The Australia & New Zealand Bank (ANZ) issued a report this week predicting that gold demand in Asia will double in the next 15 years and with it, so will the price of gold.
The report was authored by two analysts at ANZ Bank and stated that demand for the metal will reach nearly 5,000 tonnes a year by 2030 with the price hitting $2,400 per ounce. According to the World Gold Council, the annual demand in 2014 reached nearly 4,000 tonnes, but as we have reported before, the WGC’s reporting mechanism is flawed and woefully inaccurate.
ANZ claims to have supplied “more than 20 percent” of China’s total gold imports last year, however, it is likely that number correlates only to the official imports, since China deliberately obscures import totals for geopolitical reasons.
The bank’s report stated that the increased demand will be the result of expanding wealth in Asia leading to more investment and jewelry purchases as well as the further evolution of new “emerging-market central banks.”
Despite direct requests from the U.S. to limit involvement, in the past week, many of the United States’ closest allies (including the UK, France, Germany, Italy, and Australia) publicly expressed interest in joining the new Asia Infrastructure Investment Bank (AIIB), an emerging-market development bank meant to rival the IMF.
Last year, governments officially added more than 475 tonnes to their reserves, making it the second-largest increase in 50 years. Naturally, those are only the official reports. Actual numbers are likely to be significantly higher due to the intensifying currency wars and global de-dollarization movement.
China’s rapid accumulation of gold in recent years has many analysts believing the country will make a move to partially back the renminbi with gold in order to bolster its value as it becomes more in use as an international reserve currency.
The IMF recently stated that it will consider adding the RMB to the Special Drawing Rights basket of currencies later this year, a statement that experts have interpreted to mean that it will in fact, make the move to include the currency. If that does occur, the IMF will likely require a more open economic policy from China and could direct the country to reveal their true gold reserves while they temporarily “float” the value of the renminbi to push it to an actual market value. The renminbi is currently pegged to the dollar.
The ANZ report stated “if China’s shift to a more open economy is bumpy and global financial instability continues, the price may surge to $3,230,” but that number could depend on just how much China has managed to accumulate.