Nigeria Content Online

The Independent
Petroleum Marketers Association of Nigeria (IPMAN) on Thursday called
for full deregulation of the energy sector to address problems of
scarcity of diesel and kerosene.

Olumide Ogunmade,
chairman, western zone of IPMAN, told the News Agency of Nigeria (NAN)
in Lagos that the failure of government to attract investors to the
sector contributed to scarcity of these products.

He said that the
high prices of crude oil in the international market also contributed
to the scarcity and the high prices of the products in Nigeria.

The IPMAN chief said that some marketers were already profiting from the scarcity by hiking prices of the products.

“When the sector is
fully deregulated, many players will come into the business and create
an open market that will be attractive and ensure efficient supply.

“If the sector is
fully deregulated, it will encourage and attract investors. Building of
local refineries will also assist in addressing the scarcity and high
prices,” Mr Ogunmade said.

The marketplace has
become highly dynamic and vibrant and as a result, brand strategies
should focus on aligning with changing market realities.

It is evident now
that old strategies may not work again with the present scenario in the
marketplace. Competition has become stiff and consumers are more
discerning than before. Unlike before, brand strategies should focus on
raising consumer interest and reinventing the rules to meet up with the
current trends in the market.

I marvel today that
I can find Mr Biggs outlets in the heart of Oshodi as well as in Abule
Egba. Several years ago, they were restricted to choice elitist
locations. However, the aggressive market penetration strategies of
Tantalizers and others forced Mr Biggs to re-think and reposition the
business.

The positioning
strategy of Tantalizers and others encroached on the market share of Mr
Biggs. Tantalizers achieved a great feat by establishing its outlets at
strategic locations. Sweet Sensation and Tastee Fried Chicken also
faced the market realities by building consumer-centric brands to
deliver on brand promise. This forced Mr Biggs to also return to the
drawing table and align with foreign partners to penetrate the market
and retain its pedigree.

Today, the Nigerian
fast food industry brands, worth 250 billion naira according to the CEO
of Tastee Fried Chicken, have grown to become dominant brands even with
the entrance of foreign brands such as KFC, Nandos, and Barcelos. If
the fast food brands have not embraced the paradigm shift to deliver
customer-centric services and move with the pace of the market, this
would have been an unfulfilled dream.

It is imperative to
state that the stronger the brand, the more it has power to influence
the market and gain acceptance. I believe this is one edge that Mr
Biggs deployed effectively to retain its pedigree. The “Mr Nigeria”
communication campaign reinforces this assertion.

Market realities
have also shown that much emphasis should not be placed only on brand
image but a strong focus on the brand and its offerings. There should
be one unique selling point for the brand that differentiates it in the
market place. It is now a focus on “what I can offer as value” as
against “this is who I am”. The brand should be viewed from the
totality of its offerings to retain consumer loyalty.

The need to gain
consumers’ attention is one area that brands have been forced to deal
with. They need to make efforts to determine consumer ratings and
continuously touch base with them. This is evident with the fast food
industry. Consumers’ patronage was taken for granted but now, the QSR
brands engage in consumer insights to improve on their service
delivery.

To remain dominant
in today’s market, it is important to evaluate consumer response in
order to build relationships and sustain loyalty. However, there is
still a long way to go in this regard due to the service delivery of
some brands within the industry.

The market
realities are telling a different story and brands need to re-invent
the rules to remain dominant in the market and survive the onslaught of
other competing brands.

Indomie noodles has
continuously developed to remain dominant. Despite the fact that
Indomie has become the generic name for noodles, it has continuously
strived to face market realities and not take anything for granted. The
introduction of the box noodle is pointer to this fact. Brands should
not rest on their oars.

Brands also need to
build visibility. This is one challenge that is facing some insurance
companies in Nigeria. The market scenario today dictates visible image
to promote brand acceptability. This is one major reason for apathy to
insurance services as visibility efforts to instil public confidence is
not there.

