Gold Buyers Smash Records
by TMFSinchiruna's CAPS Blog
The conclusions should
come as no surprise to anyone who's been
following gold, but the data is worthwhile to
review. Also, here is a link to the World
Gold Coucil's quarterly report on which the below
article excerpts are based. Unfortunately, it
requires a login to view the full reports.
The spot price of
Gold has fallen more than 20%
from its all-time high, reached in March of
2008. But if you think that means demand has
declined, think again.
Gold demand has in fact exploded, and not just
here and there. Everywhere. Around the world,
customers have been queuing up to strip coin
shops’ shelves bare. Mints have been running
24/7 and still have been forced to ration coin
shipments to their dealers. ETF vaults are
Now, the World
Gold Council has confirmed the
trend with hard numbers for the third quarter of
this year. In a page-and-a-half press release
summarizing 3Q2008 activity, the WGC had to use
the word “record” 10 times. Some highlights:
Dollar demand for
Gold in Q3 was a record $32
billion, 45% higher than the previous record,
set in 2Q2008. Identifiable investment demand,
which incorporates demand for
exchange-traded funds (ETFs), bars and coins,
rose to $10.7 billion (12.3 million ounces),
double year-earlier levels. Retail investment
demand rose 121% to 7.5 million ounces, with
strong bar and coin buying in the Swiss, German,
and U.S. markets. Europe as a whole saw an
all-time record 1.64 million ounces of bar and
coin buying. France became a net investor in
for the first time since the early 1980s.
Gold ETFs posted a record quarterly inflow of
4.8 million ounces in Q3. After the collapse of
Lehman Brothers in late September, ETF inflows
shot higher by an unprecedented 3.6 million
ounces in only five days. Demand for
jewelry hit a record $18 billion. Leading the
way was India, which witnessed a rise of 65% in
dollar value (1.3 million ounces) compared with
3Q2007. The Middle East, Indonesia, and China
all experienced increases of more than 40% in
value or 10% in weight, year over year.
At the same time that demand is setting records,
supply has been unable to keep pace, falling
9.7% from year-earlier levels, the WGC reported.
The drop was largely due to inaction on the part
of central banks, which have increasingly shut
their vault doors.
Heavy demand, declining supply… small wonder
Gold prices have remained near record highs
in most of the world’s currencies; that dealers
have been marking up coins by 10% or even 15%
(when they can get them); and that one-ounce
coins still fetch bids close to $1,000 on eBay.
When will the spot price in U.S. dollars, which
is set by the futures market, catch up? No one
knows. But it will.
The world’s hunger for
Gold will only grow into
a future awash in fiat currency.
Gold is the
ultimate and, at day’s end, the only safe haven
from the kind of currency destruction that is
being visited upon the dollar, the euro, even
the renminbi, as governments everywhere
desperately try to stave off a deflationary
depression the only way they know how: by
turning on the printing press.
We are in a period of intense monetary
inflation. It will be followed, inevitably, by a
long period of price inflation. People will be
desperate to preserve the buying power of their
dollars, euros, etc., and they will turn to the
one thing capable of doing just that.
Gold rises, it will lift the shares of
selected mining companies with it. The ones that
prosper the most will be those that have
positioned themselves to survive the credit
crisis -- by stockpiling cash, keeping
production costs down, and locking up borrowed
money on favorable terms.
Companies that have failed to do this will go
under, unable to get credit in a frozen market.
That will both diminish competition and further
curb supply, and those that properly planned
ahead will rake in enormous profits as
through the roof. Or more likely, as Casey
Research founder Doug Casey puts it,
to the moon.”
But which are the companies poised to profit the
most? The ones we cover in our monthly
newsletter for conservative investors,
We are dedicated to bringing you the information
that will allow you profitably to pick your way
through the present economic minefield. We
search the world of producing
Gold miners, to
find the best of the best. We pinpoint the
investments that will not only hold on through a
market downturn, but will rebound spectacularly
as the commodities market recovers, which it
In addition, we bring subscribers the best ways
to invest in physical
Gold, including where to
find coins and bars at affordable prices in
times of extreme scarcity -- like right now,
when mints are not minting, most dealers are out
of stock, and those still taking orders are
charging exorbitant premiums.
While we specialize in producing companies, we
also cover such alternative
Gold investments as ETFs, mutual funds, royalty companies, and
closed-end funds. We strive to find what’s best
for you. And we answer your specific questions,
each month in our
BIG GOLD Responds section.
The elaborate world financial structure that has
been erected over the past two decades created a
humongous bubble that has now popped. What will
come in the aftermath of this cataclysm cannot
be foreseen, but it will be different. One thing
is for certain, though,
Gold has been money, in
all times and places, for thousands of years.
The people of the world are already returning to
it as the sole store of value, and that’s a
trend that will accelerate in the coming years.
You can count on it.