The Case For Physical Gold part I

1. Central Banks are holding more gold, allowing the support for higher prices and easing of dollar reserves ($1040 is currently seen as a bottom of support where China or India would buy gold on the IMF block at that price).





WORLD OFFICIAL GOLD HOLDINGS March 2010

Holder-Tonnes-Percentage of Foreign Reserves

• 1 United States 8,133.5 70.4%
  
• 2 Germany 3,406.8 66.1%
  
• 3 IMF 3,005.3 1)
  
• 4 Italy 2,451.8 64.9%
  
• 5 France 2,435.4 65.7%
  
• 6 China 1,054.1 1.6%
  
• 7 Switzerland 1,040.1 27.1%
  
• 8 Japan 765.2 2.5%
• 9 Russia 641.0 5.1%
  
• 10 Netherlands 612.5 53.4%
• 11 India 557.7 6.9%
• 12 ECB 501.4 25.2%
• 13 Taiwan 423.6 4.1%
  
• 14 Portugal 382.5 84.9%
  
• 15 Venezuela 360.8 36.8%
  
• 16 United Kingdom 310.3 16.5%
  
• 17 Lebanon 286.8 25.6%
  
• 18 Spain 281.6 35.7%
  
• 19 Austria 280.0 54.6%
  
• 20 Belgium 227.5 33.7%
• 21 Algeria 173.6 3.9%
• 22 Philippines 154.4 12.5%
• 23 Libya 143.8 4.8%
  
• 24 Saudi Arabia 143.0 1.2%
  
• 25 Singapore 127.4 2.3%
  
• 26 Sweden 125.7 9.3%
  
• 27 South Africa 124.8 11.0%
  
• 28 BIS 120.0 1)
  
• 29 Turkey 116.1 5.4%
  
• 30 Greece 112.4 73.2%
  
• 31 Romania 103.7 8.1%
  
• 32 Poland 102.9 4.2%
  
• 33 Thailand 84.0 2.0%
• 34 Australia 79.9 6.7%
  
• 35 Kuwait 79.0 11.9%
  
• 36 Egypt 75.6 7.8%
  
• 37 Indonesia 73.1 3.9%
• 38 Kazakhstan 70.5 9.3%
  
• 39 Denmark 66.5 3.0%
  
• 40 Pakistan 65.4 16.2%
  
• 41 Argentina 54.7 3.9%
  
• 42 Finland 49.1 16.4%
  
• 43 Bulgaria 39.9 7.9%
  
• 44 WAEMU 2) 36.5 10.3%
• 45 Malaysia 36.4 1.3%
• 46 Peru 34.7 3.7%
• 47 Brazil 33.6 0.5%
  
• 48 Slovakia 31.8 61.5%
• 49 Belarus 3) 28.4 18.1%
  
• 50 Bolivia 28.3 11.6%

2. Demand for physical bullion and coins has sky rocketed… 860% for the US Mint (from 2007 to 2008) and has been up abroad as well. http://www.forbes.com/2009/11/25/gol...ties-mint.html

http://www.reuters.com/article/idUSN0762739220100507


3. Monetizing debt in our situation will lead to fiat currency devaluation and unattractive bond yields respective to inflation and the risk of the issuer. http://www.marketoracle.co.uk/Article18717.html
http://goldnews.bullionvault.com/gold_investment_012220104


4. Exposure to synthetic gold has intrinsic backing that is quite limited considering the amount of physical gold backing the paper gold traded in the open market may be close to 100:1. Levels of leverage like this are bound to send paper gold prices crashing and physical prices rallying. http://www.huffingtonpost.com/nathan-lewis/its-ponzimonium-in-the-go_b_519893.html
http://www.gata.org/node/8478
http://seekingalpha.com/article/189994-another-monday-another-gold-manipulation-notion




5. Mine supply and mining costs are expected drive the physical supply side down and central bank gold sales are drying up as large players try to acquire tonnes without affecting the price (central banks sales account for over 10% of annual gold "supply"). We currently see a lack of hedging by gold miners, showing their bullish perspective on the future price of the metal. http://www.commodityonline.com/news/IMF-sells-185-tonnes-of-gold-in-March-27912-3-1.html
http://asia.news.yahoo.com/rtrs/20100505/tbs-gold-imf-sale-7318940.html