For any brand to
remain in today’s market, it should make every moment count for the
consumer. This clearly its distinctiveness. The strength of the brand
and its position in the mind of the consumers describe one’s market.

Airtel and its indiscriminate deduction

During the course
of the week, I lost over N500 to Airtel as a result of indiscriminate
deduction for calls never made. Each time the text message on Airtel
Millionaire promo enters my phone, I lose N100. I conducted a random
opinion sample and some other subscribers are affected too. We demand
an explanation from Airtel on this.

The
National Pension Commission (PenCom) has said it would no longer
hesitate to take legal actions against companies that flout its orders
on registration of employes for the scheme.

In
a memo, the management of the commission also warned that it would
sanction errant companies that deduct contributions from their staff
but fail to remit such.

Private
sector organisations and other employers where there are five or more
employees are mandated to join the contributory pension scheme by
virtue of the provisions of section 1(2) of the Pension Reform Act 2004
(PRA 2004).

Accordingly,
employees of private sector organisations including firms engaged in
legal, accounting, architecture, pharmaceutical, engineering, and other
similar professional services are required to open Retirement Savings
Account (RSA) with any Pension Fund Administrator for the payment of
their monthly pension contributions, in line with the provision of the
PRA 2004.

“By
this notice, all private sector organisations including firms of
lawyers, accountants, architects, pharmacists, engineers, and similar
professionals operating in Nigeria are required to comply with the
Pension Reform Act 2004 and in particular, the provision of section
11(5) of the Act, which obligates employers of labour to deduct from
source, both the employee and employer portions of pension
contribution, and remit same directly to the pension fund custodian
designated by the employee’s PFA,” the circular stated.

Flouting the regulations

The
commission further added that remittance of such pension contribution
is required to be made “within seven working days from the date of
payment of salary of the employees.”

However,
enquiries show that many private organisations have persistently
flouted the commission’s rules on pension funds administration. While
some companies have not even enrolled their staff on the scheme, some
owe several months and don’t have their employees’ pension fund
accounts up to date.

Seun
Akintade, a consultant in Lagos, said the regulatory body should get
its staff enlightened and trained so that they can efficiently monitor
the organisations and hence be taken seriously.

“PenCom
would have to step up in terms of efficiency and regulatory duties, if
they would be taken seriously. A lot of firms fall short of their
responsibilities in this regard and so it is up for the commission to
do more than issue warnings,” she said.

Recently,
the commission said it would reveal its guidelines on plans to increase
the amount of pension funds that can be invested in the domestic stock
market.

Presently,
pension fund managers are permitted to invest only up to 25.0 per cent
of their assets in equities, 35.0 per cent in the money market, and the
rest in government bonds. The expected increase in the amount of funds
that can be invested in equities would further deepen the capital
market.

However,
apart from improving portfolio yields on pension funds assets, the
regulators need to review existing guidelines with a view to unlocking
long term capital to address Nigeria’s huge infrastructural gaps.

The Anglo-Dutch oil
giant, Shell Petroleum Development Company (SPDC), has been accused of
not being truthful in its decision to end gas flaring in Nigeria.

Friends of the
Earth International, an environmental organisation dedicated to
preserving the health and diversity of the planet for future
generations, said Shell has once again flouted its promise to cut down
on its gas flaring activities.

In a statement
yesterday, the group said, “Friends of the Earth International condemns
the increase of this unnecessary and harmful practice and calls on the
Nigerian government and the international community to force Shell to
stop flaring.”

The group’s
condemnation is coming a week after Shell announced the signing of a
$101 million contract with Saipem Contracting Nigeria Limited for a
pipeline system that it said will gather a huge percentage of its
currently flared associated gas to be used in the domestic gas market.

However, Friends of
the Earth International said despite promises made by Shell since the
1990s to stop flaring the ‘associated’ gas released in oil production
in the country, the company flared more gas in 2010 than it did in
2009. This, according to the group, came to light from the
sustainability report brought out by Shell last week.

