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Gold Will Be Top Performer in 2012 - UBS Poll Of 8 Trillion USD Official Sector

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From GoldCore

Gold Will Be Top Performer in 2012 - UBS Poll Of 8 Trillion USD Official Sector

Today's AM fix was USD 1,622.25, EUR 1,284.44, and GBP1,043.58 per ounce.
Yesterday’s AM fix was USD 1,619.00, EUR 1,289.83, and GBP 1,044.65 per ounce.

Silver is trading at $28.80/oz, €22.92/oz and £18.59/oz. Platinum is trading at $1,498.70/oz, palladium at $633.52/oz and rhodium at $1,215/oz.

Gold edged up $5.50 or 0.34% yesterday in New York and closed at $1,624.30/oz.  Gold traded sideways in Asia and is remaining in a narrow range holding above $1,620/oz in European trading.

Gold climbed for its 6th session, its longest rally since October, on news that the US recovery shows signs of faltering. Gold has crept gradually higher again this week and appears to be consolidating on the sharp gains seen on June 1st when gold surged after the poor jobs number (see chart below).  

Gold has rallied to a one week high as US jobless insurance benefits surprised and rose by 6,000, consumer prices fell in May and the current US account deficit grew in Q1 by its largest number in three years. Gold is being aided by suggestions that the Fed will employ more QE thereby further debasing the US dollar.


Gold Spot $/oz 20 days, 30 minutes – (Bloomberg)

The yellow metal will be supported by speculation that central banks from major economies stand ready to take steps to stabilize financial markets by providing liquidity and preventing a credit squeeze if the outcome of Greek elections on Sunday causes tumultuous trading.

If severe market strains emerge after an unusual confluence of three elections this weekend - there are important polls in Egypt and France as well - central bankers are on standby to ensure enough cash is flowing through the financial system and in an attempt to prevent bank runs and major problems in the world’s financial system.

There has been increased demand for gold and silver bullion in recent days and again today due to the high degree of risk associated with Greek’s elections on Sunday which could lead to its exit from the euro.  If the leftist candidate is successful there are concerns of serious dislocations in financial markets on Monday.

US Federal policy experts begin a 2 day meeting on June 19 to examine its monetary policy.  The Fed, has said that Greece’s departure from the euro would deepen the European debt crisis and threaten economic expansion in the United States. In the 2 prior rounds of QE from 2008-2011 the Fed bought a massive $2.3 trillion in bonds to lower borrowing costs and in a vain attempt to stimulate growth.

The Bank of England and British government look set to act together with new monetary policy measures worth some £100 billion to tackle tightening credit and financial market conditions triggered by the euro zone crisis.

The BOJ continues to maintain ultra loose monetary policy and is holding rates at near 0%. Separately, ex-Soros Japanese adviser Takeshi Fujimaki says Japan may default within five years.

Japanese and international investors are slowly realising that the yen is no longer a “safe haven” currency which has obvious positive ramification for gold.


$8 Trillion Official Sector Likes Gold - UBS Poll

Confirmation of how gold is regarded very favourably by the official sector has come from the largest private gathering of central bank reserve managers, multi-lateral institutions, and sovereign wealth funds in the world - UBS' 18th Annual Reserve Management Seminar for Sovereign Institutions.

UBS' 18th Annual Reserve Management Seminar for Sovereign Institutions Asset Poll 

More than 80 institutions with collective assets under management of over $8 trillion attended the event and were polled regarding macroeconomic matters and their outlook for various asset classes.

Gold is seen as one of the assets likely to outperform again in 2012 due to risks posed to the euro and longer term risks for the dollar.

Those polled by UBS were also positive on emerging market debt. Both asset classes, gold and emerging market debt, were the top pick of 22.5% of the assembly – thereby accounting for 45% of the votes.

On gold’s role as a reserve asset, the importance reserve managers attach to the yellow metal has slipped back to 2009 levels, with about 14% having the opinion that it will be the most important reserve currency in 25 years. This marks a decline from the past two years’ surveys wherein over 20% viewed gold to be the most important reserve currency. 


Cross Currency Table – (Bloomberg)

This year’s survey confirmed that reserve managers anticipate that the dollar will fall from its pedestal as the sole reserve currency within the next 25 years.

