GOLD SITUATION & OUTLOOK:

Speech to the 4th Annual China Gold & Precious Metals Summit

GOLD SITUATION & OUTLOOK:

How Monetary Policies, Investment Demand, Central Bank Interest, and Other Supply/Demand Factors Are Affecting the Market and the Metal’s Future Price

Shanghai, China — December 3, 2009

"Interestingly, the locus of world gold-mine production is shifting from the previous “big four” to the emerging market nations - particularly China and Russia - both of which seem likely to hoard or consume most, if not all, of their gold-mine production, rather than sell it into the world market.

China became the world’s number one gold-producing country in 2007 aided by supportive government policies that continue to promote a rapid pace of mine development and rationalization of the industry. As you know better than I, these policies are likely to continue . . . and China’s gold-mine production should continue to grow, both in absolute terms and as a proportion of total world output."
KEY GOLD-PRICE DRIVERS
The central banks of China and Russia  have already embarked on gold-buying programs – and some other central banks with low exposure to gold as a percentage of total official reserves are likely to join them.  Meanwhile, the major European central banks with high gold holdings as a percentage of total reserves are likely to abandon altogether their gold sales programs of the past decade.
A gradual recovery in gold jewelry offtake reflecting the hesitant economic landscape in the main gold-jewelry consuming nations and the continued growth of China, now the world’s biggest gold jewelry market.