20FEB2012: Demand for gold reached 14 year highs in 2011 with China taking major steps towards becoming the world’s largest consumer of the yellow metal. Global gold consumption in 2011 was up more than 500% over 2010 global gold consumption, with central banks also becoming major buyers of gold bullion. Strong investment demand and a government that encourages its citizens to buy gold however has thrust China into a position where their annual gold consumption could exceed that of India, which has caught even some insiders at the World Gold Council by surprise.
Central banks purchased nearly 450 tonnes of gold in 2011, the most since 1971, when we officially went off of the gold standard. An important trend to watch is the fact that many Asian and Latin American economies have been investing heavily in gold these past few years, and have coincidentally been enjoying robust economies. The European debt crisis has caused investors worldwide to take notice of gold and silver prices, with gold recording an all-time high of $1,920 oz, and silver nearly reaching $50 oz in 2011. This trend will likely continue in 2012 with central banks taking the financial high road away from the dollar.
Last week hedge-fund manager John Paulson raised a few eyebrows when he said it is time to buy gold as protection against inflation caused by profligate government spending. Keep in mind Paulson is the largest investor in the ETF, SPDR Gold Trust, in the world however, there are many others who are bullish about gold that are not your “typical” bullish about gold kind of people. The World Gold Council said last week they expect global demand to possibly exceed the 2011 consumption. Paulson`s advise is, “begin building your position (before) the inflation sets in, before it is too late”
We have seen countries like China and India, as well as many other countries increase their gold and silver bullion holdings in the past year, exceeding the World Gold Councils estimates. Central banks are buying gold and silver bullion faster than they have in 40 years, with no signs they will discontinue these policies anytime soon. Many financial institutions here in America are bullish about precious metals even though it goes against what they recommend. Even billionaire hedge-fund managers are getting involved touting gold as the best defense against the inflation that is coming our way. The message is clear: gold and silver bullion is critical to economic survival!
A major source of objection to a free economy is precisely that group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.
Milton Friedman
Once you have decided it’s time to move some of your money into gold and silver bullion for safe keeping, may we suggest you keep it simple. We recommend a combination of gold and silver bullion bars, and gold and silver bullion coins, certified by the government, or from a small handful of private mints. When you purchase gold and silver bullion products that meet these high standards, you can be guaranteed that not only is your wealth protected, gold and silver bullion products that meet these high standards are easy to liquidate.
In a sense you are serving as your own bank or financial institution, and for this reason it is important that you properly store and protect your gold and silver bullion investments. We highly recommend a private “safe”, or a secure place in your home where the metals can be stored. Many investors prefer to keep gold and silver bullion information and the whereabouts concerning their gold and silver bullion holdings in their safety deposit box, but only store their metals in a place where they have ultimate control over the assets. We feel strongly that you keep any information pertaining to your precious metals holdings private to only you and those who you feel “need to know”.
Scott Hage
President
Midwest Bullion Exchange, Inc.
