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World Gold Council Sees Ever Greater Demand For Gold, As "Consumers Become Accustomed To Higher Prices"

Tyler Durden's picture




 

The World Gold Council has released its Q1 2010 Gold Demand Trends report. Below is the summary on the global outlook for the gold market:

  • The WGC expects that demand for gold is likely to be strong during 2010 driven by jewellery demand in India and China and investment demand in Europe and the USA. Weak economic recovery in the US and Europe is burdened by high and rising public debt levels in the wake of the financial crisis. As a result, the attraction of gold to investors as a liquid, reliable asset that is both a source of stability and a store of value is high. If economic recovery does gather pace in Western countries during the second half of 2010, this will enable jewellery demand in Europe and US to recover, propelled initially by restocking in the jewellery sector as stocks have been run down to very lean levels. In China growth remained strong in Q1 driven by jewellery demand and in India jewellery demand has been recovering in spite of high gold prices. In the Middle East and Turkey demand is recovering compared with Q1 2009 and there is likely to be pent up demand in Turkey, after the long slump beginning in the third quarter of 2008.  Turkish consumers are very pro-gold but deterred by higher prices and are waiting for a ‘summer lull’ to buy. Recently, Mr Yunus Aloglu, the Deputy Head of the Istanbul Gold Exchange stated that Turkey’s gold market is still in a healthy state and explained that the country’s long-standing association with gold is unlikely to change any time soon.1 Mr Aloglu believes that Turkish consumers have switched from buying gold jewellery to making financial investments in the metal, including in gold-based deposit accounts.
  • Gold demand in both India and China was very strong and achieved higher volumes in the first quarter of 2010 compared to 2009 inspite of higher local currency gold prices underpinned by strong economic growth. India was the strongest performing market, as total consumer demand surged 698% to 193.5 tonnes. On 12 May 2010, the spot gold price in India surged to Rs 56,032/oz , the highest level for the year and just below December’s record of Rs56,052/oz, while at the same time gold prices in Chinese renminbi terms also hit a fresh all-time high of RMB8,480/oz. This suggests that consumers are becoming accustomed to higher prices.

  • The gathering storm over Greece’s public finances and debt contagion fears in Europe and the US has led to strong buying of gold coins, bars and exchange traded funds (ETFs) which may produce growth in investment demand in Q2. While momentum in ETF tonnage paused during the first quarter of the year, we have seen gold ETF flows start to rise strongly again during the second quarter as anxious investors seek safe and less volatile investments in which to protect their funds against economic turmoil. Currently, European gold investment demand is exceptionally strong, especially from German and Swiss investors. This is mainly attributable to concern over public debt levels in the Eurozone and the potential inflationary impact of the European Central Bank’s (ECB) announcement of a US$1tn (€750 bn) rescue package to purchase Eurozone government bonds to address the Greek debt crisis. In  the USA, American Eagle gold coin sales volumes have surged as concern over the Eurozone debt crisis has spilled over into US. The US Mint reported that sales of gold coins were double their usual rate during the week commencing 3 May 2010.
  • The WGC expects supply to rise to meet the strength of demand. We expect some growth in gold mine production and upward revisions to resources estimates owing to increases of long-term gold price forecasts by analysts. Gold producers in particular in China and South Africa may attempt to increase production where possible in response to the higher gold price environment. In May, Buenaventura and Gold Fields announced that their Peruvian Canahuire deposit contains a “very promising gold discovery”, of up to 5.6mn ounces of gold equivalent.2 According to the two firms that jointly own the Chucapaca project, pre-feasibility studies could be carried out at the site as early as July 2010. However, in spite of producers responding to the higher gold price, the overall trend in mine production during recent years is downwards. The announcement of the Henry Tax in Australia, the second largest gold producing nation in 2009 may result in a reduction in gold production in the future. The tax aims to raise approximately AUD$12mn in its first two years. The country’s biggest miners have threatened to cancel expansion plans in everything from iron-ore, copper and uranium mining to gas and gold unless the government rethinks its plan to introduce the tax in 2012.3 Supply from recycling activity is linked to the gold price however, the recent drop in recycling flows in spite of high prices reflects an exhaustion of near market supplies of old gold available for recycling. For recycling to increase again the WGC believes that a considerably higher price will be required to flush out less readily available supply.

