 |
Product Search
|
 |
|
Article Search
|
|
|
Resources
| |
|
Home > $10.00 To $29.99
We Have Found 0 Products for your search of $10.00 To $29.99.:
When to Buy Gold
by Matthew Goldfuss
Most people, including the more educated investors, are not aware of the fact that there has been a strong, clear, and consistent seasonal demand for gold over the last 30 years during the second half of each year, and in most cases prices have followed suit. The question is posed to me all the time, "Why?", and the reality is that that there are a confluence of factors, some of which are fundamental, while others are more of a technical nature; but none the less, prices have consistently been heading to the upside, and that trend has been even more distinct and profound during this current 'bull market' over the last decade. Who is the traditional gold buyer? We need to recognize who they are and to do so we need to understand the tangible and fundamental reasons for buying gold. In India, first and foremost we have found the largest gold buyers in the world, making up over 800 tons per year, and the vast majority of their purchases are made up of the jewelry demand. They have a long tradition of buying gold in that nation, as it has always been a way of preserving wealth in their culture, and most of their purchases come from their rural areas comprising approximately 65% of the demand. The Indian Monsoon season also plays a critical role in determining the amount of the gold demand for the year. Typically every year around May, the Indian population begins planting their crops just before the Monsoon season which normally occurs during the summer months. Later in September is when the harvesting of the crops begins and if the Monsoon season is a successful one, demand for gold consequently moves higher. This year, according to India's weather office predictions, the country should benefit from a normal rainfall in the June-September monsoon season, which is of course good news for Indian farmers as it raises hopes for a good farming season usually portending a fine year for India's gold demand.
In India there are several different periods when gold buying peaks and prices usually soar. These auspicious days, usually religiously oriented, are thought to be favorable for occasions such as the "Marriage Season" which commences in October and lasts through to the following May, and during this period gold is bought in quantity, partly to enable the bride to come to her groom covered in gold and bearing it as her "dowry". Another such phase where it is thought advantageous to buy quantities of gold is during the "Festival of Lights" in the month of October. In one more of this series of Indian gold uses we find distinct spikes in the months of January and September, because at that time manufacturers typically refill inventories to realize the demands of two Indian wedding seasons, including the festival of Diwali, starting in the month of November and ending in December, and the second which begins in late March and continues through early May. According to the World Gold Council, 10 million marriages take place every year in India, and the demand for those occasions account for a substantial proportion of the overall global jewelry purchases. According to the council, the Indian gold jewelry sector accounts for an astounding 75% of the total domestic gold demand in 2009. Making things more exciting for the gold market is that Indian consumers have adjusted their price expectations upwards; "Given the rebound in gold demand and higher price expectations WGC expects a positive outlook for the Indian gold market for 2010." It has readily become apparent that not only have Indian consumers been heavy buyers of gold in jewelry form, but in recent times they are steadily increasing their demand of gold as an investment vehicle. The "WGC believes that Indian investors may continue to move into gold as an insurance policy to protect their wealth from the aftermath of the global financial crisis since there are few assets that have the ability to hold their value during extreme conditions."
China is the second largest buyer of gold in the world and it appears that they are quickly becoming the dominant consumer in just about every commodity, and that includes gold. The total volume of gold traded on the Shanghai Gold Exchange jumped 59% in the first six months from a year earlier to the equivalent of 3,174.5 metric tons, and the Silver turnover soared more than fivefold, which is a staggering number and just underscores the potential for this country. Chinese physical bullion demand is expected to rise by over 12% to over 450 tons a year as Chinese investors have shown their willingness to buy more when prices are on the rise. Another increase of a staggering 40% comes in sales of gold products such as bars and coins by China National Gold Group Corp. which is the owner of the country's largest gold deposit. The Chinese and Eastern Asians also have seasonal buying patterns for gold as many people buy at the time of Chinese New Year which is in the late January to early February time frame. Throughout the festivities, Chinese people take pains to display their gold prominently because it signifies good fortune while also contributing to the price of gold.
In the Northern Hemisphere, demand is usually weakest during the summer, especially during August when European jewelry manufacturers are essentially shut down. Requests for gold and gold products are the greatest heading into fourth quarter in anticipation of US and European religious holidays such as Christmas in which gold manufacturers are usually restocking inventories heading into the season.
These are the traditional fundamental reasons that have been driving gold prices higher in the second half and into the first quarter in most years, but of course there are technical factors as well, and most professional gold traders recognize these fundamental factors that are usually emerging as they enter into the third quarter of the year. Throughout this 10 year 'bull run' all of the aforementioned positive factors have intensified going into the first quarter of the following year. With all of the above mentioned factors in play it becomes increasingly apparent that prices will certainly rise in the very near future and the time to make your gold and precious metals purchase is as soon as possible.
Thank you for your time and comprehension in reading this narrative concerning the optimum timing to make your precious metals purchases.
About the Author
gold-observer.comMatthew Goldfuss is a gold, silver, and precious metals representative with eight (8) years experience. He has worked in one of the top companies in the field during that time and has achieved a high level of competence and expertise.
|
