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Smaller countries might diversify into gold - Neil Meader, GFMS
In an interview on Radio 2000 @ 18:50 on Wednesday, 13 December 2006
[miningmx.com] -- THE gold price was being increased through a racheting effect in which physical consumers lent support to the metal at higher and higher levels.
Neil Meader, a senior analyst at GFMS, a UK-based metals consultancy, said physical buyers of the metal left the market when the gold price spiked. But they returned when the metal cooled but not at its previous, lower levels. He was speaking on the Moneyweb Power Hour.
Demand had been affected by much higher prices in gold but not as negatively as some may have expected, Meader said. This was probably owing to strong economic growth in the Middle East and India.
Commenting on other sources of gold demand, Meader said he "wouldn't be surprised" if smaller countries with certain exposure to the dollar swapped the currency for gold holdings. "That is realistically possible in the next two years," he said.
But
the gold market would not be able to support similar moves by larger holders of dollars such as China or Japan.
"Diversification by these countries would be unfeasible owing to the scale of dollar holdings they have," Meader said.
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