Gold Demands Trend (Q1 2012) - Enter The Dragon

Tyler Durden's picture

From GoldCore

Gold Demands Trend (Q1 2012) - Enter The Dragon

Gold’s London AM fix this morning was USD 1,547.00, EUR 1,217.44, and GBP 974.00 per ounce. Yesterday's AM fix was USD 1,537.50, EUR 1,208.73 and GBP 966.31 per ounce.

Silver is trading at $27.48/oz, €21.77/oz and £17.43/oz. Platinum is trading at $1,443.50/oz, palladium at $592.90/oz and rhodium at $1,300/oz.

Gold edged down $2.90 or 0.19% in New York yesterday and closed at $1,539.40/oz. Gold climbed during volatile trading in Asia having recovered from the NY close yesterday. In European trading the yellow metal is hovering near the $1,548/oz level. 

Cross Currency Table – (Bloomberg) 

Gold fought back yesterday after touching its lowest level since Dec 29th, as concerns about Greece’s political instability and possible departure from the euro, prompted investors to buy back into bullion. 

Technically, gold’s trend remains down but gold looks increasingly oversold. Bullion’s 14-day RSI (relative-strength index) was at 25.14, and once it’s below thirty it may indicate a rebound.

The euro rose from a 4 month low against the dollar as Fed policy makers are again suggesting that further QE is needed which will again be bullish for precious metals.

Spot palladium and silver both recovered somewhat from recent sharp falls yesterday. 

Gold Demands Trend (Q1 2012) - Enter The Dragon
The World Gold Council has released the Q1 2012 Gold Demands Trend report.

Gold demand grew 16% over the past 12 months to 1,098 tonnes. This had a US dollar value of just $59.7 billion spent on gold, globally, in Q1 2012.

While global demand was down 5% from the record high of Q4 2011, it was significantly higher than demand in Q1 2011 suggesting that global demand may be consolidating at these higher levels.

Gold Daily Pricing – (Bloomberg)

Investment Demand

Investment demand again dominated as under owned gold continues to be diversified into and accumulated globally.

Gold investment demand (all demand for gold bars, coins and ETFs and similar products) grew by 13% year-on-year to 389.3 tonnes in Q1 2012, equating to a demand value of just US $21.2 billion. 

The key drivers of this increase came from China and global ETFs.

Probably the most important aspect of demand and one of the most important fundamentals in the gold market is that of still very robust and increasing Chinese demand.

In this the Chinese Year of the Dragon – China is becoming a fundamental driver of the gold market.

Global demand was boosted by China posting a quarterly record of 98.6 tonnes of investment demand up 13% from Q1 2011. This increase was a result of investors’ continued move to preserve wealth amid ongoing concerns over inflation, volatility in equity markets and price falls in some property markets.

Jewellery demand in China, much of which is also store of wealth demand, increased to 156.6 tonnes – 30% of the global appetite. 

This increase places China as the largest jewellery market for the third consecutive quarter.

XAU /EUR Currency – (Bloomberg)

Retail and institutional investors buying exchange traded funds (ETFs) accounted for 51.4 tonnes of gold purchased in the three months to the end of March, at a total value of $2.4bn. The World Gold Council stated that this movement was in stark contrast to the first quarter of 2011, when the ETF sector witnessed net outflows.

ETFs and similar products were the beneficiary of solid inflows during the first quarter. The bulk of demand was generated in January and February, with demand tailing off to some extent during March as the gold price stabilised and investors awaited fresh economic data.

While the year-on-year data suggests that it was a challenging quarter for investment demand in Europe, Q1 2011 was an exceptional period for demand, fuelled by European sovereign debt concerns and the Arab Spring. European investment demand remains well above pre-2008 average quarterly levels and indicates sustained investor interest at relatively high levels. 

The report also argues that investment demand should continue to draw strength from continued very low real interest rates and inflationary pressures globally bolstering gold’s appeal as an inflation hedge. 

Central Bank Demand
Central banks across the developed and emerging markets purchased 80.8 tonnes of gold in the first three months of the year, at an average price of $1,691/oz.

Central banks diversified into gold despite prices being 22pc more expensive than a year ago. With risks posed to the euro, the dollar and all fiat currencies due to very poor public finances this central bank demand is set to continue.

India and China, the two largest jewellery demand markets, provided the main stories of the quarter from a jewellery perspective.

Jewellery demand in China also increased significantly to 156.6 tonnes, accounting for 30% of global jewellery demand making China the largest jewellery market for the third consecutive quarter. 

