Is it time to buy gold? Gold has undergone a meteoric rise in the past month as people flee to the “safe haven of gold”. Although it is reported as reaching new highs, this is not true when adjusted for inflation. Here is the CPI inflation calculator from the government’s Bureau of Labor Statistics:
CPI Inflation Calculator
1980
Has the same buying power as:
$2,328.44 2011
After gold passes $2328.44/oz, it will pass its previous record (assuming no additional inflation). So who is buying gold?
Central Banks Continue Buying Gold To Diversify Portfolios
Gold purchases by South Korea and Thailand this summer continue a trend in which central banks are net purchasers of the metal as they look to diversify their foreign-exchange reserves.
“So far in 2011, central banks in the emerging markets have already bought more than double the gold they bought in all of 2010, and we’ve got almost five months to go for the rest of the year,” said Jeff Clark, senior precious-metals analyst with Casey Research.
This buying has occurred despite historically high prices. “So apparently, central banks don’t regard the gold price as too high,” Clark said.
Why is China Buying Gold?
httpv://www.youtube.com/watch?v=AOoBfTMkCMU
If governments are buying gold, it is time to buy gold.
David DeGerolamo