In past surveys (conducted over the past decade) the dollar typically was tipped to remain the chief reserve currency by a plurality—if not a majority—of those polled. This time, like last year, over half of respondents believe that within 25 years a portfolio of currencies will supplant the dollar in that role.

Central bank buying has provided good support for gold this year, and indeed has been evident just when the yellow metal needed it most, with physical demand taking a step back. But the survey results from this year’s Reserve Management Seminar, particularly on what reserve managers are thinking in terms of gold’s role in their respective portfolios and corresponding allocations, suggests that official sector support is unlikely to continue in the same magnitude as seen in the last year. 

However, UBS notes that the potential for new entrants should not be underestimated. After all, there are still a lot of countries, particularly among the emerging markets, that are very much under-invested in gold from a global perspective.

The possibility of this group catching the baton from the current more prominent official sector buyers certainly cannot be ruled out.

The majority of those polled expect one or more countries to exit the Eurozone.

About 43% of respondents anticipate one country leaving the Eurozone, a further 29% expect two or more exits and the remaining 28% are in line with our call for no exit. The possibility of a Eurozone exit is seen as the chief risk to global economic and financial stability over a 12-month period by 39% of participants. The risk of Eurozone sovereign default is a close second at 34%. The majority also see global economic stagnation over the next 12 months, with 36% viewing deflation as a bigger risk than inflation.

Indeed, the macro picture in the eyes of the world’s sovereign institutions does not look all that bright this year.

The UBS' 18th Annual Reserve Management Seminar for Sovereign Institutions Asset Poll can be read here. 

OTHER NEWS
(Bloomberg) -- JPMorgan Lowers 2012 Gold Assumption to $1,791 From $1,844
JPMorgan Chase & Co. lowered its 2012 gold price assumption to $1,791 an ounce from $1,844 an ounce.

The 2013 estimate is unchanged at $1,831 an ounce, Roger Bell, an analyst at the bank in London, said in a report dated yesterday.

(Bloomberg) -- Gold Seen in UBS Poll as Top Performer With Emerging Markets
Gold will share top spot with emerging markets as the best performing asset for the rest of the year as governments take steps to boost growth, according to about 23 percent of respondents in a UBS AG survey.

(Bloomberg) -- Gold May Drop 20% to $1,300 an Ounce This Year, Shaoul Says
Gold prices may plunge 20 percent to $1,300 an ounce this year because bullion is not a “viable alternative” to currencies, said Michael Shaoul, the New York- based chairman of Marketfield Asset Management.

“The one thing that the world’s governments are not going to do is allow people to get away with making a fortune in gold” if the paper-currency system collapses, Shaoul said today at a Bloomberg Link conference in Boston. “It’s going to be extremely easy for them to sequester gold and make it illegal to hold in institutional portfolios.”

Prices tumbled 10 percent in the four months ended May 31 as Europe’s escalating debt crisis prompted traders to favor the dollar as an investment haven. The metal had rallied for 11 straight years, touching a record $1,923.70 in September, on concern that monetary stimulus programs and record-low borrowing costs would boost the rate of inflation. Bullion may fall to $1,300 this year after dropping below the support level of $1,520, Shaoul said.

Monetary easing by central banks won’t “inevitably lead to a spike” in prices, he said. “I just don’t simply believe that governments are going to tie themselves to pieces of metal.”

Gold futures for August delivery advanced 20 cents to settle at $1,619.60 on the Comex in New York. The price rose for the fifth straight session, the longest rally since late October.

(Bloomberg) -- Gold ‘Belongs’ in Investor Portfolios, Council’s Artigas Says
Investors should allocate 2 percent to 10 percent of their assets to gold in the long term, Juan Carlos Artigas, a manager of investment research at the World Gold Council, said today at a Bloomberg Link conference in Boston.

The metal “belongs” in portfolios because it provides investors with risk management and capital preservation, he said.

(Bloomberg) – Gold Hedges Fell 3 Metric Tons in First Quarter, GFMS Reports
Global gold hedges, or sales of future production, fell by about 3 metric tons in the first quarter, according to Thomson Reuters GFMS.

That left the worldwide hedge book at 158 tons, the London- based researcher said today in an e-mailed report. “Hedge book reductions came from ongoing deliveries into forward sales and the maturity of option positions, with little active dehedging,” Thomson Reuters GFMS said.

Bloomberg competes with Thomson Reuters Corp. in selling financial and legal information and trading systems.