Full report

 

 

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Fri, 05/28/2010 - 08:18 | 378701 Kina
Kina's picture

Listen, I intend to buy another slab of gold monday/tuesday so you bent cops out there please....push up AUD, push down gold.

Thanks in anticipation.

Fri, 05/28/2010 - 08:44 | 378730 Temporalist
Temporalist's picture

If the IMF sold their last round of Au at $1045 what are they waiting for now that it is $1200 to sell the next chunk they've been promising?  Perhaps they no longer want to get rid of it at bargain basement prices when they know it's going to all time highs again.

Fri, 05/28/2010 - 15:23 | 379766 Gold...Bitches
Gold...Bitches's picture

In construction a common phrase is "measure twice, cut once."

With the IMF, it's a function of state the intention to sell 304,298,601 times, then sell once, and then only some of the total they continually state they will sell.

Fri, 05/28/2010 - 08:48 | 378739 unwashedmass
unwashedmass's picture

 

o dear Ben....the peasants are figuring it out!!!! what to do, what to do, what to do!!!!

better hurry up with that bill confiscating 401(K)s and IRAs and making people invest in treasuries, before they move it all into gold and gold investments....

there is goign to be intense pressure to grandfather the investments people have.....so you aren't going to be able to take everything....

and if you wait much longer..........

the peasants are catching on fast, little boy.

Fri, 05/28/2010 - 08:53 | 378744 frosty zoom
frosty zoom's picture

gold is useless.

 

 

Fri, 05/28/2010 - 09:04 | 378749 MarketTruth
MarketTruth's picture

And your country of origin and citizenship is ??? With all due respect, your comment sounds like that from an uneducated American or UK bankster. Asians, those in India, Vietman, Russia... and of course the Swiss know that gold IS money.

As did the United States of America founding fathers, and they knew of the great perils of paper currency as offered by bankers versus that of gold and silver.

Fri, 05/28/2010 - 09:13 | 378775 Internet Tough Guy
Internet Tough Guy's picture

But your content-rich comments are priceless.

Fri, 05/28/2010 - 09:26 | 378794 JackTheOffer
JackTheOffer's picture

Right!  Never, never buy gold.  Can you eat it??  Nah, of course not.  And also, some people think it's pretty, but really, it's ugly.  It has that sick yellow color, which is a warning sign!  Also, scientists won't tell you this, so as not to cause a panic, but gold is poison.  Gold causes cancer!  Never touch it!  Also, you don't even want to be in the same room with gold, because breathing gold fumes will kill you!  It's true!  And tell all your friends the real truth about gold, so they don't end up dead because of their own foolishness, if they get caught up in the gold craze.

If you have any gold around your house, or even if you just think you might have, call me! -- right away!  I can arrange for safe, environmentally friendly disposal of your deadly, cancer-causing gold at a cost to you of only $20 per ounce.  That's a wonderful bargain when you consider that it can save your life!  Myself and my trained team of technicians will ensure all your gold is removed, with zero environmental contamination.

Call now, for safe, economical gold disposal!

Just remember, Better Green Than Gold, and better safe than dead!

 

Fri, 05/28/2010 - 12:24 | 379257 Chump
Chump's picture

This is solid Gold!

Fri, 05/28/2010 - 10:42 | 378978 SilverIsKing
SilverIsKing's picture

You seem like an expert.  If you'd be so kind, please share with us your infinite wisdom on the subject.

Other experts, much like yourself, have also stated that gold is useless.  They said this when gold was selling for $300/oz, $400/oz.......$1,000/oz, and continue to make this claim.

I would appreciate you sharing your supporting argument, especially since I agree with you that gold is useless, but only for people like yourself.