The first quarter of 2012 was an unprecedented period for India, with a number of market forces converging to dampen demand. Weakness in the rupee resulted in elevated local prices while consumers digested a rise in import taxes on gold and the introduction of an excise duty on gold jewellery, which prompted jewellers’ country-wide to strike. However, in May, the government withdrew the new tax on jewellery and the market is already responding positively.

High gold prices continued to erode jewellery demand in western markets. However, the World Gold Council believes that demand will move upwards in these markets, as gold becomes re-premiumised; high-end consumers, searching for “fewer, better things” will return to gold’s unique value proposition, combining emotional and intrinsic value in a way which defines true value.

XAU/GBP Currency – (Bloomberg)

The report reveals that in Q1 2012, demand for gold in the technology sector decreased by 7% year-on-year to 107.7 tonnes, with demand falling across all segments of the technology sector.  
Much of the weakness in the technology sector can be attributed to high gold prices and the continued fragile global economic environment, which resulted in lacklustre growth (if not recession) in a number of the key markets for consumer goods containing gold. 

There was strong consumer demand for wireless products such as mobile phones and media tablets. Similarly, a rise in end-use by the auto sector has also benefited demand, even though production volumes in Europe remained under severe pressure. Further growth within the NAND flash memory market also helped offset losses elsewhere, thanks to major sales drivers such as ultrabooks equipped with solid-state-drives and smart phones.  

While demand remains robust globally and particularly from institutional investors, Asian store of wealth buyers and central banks, gold remains very under owned vis-à-vis other assets such as equities, bonds and cash. 

The entire global gold demand in the first 3 months of 2012 was just $59.7 billion and all the investment demand for gold in the world was just $21.2 billion in the same period.

By putting this number in perspective we can see how small the gold market remains and how there is the possibility of much more demand which could push prices higher in the coming months and years.

The US trade deficit for just one month has been close to or over $50 billion dollars for a number of years now.

Tomorrow, Facebook will float an event that is expected to value the business at around $100 billion and there are hundreds of examples of valuations in the tech sector which seem optimistic at best given the macroeconomic, systemic and monetary challenges facing the world.

An example of this potential systemic risk is the $3 billion loss by JP Morgan. One investment bank lost $3 billion on a few trades. This equates to a value of one tenth of the dollar value of all the gold in the world that was bought for investment purposes in Q1 2012.

This suggests that the bubble may again be in debt, in finance, in the leveraged banking sector and in the tech sector and when the bubbles in these sectors burst, some of that capital will flow into the very small physical gold market.

This could lead to dramatically higher prices and means that our long held price target of $2,400/oz (the inflation adjusted high from 1980) is becoming increasingly conservative.

However, as ever physical gold bullion should be bought for wealth preservation reasons rather than the blind pursuit of capital gains. 

The World Gold Council’s Q1 2012 Gold Demands Trend report can be read here.  

(Bloomberg) -- Singapore’s Gold-Trade Plan Requires Refineries, WGC Says 
Singapore, aiming to become a regional gold-trading hub, needs domestic refineries, a clearing system and more storage to provide liquidity and facilitate trade, according to the World Gold Council.

“Now, we don’t have internationally recognized refineries nearby,” Far East Managing Director Albert Cheng told reporters at a briefing today. A Singapore-based one would help facilitate supply, he said.

The country plans to boost its share of the global gold trade to as much as 15 percent over the next decade, from 2 percent, according to a government trade agency. Investment- grade gold, silver and platinum will be exempt from a 7 percent goods and services tax from Oct. 1, Finance Minister Tharman Shanmugaratnam said his budget speech in February.

(Bloomberg) -- UBS Says Gold Needs to Drop Below $1,500 to Draw Investor Buying
Gold needs to fall below $1,500 an ounce to attract investor buying, according UBS AG said in a report today.

“We don’t think gold has met its price floor yet,” London-based analyst Edel Tully wrote in a report today. Physical demand from gold’s key physical markets is also “underperforming,” she wrote.

(Bloomberg) -- Gold May Beat Silver Rallying to $1,600: Technical Analysis
Gold may outperform silver and rally to $1,600 an ounce in the near term, Barclays Plc said, citing historical multiyear trading patterns.

An ounce of gold bought 56.0387 ounces of silver today. The so-called ratio reached 57.1101 yesterday, the most since December, according to data compiled by Bloomberg. The ratio has risen 28 percent in the past year, as concerns about slowing global economic growth prompted investors to reduce bullish bets on silver used in everything from solar panels to batteries.