(Bloomberg) -- Gold Demand Not Going Away Any Time Soon, Winmill of Midas Says
Investor demand for gold is “not going away any time soon” as growth remains resilient in India and China, said Tom Winmill, the president of Midas Funds Inc.

Accommodative monetary policy and government budget deficits will also support bullion, and prices may reach $1,900 an ounce by the end of the year, he said at a Bloomberg Link conference in Boston today.

For breaking news and commentary on financial markets and gold, follow us on Twitter.

NEWS
Gold Traders Bullish as Hedge Funds Increase Wagers – Business Week

Gold up for 6th day, US data boosts easing hopes
- Reuters

Gold Records Longest Rally Since October On Stimulus Bets - Bloomberg

Central banks ready to act as world prepares for Greek poll - Reuters

COMMENTARY
Evans-Pritchard: ECB last hope as dam breaks in Spain – The Telegraph

Keiser Report – Con Games Go Global! – Max Keiser

Auguries—Endgame – Resource Clips

Steve Forbes on GoldSeek.com Radio - GoldSeek

 

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Fri, 06/15/2012 - 08:10 | 2528727 fonzannoon
fonzannoon's picture

"This year’s survey confirmed that reserve managers anticipate that the dollar will fall from its pedestal as the sole reserve currency within the next 25 years."

speechless.

Fri, 06/15/2012 - 08:12 | 2528731 Rubicon
Rubicon's picture

Worthless.

Fri, 06/15/2012 - 08:37 | 2528774 Chaffinch
Chaffinch's picture

Hmmm. I could buy more Gold - or I could buy some emerging market debt - which one do I pick...?
I don't find that a hard decision to make....
Guess that's why I'll never make it as a professional...

Fri, 06/15/2012 - 18:06 | 2529418 WhiteNight123129
WhiteNight123129's picture

Hi Guys, Some readers of the blog are profesional and yes a lot of guys hired in Hedge Funds do not have much of a clue. The issue is that when we have crunch time people go back to liquidity, since Gold can not be spent, it has to be sold to generate liquidity in crunch time, so we might have the last Dollar really in the middle of next year until people finally realizes that the currency is a swiss cheese. (At least you can eat the cheese around the holes). The same happened in 1873, despite more greenback printed, greenback got strong against USD.

 

Fri, 06/15/2012 - 08:34 | 2528771 ArrestBobRubin
ArrestBobRubin's picture

Did they mean 25 months? Maybe a typo :-)

Fri, 06/15/2012 - 16:34 | 2530668 LowProfile
LowProfile's picture

Really.  25 years might as well be "it could happen, sometime.".

Fri, 06/15/2012 - 08:12 | 2528729 youngman
youngman's picture

"On gold’s role as a reserve asset, the importance reserve managers attach to the yellow metal has slipped back to 2009 levels, with about 14% having the opinion that it will be the most important reserve currency in 25 years. This marks a decline from the past two years’ surveys wherein over 20% viewed gold to be the most important reserve currency."

Because they have moved into guns and ammo as an important investment alternative..... 

Fri, 06/15/2012 - 08:16 | 2528740 BW
BW's picture

Breaking - Lawyers for Ron Paul make HUGE announcement! We are Uniting to Change the World with President Paul!

 

No joke!!!
The lawyers for Ron Paul have announced they are taking over the Ron Paul campaign and they will challenge every single voter fraud claim this Whole election.
Romney rigged this election, & they claim they have proof.
Ron Paul WILL BE ON THE NOMINATION!!!
the delegates will all be UNBOUND!
We are NOT letting this Tyrannical takeover Happen!!
This announcement happened at 10 pm Thursday.
The lawyers are offering support to EVERY DELEGATE TO ENSURE THEIR RIGHT TO VOTE THEIR CONSCIENCE! no matter what candidate they support, we will help them vote for their true choice.

This audio clip is the most important clip of this WHOLE Campaign.

http://www.ronpaulforums.com/showthread.php?380736-MAJOR-ANN...

If you quit on the movement, you owe Ron Paul an apology....
And get your ASS BACK IN GEAR!!!

 

Fri, 06/15/2012 - 08:24 | 2528751 Gringo Viejo
Gringo Viejo's picture

Sorry but the fix is in. Anyway you cut it....OBAMNEY wins.

