LONDON, 26 September 2011 - The Financial Times' professional advisor website, FT Adviser, today publishes a detailed view of the outlook for gold investment from Adrian Ash, head of research at world No.1 physical gold-market online, BullionVault.
A previous winner of Best Financial Website and Best Business-to-Business Website of the year awards, FT Adviser is dedicated to the financial intermediary market, giving in-depth and expert coverage of investments, mortgages, pensions, insurance and regulation.
"Whatever your stance on gold today," says Adrian, "the recent run towards $2,000 per ounce begs the question: how did this unyielding, industrially useless lump get here?"
Adrian's 1,000-word article details the start of the gold bull market a decade ago, explaining how demand and supply dynamics have changed thanks to the surge in private household demand from emerging Asia's biggest powers, India and China.
"As recently as 2005, some Western gold-market analysts expected rising incomes in Asia to lead to substitution for consumer items and financial services. But [while] fresh hoarding by the People's Bank of China is hotly anticipated, new private demand [in China] has matched total official reserves in the last two years alone."
Recycled "scrap" metal flows have also changed the global gold market dramatically, says Adrian, along with the forward selling - and then desperate scramble to buy back - amongst the major gold mining producers.
The critical factor? "Low to negative real rates of interest...the common denominator of the 21st century's 600 per cent gains to date and the bull market of the 1970s." Given that it was high real interest rates - after allowing for inflation - that rescued the bond market and ended the 1970s bull market in gold, "What killed gold's last bull market looks a long way off yet," Adrian concludes.
You can read BullionVault's article in full at FT Adviser here...
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