Gold Prices Will Hit Record On Surging Asian Demand, ANZ Says

With Japan all set to become the sole owner of Japanese government bonds and equity ETFs and with ECB officials explicitly promising to print euros until the market finally gives up and submits to “monetary dominance,” the utility of owning a barbarous yellow relic may be less clear as it appears that the path to eternal prosperity runs parallel to the road where printing worthless paper to buy other worthless paper somehow doesn’t dead end at the intersection of “absolutely broke” and “massive bubble.” 

Be that as it may, there are still some analysts out there who believe owning an asset that can’t be printed by central planners is probably not a bad idea in an era where the CBs of the world have driven the idea of a “market” to the edge of extinction. When you couple that with EM CB demand and cultural dynamics in Asia, you’ve got the recipe for surging prices. Here’s more, via Bloomberg:

Gold demand in Asia is set to double by 2030 and boost prices to a record as investment and jewelry purchases climb, according to Australia & New Zealand Banking Group Ltd.

Demand from retail and institutional investors will jump to almost 5,000 metric tons a year by 2030 from 2,500 tons, analysts including Warren Hogan and Victor Thianpiriya said in a report.Prices may rise to more than $2,000 an ounce by 2025 and to $2,400 by 2030, they said. The bank says it supplied more than 20 percent of China’s gold imports last year.

“The bedrock, the anchor of our views of increasing demand for physical gold will come from rising incomes in Asia,” Hogan, chief economist at ANZ, said by phone from Sydney on Wednesday. “Gold is going to have that investment role and it’s going to become more prominent.”

While the bank has a short-term target of $1,100, prices will increase through 2030 on growing wealth in Asia, rising investment by money managers and expanding holdings at emerging-market central banks, the bank said. If China’s shift to a more open economy is bumpy and global financial instability continues, the price may surge to $3,230, it said.

Rising incomes in Asia will increase gold demand as people purchase more jewelry and continue to channel savings into gold for cultural reasons, according to the ANZ report.