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World Gold Council Provides Third Quarter Update Of Gold Demand Trends
As more and more pundits go for the whole "anchoring" thing and throw around numbers anywhere between $6,300 and -$0.99 per ounce as what the price for an ounce of gold should be, we present some actual data which demonstrates core supply and demand trends in the gold market. The World Gold Council's latest "Gold Demand Trends" quarterly update has been released, with the key message being that while end customer demand is collapsing (gee, the consumer must not be drinking Timmy's Kool-Aid just yet), "the central bank sector presents a positive story, with the underlying trend of improvement expected to remain intact. As with private investors, central banks are looking for diversifiers, and in particular, ways of diversifying their dollar exposure." Nuff said.
Some key points from the report:
- The volume of total identifiable gold demand in the third quarter of 2009 was down 34% on the levels of a year earlier at 800.3 tonnes, equivalent to a 27% decline in $US value terms to $US24.7bn.
- Of course, Q3 2008 was an exceptionally strong quarter, benefiting from the start of the safe haven investor flows in the west as financial sector concerns escalated as well as a surge in gold demand in several key non-western markets in response to a correction in the gold price. If we compare the 12 months to September 2009 against the corresponding period a year earlier,
tonnage demand was up 2%. Alternatively, if we take the average Q3 result over the five years to 2007 (832 tonnes) and compare Q3 2009 against this benchmark of a more typical Q3, the decline in tonnage is just 4%. - While the $US gold price in Q3 2009 was 10% higher than in Q3 2008, over the same period the gold price rose 22% in Indian rupee terms, 36% in Turkish lira terms and 27% in pound sterling terms.
- All three sectors of gold demand experienced an increase in tonnage relative to Q2 2009, but a decline relative to Q3 2008. The biggest decline relative to year-earlier levels was in identifiable investment, which fell 46%. Using the five year average benchmark described earlier, investment recorded a 73% rise.
- Bar hoarding, which largely covers the non-western markets, improved 41% quarter-on-quarter to 81.2 tonnes. In contrast, other identified retail investment, which largely covers the western markets, eased 6% to 43.1 tonnes - however, the absolute level of investment remained very healthy on a historical basis.
- ETF demand, at 41.4 tonnes in Q3 2009, was robust on a historical basis but nevertheless marked a significant reduction on the 149.5 tonnes experienced in Q3 2008. Relative to Q2, the decline was 27%.
- Jewellery demand in Q3 2009 was 30% below year-earlier levels. Most countries recorded a decline, the most severe being India, Russia and Turkey (-42%, -52% and -55% respectively). In each case, the magnitude of decline was exacerbated by an exceptionally strong Q3 2008. The
exception to the trend was mainland China, where jewellery demand rose 8% in tonnage terms relative to year-earlier levels. - Industrial demand recorded its second consecutive quarter-on-quarter improvement, and the magnitude of the decline relative to year earlier levels, at 11%, was almost half the decline recorded in Q2. The electronics sector was the main source of improvement.
- Gold supply in Q3 was down 5% on year-earlier levels. The biggest contribution to the decrease in supply came from the central bank sector, which went from net sales of 77 tonnes in Q3 2008 to net purchases of 15 tonnes in Q3 2009. An increase in producer de-hedging also made a significant contribution to the lower levels of supply, while increased recycling activity had an upward impact on supply.
- Q3 supply was 8% below the levels of the previous quarter, the main reason being a significant increase in producer de-hedging. Notably, the supply of recycled gold reduced relative to Q2 levels, despite the higher gold price.
- The official sector recorded its second consecutive quarter of net purchases in Q3, although the absolute level of purchases remained small.
And the official outlook by the WGC:
The outlook for Q4 remains mixed. With the gold price having increased further, jewellery sales are likely to continue to struggle with the exception of China, where the outlook remains cautiously positive. There continues to be potential for pockets of buying on dips in the gold price, although it is still unclear where that support will emerge now that the price has moved into a new trading range.
The outlook for investment flows is region specific. In India, Turkey and the Middle East, the price is acting as a deterrent, but in parts of Asia, including China, the rising gold price is seen as a positive factor - consumers like to buy into a rising price. In western countries, demand could ebb slightly further in Q4, but absolute levels of demand are likely to remain well supported by continued economic and currency uncertainty, inflation concerns and the search for diversification.
