Citigroup-黄金行业需求分析-09.21

21 September 2007 13 pages

GOLD: Riding the "Re-Flationary Rescue"

Investment Demand Supplements Seasonally Strong Fabrication

 Gold silences the skeptics — Gold has broken to 28-year highs above $730 per
ounce, and seems to be entering a new investment-driven phase, consistent with
our Multiple Handoffs framework. After languishing during the initial phase of the
credit crunch, Gold has re-asserted its safe-haven status. The equities anticipated
the move, and have fully, finally participated.
 Fabrication sets the stage – While investment demand is sprinting with the baton,
2Q Gold demand was up +19% YoY, led by India (+91%), China (+32%) and the
MidEast (+20%). Investment was very weak from mid-06.
 A true, multi-currency Gold rally – Prices have been rising in Euro and Yen terms,
which is a critical credibility test. We see Gold as a prime beneficiary of the "Reflationary
Rescue," which should be positive for hard assets and basic materials.
 Seasonality is serendipitous – The powerful macro-driven resurgence in Gold
investment has coincided with seasonally strong fabrication offtake, which may
extend the move. That is, Indian/Asian holders would normally be aggressive
sellers, but are limited by fabricator pre-buy ahead of the Western holidays, Indian
festivals, and the Chinese New Year. This could set up an early-08 correction.
 Gold at $850 – 1,000/oz: A real possibility – We continue to be positive on Gold,
based on a mix of macro/monetary and supply/demand drivers. We expect Gold's
multi-year bull market to continue, are maintaining year-average forecasts at
$750/oz for 2008/09. Within this, a test of the historic highs is likely.