By Ross Norman
According to Chinese mythology Dragon years are the luckiest and ones that bring powerful changes and optimism. It is most closely associated with high energy and prosperity. In contrast, last year - the year of the rabbit - by tradition brings instability while the Dragon confers stability - in short, expect a bounce in markets as we saw in 1988 when this pattern was repeated.
2012 is not just about Dragons but the Water Dragon - something that occurs once every 60 years - the year Queen Elizabeth II came to the throne. In Western mythology dragons are for slaying, but in the East it is a divine beast much revered and cherished. By extension - the WATER element (as opposed to fire, earth, wood or metal dragons which alternate) suggests that things will get off to a quick start. Myth or not, Chinese gold sales over the last two quarters certainly suggest that they are keen to participate in the new prosperity and recent price strength reflects this.
In the West horoscopes are regarded broadly as a bit of fun but something with little real significance. In the East they take these things more seriously - perhaps it's time we factored Eastern myths into our forecasts - especially when (perhaps through wish fulfillment) they clearly have such an important effect on markets such as gold.
At a more prosaic level - the recent gold strength of the last few days ebbed away in line with Euro weakness.
Discussions over the Greek debt has ebbed and flowed but they saw a setback yesterday after private bondholders and Eurozone ministers failed to reach an accord on the re-structuring of the debt.
The recent gold price strength is owed in part by solid physical demand for the yellow metal out of India during the wedding season in spite of the rise in import duties. This is a particularly positive sign for gold bugs bearing in mind the weak level of sales seen during Q4 2011.
With the prospect of new wealth in 2012, this might just be the year that I buy something small but special and golden for my mother-in-law - it is after all year of the dragon.
The author is CEO of Sharps Pixley (www.SharpsPixley.com, www.PGM.net)
