As governments try to boost growth with a weaker currency, low inflation may eventually turn into higher inflation when monetary debasement continues. When a local currency devalues, gold prices in local currencies typically shoot up as local citizens scramble for an alternative currency to protect their wealth.
Gold and silver tumbled the most in six weeks as signs of faster U.S. economic growth fueled bets that the Federal Reserve will keep cutting stimulus. Palladium capped the longest decline in almost five months.
Chinese consumers, including those from the Mainland, are snapping up more golden horse accessories and gifts this year compared to last year's golden reptiles — snakes are viewed as both malevolent and divine by the Chinese.
The LBMA and the GFMS expect an average gold price of $1,219 and $1,225 in 2014. This compares with an actual average price of $1,411 last year and a gold price of $1,204.50 for London Gold Market PM Fixing as of Dec. 30, 2013.
By December, the most recent month for which statistics are available, the U.S. dollar Fiat Money Quantity (FMQ) had grown to $12.48 trillion. This is $5.05 trillion more than if it had grown in line with the established average monthly growth rate from 1960 to the month before the Lehman Crisis.
Hedge funds raised bullish gold wagers to the highest in eight weeks as signs of stronger Chinese demand drove prices to the longest rally since August. Goldman Sachs Group Inc. says the gains will be short-lived.