I have talked about gold or precious metals a lot over the past 2 years. Don't want to repeat what I have already talked. Just a quick note about what I have recently read that two more signs to support why gold will continue to go up, A LOT HIGHER!
One is what central banks worldwide are doing with gold. In the past 20-30 years, central banks had always been the net seller of gold each year. But the situation has changed in the past 2-3 years. Central banks have become the net buyer of gold. In June and July this year, about 150 tons of gold were bought by central banks. The Chinese central bank is probably the most aggressive one for buying gold. Not only all the gold mined in China has all been bought by the central bank (it is illegal to export gold by Chinese miners), substantial amount of additional gold has also been imported each year by the China central bank. It is still rumor but I believe it is credible that the Chinese government is accumulating gold in order to support RMB (the Chinese Yuan) to be the only world currency backed up by gold. If this is true, then RMB may replace the US$ to become the world reserve currency eventually.
The other news very bullish for gold is that Samsung is providing financial support to a mining company, Cluff Gold, and in return to get gold bullion; See the press release of Cluff Gold:
Cluff Gold plc, the dual AIM/TSX listed West African focused gold
mining company, is pleased to announce that it has signed a Memorandum
of Understanding for a long term strategic partnership with Samsung
C&T Corporation (“Samsung”). This alliance commences with an
unhedged US$20m facility to provide additional funding to Cluff Gold to
further the development of its portfolio of assets.
Through this
long term partnership Samsung will have access to a reliable supply of
gold bullion, underpinned by the Company’s strong operational and
management team whilst Cluff Gold will benefit from Samsung’s financial
support. The relationship is expected to result in a
significant financing in Cluff Gold’s Baomahun project, subject to the
outcome of the feasibility study, together with an ongoing commitment to
jointly assess other opportunities in the region.
This is a rather significant development, indicating that major companies cannot stand the continuing depreciation of currencies and are turning to gold as their cash reserve. In other words, companies will more and more treat and accept gold as money. I won't be surprised to see that soon gold and/or silver will be the acceptable currency for business and services between corporations. Think about the implication for gold and silver prices in the long run! But be careful about the very short-term volatility for gold and silver, which need a healthy pullback before turning up again.
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