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Profit Confidential (www.ProfitConfidential.com), an e-letter published by Lombardi Publishing Corporation, a 29-year-old consumer publisher that has served over one million customers in 141 countries, is announcing that, in spite of the negative sentiment, gold prices under $1,200 an ounce provide a solid opportunity for gold bulls.“Gold prices have fallen below $1,200 an ounce and negative sentiment continues to increase, with economists claiming gold prices have further to fall and that ‘funds’ are building up short positions,” says financial analyst Moe Zulfiqar. “In spite of the negative sentiment, I believe low gold prices are presenting a solid opportunity for long-term investors. That’s because the most basic fundamentals influencing gold prices, supply and demand, are improving.”
During the first 11 months of 2014, U.S. gold mines produced 193,000 kilograms (kg) of gold bullion. December numbers have not yet been published, but if gold production in that month averages the annual monthly output of 17,500 kg, then full-year production would be about 210,500 kg. If this ends up being the final number, then it will be the lowest level of gold production by U.S. mines since 1990. Other major gold-producing regions are reporting similar production figures as well. (Source: “Gold In November 2014,” U.S. Geological Survey web site; http://minerals.usgs.gov/minerals/pubs/commodity/gold/mis-201411-gold.pdf, last accessed March 10, 2015.)
“Gold production will remain weak. Remember: there is no incentive for producers to produce if gold prices are low,” Zulfiqar adds. “In addition, production guidance provided by global mining companies isn’t reassuring. Even if they are reporting an increase in production this year, it’s not substantial.”
Coupled with weak gold production is increasing demand, even from India and China, the two biggest gold-consuming countries in the world. Central banks are also snapping up gold bullion; and have been on a buying spree, purchasing 409.4 tonnes in 2013 and 477 tonnes in 2014. (Source: Grubb, M., “Gold Demand Trends Full Year 2014,” World Gold Council web site, February 12, 2015; http://www.gold.org/supply-and-demand/gold-demand-trends/back-issues/gold-demand-trends-full-year-2014.)
“With the U.S. dollar rising, the value of their currencies will decline significantly. As this happens, will world central banks buy more gold to stabilize their currencies?” Zulfiqar concludes. “Wall Street might be bearish on gold, but all the fundamentals are improving. The fact of the matter is that gold prices are only going down because the U.S. dollar is strengthening. Compare the precious metal prices with other currencies and you will see they are up year-to-date.”
For more information on Profit Confidential, visit www.ProfitConfidential.com. Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, visit www.lombardipublishing.com.
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