A “multiyear trend break signals further relative outperformance for gold,” Barclays analysts including Philip Roberts wrote in a report yesterday. “We look for buying interest near $1,520 to underpin a near-term uptick toward the $1,600 area,” they said, referring to gold prices.

The metal erased this year’s gain on May 14 as concern that Europe’s debt crisis is deepening boosted the dollar and cut bullion’s appeal as an alternative asset. The metal for immediate delivery rose 0.8 percent to $1,552.38 an ounce at 2:13 p.m. Singapore time after declining yesterday by as much as 1.1 percent to the lowest level since Dec. 29.

That decline may have been excessive as technical indicators show gold is in an oversold position, Australia & New Zealand Banking Group Ltd. said in a report today. Gold’s 14-day relative strength index has been below the level of 30 since May 11, an indicator that the price may rebound.

While gold has a potential to rally to $1,600, silver faces a downside risk toward $26 an ounce, Barclays said, citing a multi-week channel that shows the declining trend. Silver for immediate delivery traded at $27.725, up 1.9 percent after dropping as much as 3.4 percent yesterday.

In technical analysis, analysts study charts of trading patterns to try to predict changes in a security, commodity, currency or index.

(Bloomberg) -- Bank Rossii Cut Domestic Gold Purchases by 40.5%, Interfax Says
Russia’s central bank reduced its purchases of gold on the domestic market by 40.5 percent to 81.3 metric tons last year, RIA Novosti reported, citing the regulator’s annual report.

That compares with domestic gold purchases of 136.6 tons in 2010 and 142.9 tons in the previous year, according to the news service.

(Bloomberg) -- India Gold Imports May Reach 1,000 Tons in 2012-13, Group Says
Gold imports by India may rise to about 1,000 metric tons in the fiscal year 2012-13, up from 933 tons a year earlier, according to the Associated Chambers of Commerce and Industry of India.

Imports may rise in the June to August period because of “pent up demand” for the nation’s wedding and festival season, the group said today in an e-mailed statement.

(Bloomberg) -- Rejection of Nationalization Positive for South Africa: Moody’s
South Africa’s decision to reject a proposal by the ruling African National Congress’s youth league to nationalize the country’s mines is credit positive for companies in the sector, Moody’s Investors Service said in a presentation handed to reporters in Johannesburg

For breaking news and commentary on financial markets and gold, follow us on Twitter.

China May Surpass India as Biggest Gold Market – Business Week

Chinese gold demand hits record - BBC

China tops India as No. 1 gold consumer: WGC – Market Watch

Japanese pension fund switches to gold – The Financial Times

Europe Must Face Ugly Reality of Greek Exit from Euro - Bloomberg

MacKintosh: Gold: just another commodity – The Financial Times

Canary In The Gold Mine: In Historic Move, Japanese Pension Fund Switches To Gold For First Time Ever – Zero Hedge

Appetiser cost of Greek exit is €155bn for Germany, France: trillions for meat course – The Telegraph

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Quintus's picture

I suppose all of this would be interesting if the supply of and demand for gold actually related in any way to the price of gold.

Harlequin001's picture

Well in a way it does, because if demand goes up and the price doesn't, when gold eventually finds its true value it will need to rise so much higher.

I might not like it but I can live with that...

PR Guy's picture

Yes... which is why I'm watching and waiting. Keep that price going down, er, bitchez. I want to pick my stash up cheap.

ArrestBobRubin's picture

The WGC is notorious, a cynically named wolf in sheep's clothing.  About as effective an advocate for gold as BS Bernanke is.

Whatever they're reporting as demand for gold, triple it.

WmMcK's picture

You have offended my family ... oops, wrong enter the dragon thread, then again maybe not.

JustObserving's picture

"The entire global gold demand in the first 3 months of 2012 was just $59.7 billion and all the investment demand for gold in the world was just $21.2 billion in the same period."

Meanwhile in the US of A, debt and unfunded liabilities increase by $23.13 billion every day.

Harlequin001's picture

Shhh, you'll frighten someone with talk like that...

GetZeeGold's picture



Chuckie Munger.....the Philistines are on line 2.


fonzannoon's picture

am I justified to be jumping for joy right now about gold? Up 20 bucks while everything else is still shit? Is this just a head fake?

Tao 4 the Show's picture

Very well could be - gold is oversold and due for a bounce. But the correction itself is getting long in the tooth at 37 weeks. Doubt it will continue more than a year, and perhaps even nearing its end now. We'll see.

