Gold Demand Soaring Despite Gold Prices Remaining Suppressed
Gold prices are up roughly 2.5% since the beginning of 2018. Don’t for a second ignore the metal and get lured by the stock market returns. This year could be great for precious metal investors.
You see, currently, there’s a gold rush in the making and no one is talking about it.
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For example, look at the Perth Mint’s gold sales for January.
The biggest mint in Australia sold 37,174 ounces of gold in coins and bars last month. A month earlier, in December 2017, this amount was 27,009 ounces. Simple math here: this represents an increase of close to 38% year-over-year. (Source: “Perth Mint’s Jan gold sales surges 38 pct m/m, silver jumps 22 pct,” Kitco Metals Inc., February 1, 2018.)
China And India Buying Immense Amount of Gold
Look at China as well. It’s one of the biggest consumers and producers of gold in the world.
Not too long ago, there was a lot of noise that suggested that Chinese consumers aren’t interested in owning gold and that demand for the metal in the country could be dismal.
Before you subscribe to that theory, know that gold demand in China is soaring, despite where gold prices stand.
Just recently, the Chinese state TV, China Central Television (CCTV), reported figures from the China Gold Association. It said that gold demand in China grew by 9.41% in 2017 to 1,089 tonnes.
Explaining the numbers further, it said that jewelry demand increased by 10.35% and gold bar demand in the country increased by 7.28%. (Source: “UPDATE 1-China’s gold consumption rises 9.4 pct in 2017 -state TV,” Reuters, February 1, 2018.)
To put things into perspective, gold mine output is around 3,100 tonnes. In 2017, China consumed the same amount as 35% of global gold mine output. (Source: “Gold,” U.S. Geological Survey, last accessed February 1, 2018.)
There’s one more interesting thing that CCTV reported. It said that Chinese gold production in 2017 dropped 6.03% year-over-year. This was the biggest decline since 2000 and was due to production cuts and mine closures.
There’s a gold rush in India as well. It doesn’t look like gold prices matter to Indian consumers whatsoever. They just want more of the yellow metal.
In December 2017, $3.39 billion worth of gold was imported to the country. In the same period a year ago, $1.98 billion worth of gold was imported to the country. (Source: “Quick Estimates For Selected Major Commodities For December 2017,” India’s Ministry of Commerce and Industry, last accessed February 1, 2018.)
In other words, gold imports into India increased by 71% in December 2017!
What Could Be Ahead for Gold Prices in 2018?
Dear reader, if there’s one asset that’s severely ignored, it’s gold. If you are ignoring it, you could be making a big mistake. The fundamentals of the gold market, as I see it, are in favor of those who are bullish.
Over the last few years, so much attention has been paid to stocks and other things like cryptocurrencies. Let me ask this: When was the last time you heard about anything “exciting” happening in the gold market on the evening news?
Mark my words: if stocks, for example, witness a decline, I wouldn’t be shocked to see investors rushing to buy gold. In the midst, we could get skyrocketing gold prices.
With all this said, I remain bullish on gold prices in 2018. I believe the yellow precious metal could do a repeat of 2016 and 2017 this year.
