On the 19th August 2013 the UK Financial Times reported "UK gold exports surge tenfold this year" - suggesting that investor selling has driven bullion out of London vaults into the hands of Asian consumers. In addition, exports to Switzerland "leapt to 798 tonnes in the first six months of the year, up from 83 tonnes in the first half of 2012…" "The Swiss are running three or four shifts to keep the refineries going non-stop. They're throwing bodies at it.", said one senior gold trader.
A few days later, (23rd August 2013) the same newspaper printed the headline "Does Investing in gold have a future?" - and suggested that perhaps the interest in gold as an investment has lost its luster. It admits that the price of gold is "set by the speculators" but concludes: "The main question is what role - if any - gold should play in the portfolio of the ordinary investor. Opinion is fairly evenly divided. Those convinced that the financial crisis has yet to fully play out view it as an insurance policy against further turbulence in financial markets and the debasement of paper money."
Any investor has to take into consideration the fact that gold is undoubtedly traded as a speculative investment in the short term. Many private investors, businesses and countries, trade gold for potential capital gain purposes, inflation hedging and settling balance of payments accounts.
What is undeniable however, is the fact that since records began, gold has maintained its purchasing power throughout the centuries, whereas paper money (fiat currencies) and the vast majority of other non-precious metal assets have not.
It is this single fact that should remind investors (as opposed to speculators or gamblers) that gold and other precious metals such as silver, palladium or platinum, have a place within their investment portfolio, taking the medium and long term into consideration. It is for this reason that Gold IRAs and Precious Metal IRAs are uniquely suited for such consideration, as individuals are saving towards their retirement, and wish, at the very least, for their wealth to be preserved, if not for it to grow in value.
When Gordon Brown was Chancellor of the UK, during the period 1999 - 2002, he sold 400 tonnes of gold (the majority of the UK Gold Reserves) for between $256 and $296 an ounce - only to see it recently peak at $1900 and now standing closer to $1340 an ounce. Experts predict that gold now has a "floor value" of around $1200 - which is approximately the extraction cost to the mining companies. Without debating the reasons for the sale, at the time, no-one could understand the logic of it, even based on previous gold price movements.
So, if you were to ask the author of this article, to whom would he base his trust - the UK currently selling gold - or China and Switzerland purchasing as much as they can - one does not need to be a mind reader to guess.
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