Nnimmo Bassey,
director of Friends of the Earth Nigeria and chair of Friends of the
Earth International, said, “According to its own figures, Shell flared
over 30 per cent more gas in 2010 than in 2009. This, according to
them, was mainly due to increased production in Nigeria and new
activities in Iraq.”

He added that
“Shell has been flaring gas in Nigeria since 1958. Though gas flaring
has been illegal, to them it is a standard industry practice. They
continue to reap obscene profits from the oil fields of Nigeria at the
expense of the lives and the livelihoods of the poor people. While they
speak from both sides of their mouths, we see that they are increasing
the volumes of gas flared and are thus intensifying their poisoning of
the environment and the peoples of the region.”

According to him,
they engage in this unacceptable and illegal activity just for the
maximisation of their profits. “Gas flaring is an act of ecocide and
everyone should join us to demand that Shell stops this madness,” he
added.

He insisted that
the company knew that its antics would be open to public scrutiny when,
to coincide with the release of the Sustainability Report, it hastily
announced the signing of a $101 million contract for a pipeline system
that it claimed will gather 90 per cent of currently flared associated
gas to be used in the domestic gas market.

He noted however,
that, “We are not deceived in any way. Our position has always been
clear and articulated on this matter. Shell does not respect the people
and environment of the Niger Delta. It will rather continue making
obscene profits and foul the air with the noxious fumes than capture it
and process into natural gas to the benefit of the people.”

The Shell Report

Precious Okolobo, a
spokesperson for Shell, said the company has released a detailed
analysis on its gas flaring up to date and that he had no further
explanation to make. He refused to comment, referring the reporter
instead to the report.

The analysis,
titled ‘Shell in Nigeria; Gas flaring’ and dated April 2010, said SPDC
and its joint venture partners are committed to ending the routine
flaring of gas as soon as possible and are working towards that goal.

According to the
firm in the report, in 2000, the Shell Development Company of Nigeria
Limited (SPDC) joint venture (JV) began an ongoing multiyear programme
to install equipment to capture gas from its facilities.

However, it said
the programme has been delayed by events outside its control, such as
funding shortfalls from Nigerian National Petroleum Commission (NNPC)
(the government-owned majority shareholder of the JV); security
concerns, which meant it was not safe for staff to work in large parts
of the delta for long periods of time; and delays in NNPC contract
approval processes.

“Despite the
delays, between 2000 and 2009, SPDC installed Associated Gas Gathering
(AGG) infrastructure at 33 sites, covering over 60 per cent of its
associated gas production. Unfortunately, 18 of these facilities were
either vandalised or not commissioned because of the crisis in the
delta in recent years.

“In total, SPDC
flaring dropped by more than half between 2002 and 2010 from over 0.6
billion cubic feet a day (bcf/d) to less than 0.3 bcf/d, although
production losses contributed to this decline.”

The firm says it is
partnering with the Nigerian government and the World Bank to identify
suitable Nigerian investors that would collect associated gas from
flare sites for small scale local projects. It added that over 30
potential investors have indicated their interest in this scheme and
SPDC is supporting the screening and selection processes.

This report, however, is what ERA/FoEI are contesting.

‘Our gas flaring complies with the law’

Shell said that the
gas it continues to flare complies with the law, and it would continue
its production which entails flaring until instructed otherwise.

“Where SPDC continues to flare, it complies with the law,” the firm said.

“The minister for
petroleum has the power to permit companies to flare on agreed terms
and conditions. The only way to end flaring at flare sites without AGG
equipment would be to stop oil production. This decision cannot be made
by SPDC without direct support from other JV partners, including the
government-owned majority partner NNPC.

“In a letter dated
31 December 2008, the government directed SPDC and other oil companies
to continue with production (and, therefore, flaring) until instructed
otherwise,” it added.

Just last week,
Shell announced the signing of a $101 million contract for a pipeline
system that will allegedly gather a huge percentage of its currently
flared associated gas which it claimed will be used in the domestic gas
market.

