Tags: Grubb | gold | bull | demand

World Gold Council's Grubb: Gold's 'Bull Market Is Very Much Intact'

Wednesday, 08 May 2013 08:05 AM

By Dan Weil

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Gold's 12 percent drop so far this year hasn't dimmed the World Gold Council's enthusiasm toward the metal.

"We feel the bull market is very much intact, even if there's a lot of uncertainty at the moment for investors," Marcus Grubb, the Council's managing director of investment, told Yahoo.

"There's some switching into equities in the United States going on. This has affected gold to some degree, but we don't believe you're seeing this great rotation as it's called."

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Spot gold traded at $1,464 an ounce early Wednesday. That's down 24 percent from the record peak of $1,921 in September 2011. But it's up 10 percent from the April 15, 2013, low of $1,336.

"From here, we see gold recovering its previous position, and then long-term drivers increasing the demand for gold," he adds.

Gold's plunge last month stemmed largely from a big short sale in the New York futures market, Grubb argues. And now physical demand is pushing gold back up, he maintains. For example, consumers in India and China are now paying a premium for physical gold.

While gold could suffer if U.S. economic performance improves, the precious metal remains a strong hedge against inflation, currency debasement and financial instability, Grubb explains.

Others aren't quite so enthusiastic.

"To suggest the gold price makes a lot of upside from here requires either a global crisis or a re-emergence of inflation," Gary Dugan, chief investment officer of Asia and the Mideast for Coutts & Co., the private-banking division of Royal Bank of Scotland, tells Bloomberg.

"I can't see in the next 12 months, a significant upside surprise on inflation, other than a geopolitical risk that leads to the oil price going up. We still have all the makings of a potential crisis in the Middle East."

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