The central bank sector presents a positive story, with the underlying trend of improvement expected to remain intact. As with private investors, central banks are looking for diversifiers, and in particular, ways of diversifying their dollar exposure.
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Fed loses control of the POG, I called this 4 years ago...that's when all hell breaks loose; that is your Rogue Wave.
Powers that be are planning for the End of Fiat; end consumers locked out as usual. So nobody knows what gold is worth now; when they're selling the family silver, they'll discover the value of metals
this morning under congressional questioning, out little timmie became somewhat agitated by the line of discussion. it appears that the hive consciousness becomes irritated when it is the recipient of anything remotely resembling criticism...
The success of Cash4Gold companies says a lot about retail gold demand. As long as these companies are around, I don't think anyone can claim a 'top' in Gold prices.
Within the last 6 weeks someone (or group, whatever) investigated some of these "Cash4Gold"-like companies, and found they mostly offer 20 cents on the dollar. I believe the "report" I read was that the in-home "gold party" scheme offered the closest payment to the actual value.
I mean, when someone I know mentions the possibility of contacting some similar outfit, I try to stilfle the strong urge to blurt out "Are you a moron?".
-no spell-check was performed on the above...
If there is a bubble in gold then it's only a beginning of it.
Everybody bought homes, I mean everybody,,that was a bubble. When you try to sell a gold maple leaf on the street for $50.00 and no takers, that's does not constitute a bubble/ mania...Watch
http://www.youtube.com/watch?v=Gk5aRIz17fk&feature=PlayList&p=C7319A59D7...
That's why i mentioned 'if' and the 'beginning'. Surely, when the bubble is in full flower, people on the street would know what gold is, who's coin is that and what exactly the price is. Try the same experiment couple of years later and you probably will be lucky to get out of there in one piece. Bubble in real estate did not start immediately as well and no one could say for how long and how far it can grow, it takes time to get everyone on board, when that happens everyone would talk about it, where you can buy it and who's a good trader and usually it's the time to sell.
What a great day!!
we went over that clip a few days ago, just not a good example. If it smells like a con, and it's asking you if you have at least $50 on you in the dawn hours, and there's another guy with a camera... (But me, hey, I carry, let me at him...)
It's not a mania if everybody's saying it's a mania.
GG I've been buying gold for 20yrs,,,It's not a mania,,thought experiment,,,go up and down the block of your neighborhood knock on the door and ask them how much gold they bought in the last 60 days,,98% will say, have I bought what? they don't even know how to go about it...
Remember the tulip mania? now that had legs
I agree w/your point, but what would you say was the last true 'mania' we had? Housing? If so, back in 2005 could you walk up and down your street asking if your neighbors are buying real estate and expect different results?
Sure, the capital outlay was different, but the programs available allowed damn near everybody to get into a property (or more). Plus, to put that in perspective with the Tulip Mania, people at that time were apparently putting up entire estates for the purchase of specific bulbs.
Like everything else, prices rise and fall. Gold is rising now and will eventually fall regardless if Amerika and whatever currency it's using in the future exists or not.
Gloom, doom, panic and hype make the world go round.
Cheers~
Hello, Joe Sichs Pach
If so, back in 2005 could you walk up and down your street asking if your neighbors are buying real estate and expect different results?
My guess is, that around 2006.5 you would have garnished more hits for condos in Florida, Income property Carlton Sheets, Lake Homes, Partnerships in REITS, than you would have with the gold question..
If we examine the definition of mania it may not have been the most accurate of words. Lets stick with Bubble, Froth....
Your right to express the point that gold will fall regardless of the U.S fiat, as nothing goes up or down in a straight line..
In summary I would agree,,,, Good post....
Let's hope it stays that way, because if it becomes one, then it's going to be a lot more difficult to buy precious metals at a reasonable price.
