No. 1: No major central-bank bullion sales in Europe are on the horizon
1) Fears are receding in peripheral Europe: The recent collapse in gold prices was precipitated by news that Cyprus may sell its gold holdings to assist in the recovery from its banking crisis. Panic spread over fears that the rest of peripheral Europe would sell bullion reserves but no news has emerged to match those fears. Yet.
2) Equities could tumble: Record strength in stock indices such as the Dow Jones Industrial Average is not supported by macroeconomic fundamentals. Sooner or later, stock markets will correct and gold will be back in vogue.
3) India's monsoon season won't last forever: Inhabitants of the world's second most populous country are also the biggest buyers of gold jewellery. The problem is, a large part of that is purchased to celebrate weddings, and nobody wants to get married in the rain. That suggests there is a seasonal element to gold's current weakness, so in the Fall demand will be back again. India's overall population growth will contribute to strong long-term demand.
4) The important Indian demand for gold isn't all about jewellery: In some jurisdictions, notably India, gold counts as part of a bank's liquidity ratio. If the asset base of banks in those jurisdictions grows, so too will demand for gold.
5) Retail investors are still buying: Despite what financial experts say - that the world's economy is in recovery so gold is no longer needed as a hedge -- retail investors are treating gold's current travails as a buying opportunity. On the back of April's 20% drop in gold prices, CoinNews.net reported that sales of gold bullion coins rose 40%.
More information can be found online at http://www.goldbullionadvisors.com
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