This Month in Gold – December 2012

Schiff: Gold Will Pass $2,000/oz
ABC News – Gold will go much higher than $2,000 an ounce, says Peter Schiff, CEO of Euro Pacific Precious Metals. The reason it hasn’t gotten there yet, argues Schiff, is because most people have yet to fully grasp the true scale of the economic predicament the US faces. However, Schiff warns that there are many scammers in the gold market today. He has published tips to help buyers avoid the most common swindles.
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Supply-Side Squeeze Ahead for Gold, Says Barrick CEO
Bloomberg – The CEO of Barrick Gold Corp., the world’s largest producer, said in November that gold discovery rates are declining even as exploration spending is hitting all-time highs. Jamie Sokalsky pointed out that none of the finds currently being made are “supergiant,” or in excess of 20 million ounces. “I don’t see a surge in gold production [even] if we saw a gold price of $3,000,” Sokalsky said. He noted that today it takes twice as long to develop production as it did a decade ago. In short, the supply-side sees little room for growth, while the demand-side is exploding. Expect prices to adjust accordingly. 
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Brazil Ups Gold Holdings, Again
Reuters – After stepping back into the bullion market in September for the first time since 2008, Brazil’s central bank upped its gold holdings yet again in October, according to IMF data released this month. The data shows that Brazil increased its gold holdings by slightly more than 17 tonnes, bringing its total holdings to 52.5 tonnes. The increase is a ten-fold expansion of September’s increase of 1.7 tonnes, suggesting an acquisition trend that is decidedly upwards sloping. Meanwhile, emerging markets Kazakhstan and Turkey also increased their gold holdings, while Germany – now responsible for bailing out its fellow EU member-states – shed some 4.2 tonnes.
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China Keeps Gold Bugs Smiling
Financial Times – The big take-away from this year’s London Bullion Market Association annual convention, held for the first time in Hong Kong, is: China’s love affair with gold is only beginning. In 2007, China made up 10% of global demand for gold. By 2011, that figure had more than doubled to 21%. Many people in China and the region view gold as a second currency. Gold also is useful to circumvent strict capital controls on the yuan. In addition, the central bank in Beijing is widely expected to grow its bullion holdings, which currently stand at less than 2% of total reserves.
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Indian Gold Demand Likely to Jump 23%
MarketWatch – Strong festive season purchases and an uptick in economic growth suggest demand for the yellow metal in the South Asian behemoth is likely to register 23% higher than previously estimated. Total demand for 2012 is likely to approach 800 tons, up from a previous estimate of 650-750 tons. The pickup in demand in India is bullish for international prices.
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Lawmaker Asks to Be Paid in Gold
Politico – Jerry O’Neil, a Montana state lawmaker and a member of the Republican Party, has asked the state legislature to pay his salary in gold rather than US dollars. Recently reelected to his northern Montana district, O’Neil says his constituents have asked him to uphold the text of US Constitution, which states that only gold and silver can be allowed as legal tender. “I think we’ve gotten a tremendously long way from [the Constitution],” O’Neil argues. “If we don’t start paying that debt down, we’re going to lose the country.”
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