LATEST ON THE BANK ROBBERY @FORT KNOX
November 19, 2009
Jim Willie, The Golden Jackass
The rise in gold pre-sages a currency collapse, led by the USDollar. Gold vaults at commodity exchanges in New York and especially London are being drained by delivery demands. Gold demand is skyrocketing, as distrust for the USDollar is broadening and revolt against the US$ is deepening. The quintessential finance war is between the United States and China, with the battlefield being the US$ and Gold. The race over the $1000 price level came in the face of mammoth shorting by the same Usual Suspects on Wall Street, which do so with paper, but without the required collateral. The gold market is poised for a surprise upward move from a basic broken condition, as the Powerz are losing control. It would be a joy to watch except for the extreme hardship due to come to the betrayed American people.
$$$ THE BIGGEST GOLD CRIME STORY OF THE CENTURY MIGHT BE SOON COMING TO FULL LIGHT. EVIDENCE IS BEING ACCUMULATING THAT THE CLINTON ADMIN WITH RUBIN AT USDEPT TREASURY REPLACED PERHAPS THE ENTIRE CONTENTS OF THE FORT KNOX GOLD WITH TUNGSTEN BARS PLATED BY GOLD. THE SALTED GOLD BARS ARE FASTING BECOMING A GLOBAL CRIME ISSUE. HONG KONG DISCOVERED THEM, AND NOW ASSAYERS ARE TRYING TO AUTHENTICATE MOST OF THE GLOBAL GOLD HELD IN BANKS. ENTIRE NATIONS ARE AT RISK. BEFORE LONG THE USGOVT COULD BE DECLARED A ROGUE NATION INTERNATIONALLY. $$$
Evidence is being gathered by perhaps a dozen key gold traders with diverse connections to the gold industry. They tie the delivery systems, the authentication processes, the assayers, record keeping, big financial firms, and trading platforms. Evidence mounts that as many as 1.5 million 400-oz gold bars were replaced at Fort Knox during the Clinton Admin with tungsten bars covered with a thin gold plate. This was a complex metallurgical feat, from what is told. The first 'salted bars' were discovered in Hong Kong a month ago, reported by the Hat Trick Letter. Since that time, tens of thousands of bars have been examined, usually using four test holes drilled for direct sampling. Other non-invasive methods are being used as well, such as electro-magnetic tests to detect the actual lattice structure of the metal to distinguish gold from other substitutes. Word came this week that almost every available assayer in the world is currently tied up, charged with proving the authenticity of gold bars worldwide, right now! Rob Kirby suspects that the Street Tracks GLD exchange traded fund might be loaded with such salted bars. It is a perfect destination for them, since the Wall Street syndicate prevents any audit. The total value of gold removed within the plot was worth over $500 billion. So where are the real gold bars stored? My guess is the same location where the Madoff money is secretly held.
My view is the story is not only credible, but it is the climax to the US financial collapse. In time the United States will be isolated, declared a Rogue Nation, unable to fund its debt except with monetization, whose leaders and former leaders face international prosecution. The resulting inflation will undermine the USDollar to the point that it will not be accepted. A USTreasury default will be forced, all in time. To be sure, some demand for gold might be frozen into inaction obviously, as customers would fear owning fake gold bars. However, the significantly greater effect is that sellers of gold will scramble to purchase real gold bars, so as to avoid fraud charges, criminal prosecution, and jail time. They will be motivated to repair the fraudulent transaction with full expedience. The replacement effect will cause an extraordinarily huge demand. Only at that time, will the risk of exposing the stolen gold come, as the thieves will want to cash out on their crime, at least partially. The removal and illegal swap of gold has precedent. In the 1960 decade, around 1968, President Lyndon Johnson ordered the removal of 7000 of the 8000 tons of gold from Fort Knox, and had it sent to England. The motive was to support the gold price at the time. Just a few years later, the US under President Nixon abandoned the US$ Gold Standard, as dictated by the Bretton Woods Accord. The gold was replaced during the Johnson Admin in Fort Knox by lead bars plated by gold. A contact of mine was in the USMilitary Police at the time. He reported long caravans exiting Fort Knox for weeks at a time, but the details of shipments were not known to the guards, only their duties.
