Global investors doubled their purchases to 1,820 tonnes last year, according to chief executive Philip Klapwijk – the most accurate forecaster of Gold Prices in the London Bullion Market Association's 2009 survey.Klapwijk also noted that the overtake is worrisome, and added this cautionary note:
Jewelry buying, in contrast, fell by almost a quarter to 1,687 tonnes, the lowest level since 1988.
Guessing that a "large amount of money" is now looking to [b]uy [g]old as a defense against sub-zero real interest rates and the continued decline of the Dollar, Klapwijk forecast a "bumpy" road to new record prices above $1300 in 2010.
"The market, if you like, has become a bit like a junkie...more and more dependent on bigger and bigger fixes from the investor community."The rest of the report covers other topics, including an optimistic take on future demand in the PRC, but that particular point is worth lingering upon. In and of itself, it doesn't suggest a bubble; from what I've been able to scry out, the bulk of that demand is from people expecting gold to rise on the fundamentals. However, that demand environment is compatible with momentum players settling in. We'll see the momentum trade really take off if the gold bull proves to be less bumpy than Klapwjik expects.
This Financial Post Online report focuses on Mr. Klapwjik''s comments, going in to a little more detail. It specifies that he's bullish overall.