WmMcK's picture

Moves in the yardstick/FRN are just shit. Maybe the GSR (or another less emotion-ridden ratio) would be a better measurement to consider.

SWCroaker's picture

Today's blip took place over about a 3 minute period.  Sad to say, that points strongly to the delicate and subtle "entry" preferred by modern day hedge funds and their momo-chasing wannabes.  Be warned that they "pull out" with about just as much grace.


We'd prefer to see a movement of comparable size that takes hours rather than a minute.  That would at least stand a change of being actual "buyers" who might maybe just have a chance at doing something like "holding".


I like the move, but suspect it is... transitory.

Mercury's picture

During my two minutes of CNBC watching this morning Joe Kernan (an MIT grad) actually said, in defense of the value of the dollar, that it was "backed by the full faith and credit of the US government and a poweful economy."

Which of course I suppose it still will be when a loaf of bread costs $30.

fonzannoon's picture

I saw that Kernan segment. People will watch it on youtube in 5 years and laugh at their smugness in the face of such stupidity.

fourchan's picture

joe has lost his mind over the years, i miss the days of him and the brain at the crappy desks in the morning.

GetZeeGold's picture



Yeah but you've to to admire him......he held out longer than most.


orangegeek's picture

Gold is up today.  What's interesting is the USD is also up.


Markets and metals tend to move in the opposite direction of the USD.  But not today.  Interesting.

Tao 4 the Show's picture

Weak hands have been long since flushed and already being processed in the sewage treatment plant. U.S. bonds are overbought so looking more like a loser for those who might want to turn their money around any time soon. Better to buy an oversold product (gold) or overbought ones (USD and US bonds)?

ThirdWorldDude's picture

one might ask himself if the whales have unloaded their short positions

Inthemix96's picture

If any of the central planners actually knew what the fuck they were doing gold would be miles higher as to where it is now. Apparantly.


Ben Bernanke

ArrestBobRubin's picture

Gold, silver futures GREEN??? MY EYES OMG MY EYES

Tao 4 the Show's picture

I have no idea when gold will really turn around, but when it does, it will move up slowly for a short while and then bolt upwards quickly leaving no time for those looking to hitch a ride.

ArrestBobRubin's picture

No, first gold will get SLAMMED.

When the dam breaks and the gears cease up, the panicked rush for liquidity will cause everything to be sold off. Gold will be no different.

Wait for that as the best remaining opportunity to load up on it. Before it goes where it's going, it will first take a big trip south...

This will be the process, at least that's what Dr. Stephen Leeb and others predict. The same process played in 08/09 and its aftermath.

Tao 4 the Show's picture

Well, good luck with trying to time it. I am making no comment about whether or not another dip is coming - only that the rise, whenever it comes, will generally be very fast and catch most off guard.

And BTW, today's action is a case in point of exactly what I am talking about.  . Kind of makes you look like an ass, doesn't it?

monopoly's picture

I find it so absurd that the  "brilliant ones" have been selling gold, as we look around the planet, our markets, our govt. bank CEO frauds and crooks, and our friends in Europe. I love sales and picked up more last week. How can you possibly sell gold, silver in this environment. 

ArrestBobRubin's picture

Yup, while all the truly "brilliant" have been doing is buying more and more gold at lower and lower prices.

The Eastern Coaltion is draining the PMs out of the West's zombiebank system at bargain prices. You think Jamie's cryin' now? Just wait.

Buh-bye bitchez, thanks for offing yourselves.


MFL8240's picture

Despite these glaring facts, the US fraudsters still fuck with paper gold and rob Americans of their wealth.

Inthemix96's picture

Englands gold reserves were far to high at the time, we took a tactical decision to inform the market one week in advance that we would be selling half the British gold reserves at $250 an ounce. This gave us the required leverage we needed on the global scale.

What do mean? No I am not a fucking one eyed scotch cunt of an idiot.


Gordon McBroon

LULZBank's picture

Privatisation and Transparency has been at the heart of Englands policies.

Inthemix96's picture

Indeed, and no one could epitomise the plight of Englands finances more than mcbroon himself, bar the war criminal b.liar mind.

Fills you with a certain pride knowing that Englands politicos are the biggest cunts in the known universe. Fills my eyes with tears it does.

LULZBank's picture

Talking of cunts... I think the English electorate made a perfect choice of Cameron as the current PM.

