New Gold Market Dynamics

New Gold Market Dynamics

There is a fundamental shift in the dynamics of the gold market

  • Credibility Crisis for Governments and Financial Systems
  • Lack of trust in currency - investors worried about currency debasement and fear of inflation seek an alternative store of wealth
  • Huge demand for Physical Gold
  • Gold Availability & Steady Supply primary consideration
  • Higher Working Capital requirements for mines  - Additional capacity at a premium
  • Scrap made up the mining supply shortfall, but hard to sustain the pace
  • Storage Space becomes scarce commanding premium
  • Shipping and logistics –  At times backlog in physical clearing
  • Nothing could be taken for granted - Counterparty Risk in derivatives transactions is hard to assess
  • Rising volatility - Break down of correlations in asset classes
  • Strong market dynamics -Expect powerful triggers in near term
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