Fri, 05/28/2010 - 11:39 | 379152 RockyRacoon
RockyRacoon's picture

So, you've been here 6 days and made 2 posts.

We should deduce what from your cryptic comment?

If you can't contribute more intelligently why not just bow out gracefully and GO AWAY.

We have other trolls who do a much better job of bashing PMs; your comment is just goofy.

Fri, 05/28/2010 - 15:24 | 379772 Gold...Bitches
Gold...Bitches's picture

and I think you are useless as anything other than a mobile bag of protoplasm.

Fri, 05/28/2010 - 08:55 | 378747 Instant Karma
Instant Karma's picture

As long as you guys tell me when to sell.

Fri, 05/28/2010 - 09:02 | 378756 Black Swan
Black Swan's picture

Hey Frosty Zoom

"gold is useless"

Well if thats the case then i'm happy to take all the gold you have off your hands and replace it with let's say USD or EURO and in 5 years lets see who's better off, i know what i'd betting on is going to hold it's value better.

Good luck BUD !!!

Fri, 05/28/2010 - 09:11 | 378769 Internet Tough Guy
Internet Tough Guy's picture

They expect production to increase how and where? Oh, a mining company says they have a promising find. And they never lie, nosiree.

Fri, 05/28/2010 - 09:34 | 378807 bbbilly1326
bbbilly1326's picture

 

    Really, gold bugs ought to be called "troll bugs" the way they ALWAYS take the bait from these      idiots  trashing PMs.........

Fri, 05/28/2010 - 11:43 | 379160 RockyRacoon
RockyRacoon's picture

But it's so much FUN!  Besides, the anti-gold trolls provide a valuable service:  It gets us to examine our own positions.  That's not all bad.  The fella above, however, contributes nothing to the debate.  At least JB/MB, the Yipster, and others tend to provide arguments that they consider valid.  I say keep the anti-gold trolls on the payroll.

Fri, 05/28/2010 - 10:00 | 378862 mjv
mjv's picture

Has anyone here purchased gold bars or coins from APMEX?  And any preference as to the type of physical?  I'm leaning towards the Credit Suisse 1oz bar with the assay card.  Any reason to choose differently?  (The bars seem to carry a lower premium that the American Eagles and the Maple Leafs.)

Fri, 05/28/2010 - 10:45 | 378983 MarketTruth
MarketTruth's picture

Apmex is fine (not the least expensive tho) and the key imho is the spread from 'X' over spot to buy and the 'Y' price per spot when selling. Pamp/Credit Suisse bars are fine. For spread calculations i use www.Tulving.com as they have better rates than Apmex.

Remember to factor in ALL costs including getting funds to/from dealer and (if any) shipping expenses.

Fri, 05/28/2010 - 11:46 | 379172 RockyRacoon
RockyRacoon's picture

Your questions have been entertained many times.  You might want to check out the Forums for detailed discussions:

http://www.zerohedge.com/forums/zero-hedge-forums/-general-discussion-forum

Fri, 05/28/2010 - 11:48 | 379179 mjv
mjv's picture

thanks for the link

Fri, 05/28/2010 - 15:10 | 379736 frosty zoom
frosty zoom's picture

folks, 

calm down.

please tell me, ¿what is gold useful for?  

malleable tulips, i see.

sure, people think it's money, but ¿why?

energy  --  oil, uranium, coal... is money.

gonna power your factory with gold?

Fri, 05/28/2010 - 15:29 | 379785 Gold...Bitches
Gold...Bitches's picture

listen up.  family/dynasty with real wealth keeps it sitting there in a vault regardless of the daily price because they know that once every so often (say 50-100 years) gold gets revalued against paper assets that flooded the world since the last reset.  Those resets are usually enough of a gain for an entire lifetime.  Its happened over and over and over through out history.  Sure, the argument that this time is different may apply - but considering how many times I've heard that over my lifetime (and none of them really were different) its hard for me to believe that gold should be sold because this is the one time that it wont follw through as it has many many times in the past in the same/similar situation.