Hassan Sunmonu, the
mediator appointed to negotiate and reconcile government and members of
the organised labour over unresolved issues concerning the full
privatisation of the Power Holding Company of Nigeria (PHCN), has said
he would begin to collect memoranda and other submissions from
concerned parties after next week.

Mr Sunmonu, who is
chairman of the committee, said yesterday that memoranda and relevant
documents collected from both parties would be tendered as from May 3,
2011, to allow for effective circulation among interested parties,
ahead of the first meeting two weeks later.

“It is important
that submissions and documents are tendered and circulated in advance
in order to ensure meaningful and productive discussions from the
start. The first round of meetings to kick-start series of negotiations
between the Federal Government and the trade unions in the PHCN would
commence on May 16, 2011 in Abuja,” Mr Sunmonu said.

The former
secretary general, Organisation of African Trade Union Unity (OATUU),
made this known when he met with government representatives under the
chairmanship of the Minister of Labour and Productivity, Chukwuemeka
Wogu.

Mediating truce

Mr Sunmonu, who
accepted the Federal Government offer for him to serve as Chief
Negotiator/Conciliator in the crisis last week, said a similar meeting
was held last Tuesday with members of the organised labour in Lagos,
preparatory to the commencement of the negotiation agenda on May 16,
2011.

The appointment of
the Sunmonu Committee is to help facilitate the peaceful and speedy
resolution of all labour issues in PHCN, as well as ensure full
involvement of the labour unions in the implementation of policies
under the Power Sector Reform process.

The organised
labour, through its umbrella organisations, the National Union of
Electricity Employees (NUEE) and Senior Staff Association of
Electricity and Allied Companies (SSAEAC), recently threatened to call
its members out on a nationwide industrial action that would throw the
nation in darkness from May 1 this year if government fails to publish
the White Paper on the report of the House of Representatives Committee
on Power, which probed the $16 billion scam involving the
implementation of projects under the National Integrated Power
Programme (NIPP).

Preceding the
14-day ultimatum was a demand by the union for government to
immediately take steps to resolve pending issues bordering on the
welfare of members, particularly with regard to the privatisation of
the PHCN.

The unions were
incensed that government was determined to go ahead to with its plan to
wind down the company, despite the lingering issue of workers’
unresolved entitlements.

The Nigerian Stock
Exchange (NSE) yesterday listed N1.7 billion zero coupon Bond 2013
series of the Asset Management Corporation of Nigeria (AMCON).

A statement by the NSE in Lagos on Wednesday said that the bond would be listed at N1, 000 per share.

AMCON, a fortnight
ago, issued the N1.7 trillion bonds, comprising of N1.1 trillion to
replace the initial consideration bonds issued to 21 banks on December
31, as well as another N600 billion bonds to buy up the margin related
non-performing loans of non-rescued banks.

AMCON executive
director, finance and operations, Mofoluke Dosumu, who confirmed this,
said the government has granted its entire request for waivers,
preparatory to the listing of the bonds on the Nigerian Stock Exchange.

On the anniversary of the disaster, BP filed suits totaling more than $80 billion against Transocean and Halliburton.

And in a separate action on Wednesday, BP sued Cameron International Corp, the maker of the blowout preventer, the so-called fail-safe device that failed to automatically shut down the well.

BP is seeking up to the full cost of the disaster — estimated at $42 billion — plus costs, interest and punitive damages from each of the companies which helped it drill the doomed well.

Meanwhile, BP’s partners in the well, Anadarko and Mitsui filed a lawsuit against it, challenging BP’s demands that they contribute to the cost of the clean-up effort.

Wednesday was the deadline — one year after the disaster — for companies connected to the spill to file claims against each other.

Analysts said the companies probably did not want the cases to ever get to court, as this would lead to a spectacle which would only further damage their already battered images.

Instead, the suits were seen as tactical moves ahead of settlements that could see some of the burden shared. The litigation is expected to last for years.