For some excellent forensic financial analysis on the fake gold project, called Operation Grand Slam, see Rob Kirby's article. It is entitled "On Doing God A New Take On Operation Grand Slam With A Tungsten Twist HERE), dated 12 November 2009. $$$ GOLD MARKET BREAKDOWN IS WITHIN VIEW. LONDON GOLD IS BEING DRAINED BY THE CHINESE. A DISMANTLE OF THE CRIMINAL APPARATUS IS THEIR GOAL. UPON FULL BREAKDOWN, THE GOLD PRICE WILL BE RELEASED FROM PAPER TENTACLES AND RISE SHARPLY. $$$
Pressures mounted in early October at the London metals exchange as gold contract holders demanded delivery of gold. My source tells me that the parties demanding gold were almost exclusively Chinese. It is mostly private billionaires. Their stated motive was to diversify out of US$-based assets. Their rumored motive was to ruin the exchange, expose the chronic fraud linked to government ministries, and force the USDollar to fight in the open to demonstrate value or lack of value. The source said the next round of gold contract delivery pressure comes in late November, then again in March 2010, and finally in June 2010. He said the gold is gradually being drained in London, and that all demands for gold delivery were met in October, using legal force, the courts, and powerful attorneys. Not a single gold contract was settled for cash with a 25% dividend bribe. He concluded that the financial system will be broken at the gold-USDollar cross beam. He openly stated that he could not conceive of the system holding together past June of next year, and a severe test is likely in March 2010. He said with sly tone, "There is a saying: Watch out or you become shit before your own shovel. That is what is happening to the BOYZ right now. The people in the driver seat of the bulldozer have clear instructions what to do in the gold market." When the breakdown comes, it will be next to impossible to trade in USDollars, to settle commerce in USDollars, to finance the USTreasurys, to supply the USEconomy with credit, and to maintain the US banking system. The banks in the United States will then shut down in all likelihood.
My view is that a battle royal is being played out with gross global pressures, between the old broken insolvent corrupted powers of the West versus the new wealthy ambitious powers of the East, led by China. The future chapters will possibly involve the Intl Court in The Hague for prosecutions against the Wall Street firms and former USTreasury officials. It will possibly involve a wave of murders from the middle levels, working up, since the guilty parties operate with impunity and government protection. It will surely involve relentless attacks on COMEX and London CME for gold deliveries, where collateral requirements are not enfoced. The practice is known as naked shorting, illegal. It will probably involve the isolation of the United States, with full recognition of a crime syndicate lodged within its government ministries and capital markets. These are truly incredible times.
Thanks for posting this.
I'm trying to get physcial. I can get it at 4.2% over spot. Is there somewhere else to go? I'm also getting into Goldmoney. With the tungsten rumor's spreading, it wouldn't be a good idea to get it there.
GG or anyone. Any recomendations?
allamericangold.com
lot of years in the business and honest
How can you recommend allamericangold.com, when you click coins you get a list of numismatics!!!! That is NOT what anyone, including the OP is looking for. Geez!
I recommend and use the following. If anything, use them as your reference if you buy from someone else, note that for The MoneyChanger you'll need to sign up for his email and NOT live in TN.
http://www.the-moneychanger.com/entry.phtml
http://www.tulving.com/
when the total amount of gold ever mined can fit into two swimming pools, then it can be said that there is no such thing as a gold bubble and there never will be. precious metals have always been real money and that is the way it has been since the dawn of adamic man in the garden. nothing has changed except the brain washed perceptions. perhaps now the pendulum is swinging back to reality now.
Repeat from Faber post: A high price on gold will be what defines Bernake as a successful Fed Chairman. Why you may ask? Because Bernanke is at the moment trying to reinflate the economy. A high price of gold indicates coming inflation - reinflation. So if the market percieves that he is going to be succesful reinflating the market, gold will be the best indicator. The last thing that Bernanke wants to see is the price of gold collapse. If that happens, everyone will thinking that we are in a deflationay mode and no amount of QE is going to help. So the question will be .... will Bernanke be succesful in QE. Paulson and crowd would say yes and that that is why they have done long gold. I would otherwise disagree.
here's another Timmay feed
http://jec.senate.gov/index.cfm?FuseAction=Hearings.HearingsCalendar&Con...
question:
What is it with Minnesota, I'm just watching Senator Amy Klobuchar question Geithner - I'm not sure who appears to be more mentally handicapped.
That would be eastern Minnesota.
The western half of Minnesota can still think.
Do you have a link for that?
Tyler, FWIW IMHO you couldn't find a worse source of information on Gold than WGC if you tried. These are the same people who did not include Central Banks' buying in the overall demand for Gold this year (even though they were net buyers this year) because - wait for it - traditionally they have been sellers. WTF? These guys are funded by the big banks (who are most ikely short a buttload of gold) and are out to spread misinformation about gold masquerading as a legitimate source of information.
Merely a datapoint. reader beware
+100
"nuff sed"
of course nadler will be johnny on the spot on this information.....
