5 June 2009

China to consume 40% of global gold production ~so Indian dude reckons

The economic fundamentals for gold are favorable. Production of gold from South Africa, United States, Australia and Canada, has dwindled every year over this past decade.

These countries, which combined to produce two thirds of the global gold through the 1980’s, now produce less than half of the gold mined today. In 2006, South Africa, the world’s largest producer of gold, hit its lowest production level of gold in 84 years.

Meanwhile, physical demand for gold has been going through the roof. Much of the recent explosion in demand can be attributed to retail investors in India, China and other parts of Asia where the appetite for gold as investments is soaring.

India, for example, is experiencing an 80% growth in gold investment following a loosening of trade and market restrictions.

And let’s not forget China.

China, which has the fastest-growing economy in modern history, is undergoing major changes in the way they handle gold.

China, home to 1.3 billion people, private gold ownership has been outlawed for generations. But in 2002, the Shanghai Gold Exchange opened and started free trade in gold for the first time in the nation’s history.

Even more recently, China legalized gold investment by private citizens.

Considering the high savings rate in China, gold is a logical investment. It’s estimated that the equivalent of US $36 billion in Chinese private investment could move into gold in coming years.

Plus, the Chinese government is moving to increase its low gold reserves. Given these recent developments, China alone will consume 40% of the world’s entire gold production for years to come.

The worldwide monetary policy and global supply-and-demand for gold have already ignited a powerful rally that’s virtually certain to carry gold to much higher price points, despite the breather the rally appears to be taking right now.

he world economic powers are working together to stabilize world markets in the short-term. Yet, the result may well be a longer-term debasement of paper currencies and a powerful reason to invest in gold now.

The bottom line is this… although gold is viewed as a hedge against inflation and financial catastrophe, it’s price is currently dropping because the average investor is so preoccupied with the meltdown… They are more inclined to focus on the short-term weakness in the economy and deflation, then inflation.

Their loss, your gain.

Gold has a huge run in front of it… experts predicting it could eventually go from its current $830 to over $6,000… a 623% gain.

And gold stocks have been battered mercilessly… with all three of our “backdoor” entry recommendations down over 50% in the last few months… opening up an opportunity for you to double your money in all three opportunities in the coming months…

Thing is, once investors realize the massive amount of money that is flooding the market and the subsequent inflation issue, gold will rally… just as it has during other periods of world tension.

Right now, we have an unprecedented financial sector meltdown… inflation is out of control across many parts of the world… and investors have lost faith in the U.S. dollar.

Yet the price of gold has dropped 15% over the past month… go figure.

On top of that, gold resource company share prices have slumped 50% or more from the highs set within the past three months.
A classic case of “over-reaction” from panicked investors…

It appears the financial sector panic has now moved to the resource sector. The uninformed investor is selling first; asking questions later.

Karim Rahemtulla is Investment Director, Xcelerated Profits Report

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