Hedge Funds are Buying Gold
Gold prices have been rising for 4 straight weeks now, as hedge funds start buying more gold products, especially ETFs.
Investors are also anticipating another round of US Quantitative Easing (QE) and a bailout plan for Greece, which will spur economic growth and inflationary fears. Gold is still the best hedge against inflation. Gold has risen about 70% since the first round of QE in 2008. In these rounds, the US Federal Reserve bought $2.3 trillion worth of debt.
The highest volume gold options are for prices higher than current levels, and there are a considerably number of call options at $2,200 in the next very short-term.
Reports show that bullion-related ETFs are rising to their highest levels in 3 months.
Governments are also buying gold for their central banks. Central banks bought 456 tons of gold in 2011 — the highest level in 50 years — and are expected to buy another 400 tons in 2012. The latest buyer is Kazakhstan, who just announced plans to buy almost 25 tons in 2012.
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