The gold market has demonstrated its robust strength and commitment to a long-term bull market.
Posted by Adam King on January 14, 2012
Gold Market Preferred for 2012
January 14, 2012 – The gold market has demonstrated its robust strength and commitment to a long-term bull market in the past two weeks as it popped with a New Year’s rally, ended the December correction, and broke through the 200 day moving average to settle in the $1,640 per ounce range. All in all, it has been a remarkable year for gold already. The news on the wire indicates that banks, including some very major banks, are anticipating a strong year for gold.
A CNBC report this week cited gold as investors’ favorite asset for 2012, which makes perfect sense as it was the best performing asset of 2011 and gained 24 percent in 2010. 164 investors took part in a poll by the Japanese investment bank Nomura and 19.5 percent said they would choose to buy gold and hold it until the end of the year.
For investors, one of the major reasons for the proclivity towards the gold market is the uncertainty of the European problem. 60 percent of the respondents to the poll said one or more countries will leave the Euro currency in 2012. There is heavy concern about the month of March, cited in the poll with about 20 percent, because the yield spreads for bonds of periphery Euro zone countries reach their peak at that time.
The gold market, however, is a win-win option. If the economies of the world turn a corner and begin to get better, commodity prices will rise and the price of gold will benefit handsomely. If the economies of the world continue at a sluggish pace or there is further significant disruption to the financial system out of the European Union, we will see a hell of a bull run to precious metals, tangibles, and safe haven assets. Gold is the epitome of all three.
While there is a possibility in the meantime of a correction in the price of gold, the long- term bull market is very much intact and big banks are calling the gold market positive territory for 2012. Goldman Sachs, Credit Suisse, Societe General, and JP Morgan have all released reports highlighting gold as the place to be in 2012. In terms of fundamentals, the gold market has all the markers of a market ready to perform and perform well.
Stewart Lawson
Senior Staff Writer – Certified Gold Exchange
Categories:
US Gold Market
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