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Gold! Why You Should Buy Now

Gold demand is soaring. George Milling-Stanley, manager of gold market analysis at World Gold Council, offered CNBC some fun facts about the "6,000-year-old hedge" -- and why he wishes he could buy more of it.

Global investment demand for gold in the second quarter: $3.5 billion, up 29 percent from the same quarter in 2007.

Demand breakdown annually:

- Jewelry: 65 percent, or "2/3 to 3/4" of annual consumption.

- Investment: 13 to 14 percent

- Industrial: 12 percent

- (The remainder: Medical & miscellaneous.)

Milling-Stanley says jewelry provides a dependable floor -- while investment demand determines whether prices will rise or fall going forward.

By nation: India accounts for 25 percent of annual demand; the U.S., Egypt and Vietnam follow.

Gold ETF holdings dropped in April; but recovered in May and June.
(Contd.)

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A Contrarian View:

  • CNBC Video: Gold Decline?

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Price correlations: At the moment, gold is following oil because of the effects on crude of the stronger dollar, Milling-Stanley says. But this is not a mathematical relationship, he says. But the dollar-to-gold connection is "a very, very strong inverse relationship."

As gold is both a commodity and a currency -- and is never totally consumed/used up, unlike most other commodities -- the analyst says it always enjoys offsets, particularly as an alternative to stocks and bonds.

"Gold has been an excellent 6,000-year-old hedge versus inflation and geopolitical tension -- which doesn't seem to be going away. I only wish I could afford to buy more of it," Milling-Stanley said.

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Top gold ETFs:

- SPDR Gold Shares

- iShares COMEX Gold Trust

- Market Vectors Gold Miners ETF

- PowerShares DB Gold

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Disclosures:

Disclosure information was not available for Milling-Stanley.

Disclaimer