Fear of inflation in China generated another boost in demand for gold, pushing the Gold Price Per Gram up by about 30 percent. The growing popularity of mutual funds around the world led to the creation of more gold funds, a stable fund ready to be launched on the market as soon as possible. Even the most optimistic gold traders and analysts say they expect consolidation in the coming weeks, as traders make profits. That measure, which could not be changed quickly due to the years needed for a single project, would surely restrict the supply of gold and further increase the Gold Price Per Gram. The collapse of the Soviet Union in 1991 created new pressure on gold, as the Russian central bank began selling thousands of tons of it on the market, in an attempt to quickly get the international capital it so badly needed.
This year, the estimated demand for gold for jewelry and industrial needs is 83 million ounces, according to the CPM Group, up 6 percent from last year. The number of open gold futures contracts has increased along with the price, a sign that traders say indicates that investors are comfortable with these price levels. This upturn, they say, will last for about a while, largely due to long-term supply and demand imbalances and renewed investor interest in long-standing gold. And the enormous commitment to gold made in April by Sir James Goldsmith, the French-British financier, and George Soros, a renowned fund manager and speculator, was the last spark the tinderbox needed.
For example, Swiss investment advisors, who have long urged clients to keep at least 10 percent of their portfolios in gold, reduced that figure to zero as the price continued to fall. Last fall, with gold prices much lower, Belgian and Dutch central banks sold gold to the bottom. Gold funds around the world have been investing capital in the markets, showing their best returns in years.