Top 5 Reasons 2012 Will Be a Golden Year

Investing in Gold in 2012

Dennis Garman was recently quoted by Bloomberg as saying the following:

“Since the early autumn here in the Northern Hemisphere gold has failed to make a new high. Each high has been progressively lower than the previous high, and now we’ve confirmation that the new interim low is lower than the previous low. We have the beginnings of a real bear market, and the death of a bull.”

Here are the Top 5 Reasons 2012 will be a Golden Year for precious metals investors.

1. As an asset, gold is under-owned on an institutional level. Gold only represents 1.5 percent of all total global assets including equities, fixed income, private equity and real estate. The investment demand for gold has been increasing on a yearly basis and is attractive for institutional investors to step in to purchase more aggressively this year.

2. Gold’s status as a safe-haven continues to increase with the surge in market volatility. Since 2008, volatility has become a permanent staple in the markets. According to the VIX index, volatility is at historic highs. This pushes investors towards the safety of gold which will increase for many years.

3. Central banks are starting to load up on gold. This is one of the single largest shifts we’ve seen in the gold markets. Up until 2010, global central banks were net sellers of gold assets. In 2011, many of the world’s leading central banks began aggressive purchasing programs to buy gold. In 2011 gold purchases were up more than 160 percent from 2012. The central banks of Kazakhstan, Mexico, Russia and South Korea all went to the open market to buy gold to diversify away from their dollar holdings.

4. Here is one that many of us are able to see with our very eyes. The emerging market jewelry demand remains very strong. Over 50 percent of gold goes toward the manufacturing of high-end jewelry, and the majority of these purchases are made in emerging markets; notably in India, China and the Middle East. High-end consumers who purchase gold should continue their purchases into 2012 and moving forward.

5. Product costs are rising with the physical supply of gold extremely tight. High prices do give miners incentives to produce more, but it is not enough to keep up with the bullish demands as it takes 5-7 years for a new mine to start producing at commercial levels. With the cost of extraction increasing dramatically (labor, energy and environmental costs) this limits the supply against an increasing demand.

» Contact Cornerstone Asset Metals today to learn more about buying gold as an investment.

Past performance is not an indication of future potential values.