Dear Reader,

We are currently seeing a deep correction in the gold price since recent highs this fall. This correction comes as the Eurozone’s credit crisis deepens and capital flees the Euro thereby pushing up the USD.

The strength of the USD gain over the short term has been a powerful driver forcing most commodities downward.

Copper        -20.15% YOY
Cocoa         -28.71% YOY
Cotton      -43% YOY
Lumber      -21.35% YOY
Soybeans      -12.53% YOY
Sugar         -29.8% YOY
Wheat         -20.55% YOY
Natural Gas      -24.17% YOY

One of the few gainers in the commodity space is oil, at +15.33% YOY for Brent Crude.

Globally, major stock markets have also been hit hard this year.

USA S&P 500     -8%
UK FTSE        -13%
France CAC 40    -25%
Germany DAX 30    -21%
Switzerland SMI    -15%
Sweden OMX    -22%
Japan NIKKEI225    -19%
Australia ASX    -15%
Hong Kong     -22%

Gold is one of the few assets this year that is up YOY with current gains of 15.56%.

The current push of the USD upwards to over 80.10 cannot be sustained as the US requires a weaker dollar to stimulate GDP growth through exports. This portends more Quantitative Easing (printing money).

Combine this with the current massive round of QE (Printing) in Europe, and we have the foundation for higher prices of commodities globally over time.

In this edition of our Global Insider, Duncan Cameron and I provide a firsthand view of what is happening in the Chinese gold market as we report from the 6th Annual China Gold and Precious Metals Summit.

From my experience at this conference, the appetite for gold among Chinese investors is just getting started. With China gobbling up close to 750 tons of gold this year, it is proving to be a source of demand that has exceeded annual Gold ETF investment globally. Personal conversations with Chinese Government Officials indicate that the policy direction will be away from real estate and equities, and the Chinese people will be encouraged to buy long-term wealth-preserving assets. This means gold, among other possibilities.

Please enjoy this month’s Global Insider with our compliments, and our wishes for a Merry Christmas and New Year.

You can download this months edition of the AFE Global Insider here: http://www.anglofareast.com/downloads/global-insider/afe_december_2011.pdf

This entry was posted on Friday, December 30th, 2011 at 10:34 am and is filed under Archived. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.