“It’s got a fairly low chance of being successful,” said one analyst who declined to be named because of the legal sensitivities around the case. “I get the feeling that there is positioning going on here for a settlement.”

So far, BP has met the full cost of the clean up effort alone and is paying compensatory damages to affected people in the Gulf.

At 1216 GMT, Transocean shares were off 4.6 percent, while BP shares traded flat, against a 0.5 percent rise in the STOXX Europe 600 Oil and Gas index.

FRAUD ALLEGATION

BP said Halliburton concealed critical information which could have prevented the disaster.

“Halliburton’s improper conduct, errors and omissions, including fraud and concealment, caused and/or contributed to the Deepwater Horizon incident,” BP said in a court filing.

“Halliburton knew and understood it was misrepresenting material information,” BP added.

The nature of Halliburton’s claims against BP was unclear. In an emailed statement Halliburton said: “We will vigorously defend these claims.”

In January the company disputed a U.S. presidential commission’s characterization of its cementing work on the blown-out Macondo well, saying that the report omitted key facts.

On Wednesday, BP also filed a lawsuit against rig operator Transocean.

Since the outset of the disaster, BP has sought to blame its contractors, namely Transocean — a move which PR experts said had damaged its image. The Presidential investigation into the report did criticize these companies but directed most of its criticism at BP.

Service providers’ contracts with operators usually provide indemnities against any environmental damage which may result from their work and one analyst said this limited BP’s opportunities to recoup cash from Transocean or Halliburton.

If BP can establish gross or willful negligence on the part of the contractors, it may be able to void such indemnities but this is seen as hard to achieve.

“I don’t think it’s built into peoples’ expectations,” said the second analyst, who also declined to be named due to the legal sensitivities.

BP was widely criticized for trying to shift blame onto Transocean during the crisis. President Barack Obama called the mudslinging between the companies a “ridiculous spectacle.”

Joseph Lampel, Professor of Strategy at Cass Business School said a lawsuit would be even more damaging to all the companies.

“The lawyers may have a go at each other. They will cross-examine witnesses and they will dig into every detail imaginable. This kind of battle is not only fought in the court room but in the arena of public opinion,” he said.

“What we know about any corporate battle in court, is that it’s rare for any side to come out better.”

REUTERS

The absence of market makers is stifling the growth and efficiency of the Nigerian capital market.

New chief executive officer of the Nigerian Stock Exchange (NSE), Oscar Onyema, has promised to reverse this trend by working with the capital market community to allow market makers play their role effectively.

Market makers are wholesale operators who create liquidity in the stock market by either buying shares when there is a glut, or selling shares when there is scarcity.

Speaking at the monthly breakfast meeting of the Nigeria South Africa Chamber of Commerce yesterday in Lagos, Mr Onyema said he would provide a level playing field for participants to operate within the rules.

“One of the things I have observed is that 20 per cent of the top securities account for about 80 per cent of the market,” he said.

He said the capital market was in need of market makers that would help to deepen it and improve liquidity.

Operational efficiency

“We will look at operational efficiency so that when you want to move a large chunk of stocks or bonds, you can do that easily without impacting on the price of the security. My vision is to position the Nigerian market as the gateway to the African frontier market,” Mr Onyema further said.

The Securities and Exchange Commission (SEC) in 2008 approved five brokerage houses to act as market makers. These include Vetiva Capital Limited; Value Capital Limited; Afrinvest Plc; Diamond Capital; Financial Market Limited; and Chapel Hill Dunham.

Since then, there has been no impact due to the market downturn and the absence of clear operational guidelines.

Mr Onyema said the absence of market makers was affecting market liquidity.

“How do we make sure that securities have a standing bid and offer at any point in time? How do we get market makers that have the right depth and knowledge to provide liquidity in our market place? That is what we are looking at right now,” he said.

