Demand for gold in India is exploding, which is one of three factors setting the stage for much higher gold prices.
Gold Demand in India & China Soaring
In March 2016, $973.45 million worth of gold was imported into India. In comparison, this March, $4.18 billion worth of gold was imported into the country. (Source: “Quick Estimates For Selected Major Commodities For March 2017,” India Department Of Commerce, last accessed April 25, 2017.)
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That means 329% more gold was imported into India in March 2017 than in March 2016! In fact, for the month of March 2017, gold was the third-most-imported item (U.S. dollar-wise) into India after petroleum products and electronic goods.
In China, demand for gold is also going through the proverbial roof again. China gold imports via Hong Kong this March came in at 111.64 tonnes. The month before, only 47.931 tonnes were imported. This represents a month-over-month increase of 132.91%! (Source: “UPDATE 1-China’s net-gold imports via Hong Kong more than doubles in March,” Reuters, April 25, 2017.)
India and China are the world’s two biggest gold importers. China is also one of the biggest producers of gold. Local production is generally consumed in China. If the country is importing even more gold, this gives us an idea of how robust demand for the yellow precious metal actually is in China.
Central Banks Still Buying up Gold
Central banks are a solid buyer of gold, too. The year 2016 marked the seventh consecutive year during which world central banks were net buyers of gold. This year, they are at it again.
In 2016, Russian central banks purchased 201 tonnes of the yellow metal. In 2017, they are expected to buy even more. (Source: “Gold Bugs: Why Russia is Stacking Bullion Bricks Like There’s No Tomorrow,” Sputnik, April 2, 2017.)
Turkey’s central bank, a persistent gold buyer, could be taking steps to buy up the local gold supply in an effort to boost its reserves so it can strengthen the country’s currency, the lira. (Source: “Turkey to give central bank first option on buying domestic gold – sources,” Reuters, April 4, 017.)
Gold Prices Heading to $2,500 an Ounce?
Dear reader; it is often said that investors should look at assets when no one else is looking at them. Gold is in that category today.
All eyes are on the tech-heavy NASDAQ these days, as it hit the 6,000 level for the first time. Gold is being shunned in favor of the action in the stock market.
Gold prices are depressed in my opinion. Given all the geopolitical uncertainty in the world, surging gold demand, and contracting supply…the stage is set for gold prices to hit $2,500 an ounce. Once gold starts to move to $1,400—then $1,500—an ounce, it will not take much for the little demand that comes in to propel gold prices even higher.
