The Daily Nugget: Kazakhstan Flying The Flag For Gold Investment

Friday morning, gold was up thanks to a strong euro against the dollar (the strongest for two weeks) as eurozone meetings raised hopes that a Greek bailout is not too far.

Gold’s advance this year of over 10% so far is setting it up to make its 12th consecutive annual gain. According to Bloomberg this is "the longest streak in data going back to 1920."

The big news Thursday was the central banks who continue to add to their gold holdings. Brazil, Turkey, Russia and Kazakhstan, all of whom have been acquiring gold in recent years, added 17.2 tons, 17.5 tons, 0.4 tons and 7.5 tons respectively.

According to the WGC, Kazakhstan’s gold reserves account for 19.7% of their total reserves. While still significantly less than the likes of the US and Germany, this is still a number not to be sniffed at compared to most other countries’ gold reserves.

The move by central banks to stock up on gold has been a trend since 2009. Brazil’s significant purchase, for the second month in a row, in once again an example of a country which sees huge government spending which is generating government wealth which they are choosing to reinvest in gold for when the nasty stuff really hits the fan.

Yesterday Merrill Lynch Wealth Management told reporters that they are believe gold will make a move above $2,000 next year. This latest round of gold buying will no doubt support gold above $1,700 and hopefully provide further support for 2013 – an added bonus considering all the threats to the US dollar’s strength next year.

At present the gold market seems fairly cautious this week, trading in a narrow range. The fiscal cliff, the Middle East situation and Greek bailout discussion appear to have slowed gold’s rise. However, some analysts expect the gold price to break through $1,734 today, meeting resistance at $1,749.

Holdings in Exchange-Traded Products rose to a new record yesterday yet again, to 2,605.318 metric tonnes. Another phenomenal indicator of gold demand was the release of US Mint figures which showed a year-on-year 145% increase in gold coin sales in November judging by the current pace of sales this month.

For the time-being there is a ceasefire in the Middle East between Israel and Hamas, brokered by Egypt this is considered to be the "real-thing" compared to Tuesday’s ceasefire. Despite this, investors in gold and silver, did not appear to react to this development.

Silver has had such a good year so far – up 18% on the year. Today it hit a new high for the month – $33.43, at the time of writing it has falls back slightly to $33.35.

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