05-29-2011, 05:53 PM
Far more people now have access to gold...
DURING the last major precious metals bull market in the 1970s, only about 10% of the world could own gold, writes Casey Research partner David Galland.
Due to either legal restrictions or a lack of liquid capital, 90% of the planet was shut out.
Today, few countries prohibit gold ownership, and a far higher percentage of the world's population has transitioned out of poverty.
China provides the most germane example, having legalized gold and silver ownership for private citizens in 2004, and through the explosive growth in national GDP that has caused Chinese gold purchases to skyrocket.
Confirming the point, the following is an excerpt from a recent Wall Street Journal article:
Chinese investors are snapping up Gold Bars and coins, buying more than ever before in the first quarter of 2011 and overtaking Indian buyers as the world's biggest purchasers of the metal.
A growing middle-class in China is raising the appetite for gold there.
China's investment demand for gold more than doubled to 90.9 metric tons in the first three months of the year, outpacing India's modest rise to 85.6 tons, the World Gold Council said in its quarterly report on Thursday. China now accounts for 25% of Gold Investment demand, compared with India's 23%.
The report underscores the rising appetite for gold among the growing middle-class in China. Fears of the country's soaring inflation, as well as a search for new investments, is luring investors to gold, and marketing of the precious metal has also increased in recent months.
"I think people will be surprised by the strength in the Chinese demand, but we think this is a trend that is set to continue," said Eily Ong, an investment research manager at the gold council.
Notoriously active savers, stashing away on the order of 50% of their income, the Chinese are increasingly opting for gold over China's currency, the renminbi, to stash their wealth.
For those wondering just how big a development this is, consider that in 2007, just before investing in gold became "the thing to do," gold demand in India was 61% of the world's total while China's gold demand was only 9%.
In other words, India is no longer the only elephant in the gold vault. And they are not alone – investors around the world are now able, and willing, to Buy Gold as a way of protecting their wealth from the inevitable decline of the fading fiat currencies.
I still don't think we are out of the woods on a commodities correction, but there are so many black swans floating overhead that literally anything can happen, at any time. Thus buying in tranches on pullbacks over the next four to six months still makes a lot of sense.
Buy Gold through BullionVault and get live access to the world's only 24/7 bullion market...
DURING the last major precious metals bull market in the 1970s, only about 10% of the world could own gold, writes Casey Research partner David Galland.
Due to either legal restrictions or a lack of liquid capital, 90% of the planet was shut out.
Today, few countries prohibit gold ownership, and a far higher percentage of the world's population has transitioned out of poverty.
China provides the most germane example, having legalized gold and silver ownership for private citizens in 2004, and through the explosive growth in national GDP that has caused Chinese gold purchases to skyrocket.
Confirming the point, the following is an excerpt from a recent Wall Street Journal article:
Chinese investors are snapping up Gold Bars and coins, buying more than ever before in the first quarter of 2011 and overtaking Indian buyers as the world's biggest purchasers of the metal.
A growing middle-class in China is raising the appetite for gold there.
China's investment demand for gold more than doubled to 90.9 metric tons in the first three months of the year, outpacing India's modest rise to 85.6 tons, the World Gold Council said in its quarterly report on Thursday. China now accounts for 25% of Gold Investment demand, compared with India's 23%.
The report underscores the rising appetite for gold among the growing middle-class in China. Fears of the country's soaring inflation, as well as a search for new investments, is luring investors to gold, and marketing of the precious metal has also increased in recent months.
"I think people will be surprised by the strength in the Chinese demand, but we think this is a trend that is set to continue," said Eily Ong, an investment research manager at the gold council.
Notoriously active savers, stashing away on the order of 50% of their income, the Chinese are increasingly opting for gold over China's currency, the renminbi, to stash their wealth.
For those wondering just how big a development this is, consider that in 2007, just before investing in gold became "the thing to do," gold demand in India was 61% of the world's total while China's gold demand was only 9%.
In other words, India is no longer the only elephant in the gold vault. And they are not alone – investors around the world are now able, and willing, to Buy Gold as a way of protecting their wealth from the inevitable decline of the fading fiat currencies.
I still don't think we are out of the woods on a commodities correction, but there are so many black swans floating overhead that literally anything can happen, at any time. Thus buying in tranches on pullbacks over the next four to six months still makes a lot of sense.
Buy Gold through BullionVault and get live access to the world's only 24/7 bullion market...
05-24-2011, 07:35 PM
KEVIN PUIL is a Chartered Financial Analyst (CFA) with more than 15 years' experience in the investment management business. He works as portfolio manager at Malcolm H. Gissen & Associates Inc. in San Francisco, and as senior analyst for its Encompass Fund. The Encompass Fund, which focuses on global resource companies exploring for and producing gold and silver, copper, uranium and rare earth elements, racked up a healthy 60% return in 2010, following a spectacular 139% in 2009.
In this interview with The Gold Report, Kevin explains why Gold Mining firms are increasingly training their sites on copper.
TGR: Do you see more of the seniors that are heavily weighted toward gold adding more base metals to their portfolios?
Kevin Puil: I definitely see more M&A in the copper sector, and I also can see more gold companies actively looking for projects that will give them exposure to both gold and copper.
TGR: Will that confuse investors who traditionally have a different reason for investing in copper than they do in gold?
Kevin Puil: A lot of the senior gold producers have exposure to copper, whether investors know it or not. It's arguably more profitable than mining gold.
TGR: What are your feelings about copper? And where does Encompass Fund stand?
Kevin Puil: I'm definitely bullish on copper over the medium and long term. The new world reality is increased consumption of raw materials by emerging classes in big countries with accelerated development. Demand is back on track, while supply isn't. It's taking longer to repair the damage to the supply side than to the demand side.
A few factors play into this. Companies are mining lower ore grades because new quality projects are scarce. In addition, political instability, as well as mining service and equipment supply problems are becoming major challenges for copper miners.
TGR: As you pointed out, with spot copper prices hovering around $4/lb., copper mining is still profitable for most of the seniors, and several seniors already have fairly significant copper credits or copper assets. Against that backdrop, will we see more juniors entering this space? And where would you expect to see more copper mining?
Kevin Puil: Definitely. I do see more juniors getting involved in copper exploration and I think the majority of these projects will be found in Latin America, Canada and Australia. We're seeing more activity—not just in the copper, but the gold/copper combination projects. We've already seen a number of acquisitions during the last year.
TGR: With so much emphasis on gold as it continues climbing to new heights, it might be easy for investors to overlook copper, but you've made it clear that the copper space is heating up and there are some exciting stories to tell.
Kevin Puil: As I said early on, I'm bullish on copper and so are a lot of senior miners. They're looking to diversify, and for gold miners, copper is an easy way to do it. As companies have to look toward increasingly more difficult geography and geologies to meet demand, it's going to take more time and a lot more money to bring new copper supply online. We can probably expect more senior miners to get involved with copper as the supply/demand structure holds up for different reasons than the supply/demand structure for gold.
TGR: Thank you Kevin, you've given us a lot to think about.
Looking to Buy Gold?...
In this interview with The Gold Report, Kevin explains why Gold Mining firms are increasingly training their sites on copper.
TGR: Do you see more of the seniors that are heavily weighted toward gold adding more base metals to their portfolios?
Kevin Puil: I definitely see more M&A in the copper sector, and I also can see more gold companies actively looking for projects that will give them exposure to both gold and copper.
TGR: Will that confuse investors who traditionally have a different reason for investing in copper than they do in gold?
Kevin Puil: A lot of the senior gold producers have exposure to copper, whether investors know it or not. It's arguably more profitable than mining gold.
TGR: What are your feelings about copper? And where does Encompass Fund stand?
Kevin Puil: I'm definitely bullish on copper over the medium and long term. The new world reality is increased consumption of raw materials by emerging classes in big countries with accelerated development. Demand is back on track, while supply isn't. It's taking longer to repair the damage to the supply side than to the demand side.
A few factors play into this. Companies are mining lower ore grades because new quality projects are scarce. In addition, political instability, as well as mining service and equipment supply problems are becoming major challenges for copper miners.
TGR: As you pointed out, with spot copper prices hovering around $4/lb., copper mining is still profitable for most of the seniors, and several seniors already have fairly significant copper credits or copper assets. Against that backdrop, will we see more juniors entering this space? And where would you expect to see more copper mining?
Kevin Puil: Definitely. I do see more juniors getting involved in copper exploration and I think the majority of these projects will be found in Latin America, Canada and Australia. We're seeing more activity—not just in the copper, but the gold/copper combination projects. We've already seen a number of acquisitions during the last year.
TGR: With so much emphasis on gold as it continues climbing to new heights, it might be easy for investors to overlook copper, but you've made it clear that the copper space is heating up and there are some exciting stories to tell.
Kevin Puil: As I said early on, I'm bullish on copper and so are a lot of senior miners. They're looking to diversify, and for gold miners, copper is an easy way to do it. As companies have to look toward increasingly more difficult geography and geologies to meet demand, it's going to take more time and a lot more money to bring new copper supply online. We can probably expect more senior miners to get involved with copper as the supply/demand structure holds up for different reasons than the supply/demand structure for gold.
TGR: Thank you Kevin, you've given us a lot to think about.
Looking to Buy Gold?...
