CAPE TOWN (miningweekly.com) – Experts believe the buying of gold for investment purposes is set to increase, as currencies decline. Uncertainty over decisions made by US President Donald Trump may also see investors heading for gold.
“There will be a lot of gold buying for investment purposes in the next few years. We expect increased demand from the whole world as currencies decline. It’ll be extremely positive for gold,” Matterhorn Asset Management managing partner Egon von Greyerz said on Tuesday.
Von Greyerz was a member of a high-level panel on the fundamentals in the gold market at the Investing in African Mining Indaba, in Cape Town.
He said he expected the US dollar to stay strong for a little while, but then take a turn for the worse in coming years. Massive debt will pile on the pressure for Trump.
“Trump has a very difficult task. I think he will be one of the most hated presidents in US history when he leaves, if he lasts five years. He has come into a country with massive debt and trade deficits since the 1970s.”
Newmont chief economist Tom Brady, who was also on the panel, noted that elections in Europe could also see investors going for gold.
“We will be monitoring the election situation, with an election in France in April, the Netherlands in March, and others. That could be a driver of an added safe haven.”
China will continue to be a rapid, growing market, World Gold Council member and investment marketing manager John Mulligan added. Gold consumption in China has grown by 330% since 2000, heralding a sharp break from the past, when it was illegal to own gold bars and coins in China. A growth in private wealth has sparked an interest in gold.
Von Greyerz expects the trend to continue.
“We haven’t seen anywhere near the real demand coming from China yet. There are still up to 300-million people in the countryside in China, who don’t have access to gold today. We will see a major increase in demand from the Chinese people. This will continue to be the biggest market in the world for a long time.”
Mulligan said the fourth quarter of 2016 saw a resurgence in consumer demand for gold, with China’s remarkable surge in private investors and Germany also showing a strong interest.
The US election also triggered a change in the risk climate for investors there.
He said private investors were buying gold bars and coins, with a spike in private wealth buying for wealth preservation.
Harmony Gold COO Philip Tobias, meanwhile, said Trump’s election and Brexit had been to the advantage of South African gold players, including Harmony Gold.
Tobias said the South African gold market was still fairly competitive, although there was room to improve efficiencies.