Salient to Investors:

Gold looks poor technically but its fundamentals of robust investment and central bank demand remain intact.

Gold will be supported by the US political standoff about the debt ceiling and expectations of continual quantitative easing.

A lack of trust regarding central bank gold reserves could lead to a form of a run on central banks gold reserves.

The US Mint has sold out its 2013 American Eagle silver bullion coins due to soaring demand in the first two weeks of January.

The Official Monetary and Financial Institutions Forum said:

  • Demand for gold will rise as the world heads towards a multi-currency reserve system under the impact of uncertainty about dollar and euro stability.
  • Expect twin shocks to the dollar and the euro
  • Gold correlates negatively with the dollar, and no other reserve asset seems safe from the coming dollar shock.
  • Western economies have failed to dismantle gold’s monetary role
  • China’s yuan is emerging as a genuine international currency, and China is unlikely to be satisfied storing its wealth simply in liabilities of other countries.
  • The world is headed toward uncharted waters of a durable multi-currency reserve system, when central banks are expected to increase their interest in gold as a haven from currency storms.
  • The role of gold in the international monetary system will be further enhanced in the coming decade as a result of basic uncertainties over the dollar and the euro.

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