It is priceless to have a reliable source of "information" for a change, to say the least. Thank you. BTW is there a CDS for opthalmologists out there :-?
http://www.businessinsider.com/gold-tanking-2009-11
1138 to 1132 is tanking???
"The Gold Council seems like they will never change. The Gold Council, which is a mouthpiece for the major producers, reflects the degree of understanding of what gold is that the management of the majors ascribe to. Remember it was the majors that lost their rears betting against gold through their short of gold OTC derivatives, making the richest corporation in the world one of the major gold holders as the buy side of ALL those short."
-Jim Sinclair
http://jsmineset.com/2009/05/29/jims-mailbox-157/
Doesn't this data mean that because demand for gold has actually droped since last 3Q compared to this 3Q that the relative money supply is what is causing the rise in gold prices?
Am I missing something or isn't this really bullish for gold being that it is no where near a bubble or mania, its price is simply in line with real inflation.
Please correct me if I am wrong.
Burnbright,
at the end of Q3 gold in Euro was the same price as april 09. The rise was more $ weakness then anything else.
In November gold started to move in Euro and a little earlier in Yen.
In a solid uptrend it should move in all major currencies.
A mania looks different, everybody talks about it, it can only go up, everybody buys…
The volume of real metal is right now only picking up; look at the US Mint or other mints.
UK/Austria are mentioned here:
http://www.bloomberg.com/apps/news?pid=20601012&sid=ajSyUvek1EtE
US min:
http://usmint.gov/mint_programs/american_eagles/index.cfm?action=sales&y...
In 1998 the US mint sold more the 3 mill. oz, this year will be a little above one mill oz.
That is the start of a big move that might become a bubble but definitely not the end.
"The rise was more $ weakness then anything else."
Like I said, inflation...well for us in the US of course.
Burnbright,
I think you are right on it. Gold is simply telling us how far the value of a dollar has really declined. Demand for gold is probably negative right now as everyone and my mother rush to sell their old jewelry, coins or fillings. When that source has been depleted over the next few years and mine productions continues to drop then demand and the contiuously dropping dollar is going to cause the real run up in gold. At least IMHO.
Well now this is ridiculously interesting. Just looked at annual Gold production. From 1980 to 2000 annual production went from 1250 tons to 2500 tons/yr. Since 2000 Gold production has been in decline. So over the last 30 years it would seem: 1) Gold demand has been steadily increasing. 2) The price of Gold was suppressed by the massive (doubling) of world Gold output between 1980 and 2000. Since 2000 the price has gone up because of the decline in production and the STEADY increase in demand. 3) In light of these facts the price of Gold has really NOT been impacted that much by the recent financial turmoil but is progressing in a simple supply demand curve. Conclusion: Gold has MASSIVE upside potential. IMHO.
Gold is another resource that is beginning to experience actual physical constraints. Ore from the 1950s averaged 12 ounces returned per ton. Ore from this last decade is down to 3 ounces returned per ton.
So you have an actual physical shortage of gold slowly developing, coupled with the financial bubble of the millenia causing people to start moving towards precious metals as a hedge against fiat currency collapse.
I agree with your conclusion. The only thing that can bring gold down in price for the next few years is a serious deflationary collapse. That's what the free market really wants - to clear the decks on bad loans that have been made but it's not what the Fed, Wall Street, or Washington DC want. The outstanding question is whether Fed/Wall Street/Washington DC actions can permanently turn the tide from deflation to inflation.
Knowing the above, if you are playing gold as an "investment" then you can only win in the inflationary scenario. But if you hold gold as a physical hedge intended to move wealth from one stable social era to another, even deflation doesn't hurt you. In 1913 a one ounce gold coin bought an excellent men's suit or a Colt .45 pistol. Today that one ounce of gold will still buy you an excellent suit or a Colt .45 pistol. But the corresponding $20 bill, which would have bought the suit in 1913, today barely buys the cufflinks or a box of ammo for the pistol.
Gold is a bad "investment" if we deflate but it's a great way to preserve relative wealth across periods of social collapse and disruption. Unfortunately, our current "leaders" appear hellbent on leading us right into the jaws of some sort of social disaster.
amerikan checka harassing new york pastor at his church for daring to speak out on issues....
http://www.examiner.com/x-24054-Sioux-Falls-Conservative-Examiner~y2009m...
In the "who do you trust" series of memes; i would ask a simple question: All the gold ever mined is 150,00 tons?
Says who?
40muleteam borax