Gold bulls dig in for big rally
Speculatord are buying gold faster than the world’s biggest producers can mine it, as analysts forecast a 27 per cent rally that may extend the longest run of annual gains since at least 1920.
Exchange-traded products backed by bullion added 42.5 tonnes in the week to May 14, the most in 14 months, data from UBS shows. China, Australia and the 16 other largest mining nations averaged weekly output of 42.3 tonnes last year, researcher GFMS estimates. The median prediction in a Bloomberg survey of 23 traders, analysts and investors is that it will reach $US1500 by the end of the year.
« You could see gold go up another $US1000, » said Evan Smith, who helps manage $US2 billion at US Global Investors in San Antonio. « All of the turmoil and problems we’ve seen in Europe is just another reminder that there’s a lot of value in gold as a safe haven, » he said.
China, the biggest consumer of industrial metals, will expand 10.1 per cent this year, more than three times the pace of the US’s anticipated 3.2 per cent gain, according to as many as 77 economists surveyed by Bloomberg.
Supply from mines, which peaked in 2001, fell in five of the last eight years, data from London-based GFMS show. Companies are digging deeper to extract dwindling reserves, with mines in South Africa extending as far as 3.8km down.