S&W’s Markova stays bullish on gold bullion prices

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Smith & Williamson Investment Management £73m Global Gold fund manager Ani Markova says she is bullish on gold bullion prices.

She says: “Gold bullion has performed really well this year, leading to another year of very mixed signals in the market, we will continue to be optimistic about the price of the bullion.”

She says India, an important player in the gold bullion market, has seen an increase in tax on bullion imports which has led to a drop in imports.

She adds: “That trend reversed a bit in the third quarter where we have seen a 9 per cent increase in jewellery demand in the country [India] and a bit of re stocking.”

“Overall year-to-date India is still down 24 per cent. I don’t expect India to recover or outperform in the third quarter.”

However, we could see China leading gold bullion demand, she adds, we should expect further gold being bought by the country, driving demand for the gold bullion.

She says: “China has been importing significant amount of bullion in the past several months, China imported more than 500 tonnes.”

“It is very very important for everybody to understand, China do have a goal of diversifying their foreign reserve. They have the RMB, the convertible currency, and if they decide to match the US bullion holding that would take three years of global mining production to meet that expectation.”

“We know China is the number one producer in the world and no gold leaves the country. There is a pent up demand. I would rather be a buyer of bullion when China is buying.” she adds.

“Stay tuned, I think there is a very big catalyst ahead of us and I some of them will play out in 2013.” She says.

In her outlook for gold mining Markova says there will be much more merger and acquisition activity ahead.

She says: “A lot of these [gold mining] projects will be completed early next year”

“I am optimistic management teams have learned from shareholders, better controls of cost better decision making and project management we have seen changes in CEOs in the past 12 months. I continue to be optimistic about the [mining] sector.”