There has been an unprecedented surge in Saudi gold purchases in the past two weeks with over $3.5 billion being spent on the yellow metal (Gulf News)
Gold market expert Sami Al Mohna told this buying had substantially increased the gold reserves of the country: ‘Many Saudi investors see this as the right time for making investments in gold as the price is the most reasonable one at present’.
He said gold was seen as a traditional safe haven at a time of global financial turmoil. Gulf regional stock markets have fallen very sharply since early October, leading to an exodus of cash which needs to find a safe haven.
Gold is currently trading at prices similar to a year ago, and 30 per cent off its March peak.
Saudi investors clearly think this is the right time to buy and are piling into gold.
The speculation these large physical gold transactions have been place at prices far above the spot price set in the futures market. It is very unlikely that such a large hoard of physical gold could have been bought for the depressed current price.
Market analyst Jim Sinclair has pointed out that if less than two thousand millionaires insisted on delivery of physical gold at the end of their futures contracts, as is their legal right, then the spot gold market would jump to new highs.
Click here to watch Sinclair's YouTube clip on Gold.
Saudi investors have spotted a bargain, and it may be a much better one than they think.
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