Central banks play an important role in maintaining and increasing the
demand for gold bullion. Russia's central bank is one of the most top in buying
gold to strengthen its reserves. In the record of the World Gold Council (WGC)
The Central Bank of Russia is a major gold buyer both in 2014 and 2015. With
the fall of the ruble in 2015 made a gold purchasing trends by Russia changed
later.
Investors are still confident of gold investment demand this year will
still be increased by 15% from the four quarter amounted to 169.3 tons
yesterday. This is in line with the capital outflows Gold ETF which experienced
a slowdown anyway. WGC reported that gold demand remained flat over the past
year alone, which is 4,212 tons, of which the first half is lower than in the
second half. The fall in gold prices in the second half coupled with increasing
geopolitical crisis and the global financial turbulence makes the purchase of
gold rose.
Purchases made by the central banks also increased from last year
amounted to 584 tons in 2014 to 588 tons. Step diversification of assets is
done in anticipation of the fall in crude oil prices and global economic
confidence falls. Russia's central bank, for example, buy no less than 200 tones
of gold by 2015, of which 141 tons of which was purchased in the second half.
Oil is one of the mainstay of Russia's commodity, so the fall in crude oil
prices is anticipated to increase foreign exchange reserves in gold.
The amount of gold bought by central banks recognized by WGC higher
than their estimates. An estimated range of purchases by central banks over the
year is 400-500 tons, is now at least a range of purchases rose at 500-600 tones.
Interestingly, the change since 2010 is that they initially net sellers, a net
Purchaser.
In contrast, demand for gold by retail customers decreased by 2%, or
3,427 tons, excluding the purchase of gold is still increasing in China. The
problem is China has faced slowing economic conditions and their currencies
also weakened. On the bright side, traditionally gold itself is still a
commodity that is in demand in India. Typically, gold demand will soar in the
second half before the celebration of Diwali.
The retail consumer prefers gold in the form of bars and coins,
particularly in China. Although Yuan expected to weaken this year, it raised
chances safeguard assets by purchasing gold. By contrast, in Russia, the retail
consumer demand has decreased most sharply, the lowest in the last 14 years or
a total of 42.1 tons or 39 per cent decline. The fall in crude oil prices and
the ruble makes consumers hold back on purchasing gold.
In 2016, so far the price of gold rose 12%. Triggered investor concerns
over global economic conditions are opaque, although the shadow of the
strengthening US dollar, if the interest rate is raised again by the US central
bank, the Federal Reserve - will hit the price of gold back. Even Goldman Sachs
estimates ema at year-end prices could return to $ 1000 per ounce. Despite the
potential to go down, but for investors who are concerned about erosion of
their portfolio in equity assets, of course, buying gold is a good choice,
especially if it has been done since January 1 yesterday.
Gold has become an investment option especially addressing the trend of
negative interest rates, which is expected to be done by central banks this
year. On Tuesday (16.02.2016) for the first time in history, the Japanese bond
yields to redeem past 10 years are in a negative position. Of course, placed
the money in banks with negative interest rates are actions that will erode
assets. One way to save the assets in such circumstances are changing commodity
investments in gold. For some market participants who are not familiar with
gold trading over the years, the way out is indeed feels awkward. But this is
the best step that can be taken when the current condition is uncertain.
There are also other choices in allocating current investment, buying
shares of gold mining. When gold prices fall, these stocks took ideas.
Currently, some of which fall into the category of cheap. In fact today, most
of these stocks have risen after gold prices also rebounded, expected that the
majority has risen 22%. Indeed, if it had to choose between buying shares of
gold producers or buy gold directly, still better is to buy gold directly.
With the rise in share prices of gold in such a way that, of them even
have approached the high level, even when compared with the products of gold
itself can be even more expensive. At least, these two things, both gold stocks
or gold itself is moving toward the top.
Investors still have to be aware of the movement of stocks and crude
oil prices. Selloff that hit the stock market can just stop and make a rising
gold price stuck back. Everything will not run continuously, the cycle will
always be corrections and stop for a moment to determine the pace of further
movement. The US dollar is still in control is important, fluctuations in the
gold price will drag universal pattern.
More recently, a statement the US central bank governor, Janet Yellen
to negative sentiment for the US dollar. The selloff that spread to the stock
market and money into a tail wind for gold to strengthen again. No one can be
sure when selling will stop, especially the majority of market participants
today, amid the confusion as central banks themselves. Liquidation will still
underway and will end in time. Currently selling tsunami is over, you who have
bought gold will arrive turn to come out and liquidate positions.
