When gold is in an uptrend against other currencies it lets you know that something is going on under the hood that most people are missing.
When precious metals buying in these countries continues to increase in spite of the fact that it has become even more expensive to do so, Mr. Market is letting you in on just one more reason why you should pay attention … and either start “stacking” or add to your current insurance/investment position.
The Trend is Your Friend
Increased gold purchases by “Silk Road” countries – for going on two decades – have continued unabated in spite of periodic currency devaluations and loss of purchasing power to the U.S. dollar. Not to mention that China, which used to export millions of ounces of silver annually, has for some years, not only been keeping all of its internal production, but importing more!
The Shanghai Gold Exchange (SGE) chart demonstrates that this trend shows no signs of letting up.
Going forward, plan on gold being more challenging to find, and due to increased regulation along with overall country risk, more complicated, costly and time-consuming to produce. And, not to mention, more expensive to buy as mushrooming demand across the globe kicks in and continues with a vengeance.
Goldcorp was recently bought out by Newmont Mining, creating the world’s largest producer. This is the second recent gold company mega-merger – with others almost certainly to follow – indicating the need these operators have for nailing down future ore bodies, as every ounce they produce depletes their reserves.
Ian Telfer, Goldcorp’s Chairman, has said,
If I could give one sentence about the gold mining business… it’s that in my life, gold produced from mines has gone up pretty steadily for 40 years. Well, either this year it starts to go down, or next year it starts to go down, or it’s already going down… We’re right at peak gold here.