Gold bull prepares buy the precious yellow metal because of concern that monetary authorities, mainly in the developed world, will lose control of inflation and their currencies’ value in a doomsday nightmare scenario of near complete financial collapse
If the gold ‘bugs’ are proven right, they will prosper while investors in equities and other assets suffer from rampant inflation and severe economic recession.
With spot gold up 8.9 per cent this year to Thursday’s close of $1,312 an ounce, perhaps long-time gold bull John Paulson’s bet isn’t looking that bad, until it’s pointed out that gold is still some 32pc below its September 2011 record.
Buying gold on the basis of negative real interest rates is also largely a Western construct, and ignores that the physical gold market is now dominated by China and India.
And it’s here that problems emerge for the bullish gold story, with the latest World Gold Council report showing dramatic declines in demand in the two countries that account for almost half the market.
China’s gold demand fell a massive 52pc to 192.5 tonnes in the second quarter of 2014 from the same period last year, while gold importing power house India’s slumped 39pc to 204.1 tonnes.