Plenty of reasons to be cautious were
flagged up in today's "Bubble or Not?"
LOTS MORE to share from the second and last day of
this year's LBMA Annual Conference here in Montreal. But the red-eye for
London won't wait, not with Air Canada cabin staff starting a strike at
two quick charts, both highlighted by Edel Tully,
precious metals strategist at UBS, in her conference summary. First, she said
she's adding this chart – hoisted from this morning's opening
presentation by Albert Cheng of the World Gold Council in the China &
India session – to her slide deck:
shows the yawning supply-demand gap inside China's domestic gold market. Now
the world No.1 for gold mining output four years running, China cannot
satisfy its own private household demand.
picture, the chart makes a neat pairing with this slide, used by
Franco-Nevada chairman Pierre Lassonde in Monday's
keynote speech – and already a key fixture in any analyst or
strategist's PowerPoint slides, according to Tully:
of reasons to be cautious on gold were flagged by this afternoon's
"Bubble or not?" debate. In particular, the risk of a parabolic
rise – similar to how silver shot higher this spring – could see
"safe haven" buyers scared off by volatility. (Silver investment
flows have certainly turned "hesitant" since then, noted GFMS's
Philip Newman.) Or maybe existing investors will soon begin tiring of
year-on-year gains in gold, and start rotating into other asset classes instead
of waiting for what they might forecast as a "top". Or maybe a
blow-up in China – sparked by its own domestic credit and real estate
markets, if not central-bank action to try and cool them, along with
inflation – could see its tug on the world's gold supplies pushed the
other way, as the feel-good affinity for gold is reversed by economic
slowdown or even recession.
for now, as one panellist put it in the Oxford-style debate – and with
gold investment accounting for just 1% of the world's financial assets today
– "This looks less like a bubble than an opportunity."
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City correspondent for The Daily Reckoning in London, Adrian Ash is
head of research at BullionVault.com – giving you direct access to investment
gold, vaulted in Zurich, on $3 spreads and 0.8% dealing fees.
Please Note: This article is
to inform your thinking, not lead it. Only you can decide the best place for
your money, and any decision you make will put your money at risk.
Information or data included here may have already been overtaken by events
– and must be verified elsewhere – should you choose to act on