The chief executive officer, who assumed office a fortnight ago, said his desire is to build the Nigerian capital market to be comparable to the best in the world in terms of product offerings, adding that his focus would be to encourage telecommunication and oil and gas firms to list on the Exchange.

According to him, apart from attracting new issues, there is also the need to create a deep and liquid market.

“Government would need to put in place policies that would attract investors. We would work with government to make investment friendly policies,” he said.

Business decision

President of the Chartered Institute of Stockbrokers, Michael Itegboje, said the issue of market maker status is a business decision that firms that have the capacity would have to make on their own.

According to him, it is not enough for SEC to appoint firms as market makers without the enabling capacity to perform that role.

“For this market to develop, it needs market makers but they need funds. SEC approved market makers, where are they? It is a business decision you have to take. Nobody can force you to be a market maker.

“You have to take that business decision and if you find out that you can’t, you have to leave,” Mr Itegboje said.

There are some
words that those who develop dictionary software appear somewhat slow
to catch up on. One of such words is ‘fracking’. While the word is
still kept on the fringes of everyday discourse, the process it
describes is already pitting citizens against corporate power in North
America, Europe, and in Africa.

As the sound of the
name suggests, fracking has to do with fracturing. The New American
Oxford dictionary defines fracture as “the cracking or breaking of a
hard object or material … a crack or break in a hard object or
material, typically a bone or a body of rock…the physical appearance of
a freshly broken rock or mineral, esp. as regards the shape of the
surface.”

Fracking has
already raised serious problems in the United States and is being
questioned and resisted elsewhere. The nearest flash point is the
resistance to Shell in their efforts to engage in fracking in the
Karoo, South Africa. The community resistance in South Africa is
especially interesting in the sense that Shell has been confronted
there by their Nemesis: Ogoni activists displaced by their activities
in Nigeria.

In the case of the
plan by Shell for fracking in South Africa, they plan to bore holes 5
kilometres down into the belly of the earth in order to extract gas
trapped in a layer of shale stones. This is another signal that the age
of cheap oil is over.

Fossil fuels are
being sought for in increasingly less accessible locations such as
deep-water locations and in locations previously considered off limits
to extractive activities. As someone said, some of the processes can be
likened to a “societal scraping of the barrel.”

This process is not
exactly new, as it has been going on in the U.S.A. for decades,
according to some records. The causes of current anxieties are
primarily two-fold. Companies involved in this business have not
released the names and quantities of all the chemicals they use in the
fracking processes.

Secondly, the
process uses huge amounts of water, a serious concern in a season of
water scarcity. After pumping in huge volumes of water, about half of
this water is pumped out and the bubbles or gas are removed. The
wastewater with all its highly toxic dregs is then disposed of. The
question is whether this is handled in a manner that assures of safety.

According to the
experts, Shell’s “proposed exploration will apparently entail drilling
8 boreholes in each precinct (i.e. 24 boreholes in total) of up to 5
kilometre depth over a three-year period, extendable to nine years.

It appears that
each well will need between 0.3 million and 6 million litres of water
(i.e. a scenario of between 7.2 million and 144 million litres of water
required). Shell has been extremely vague as to its anticipated source
of water, with no concrete indication being given in the draft EMP or
in the public consultation meetings as to where the multinational
intends to source the requisite water from.”

While some people
argue that there are yet to be analyses showing actual water
contaminations related to chemicals used in fracking, there are several
confirming water contamination due to fracking processes.

For one, some of
the chemicals used in the process are known as carcinogens. The US
Environmental Protection Agency is examining the potential impacts on
drinking water of the various stages in the hydraulic fracturing
process. Such stages include when drillers mix water with chemicals and
sand and inject the fluid into wells in order to release oil or natural
gas.

Some 46 House of
Representative Democrats sent a letter to the Secretary of Interior in
which they stated, “communities across America have seen their water
contaminated by the chemicals used in the hydraulic fracturing process.”

Other concerns over
fracking plans have been raised in Canada and France. A report from the
Tyndall Centre in the United Kingdom, and an enquiry by the House of
Commons, has trailed the fracking business in that country.

