NEW YORK (Commodity Online): In contrast to the closing months of 2011, Gold has begun the new year on a more positive note. Whatever the metal’s short-term prospects — indeed even if gold takes another dive — we believe 2012 will be another stellar year for gold investors.

Gold shed roughly 30 percent from its all-time high to its recent late-year low point of $1,522. But, let’s not forget, even allowing for this deep price correction, gold still closed the past year with just about the best annual gain of any asset class!

2012 could well turn out looking much like the past year for gold - with sizeable gains, possibly as much as 50 percent (or more) from the recent lows

The story of gold in recent years has been a tale of institutional traders and speculators - including hedge funds, commodity funds, and the trading desks at the big banks and financial firms - producing great two-way volatility as they rushed into gold (as we saw last summer) and then, not just unwinding long positions, but shorting the metal in a big way (as we saw this past fall).

Despite the negative activity that has taken place in Gold derivative markets, long-term physical demand has remained fairly robust. Buying from the Asian gold-market giants - China and India continue to remain firm

Central bank reserve managers, ever sensitive to buying without disrupting the market, have used episodes of price weakness to step up their buying

What few gold pundits realize is that the amount of physical gold available in the world gold market - the “free float” - is shrinking, thanks not only to Chinese and other Asian buyers, many of whom are unlikely to sell, but also due to renewed interest and accumulation of gold by a growing number of central banks.

For central banks, the holding period may be measured in decades if not longer. As a consequence, future demand will have a much more high-powered affect on the price of gold - and this is one of the reasons we expect much higher prices in the years ahead.