Gold's safe haven thesis made a modest comeback as investors worried about continuing conflict in Libya and further downgrades of Greece and Portugal's debt.
"Nothing particularly new [has] happened," says Will Rhind, head of US operations for ETF Securities, "but there is increased tension throughout the world and that is causing people to look at gold as a safe haven object."
ETF Securities' gold and silver exchange traded funds, the smallest of the physically backed ETFs,
ETFS Physical Gold
ETFS Physical Silver
hold 899,620 and 18.3 million ounces, respectively.
There were also reports that gold demand in China was skyrocketing.
reported that China's English Language TV station said gold demand is going 'through the roof.' The country consumed 579.5 tons, or 18.5 million ounces, in 2010, according to the World Gold Council, and there have been rumors that China's central bank has been buying.
Nigel Moffatt, head of Treasury at Gold Corp, owner of the Perth Mint, says there is enormous demand coming from China currently. "China is ... the world's number one producer ... 340 tons of gold a year but you don't see any of that coming out of China but you see a lot of gold going into China."
"It's my belief that at this point and time what you are finding is that the Chinese central bank is probably picking up the bulk of Chinese gold that is being produced and that the imported gold is ... going into individual or commercial demand." The Perth Mint sells 20% of its production into China, unchanged from 2010.
China is unlikely to publicize if it is buying a lot of gold for fear of boosting the gold price. Over six years, the People's Bank of China stealthily increased their holdings to 1,054 tons and only announced it when they were done buying for the short term.
Gold mining stocks
, a risky but profitable way to
, were rising.
(KGC - Get Report)
was adding 2.61% to $15.74 while
(GG - Get Report)
was up 2% to $49.53.
Other gold stocks,
(AEM - Get Report)
(EGO - Get Report)
were trading at $65.19 and $16, respectively.
Written by Alix Steel in
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