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"Demand for gold could continue to increase," says Templeton chair Mark Mobius - Wealth Managers

February 08,2013


"Emerging-market growth has the potential to create a long-term bull market for commodities"

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Central banks around the world are printing a flood of money, which could lead to inflated prices for other goods and services. ... I believe long-term emerging markets demand for commodities is likely to keep growing. ... We believe emerging-market growth has the potential to create a long-term bull market for commodities. ...

We believe the end result of these developments, which we've seen echoed in other mining regions around the world, could be potential shortages of key minerals and metals, which can lead to higher prices.

I also believe demand for gold could continue to increase, given that the money supply has increased dramatically in most major economies (including the U.S., Europe, Japan and China). Consumers desire gold not only for its beauty, but many investors view gold as an inflation hedge or a way to store wealth. We've also seen central banks globally adding to their gold holdings recently.

Often people will witness a decline in various commodity prices at any point in time and assume that the threat of inflation has passed. However, commodity price moves are often caused not by the fundamentals of long-term supply and demand, but by short-term speculation that surrounds the trading of commodities -- typically based on the most explosive news headlines of the day. It looks to me that the long-term demand trend for commodities overall should continue to move upward. When we have countries like China, India and others in the emerging and frontier markets growing at a strong pace, it's reasonable to expect an increased need to power and produce more.



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