
South Africa, which is a gold producer on most of the last 100 years, experiencing rapid decline and gold output would seem to fall into fourth place in the world rankings this year. It takes about ten years to open a new gold mines and gold prices only started rising in 2001 and many remained convinced for some time that the rally will not last. So do not expect a significant increase in mining output until well after 2010. Barrick Gold (ABX) closed the fence out of the book though is an indication that they believed the gold output is likely to continue to decline and prices to continue rising.
While high gold prices mean that jewelry demand will fall, an increase in investment demand will more than flood every drop. In some developing countries, jewelry and investment demand is not really distinguishable like. Purchase of high-carat jewelry is the traditional method of investing in gold. While India has become the number one market for gold demand, China seems to be in the process of overtaking it. There are significant restrictions on buying gold limited by the Chinese until the early 2000s. Gold demand has been rising since the ban was lifted.
There are a large number of long-term trend changes in the gold market and none of them will soon be over. Perhaps there is at least a decade before a new equilibrium was established and began a major shift again and push gold prices down. At the time this happens, the price of gold will be much, much higher than today.
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