Inthemix96's picture

Very astute observation there my friend, and heres the joke, ipsos has done a poll and found that labour, who ruined my country are now 14 points infront of the cons. Fuck me shirley, the ed miller band may even get in.

And they say the populations of our countries are well informed???

No they bloody well are not, they are fucking sick in the head.

And yes, your pick as camerunt the cunt is spot on.

LULZBank's picture

Thank you Sir!

I once read in some medical journal, that one of the big concerns about experimenting with anal sex is that, the person gets addicted to it and wants it ever more.

This probably explans the ipsos polls and people longing for days of Labour. Afterall, you can always trust a one eyed man for equality. Not sure about now, as you have some mini bands running the show all over, like gog and magogs unleashed.

I think the secret of Camerons success is his mouth. He can even talk well with it too.

Publics are well informed, as far as the information what the central planners want them to have. Shadows in the cave, and each competing to get the name of the shadow right for the prize. (Plato's Allegory of the cave).

Inthemix96's picture

Nice, very nice LULZ

Good analgy that with the anal penetration mind.

Heres an old geordie saying regarding the ed miller band

"You have a hole in your head where your arse should be"

_underscore's picture

Well, not sure who you want elected then - with Cons., Labour & Libdems out of it - who else is there?

Much as I think Farrage & UKIP have (some) interesting/refreshing ideas, I don't think there's any depth of talent, or even ability to form a govt.

Unless of course, you have some left-field choice as new Tory or Labour leader of whom you do approve?



Ted Baker's picture


Olympia's picture

From the Wall Street Crash of 1929 to the Global Financial Crisis of 2007


It all started with the big crisis of 1929. The American economy reached a deadlock because of its social "pathogenesis"; a deadlock that led it to economic crisis in a different - faster- pace than the rest of the industrial forces of that time. Important decisions had to be made - mostly social - and the Whites didn't like that, especially the Whites' rulers, the Anglo-Saxons. The USA society had to either be homogenized and "forget" about racism against black people or find itself in a permanent deadlock that would threaten it with social uprising. If they didn't equate the black working people with their white colleagues so that there wouldn’t be an issue with the salaries that threatened the national currency, they couldn't avoid reactions and all that goes with it.


The problem which began as social but was turning into economic was simple. As long as the economy functioned adequately and the Blacks worked and asserted what they deserved for their work, the white employers had to "fund" the white working force with extra money because of their skin color. To avoid complaints from a white worker who received the same salary with his black colleague, the employers had no choice but to give them more money. The demands of the Blacks were used as an excuse by the Whites to demand more and everything ended up in the same pocket, since they were under the same employ. The problem that arose from this "strange" tactic was that the increased takings of the "superior" White employers were seeking outlet in investments and that threatened the capital. Having higher salaries, they bought more houses; they bought stocks and so on.


Authored by Panagiotis Traianou

Bicycle Repairman's picture

When you say 'whites' do you mean the 'blacks' that had their skin color removed by the evil Dr. Yacub?

geewhiz190's picture

for all the gold touting, it's down 8% so far this month versus the dollar being up 4%. short the first-long the second, your up 12% in 3 weeks. might be time to close out gold short and dollar long and move to the sidelines for awhile.  looking for a tradebale bounce in SPY.  materials/energy pretty oversold as are some of the big euro names like SI.

GetZeeGold's picture



Give us the figures when Euroland finishes sliding off into the ocean.


bharat's picture

I can assure you that Indian demand is Exploding at this very moment as millions of people just realized what a shitty currency (10% depreciation against the dollar over the last 2 months) we have and that gold is the cheapest and best way to hedge against fiat inflation. In fact, there are a number of articles now appearing in the Indian press as to how equities have returned negative or minimal profits over the last 5 years (for example, ). Guess where all the money is going: Gold ETFs or physical gold.

Patience is your friend.

BTW Tyler: Looks like someone has unleashed a bot that is clicking the down arrow for every post.

topshelfstuff's picture

""This could lead to dramatically higher prices and means that our long held price target of $2,400/oz (the inflation adjusted high from 1980)""

That $2,400 number isn't the number you'd get if you used the 1980 Yardstick, the original and only Yardstick used until the mid-80's, when the first of now some 10 different Yardsticks have been created, ever shrinking in size.

Below is the inflation-adjusted amount a year ago, calculated with the original Yardstick:
Determining the True Inflation-Adjusted Gold Price April 25, 2011
the inflation-adjusted 1980's price of $850 is $8,194.