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Investors: More Info Here |
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Gold
Gold investors are a happy bunch. Those with the luck or foresight to have boarded the golden railroad back in 2001 have experienced a fivefold investment in the "metal of kings." That works out to compounded return of better than 20% a year. The ongoing global stimulus initiatives will almost certainly ignite inflation, which is highly bullish for gold. In the past two years alone the U.S. Federal Reserve, the European Union (EU), and central banks in China, Japan and a host of other nations have chosen to "stimulate" their economies by ramping up spending and cranking up their printing presses. Multi-trillions of dollars of liquidity have been injected into the global economy. That's going to lead to inflation. It already has in the "volatile" food and energy segments that the U.S. government conveniently leaves out of its twisted consumer price index (CPI) numbers. The so-called concept of "peak gold" is real, and that even in the face of record gold prices, miners can't seem to crank out enough of the "yellow metal." Economic theory tells us that as demand increases, so does supply, which helps to contain prices. In the case of gold, however, that just isn't happening. There's simply not enough new gold being found to replace consumed reserves and to allow for higher production levels. Over the past year, gold production has only managed a 3.0% increase, despite a 20% increase in price. Global demand is burgeoning as wages rise in such newly emergent markets as China and India - a trend that's not going to quit. China and India with 35% of the world's population – have always been big fans of gold. India is the world's largest gold consumer. China, too, is on pace to better last year's consumption levels. Worldwide, investment demand for gold will be up, led by China, India, Russia, and Turkey. Global investors remain dramatically under-invested in gold. As it currently stands, the average investor, both retail and institutional, is sorely under-invested in gold-related holdings. Just after the gold prices hit their peak in their last secular bull run, gold and gold-mining shares represented 26% of global assets. In 2009, investment levels in these same subsectors represented a microscopic 0.80% of global assets. Clearly, gold has a long way to go just to become a significant allocation within the average portfolio.
*Past performance, future projections and past mining operation life expectancies are not a guarantee of future results. All rates of return and past results provided herein are for historical comparison purposes only. Investments involve financial risk of loss and may not be suitable for all investors. |
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