The Tyndall Report
found a paucity of information on which to base serious analysis “of
how shale gas could impact on GHG emissions and what environmental and
health impacts its extraction may have; that there is a clear risk of
contamination of groundwater from shale gas extraction.”

Fracking folks have
enjoyed exclusion from regulation in the USA for years and are very
reluctant to accept accountability today. With Barack Obama’s intent to
accelerate the weaning of his country from heavy reliance on crude oil
imports, the shift to fracking seems good to some investors,
irrespective of its highly toxic and water-guzzling nature.

The exportation of
that anti-regulation operational latitude to other lands is meeting
serious resistance. The people of Karoo are basing their resistance,
among other things, on the indelible footprints that Shell’s operations
etched into the hearts, veins, and blood of the Ogoni.

The linkage between
the Ogoni and the Karoo deserves an applause as ordinary people rise up
to ask to know “what the frack is going on” and link hands across
political boundaries to globalise the struggle and hope for the
security of humankind in a globalised world.

Gold shot up above
$1,500 an ounce on Wednesday for the first time ever, as worries over
the health of the global economy boosted the metal as a safe haven.

Spot gold hit a
high of $1,505.21 an ounce and was bid at $1,505.16 an ounce against
$1,493.90 in New York on Tuesday. U.S. gold futures for June delivery
rose $10.60 an ounce to $1,505.70.

Silver tracked gold
higher, extending a stellar performance that has seen the grey metal
outperform other precious metals this year. Silver hit a 31-year high
at $44.56 an ounce and was later bid at $44.51 against $43.89.

Gold prices are up
5 per cent in April and look set to extend gains as the metal’s appeal
as a haven from risk was boosted by talk that Greece may have to
restructure its debt and Standard & Poor’s threat to downgrade
America’s triple-A credit rating.

“There is still
going to be a lot of uncertainty over the strength of growth, in the
United States in particular,” said Macquarie analyst, Hayden Atkins.

“It looks like that
is going to be quite weak in the first quarter, so that may rattle a
few people. Then we have a critical policy point coming up with the
expected end of (the second round of) quantitative easing. There is
enough uncertainty floating around heading into the middle of the year
for people to stick with gold,” Mr. Atkins said.

While investors in
the United States and Europe are seeing the metal chiefly as a safe
store of value and a hedge against currency devaluation, stronger
inflation and rising consumer incomes in China and India are also
boosting demand there.

“The theme of
longer term higher inflation than we have seen in the last 10 years in
China is a pretty solid view, so gold is going to be an asset class
that is probably going to be more in favour in China than it has been
in the past,” Mr. Atkins further said.

China is the world’s second biggest gold consumer behind India, as well as being its biggest producer.

Rising oil, weaker dollar

In the short term,
losses in the dollar on Wednesday are supporting the precious metal
above $1,500 an ounce. The euro rose to a session high against the U.S.
dollar after an auction of Spanish bonds saw decent demand from
investors.

Weakness in the
dollar boosts gold’s appeal as an alternative asset and makes
dollar-priced commodities cheaper for holders of other currencies. Gold
priced in euros and sterling remained off recent highs on Wednesday.

Oil prices also
recovered, rising back toward the multi-year highs they hit earlier
this year as unrest in the Middle East and North Africa sparked fears
of a supply outage.

Higher oil prices
tend to benefit gold, both because they can boost commodities as an
asset class and lift interest in gold as a hedge against oil-led
inflation.

The gold:silver
ratio – the number of silver ounces needed to buy an ounce of gold –
meanwhile fell to its lowest since 1983 at 33.8.

“The last time
silver was this expensive in relation to gold was almost 28 years ago.
Both precious metals are still reaping the benefit of the news of
recent weeks and days,” said Commerzbank in a note. Platinum was at
$1,786.24 an ounce against $1,761.50, while palladium was at $753
against $726.95.Reuters