This Month in Gold – March 2013

UBS Predicts Major Gold Rally
MarketWatch – UBS, the biggest bank in Switzerland, says US monetary policy will favorably influence the price of gold in the latter part of 2013. Gold’s sell-off in mid-February is attributed to the belief that the Fed will end quantitative easing sooner than expected. However, as UBS analyst Julien Garren remarks, “given the Fed voters’ highly dovish bias, we expect them to continue printing into 3Q13.” UBS anticipates an increase in US demand for industrial metals (which include silver and copper) as well.
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Central Banks’ Gold Purchases Highest in Nearly 50 Years
CNBC – In 2012, global central banks bought the most gold since 1964, according to the World Gold Council’s latest Gold Demand Trends Report. The governments of Russia, Brazil, and Iraq bought the lion’s share of the total 534.6 tonnes. This accounts for 12% of global gold demand in 2012, up 2% from 2011. Developing countries in particular have a greater need for diversification as their official reserves of dollar- and euro-denominated assets grow. “Assets like gold are a hedge against debasement [of] foreign exchange reserves,” said Ric Spooner, chief market analyst at CMC Markets. India remained the largest overall consumer of gold in 2012, though Chinese demand is growing fast.
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US Gold Heading to Asia
Reuters – In December 2012, US exports of private gold rose by 43% from the previous month, to $4 billion, according to the Commerce Department. $2 billion of these gold sales went to Hong Kong, due to a surge in demand for the yellow metal from emerging Asian markets. Gold exports to Hong Kong have been increasing for several years as more and more affluent Asians buy precious metals to protect themselves from financial uncertainty in the US and EU. The spike in Asian gold demand has even led to a shortage of storage space in local vaults.
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Platinum Supply at 13-Year Low
Bloomberg – Closing mines in South Africa and growing automobile sales contributed to a new low in worldwide platinum supplies. According to Barclays Plc, supply will drop to 5.68 million ounces this year, the lowest since 2000. This has already driven the platinum price up 10% this year, passing the price of gold for the first time since April 2012. While demand for platinum for jewelry and investment are expected to decline this year, global car sales reached record highs in 2012 and are projected to continue apace. Growth in other industrial applications is also expected to boost demand. Experts expect total platinum demand to keep rising in 2013, in spite of contractions in Europe and a volatile global economy. Read Full Article>>

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