Friday, February 3, 2017

Gold demand soaring to four year highs across the world as central banks and individuals pile into metals

There were a number of different stories published this week that validate why gold demand is not only increasing, but hitting four year highs as currency and economic fears push both central banks and individuals into the precious metals.


China's demand for gold can't be met
A couple of weeks ago, I was in Toronto meeting with gold industry experts. One night, I spoke with a man who has been in the gold business for over 45 years.
For over four decades, this man has bought and sold gold. He has bought and sold gold mining shares. He has bought and sold gold mines. During this time, he has also worked with the Chinese government, Chinese industry and Chinese investors. He knows a few things about gold, and about Chinese gold. 
Here’s what he said to me: “I’ve seen estimates out of China that over 375 million Chinese want to buy gold. But they can’t. They live in the remote interior of the country, not the more open, coastal cities. These Chinese have little or no access to gold markets. And even if they did have access, there’s not enough gold.” 
The man explained that any Chinese with means and access is buying gold. He told me that just the Shanghai Gold Exchange has over 10 million customers. 10 million separate, account-holding customers. Just for gold. – Daily Reckoning
Gold demand rose 2% in 2016 according to World Gold Council
The Brexit vote and the election of Donald Trump drove global demand for gold to a four-year high in 2016, as pension funds and other institutional investors piled into the precious metal while higher prices put consumers off jewellery purchases. 
Global gold demand rose 2% last year to reach 4,309 tonnes, the highest level since 2013, according to a report from the World Gold Council, which represents gold miners. - The Guardian
Gold price continues to climb following inaction by the Fed
Gold hit an 11-week high on Thursday after the U.S. Fed eral Reserve gave no clear signal on the likelihood of a March interest rate increase in its latest statement, prompting another drop in the dollar
The U.S. currency slipped to a 12-week low against a basket of currencies and an eight-week low versus the euro after the U.S. central bank gave an upbeat view on the economy, but no hint of accelerating rate hikes. Spot gold struck its highest level since Nov. 17 at $1,225.30 an ounce, and was up 0.9% at $1,219.96. - Fortune
Gold backed bank deposit accounts in Turkey skyrocket
The price of gold, considered a safe haven in investments, has broken records one after another since last year, while the number of precious metal deposit accounts kept in banks are on a rise in parallel with President Recep Tayyip Erdo─čan's call on people to convert their foreign exchange savings into gold or Turkish lira in an attempt to help boost the value of the Turkish lira. Having broken successive records since last year, gold became one of the favorite investment instruments in 2016 again. 
According to Banking Regulation and Supervision Agency (BDDK) data, gold deposit accounts in banks soared to TL 16.964 billion ($4.54 billion) at the end of 2016 from TL 10.624 billion at the end of 2015. As far as the last one year's transactions are concerned, this figure corresponds to 51.6 tons of gold, based on the average gold price of TL 122 per gram. 
A total of TL 15.922 billion worth of gold deposit accounts belonged to natural entities, while TL 1.042 billion worth of them belonged to commercial institutions and others in 2016. - Daily Sabah
As more and more individuals, pension funds, hedge funds, and investors come to the realization that historic asset classes like bonds, currencies, and real estate no longer provide sufficient yield for the risk involved, it would only take 1% of the money currently dedicated to these assets to completely wipe out gold and silver supplies, and create the environment where gold no longer has a definable value since it will become priceless.


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