Gold Soars To Seven-Week High
Actions of Central Bank indicates Gold will retain bullish factors
Martin Murenbeeld, chief economist of Dundee Wealth Inc., stated that the firm weighs bullish and bearish scenarios in its analysis of gold prices to see which has the highest probability of becoming a reality. It was to no suprise that the bullish signals have remained dominant.
Murenbeeld participated Wednesday on a panel at the Argyle Executive Forum’s Gold Outlook conference, sponsored by the World Gold Council. He stated the number one signal that indicates gold will remain bullish is the degree to which central bankers have had to increase their balance sheets. The Central Banks are “forced to print money,” he stated. He want on to talk about how the U.S. did it during the economic crisis of the past three years and now the European Central Bank is faced with the same situation
“The more monetary liquidly you put into the system, the more gold prices rise,” Murenbeeld said. “That is the number one variable in our analysis—the more liquidity in the system, the higher goes the gold price.” There are also global imbalances, he said. The U.S. dollar remains weak and many central banks have excessive reserves and are seeking to diversify investments. Some central banks are buying gold while others that were selling gold are no longer selling. “So there has been a sea change in the central bank arena,” Murenbeeld said.
Deregulation of gold in Asian markets, specifically in China and India, contributed to bullish factors also. Murenbeeld said 15 to 20 years ago gold was heavily controlled in the Asian markets. “That is no longer the case and that has opened up the channels of distribution for gold buying in those countries,” he stated.
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