By: Julian D. W. Phillips, Gold/Silver Forecaster - Global Watch - GoldForecaster.com
-- Posted Tuesday, 1 July 2008 | Digg This Article | | Source: GoldSeek.com
From mid-to-end August the Indian market revives after their harvest gathering after the monsoons as 70% of gold buyers come from the agricultural sector in India. They then stay present in the market until May the following year. They buy for religious reasons and because gold represents financial security for families. Also no tax is paid on agricultural profits so in India it 'disappears' from view into gold and property. That is why Indians will not stop buying gold irrespective of the price. What they do is to not chase prices. They don't like volatility and will stand back if the price 'spikes' until it stabilizes and confirms its base is solid. In the developed world traders tend to chase prices.
Then the developed fabrication world begins to buy in September to fabricate in time for the year end festivities.
So gold's high season lies in the final and first quarter of the year.
This is the traditional gold seasonal pattern, but then add to that unseasonal investment demand on top of this and you find, as you do now, that the "Doldrums" [the quiet area where trade winds don't blow] are becoming active investment seasons for gold. Investors don't react to gold fundamentals but to global macro-economic and currency markets. These look awful with little effective action going on to rectify matters.
With investment buying growing dramatically at present [rushing over 1,000 tonnes in the gold Exchange Traded Funds] and making the yearly 'Doldrums' for gold, a vigorous season of its own, one is finding demand at a much higher level than ever seen in the market before. This is because the investment side of demand reflects the performance of gold as a monetary metal. This has, over the last few months, gone in the opposite direction to the U.S.$, but underlying that reflects the uncertainty facing the global economy as the East emerges to find there is not enough to go around. The West will be hurt before the East because the East has its surplus in hand [China alone is just about touching $2 trillion now] and the West has deficits of the same amounts.
Now with the supply of gold unlikely to rise, because of adverse conditions on the supply of gold, the only way for the gold price to go is up. For more informed direction on the gold and silver markets, please subscribe to "The Gold Forecaster" or the "Silver Forecaster".
-- Posted Tuesday, 1 July 2008 | Digg This Article | Source: GoldSeek.com
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