With the price of gold (NYSE: GLD) and silver (NYSE: SLV) down for the year, it could be time to look for bargains in the sector as there have been several rounds of good news. For investors looking for the overall reasons to buy precious metals, Koos ven der Merwe writes in a recent report:
So, what would cause the price of gold to rise? A major correction in the US market? I don’t think so unless the present fight between Congress and the White House destroys the US economy. Are Asia, and especially China and India, looking to protect their economy as the United States’ economy strengthens and their economy weakens? Very possible. Europe, with Angela Merkel of Germany pulling the strings, and the new Governor of the Bank of England, who kept Canada’s banking system out of the mess that occurred in the US, does not look as though it will weaken, but will strengthen with the US economy.
In a recent interview, Richard Fulden, Executive Chairman of Wishbone Gold PLC (PINK: WISHY), stated that, ” “India and China are the largest gold buyers worldwide. There has been a recent move away from derivative gold products (such as Exchange Traded Funds) and a move into directly holding the metal. Industrial demand only accounts for about 3% of world purchases so the major buyers of gold are doing so for investment.”
As for further reasons to be bullish about gold and silver, Fulden noted that that central banks in China and India were also buying gold. That is very bullish for Wishbone Gold PLC as it just received very encouraging reports about its holdings in Australia. That situates Wishbone Gold PLC ideally for buyers from India and China. In terms of market position, India buys the most gold of any country in the world, with China as second, as reported in a recent article in The Wall Street Journal.
The chart below shows the price action of SPDR Gold Shares, the exchange traded fund for gold: