The World Gold Council has just released the latest edition of their Gold Investor, an in-depth report on the state of the gold market in the first quarter of 2013. It includes an explanation of the gold downturn, answers common misconceptions about gold’s role in the global economy, and demonstrates why gold is an essential part of any investment portfolio.
“Short term factors including market momentum and the concentrated sell-off following analysts’ downward gold price forecast revisions along with Cyprus’ gold sales contagion could put pressure on gold prices in the near future. However, we consider that many of the fundamental drivers that have supported gold’s 12-year trajectory are still well in place. Data suggests that some investors in developed markets are betting on a swift economic recovery, and while economic data may seem encouraging in the US, many of the underlying issues that financial markets face are still relevant: countries face high level of debt while monetary policies have yet to unwind. At the same time, gold’s fate does not rely only on uncertainty and malaise in developed markets. Gold’s performance is also linked to their long-term economic expansion. There is consensus that emerging market economies will continue growing. Most economists agree that emerging markets will continue to grow and surpass developed market economies by 2020 in term of GDP. Finally, the US dollar will likely remain a crucial component of the monetary system, but may have to make room for others. As central banks diversify their foreign reserves, gold will continue to be one of the most relevant assets.”
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