Meet the new boss.....SAME as the old boss.

Want change? You won't do it within the system. Get off the grid, stop playing THEIR game.

Fri, 06/15/2012 - 08:43 | 2528781 HelluvaEngineer
HelluvaEngineer's picture

Right.  The Law.  That will scare them.

Fri, 06/15/2012 - 08:23 | 2528749 The Continental
The Continental's picture

Many think gold will be the top perforning asset in 2012. Yet very few think gold is underpriced. This is contradictory:  lies, damn lies and statistics comes to mind.

Gold is the only go to asset left. It will pop to $2000 this year. All the paper currencies are burning. The US bond market has been held together with HFT IRS amphetamine to create artificial bond demand just as gold has been suppressed with artificial supply through shorting. Both will correct back to equilibrium - the event will be historic and breathtaking.

If government outlaw and sieze gold, gold will go to ground. Governments do not dictate to gold. Gold dictates to governments.

Fri, 06/15/2012 - 09:20 | 2528930 gold-is-not-dead
gold-is-not-dead's picture

Governments do not dictate to gold. Gold dictates to governments.

word! gold's not dead!

Fri, 06/15/2012 - 08:31 | 2528764 GMadScientist
GMadScientist's picture

"sequester gold and make it illegal to hold in institutional portfolios."

Bwaahahahaha. And after everyone is done cashing out their IRAs? Then what?

 

Fri, 06/15/2012 - 08:32 | 2528765 CommunityStandard
CommunityStandard's picture

Guest post.  Oh.

Fri, 06/15/2012 - 08:32 | 2528766 ArrestBobRubin
ArrestBobRubin's picture

Gold will be the top performer this year, just like the past 11. This even after being f*cked with on nearly a daily basis.

Got Gold?

Fri, 06/15/2012 - 08:33 | 2528770 JPMorgan
JPMorgan's picture

Gold, booze and wacky baccy.

Fri, 06/15/2012 - 09:02 | 2528841 tocointhephrase
tocointhephrase's picture

in order, swap the last two around!

Fri, 06/15/2012 - 08:37 | 2528775 Crispy
Crispy's picture

Where were these Mo`s in 2000.

Fri, 06/15/2012 - 08:44 | 2528786 GMadScientist
GMadScientist's picture

Freebasing credit.

Fri, 06/15/2012 - 09:02 | 2528842 dexter bland
dexter bland's picture

they were busy selling all their gold at $250/ounce. Central banks were net sellers until recently as it started making new highs. Now that they're buying again its a sell signal if ever there was one.

 

Fri, 06/15/2012 - 08:44 | 2528785 bigwavedave
bigwavedave's picture

everything is GREEN Tyler. Green I say. The whole watchlist is GREEN. Except that pesky GBPJPY 

Fri, 06/15/2012 - 08:46 | 2528793 caimen garou
caimen garou's picture

had some gold but the aleins got it!

Fri, 06/15/2012 - 08:53 | 2528815 Bastiat009
Bastiat009's picture

It looks like this bath salts thing made it to the gold trading world. The comex dudes must be very high today. Are they going to eat each other naked soon?

Fri, 06/15/2012 - 09:03 | 2528838 Abraxas
Abraxas's picture

If I remember correctly, last year they all saw gold at $2200+ just before they attacked it from all sides. I hope this will be no replay of that gut-wrenching experience.

Fri, 06/15/2012 - 09:02 | 2528843 Munkey
Munkey's picture

You could buy gold but then you would be just a jerk. Nice one Munger, words spoken like a true little bitch.

Fri, 06/15/2012 - 09:35 | 2528991 SPADOC4
SPADOC4's picture

Too much bullishness. Time to sell

Fri, 06/15/2012 - 10:06 | 2529123 Never One Roach
Never One Roach's picture

"Gold never goes to zero," my family's financial advisor told me. He said that's why Northwestern Mutual Insurance company bought $400 million of it and the Univeristy of Texas Retirement Fund bought several hundred millions of gold bars also for theri pension plan.

 

Makes sense.

Fri, 06/15/2012 - 11:20 | 2529404 Shibumi2
Shibumi2's picture

Zero What?

Fri, 06/15/2012 - 12:17 | 2529615 akak
akak's picture

Fiatscos (of any flavor).

Do NOT follow this link or you will be banned from the site!