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Lombardi Financial, a division of Lombardi Publishing Corporation (www.LombardiPublishing.com), a 28-year-old consumer publisher that has served over one million customers in 141 countries, is releasing its expert opinion on why the current fundamental demand/supply situation for gold favors higher prices.“The fundamentals that drive gold prices higher are in full force and improving,” says economist and lead contributor Michael Lombardi. “Central banks are buying more of the precious metal (to add to their reserves), while countries that are known to be big consumers of gold bullion post increased demand.”
According to India Bullion & Jewellers Association, India’s monthly gold bullion imports are expected to rise by as much as 50% in the coming few months—in the range of 70 tonnes to 75 tonnes per month, compared to an average of 50 tonnes to 60 tonnes now. (Source: Sharma, M., “Gold imports seen up, premiums likely to double on festive buying.")
Lombardi explains that if India continues to import 70 tonnes of gold bullion each month, it will consume 31% of all world gold mine production, based on 2,700 tons in annual mine production. India used to be the biggest importer of gold bullion until China took over as the biggest importer of gold two years ago.
“While I won’t delve into all the talk on Internet financial sites about gold prices being manipulated, I continue to stress that the fundamental demand/supply situation for the precious metal favors higher prices,” Lombardi adds.
While demand for gold is rising, production is declining, says Lombardi. In the first half of 2014, U.S. mine production was 103,000 kilograms (kg), down 6.3% from the 110,000 kg of gold bullion produced in the first five months of 2013. Historically, lower gold prices have caused gold companies to close mines where production made sense at $1,600 an ounce gold, but not at $1,200 an ounce gold. (Source: USGS, “GOLD IN JUNE 2014,” September 2014, http://minerals.usgs.gov/minerals/pubs/commodity/gold/mis-201406-gold.pdf.)
“I view the decline in gold bullion prices as a buying opportunity. Over the past few weeks, it may seem that gold bullion prices have gotten weaker, but that is only if you look at gold bullion in U.S. dollars,” Lombardi explains. “Look at gold bullion in euros or Canadian dollars, or almost any other currency for that matter, and you’ll quickly realize gold prices are much higher outside the U.S. than in the U.S.”
“The greenback has experienced a strong rally over the past two months as the Federal Reserve ramps up discussions of higher interest rates. The U.S. dollar also gained strength when it was announced that the European Central Bank has cut its benchmark interest rate to 0.05% and announced new stimulus measures,” Lombardi concludes. “By all accounts, shares of quality gold mining companies are selling at bargain prices. And they offer a great opportunity for contrarian, buy-low investors.”
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.
Contact Info:
Name: Wendy Potter
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Organization: Lombardi Publishing Corporation
Address: 350 5th Avenue, 59th Floor, New York, NY 10118
Phone: 905 856 2022
Website: http://lombardipublishing.com/
Release ID: 64840
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