Central Banks and demand factors
I have a sense that when some think of Central Banks they are thinking primarily of the parties to the Washington agreement limiting the sale of gold by the signatories. I tend to think more broadly, trying to make guesses about net governmental demand for gold. This brings me to this question:
Will OPEC countries, China, Russia, and other non-signatory nation demand soak up the sales by signatories? To what extent do those purchases constitute new demand for 2006?
From there I tend to move to other demand factors.
The other big demand question revolve around purchases of gold by the various gold ETFs. Making it easier for a common bloke like me to invest in physical gold (or as some argue, to have only the illusion of doing so), has been a positive on demand for physical gold. Will there be net inflow or outgo here in 2006?
Another significant area that one does not read as much on as we did back in 2002-2004 is producer de-hedging. What impact will that have in 2006?
I don't have any disbelief that Washington agreement Central Banks will sell more goldd this year. I don't have any problem believing they will sell all of their quota under the agreement. I am not so sure a case for investing in physical gold or the shares of miners should rest on such a belief.
AI