Fri, 05/28/2010 - 16:31 | 379956 frosty zoom
frosty zoom's picture

oh, i understand well that people have considered gold as valuable for many, many centuries.

but ultimately, ¿what is it good for?

humans believed the earth was flat for a long time.

of course fiat systems will collapse.  what we need is currency based on valuable (i.e. you can do something with them) commodities.

i, too, see gold prices rising substantially in the medium-term.

but why?

maybe it's because it looks like a piece of the sun and holds a special place in our subconscious that our dna just can't shake.

 

Fri, 05/28/2010 - 20:20 | 380389 h4rdware
h4rdware's picture

Geometry = function, as is always the case in nature. Physical properties.

 

Unique, recognizable and non-synthesizable physical properties combined with rarity and an inherent uselessness for consumption, make it the perfect wealth store.

 

If gold were useful, like wheat for instance, it would by implication be regularly destroyed. To be regularly destroyed requires a sustainable flow-controlled source. Such a source is not a good foundation for money. This is the bit that is most difficult to 'get'.

 

Commodities store value but without permanence or constraint. Gold is the only permanent, limited commodity.

 

There are no coincidences in this world. Just because something isn't obvious doesn't mean it has no rhyme or reason. It just means you have more work to do.

 

 

Fri, 05/28/2010 - 21:15 | 380472 frosty zoom
frosty zoom's picture

"Gold is the only permanent, limited commodity."

uh, no...

what about cerium, praseodymium, neodymium, samarium, gadolinium, ytterbium, etceterium?

when peak phosphorus arrives, then we'll see limited commodities.

they are all limited on this finite planet.

gold's just shiny.

 


 

Sat, 05/29/2010 - 07:46 | 380910 h4rdware
h4rdware's picture

You missed the point about physical properties. Your listed materials are:

- not noble (they oxidize or are easily combined, so they perish)

- difficult to distinguish from other elements, so who would take them in exchange?

- not easily divisible. some of those are crystalline, brittle or particulate when pure.

- some of them are harmful, so they can't be carried.

 

It's not even worth continuing the list, that's more than enough.

 

If you had said silver, platinum, palladium, you might have had the beginnings of an argument. But these are already considered monetary metals. As you get farther away from the physical properties of monetary metals, you get farther away from suitability as a primary wealth store.

 

 

Sat, 05/29/2010 - 09:17 | 380949 frosty zoom
frosty zoom's picture

thanks for your reply.

let me ponder....

fz

 

Fri, 05/28/2010 - 15:40 | 379821 Hephasteus
Hephasteus's picture

Panic pills bitches!!

Cheaper than gold and they destroy your liver!!

Fri, 05/28/2010 - 17:24 | 380089 Sands8oo
Sands8oo's picture

@ frosty zoom

"What good is it for?"

What other naturally-occurring substance exists that is as easily recognized, transported, and traded for as gold? What else (aside from the broader precious metals complex) could be as easily used as a medium of exchange?

Answer: None.

Thats why gold has value to civilizations - its a store of wealth. Gold requires great work and effort (and resources) to produce. Additionally, there is 0 (thats ZERO) counter-party risk associated with gold. Nobody can go bankrupt and make gold worthless... The same can't be said for fiat currencies.

Think wealth preservation. Therein lies gold's value.

Fri, 05/28/2010 - 20:21 | 380375 Diogenes
Diogenes's picture

If the world were run by wise men, and if governments were honest, then no one would take gold if they could get paper money and paper investments.

 

From an investment standpoint gold is no good at all. From a monetary standpont it is a "barbarous relic".

 

All over the world peasants have invested their meager savings in gold for thousands of years. Yet they remain peasants.

 

But men are not wise and governments are not honest. So with much sadness we are forced to take our money out of productive assets and put them into assets that are not as productive but safer.

 

Harry Golden said fifty years ago that only 3 things were prized by princes and poets  5000 years ago and are still prized today.

 

Gold, fertile land, and a good woman.

 

Fri, 05/28/2010 - 21:14 | 380470 MichiganMilitiaMan
MichiganMilitiaMan's picture

In that Order?

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